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X CAI Costa Rica 2019: Developments and Challenges in International Arbitration

Fri, 2019-03-15 00:05

Marlon Meza-Salas

The X CAI Costa Rica held by the Costa Rican Chapter of the ICC and its Arbitration Commission, took place in San Jose, Costa Rica between February 24 and 27, 2019. Ten years have led to its consolidation as one of the most important ICC events in the region. This year’s intensive program included several academic panels and practical workshops, as well as a meeting of young arbitrators ICC-YAF. The event brought together more than 50 high-level speakers from the U.S. and other countries in Latin America and Europe.

Insights on the Topics Discussed

Making a tight summary of the issues discussed, the Congress began with references to what has happened in the last 10 years in international arbitration, in general, and in some Latin American countries, in particular, such as changes in some legislations confirming the tendency to continue adopting the UNCITRAL Model Law in a greater number of countries. It was also mentioned the amendment of some arbitration rules, or proposals from associations linked to arbitration such as the Club Español del Arbitraje (Spanish Arbitration Club, “CEA” for its initials in Spanish), as for example the CEA Code of Good Practice for Arbitration and the CEA Code for Good Practice for Mediation. The amendment of the Spanish Arbitration Law in 2011 was also commented, which allows the arbitrability of intra-companies disputes, better known as statutory or corporate arbitration.

It was also highlighted that according to the results of recent reports such as the Queen Mary University survey, arbitration remains the preferred method for resolving international disputes. The main reason for this preference continues to be the final nature of the awards, and how easy it is to enforce them in most countries of the world thanks to the New York Convention (“NYC”), on which an entire panel focused on. Among other things, the speakers discussed some practical problems at the time of requesting the recognition and enforcement of an award, the effects of applications for annulment that have not yet been settled, or what happens when an award is vacated at the seat of the arbitration. The future of the NYC was not out of the discussions either.

Recent reports and surveys also showed that the ICC continues to be the preferred institution in the world to administer cases of international arbitration, and currently has offices in New York, Hong Kong and Brazil, from which –and not exclusively from Paris– the institution is able to administer arbitration procedures. Among the initiatives of the ICC are its efforts to reduce the time and cost of arbitration proceedings by the introduction of the expedited procedure in the latest amendment of the ICC Rules of Arbitration. The advantages and disadvantages of that Fast Track arbitration were discussed in one of the panels because, although brevity is very well received, it entails some procedural issues and concerns about due process when certain procedural acts such as the Terms of Reference or a hearing are excluded.

The speakers also mentioned the constant attacks against arbitration, which have focused more on investment arbitration where the issuance of inconsistent awards is criticized due to inadequate or contradictory reasoning. Both international commercial arbitration and investment arbitration continue to be criticized for their high costs, which is attributed –among other reasons– to high attorneys’ fees or complex document production that extend the lifespan of the proceedings. However, criticisms have been much greater in investment arbitration than in commercial arbitration.

The discussions from Europe on the proposal to create a Multilateral Investment Court, or the possible ban of arbitrations based on intra-European bilateral investment treaties –following the Achmea case– were not ignored. It was clarified, however, that this last view would not affect the arbitrations based on the Energy Charter Treaty. It was also said that it is possible to see in the near future the use of financial vehicles through Switzerland or the United Kingdom post-Brexit, to continue using investment arbitration in intra-Europe disputes.

One of the panels dealt with the differences between common law and civil law, as well as, the influence of both systems in the practice of international arbitration. In this and other panels, the recent Prague Rules were mentioned, comparing them with the IBA Rules on the Taking of Evidence in International Arbitration. The comparison was mainly focused on the document production stage in arbitration proceedings –a topic on which there are very different approaches from both legal systems–, and the proactive role that the Prague Rules propose for the arbitral tribunal, granting broad powers to the arbitrators. It was pointed out that this latter could be a problem to enforce an arbitral award in some countries. Among the interesting things that were mentioned about the new Prague Rules, was that these have been described as “reactionary” by many common law practitioners, but surprisingly, they have also received a lot of criticism from civil law practitioners, even if the latter are its main target.

Another subject that was discussed was the different approaches of the above-mentioned legal systems on the value of documents and witnesses statements, since the former tend to be more valued in civil law systems and the latter tend to be preferred in common law systems. This different point of view can explain the importance and high value that common law practitioners give to the examination of witnesses and experts through cross-examination, not only in state courts but also in arbitration.

Another interesting topic that was discussed was the issue related to multi-party arbitrations and the possibility of incorporating into an arbitral proceeding non-signatories of the arbitration agreement. It was commented that this topic has been expressly regulated so far only in the Peruvian legislation, where it is required that the non-signatory has had an active participation in the negotiation, execution, performance or termination of the relevant contract.

Some Challenges to International Arbitration

It is expected that arbitration will continue to grow in many sectors, in which disputes were previously litigated before state courts, as has been happening in areas such as construction, energy, finance, technology and others. As good news, it was highlighted that arbitration has grown not only because of a greater number of cases, but also because of the nationalities of the parties and arbitrators, and in general it has grown in diversity, and the greater challenge is that diversity and inclusion continue to grow. It is foreseeable that the growth of arbitration will continue as long as it is able to evolve and adapt to the needs of its users, who increasingly demand a greater reduction of time and cost.

Consensus was reached on that it is necessary to continue encouraging and promoting arbitral culture, for which the convenience and importance of understanding technology –which is not an option, but something mandatory nowadays – and learning to work with it was highlighted. The speakers referred to the multiple challenges in this subject, and also mentioned many times terms such as “digital assets”, “databases”, “encrypted documents”, “clouds”, “cyber security”, “blockchain”, “arbitrator intelligence”, and many others.

The importance of continuing to adopt best practices in international arbitration was also highlighted. These best practices could come from both common law and civil law, whose differences tend to be reduced and harmonized when incorporated into arbitration. Each arbitration is different and it is influenced by many factors such as the nationality of the parties, their counsel’s and the arbitrators’, or the law applicable to the merits of the dispute. However, beyond these differences and the particularities of each case, the importance of avoiding assuming biased positions was emphasized, always having in mind the reduction of costs and time for the benefit of arbitration users. It must then be understood, what generates real value for the client.

Finally, it was mentioned that, only to the extent that the challenges to arbitration are understood and solved by arbitration practitioners, the myth that arbitration only works for large cases may be destroyed. The goal seems viable in international commercial arbitration, as has been happening in domestic arbitration in some countries that have knocked down that myth, such as Peru, where domestic arbitration has become the rule and important disputes are no longer discussed in state courts but in the arbitral jurisdiction.

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Ukraine’s Supreme Court Takes an Unexpected Approach on Sovereign Immunities

Thu, 2019-03-14 03:55

Oleksii Maslov

Investment arbitrations with respect to Ukrainian assets in Crimea have been in the spotlight of the international arbitration community for some time now1)E.g., see here  jQuery("#footnote_plugin_tooltip_8204_1").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });. After the Claimants in Everest Estate LLC et al. v. the Russian Federation (“Everest”) obtained the merits award in their favour in May 20182)See this post by Mykhaylo Soldatenko. jQuery("#footnote_plugin_tooltip_8204_2").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, the focus started to shift to the enforcement and set aside stages of the Crimean cases.

In July 2018, Claimants applied for recognition and enforcement of the Everest award in Ukraine. They have also requested provisional measures to be granted against the shares in three Ukrainian subsidiaries of Russian state banks (VTB Bank, Prominvestbank, and Sberbank, together the “Banks”). In September 2018, the Kyiv Appellate Court (acting as the court of first instance) granted both applications.3)See here and here in Ukrainian. jQuery("#footnote_plugin_tooltip_8204_3").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Unfortunately, the court mostly overlooked inevitable issues of the Banks’ separate legal personality and sovereign immunities of the Russian Federation.

Conversely, the Ukrainian Supreme Court in its recent judgment on the Banks’ appeal (“SC Judgment”) directly addressed these issues.4)See here in Ukrainian. jQuery("#footnote_plugin_tooltip_8204_4").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); It, among other things, concluded that Russia waived its immunity by means of the Russia-Ukraine BIT.5)A brief summary of the judgment may be found here. jQuery("#footnote_plugin_tooltip_8204_5").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); In this post, we focus on the Supreme Court’s quite unexpected take on the issue of sovereign immunities. We will start by explaining applicable provisions of Ukrainian law, proceed to the reasoning of the Supreme Court, and then highlight the most thought-provoking takeaways from the SC Judgment.

Foreign States’ Sovereign Immunities in Ukraine

Ukraine is not a party to the United Nations Convention on Jurisdictional Immunities of States and their Property, 2004 (“UNCSI”) or to the European Convention on State Immunity, 1972. Under the Constitution of Ukraine6)See here in Ukrainian. jQuery("#footnote_plugin_tooltip_8204_6").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, ratified international treaties are incorporated into the Ukrainian legal system. The Constitution, however, does not establish direct applicability of rules of customary international law. They, thus, cannot be applied directly by Ukrainian courts.

Under the domestic legislation, in particular the Law of Ukraine on Private International Law (“PIL Law”)7)See here in Ukrainian. jQuery("#footnote_plugin_tooltip_8204_7").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_7", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, foreign states enjoy absolute immunity in respect of themselves and their property from 1) suit, 2) provisional measures, and 3) execution of court judgments. There are only two exceptions to this rule, namely:

1) where the competent authority of a state concerned waives its immunity, or

2) where an applicable international treaty provides otherwise.

Neither the law nor relevant court practice specify the manner in which the waiver of immunity can be made. Thus, in line with applicable Ukrainian legislation, the Russian Federation should have had full immunity with respect to itself and its property in the territory of Ukraine.

Supreme Court’s Reasoning

Although the Russian Federation did not participate in the proceedings before the Ukrainian Supreme Court, the court record demonstrates that the Russian Ministry of Justice sent a letter to the Ukrainian Supreme Court, invoking Russian sovereign immunity. The sovereign immunity defence was also mentioned in the appellate claims of some of the Banks.

A separate section of the SC Judgment deals with sovereign immunities.8)See here, paragraphs 68-78. jQuery("#footnote_plugin_tooltip_8204_8").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_8", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The SC Judgment first acknowledges provisions of the PIL Law on absolute immunity of foreign states. Then it refers to the practice of the European Court of Human Rights (“ECHR”) in Cudak v Lithuania (Application No. 15869/02, “Cudak”) and Oleynikov v Russia (Application No. 36703/04, “Oleynikov”)9)See here and here. jQuery("#footnote_plugin_tooltip_8204_9").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_9", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, where the ECHR analysed customary nature of certain provisions of the UNCSI. The Supreme Court then stated that although the UNCSI is not ratified by Ukraine, the “restrictive immunity concept [set out in the UNCSI] is applicable in accordance with customary international law and taking into account the judgment of the ECHR in Oleynikov v Russia”. The Supreme Court further quoted paragraph 68 from Oleynikov, where the ECHR found that Russia had breached applicant’s right to fair trial by denying court review of his claim against North Korea on the basis of sovereign immunity.

The SC Judgment noted that the European Convention on Human Rights (“European Convention”) and the jurisprudence of the ECHR are directly applicable sources of Ukrainian law.10)Direct applicability is established by the Law of Ukraine “On Execution of Judgments and Application of Jurisprudence of the European Court of Human Rights”, see here in Ukrainian. jQuery("#footnote_plugin_tooltip_8204_10").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_10", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Having done so, the Supreme Court referred to Article 19 of the UNCSI, listing ways in which state immunity from execution may be waived. It concluded that the dispute settlement clause in the Russia-Ukraine BIT (Article 9) constitutes Russian waiver of immunities from “1) jurisdiction, 2) measures of constraint and 3) execution of court judgments”11)See the BIT here. jQuery("#footnote_plugin_tooltip_8204_11").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_11", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); for the purposes of the UNCSI and the PIL Law.

Food for Thought in Supreme Court’s Reasoning and Implications

The Supreme Court’s departure from the (now nearly extinct) rule of absolute sovereign immunity should be welcomed. It has close parallels with Lithuanian Supreme Court’s abortion of legislatively prescribed absolute immunity in early 2000s. At the same time, the court’s reasoning raises a lot of questions.

First, it is true that the ECHR has tackled the question of sovereign immunities and referred to customary nature of the UNCSI in a number of cases. However, in both Cudak and Oleynikov it has done so exclusively in the wider context of the right to fair trial under the European Convention. The ECHR recognises that sovereign immunity limitation pursues a “legitimate aim” and may, in principle, validly limit right to fair trial. In each Cudak and Oleynikov the ECHR analysed, whether the limitation of right to fair trial through sovereign immunity was proportionate in light of the relevant customary international law.

 On this backdrop, it is debatable whether the jurisprudence of the ECHR indeed may outright ‘import’ provisions of the UNCSI to national legislation, as the correlation is more nuanced. This question looms over the SC Judgment, as it seems to apply the UNCSI without considering Everest Claimants’ right to fair trial.

Second, assuming the applicability of the UNCSI, the Supreme Court’s reasoning with respect to the waiver of immunity from execution seems hasty. The UNCSI operates on a distinction between immunity form jurisdiction and that from execution. Article 17 of the UNCSI, dealing with arbitration agreements, states that arbitration agreements bar the state from invoking immunity in proceedings relating to “confirmation … of the award” (e.g., recognition proceedings). At the same time, Article 19, dealing with immunities from post-judgment measures of constraint (e.g., execution of an award), separately requires an express consent to such measures “by an arbitration agreement”.

The SC Judgment refers only to the latter Article and generally does not seem to recognise the UNCSI’s distinction between two immunities. Furthermore, Article 9 of the Russia-Ukraine BIT, relied on by the Supreme Court, may be viewed as lacking such express consent to execution required by the UNCSI. It refers only to State Parties’ obligation to “execute such [arbitral] award in accordance with its national law.” For instance, ICSID in its model clauses recommends a much clearer waiver of immunity from execution.12)See here. jQuery("#footnote_plugin_tooltip_8204_12").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_12", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Meanwhile, the Supreme Court’s approach is consistent with that applied by the German Supreme Court in Werner Schneider v Kingdom of Thailand.13)German court, while analysing Germany-Thailand BIT (with wording very similar to that in the Russia-Ukraine BIT) decided that it constitutes Thailand’s waiver of immunity from execution, see here, referred to by Alexey Vyalkov. jQuery("#footnote_plugin_tooltip_8204_13").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_13", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Thus, the SC Judgment adds to the wider debate on whether and in which circumstances an arbitration agreement constitutes waiver from state immunity from execution. It should be viewed in the light of evolving national jurisprudence limiting sovereign immunities.14)Detailed analysis in Ben JURATOWITCH (2016). Waiver of State Immunity and Enforcement of Arbitral Awards. Asian Journal of International Law, 6, pp 199-232 here. jQuery("#footnote_plugin_tooltip_8204_14").tooltip({ tip: "#footnote_plugin_tooltip_text_8204_14", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Apart from adding to international context, the SC Judgment fundamentally alters Ukrainian legal framework for recognising and enforcing arbitral awards against sovereign states. By using the provisions of the UNCSI on waivers as directly applicable law, the Supreme Court has likely paved the way for application of its other provisions (e.g., those on commercial exception from immunity). It remains to be seen whether and how parties to Ukrainian proceedings and Ukrainian courts will use this significant body of newly applicable law.

The submission is made in my personal capacity. The views contained in this post are not necessarily the views of AVELLUM or its clients.

References   [ + ]

1. ↑ E.g., see here  2. ↑ See this post by Mykhaylo Soldatenko. 3. ↑ See here and here in Ukrainian. 4. ↑ See here in Ukrainian. 5. ↑ A brief summary of the judgment may be found here. 6. ↑ See here in Ukrainian. 7. ↑ See here in Ukrainian. 8. ↑ See here, paragraphs 68-78. 9. ↑ See here and here. 10. ↑ Direct applicability is established by the Law of Ukraine “On Execution of Judgments and Application of Jurisprudence of the European Court of Human Rights”, see here in Ukrainian. 11. ↑ See the BIT here. 12. ↑ See here. 13. ↑ German court, while analysing Germany-Thailand BIT (with wording very similar to that in the Russia-Ukraine BIT) decided that it constitutes Thailand’s waiver of immunity from execution, see here, referred to by Alexey Vyalkov. 14. ↑ Detailed analysis in Ben JURATOWITCH (2016). Waiver of State Immunity and Enforcement of Arbitral Awards. Asian Journal of International Law, 6, pp 199-232 here. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Oil & Gas: Is Italy Doing It Wrong All Over Again?

Tue, 2019-03-12 22:17

Danilo Ruggero Di Bella and Josep Gálvez

The Italian Republic – for better or for worse – is cracking down on hydrocarbon explorations and extractions. Kicking off with the regulatory changes recently brought about by the Italian Government, this post gauges their possible consequences for the stakeholders by going through a pending arbitration which may be ripe enough to become a benchmark for future cases on the horizon. The post ends with a possible amicable solution, following the steps of a previous KAB contribution.

 

Regulatory changes

In February this year, the Italian Parliament converted the Decree-Law No. 135/2018 into Law by passing the Act No. 11/2019. Article 11-ter of this Act has massive implications for the upstream oil & gas industry in Italy. It suspends all the exploration permits, as well as any new application for production concession for a period of 18 months, which can be stretched up to 2 years. During this temporary ban on upstream activities, the Minister of Economic Development, together with the Minister of Environment, is supposed to enact a Decree containing a Plan (named “PiTESAI”) to determine, once and for all, the suitable areas for sustainable hydrocarbon exploration and production activities by having special regard for the marine ecosystem, fishery stocks and the impact on the coastline.

As soon as the Plan is adopted, the exploration permits – which are not compatible with the Plan – will be revoked accordingly. Any production concession application, pending during the adoption of the Plan and concerning areas later declared incompatible with the Plan, will be rejected, unless those production concessions are awarded before the adoption of the Plan (which is a relatively unrealistic event, given the objectives that led the Government to adopt the Decree-Law No. 135/2018 in the first place). Whereas any application for time extension regarding ongoing production concessions, which will fall within the incompatible areas with the Plan, will be declined.

Further, Article 11-ter of the Law 11/2019 is going to increase the administrative fees on hydrocarbon activities by 25 times as of 1 June 2019, in the bid to set up a fund to edge against potential investment arbitrations. The government is, indeed, well aware of the concrete risk posed by foreign oil & gas investors’ arbitral claims, because of the pending Rockhopper v. Italy case. Hence, any investors’ claims for direct or consequential damages, which may originate from the implementation of the Plan, will be covered (at least in theory) by the companies whose hydrocarbon production is left unharmed by the Plan itself. The Government estimates that such a fund will amount approximately to 470 million euros. However, this sum is far from being satisfactory to make up for the damnum emergens and lucrum cessans caused by the Government, according to the potentially affected companies (concerning at least 73 exploration permits).

As a result, the entire upstream industry in Italy – including both the companies whose explorations or productions have been halted, and those whose operational costs will exponentially rise – is disgruntled with the present situation and on the warpath.

 

The (almost ready) precedent

The Rockhopper v. Italy arbitration1)See also the forward-looking Master Thesis from 2015 of Danilo Di Bella. jQuery("#footnote_plugin_tooltip_7616_1").tooltip({ tip: "#footnote_plugin_tooltip_text_7616_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); was launched in 2017 and is now arriving at its finish line. On February 4, 2019, a hearing on jurisdiction, liability and quantum was held in Paris, bringing the case to its closure. Therefore, according to the ICSID Arbitration Rules 38 and 46, the tribunal will have to render the award within 120 days from the closing of the proceeding (i.e. presumably around May or June 2019, unless, of course, the tribunal will extend this period by 60 additional days.

Reportedly, Rockhopper claimed compensation of 275 million euros from Italy for having breached its obligations under the ECT. This case is particularly important for the future arbitrations the oil & gas companies are now threatening to commence against Italy, because it shares similar, if not identical features, with their current situation:

  1. The introduction and retroactive application of a Legislative Act to the existing concessions, thereby exploration and possible production activities are paralyzed;
  2. A Plan, that will most likely turn into a ban, imposing completely different zoning regulations (just like Article 2 of the Legislative Decree 128/2010 did) and which will end up forbidding hydrocarbon explorations and extractions in blocks previously destined for such purpose as well as imposing additional limitations or burdensome compliance mechanism;
  3. Probable retraction of promises given by previous governments contravening specific representations and inconsistencies all along the administrative procedures;
  4. A further increase of the government’s take on hydrocarbons, just like it occurred by means of Law No.134/2012 which raised off-shore royalties by more than 40% to finance sea protection and operational safety;
  5. Possible failures to observe the time-frame to conclude the administrative procedure for the issuance of the relevant Environmental Impact Assessment Decrees concerning the production concession applications pending during the adoption of the Plan.

These analogous facts laid the foundation for Rockhopper’s claims of ECT-grounded legitimate expectation violations and may now constitute the pillars for the looming arbitrations mirroring Rockhopper’s case and its recurring pattern.

Despite Italy’s denunciation of the ECT in January 2015, which became effective one year afterwards, Article 47(3) ECT, the ECT sunset clause, will protect for 20 more years investments in the oil & gas sector made in Italy before January 2016. Should the sunset clause fall short to light up the expectations of some foreign investors, Italy is a Contracting Party to an array of BITs, all containing a FET clause safeguarding investors’ legitimate expectations. Hence, awaiting the adoption of the new Plan, investors have the time to rearrange their investments through one of the many countries which Italy has a BIT with.

 

Risk analysis

Given this picture, it is worth running a risk analysis for both sides. From Italy’s perspective, there is the tangible risk of facing not just one, but multiple arbitrations; the possible defeat in the ongoing Rockhopper case (even though, arguably, the risk of being ordered to pay the 275 million euros is remote, as that sum could be reduced substantially); and the ensuing risk of setting an unfavorable precedent to be relied upon by the next belligerent oil & gas company.

From the disgruntled oil & gas companies’ standpoint, there is the risk of losing time and money pending their arbitrations (which can go on from three to five years); the risk of having the tribunal drastically reducing the compensation they aspire to get; the risk of Italy non complying with the pecuniary obligations set in the award, thus causing further delays; and the ensuing risk of being compelled to choose between trying to enforce the award or selling it for less than what it was originally worth.

 

Circumventing double-sided risks: an amicable solution

In slightly different cases, where there happen to be a long-standing dispute among the different parties of a public-private joint venture for the exploitation of natural resources, the full course of an arbitral process may prolong, if not intensify, the conflict itself without making anyone happy. In these instances, if the State party’s responsibility can be promptly ascertained, but its financial liability is below what the claimants are demanding, arbitrators have often come up with sensible solutions. A customary proposal by tribunals, for example, envisages the purchase by the State-party of the private parties’ interests in the joint venture at the price the investment was made, plus a 2% annual interest rate from the date each investment was made, plus the payment of a reasonable bonus reflecting the end of the private parties’ opportunity to obtain future profits from the concession. Understandably, such an overall payment should be secured by way of a bank guarantee and could be spread over a short number of years to be affordable.

This approach could be easily transferable – with the appropriate adjustments – in a consolidated mediation to solve the looming arbitrations unfolding before us, whose real causes are rooted in many years of a somewhat confused energy policy incapable of a long-term predictability (which is something pivotal to a sector where billions of euros are poured in with the hope of recouping gradually those investments with a reasonable profit over a long time span).

As to a positive example of a desirable amicable settlement, in the mid-eighties, Norway was in the midst of having to face multiple claims by oil & gas companies enraged at the retroactive application of a royalty payment regulation to their licenses. Right after the first leading case (Ekofisk Royalty Case) was ruled in favor of the claimant by the Norwegian Supreme Court on 19 December 1985, the Norwegian Government entered into negotiations with the other oil & gas companies providing them with a serious offer, instead of fueling their anger. Those companies, which waited for the outcome of that case and settled their dispute out of court, cut even a better deal (meaning a 3% higher compensation, plus interest on the overdue repayments) compared to the company that first commenced the court proceeding (which, in our case, could be Rockhopper). Simultaneously, Norway came out of that heated energy-related quarrel appearing even more trustworthy and appealing towards foreign energy companies.

As also indicated in an earlier KAB contribution, consolidated mediations could be the answer to multiple ongoing or potential arbitrations revolving around the same fact pattern, especially when a decision on a similar matter has already emerged and declared the victorious side by making following predictable awards. Eventually, both sides will avoid unnecessary risks, benefit more favorable terms and gain international credibility.

 

References   [ + ]

1. ↑ See also the forward-looking Master Thesis from 2015 of Danilo Di Bella. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Abu Dhabi Global Market Courts Enhances its Attractiveness as an Arbitral Seat

Tue, 2019-03-12 05:40

Peter Smith

The Abu Dhabi Global Market (“ADGM”) is an international financial free zone and an important emerging seat of arbitration in the GCC region. The ADGM’s arbitration law is based on the UNCITRAL Model Law, with a number of significant enhancements relating to the confidentiality of proceedings, the joinder of third parties, and the waiver of the right to bring an action for setting aside.

The Court of First Instance (“CFI”) of the ADGM Courts (“ADGMC”) is the court designated as the supervisory court for arbitrations seated within the ADGMC’s jurisdiction. 2018 saw the CFI exercising that function for the first time in the cases of A1 v B1 (9 January 2018) and A2 v B2 (11 October 2018). One of these cases involved a pre-claim ex parte application for interim relief which demonstrated the ability of the CFI to organise hearings quickly, use sophisticated document management and international telephone conferencing facilities, and to grant swift and appropriate relief when necessary.

These cases are part of a wider trend. As the ADGMC enter 2019, they can be expected to build on the progress made in 2018. Last year saw an increase to 14 of the numbers of cases brought in the CFI, up from 7 the year before, i.e. a 100% increase. Many of the cases listed cover real property and employment disputes but, as more companies take offices on the island and residential developments grow, the volume and range of the CFI’s docket will surely increase with the ever-greater numbers of contracts subject to the ADGMC’s jurisdiction.

The CFI’s increased workload comes as the ADGMC signed a memorandum of understanding (the “2018 MOU”) revising and updating the mutual and reciprocal recognition and enforcement of, inter alia, ratified arbitral awards between the ADGMC and the Courts of the Emirate of Abu Dhabi represented by the Abu Dhabi Judicial Department (“ADJD”). The 2018 MOU builds on an earlier MOU signed between the same parties in 2016 and Article 13(11) of Abu Dhabi Law No. 4 of 2013, but provides further clarity on the specific processes for reciprocal enforcement which the 2013 law did not cover. The 2018 MOU fills a gap in the relationship between the ADJD-ADGMC identified previously. The 2018 MOU establishes that mutually ratified or recognised awards are to have the same force as a judgment of either of the courts without the requirement of any further ratification or recognition by the other court. Mutual recognition and enforcement also extends to include court-approved settlement agreements (known as ‘memoranda of composition’) certified by either court. Parties are already benefitting from these enforcement regimes, which are the result, as may be seen, of the collaborative efforts of the ADGMC and ADJD.

As a court of the UAE, the ADGMC is bound by the UAE’s international obligations under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, the Riyadh Arab Agreement for Judicial Cooperation 1983 and Gulf Cooperation Council Convention for the Execution of Judgments, Delegations and Judicial Notifications 1996.

In October 2018, the ADGM’s Arbitration Centre opened. The new centre provides parties with state of the art meeting and hearing room facilities. In December, the ADGMC launched “the world’s first fully digital courtroom”, allowing parties and their representatives to access court documents including court forms and bundles and to attend hearings remotely.

In summary, and as a result of its sophisticated arbitral law, its collaboration with the ADJD, and the effective performance of the CFI of the ADGMC of its arbitration related functions, ADGM is establishing itself as a leading arbitration seat in the region.

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Third Party Funding in Nigerian Seated Arbitrations: Setting the Law Straight

Mon, 2019-03-11 22:30

Opemipo Omoyeni

Introduction

This post addresses the topical issue of Third-Party Funding (“TPF”) in relation to Nigeria-seated arbitrations, and posits in variance with recent work on the subject that there is no extant law prohibiting TPF in Nigeria-seated arbitrations. This post points out that there has been an apparent misapplication of the common law principles of champerty and maintenance as is obtainable in courtroom litigation to privately convened arbitrations. Further, there seems to be a narrow conception of TPF in terms of direct funding of a proceeding by a funder (funders). The author argues that the scope of TPF is broader than envisaged as TPF also includes attorney financing (pro bono and contingency or success fee type arrangements) and Nigerian law permits the latter concept.

Origins and Scope

Nigeria is a common law country. Although English case law is considered largely persuasive, certain corpus of laws were imported into the Nigerian legal system by virtue of it being a former British Colony. This is known as the Received English Law which comprises of the principles of Common Law and Equity and Statutes of General Application (being statutes in force in England on the 1st day of January, 1900).

Historically, the English courts developed concepts like “champerty” and “maintenance” in response to what was considered to be interference by non-interested third parties with ongoing proceedings. Unfortunately, these doctrines of champerty and maintenance still form part of the Nigerian legal system on account of its association with the Common Law system and the reinforcement of these principles by local courts. Thus, in order to ascertain the scope and applicability of these doctrines in Nigeria, recourse must be readily had to the English Common Law system where these doctrines originated from. It has been posited that to understand the scope of a concept, one must readily refer to the mischief the law sought to remedy 1)Steyn L.J in Giles v Thompson[1994] 1 A.C. 142; [1993] 2 W.L.R. 908. jQuery("#footnote_plugin_tooltip_8071_1").tooltip({ tip: "#footnote_plugin_tooltip_text_8071_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });.

In the medieval British era, there was a prevalent mischief of influential persons (barons) purchasing weak claims with the expectation that they could use their power and wealth to influence the administration of justice and to eventually win those claims. This mischief was aptly pointed out by the Hong Kong High Court in Cannonway Consultants Ltd v Kenworth Engineering Ltd citing an extract from Jerry Bentham’s work:

“A mischief, in those times it seems but too common, though a mischief not to be cured by such laws, was, that a man would buy a weak claim, in hopes that power might convert it into a strong one, and that the sword of a Baron, stalking into court with a rabble of retainers at his heels, might strike terror into the eyes of a judge upon the bench. At present, what cares an English judge for the swords of a 100 barons? Neither fearing nor hoping, hating nor loving, the judge of our days is ready with equal phlegm to administer, upon all occasions, that system, whatever it be, of justice or injustice, which the law has put into his hands.”

Nigerian Jurisprudence and TPF

Indeed, the mischief that both doctrines were devised to remedy, were prevalent in the public justice system as administered in court rooms and the application of the doctrines at common law was confined to litigation. Their applicability cannot be extended beyond that remit. The concerns for holding otherwise have been noted to include, among others, the erosion of the party autonomy doctrine and the same have been reinforced elsewhere 2)Giles v Thompson [1994] 1 A.C. 142; [1993] 2 W.L.R. 908 jQuery("#footnote_plugin_tooltip_8071_2").tooltip({ tip: "#footnote_plugin_tooltip_text_8071_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });.

In view of the foregoing, the contention that TPF extends to arbitration appears rather curious. The scale of the application of the doctrine of champerty and maintenance under common law cannot be readily stretched or modified to apply to circumstances and situations not otherwise contemplated at common law except modified by local legislation(s) in that regard. It is, therefore, pertinent to note that at the time of penning this article, there are no local legislations or case law positing that the doctrine extends to the field of arbitration 3)See Miscellaneous Offences Tribunal v. Okoroafor(2001) 18 NWLR (Pt. 745) 295 jQuery("#footnote_plugin_tooltip_8071_3").tooltip({ tip: "#footnote_plugin_tooltip_text_8071_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });. The attendant consequence is, indeed, that TPF in Nigeria-seated arbitrations are, in all intents and purposes, legal. The law remains that whatever is not prohibited is allowed 4) Oyo v. Mercantile Bank (Nig) Ltd. (1989) 3 NWLR 229 jQuery("#footnote_plugin_tooltip_8071_4").tooltip({ tip: "#footnote_plugin_tooltip_text_8071_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });.

On another note, there are various incidences of TPF that do not entail the funding of a claim/defense by a formal funder for an agreed consideration. The financing of a claim by a lawyer or law firm on a pro bonoor contingency basis also falls under the umbrella of TPF. These arrangements, either in arbitration or litigation, are legal and permissible under Nigerian Law. Earlier decisions of Nigerian Courts adjudging contingency fee arrangements as at best unprofessional and at worst champertuous 5) Oyo v. Mercantile Bank (Nig) Ltd. (1989) 3 NWLR 229 jQuery("#footnote_plugin_tooltip_8071_5").tooltip({ tip: "#footnote_plugin_tooltip_text_8071_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); have since been supplanted by subsidiary legislations enacted pursuant to the Legal Practitioners Act 6)Rule 50 of the Rules of Professional Conduct for Legal Practitioners, 2007 allows Nigerian Legal Practitioners to enter into contingency arrangement with clients provided that these arrangements are reasonable. jQuery("#footnote_plugin_tooltip_8071_6").tooltip({ tip: "#footnote_plugin_tooltip_text_8071_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });.

Conclusion

Whilst the Arbitration and Conciliation (Repeal and Re-enactment) Bill 2017 has been extensively reviewed with calls for a more explicit recognition of TPF in the Bill among others, the law as it stands does not prohibit the incidence of TPF in Nigeria-seated arbitrations. A better approach, the author suggests, will be to demand for an enactment of a comprehensive regulatory framework for TPF, as is obtainable in other jurisdictions, by calling for a holistic revision to the Bill to provide for issues  bordering on disclosure of funding arrangements, conflict of interest considerations as it pertains to the arbitrators,  element of control and influence of the funder in the proceedings as well as other concerns in this space. An adoption of this approach will make Nigeria an attractive choice as a seat for contracting parties in arbitrations.

References   [ + ]

1. ↑ Steyn L.J in Giles v Thompson[1994] 1 A.C. 142; [1993] 2 W.L.R. 908. 2. ↑ Giles v Thompson [1994] 1 A.C. 142; [1993] 2 W.L.R. 908 3. ↑ See Miscellaneous Offences Tribunal v. Okoroafor(2001) 18 NWLR (Pt. 745) 295 4. ↑ Oyo v. Mercantile Bank (Nig) Ltd. (1989) 3 NWLR 229 5. ↑ Oyo v. Mercantile Bank (Nig) Ltd. (1989) 3 NWLR 229 6. ↑ Rule 50 of the Rules of Professional Conduct for Legal Practitioners, 2007 allows Nigerian Legal Practitioners to enter into contingency arrangement with clients provided that these arrangements are reasonable. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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The Interpretation of the New York Convention by the UAE Courts: a Geneva Flavor?

Sat, 2019-03-09 21:19

Abdelhak Attalah

Introduction

The United Arab Emirates (the “UAE”) is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the “NYC”), which was adopted into UAE law by Federal Decree No. 43 of 2006. However, there have been instances where the lower courts of the UAE have come to interpret the NYC requirements for enforcement, and the concept of “double-exequatur” has arisen (i.e., the need for it to be shown that the arbitral award has been rendered enforceable in the jurisdiction in which it was made before it can be enforced in any other jurisdiction).

This has created uncertainty, which undermines one of the NYC’s fundamental objectives: to establish uniform international standards for the recognition and enforcement of foreign arbitral awards in signatory countries.1) Pieter Sanders, Quo Vadis Arbitration?: Sixty Years of Arbitration Practice, A Comparative Study (Kluwer Law International, The Hague 1999) 67-69; Gary B. Born, The New York Convention: A Self-Executing Treaty (2018) 40 MJIL 116,119 (accessed on 3 January 2019) jQuery("#footnote_plugin_tooltip_3499_1").tooltip({ tip: "#footnote_plugin_tooltip_text_3499_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Recent UAE Case Law on Double-Exequatur

Fortunately, to the relief of arbitral award creditors, in a ruling of the Federal Court of Cassation (the “FCC”) of 15 January 2019 in the joint Commercial Appeals Nos. 620/2018 and 654/2018, the FCC overturned a refusal by the Khor Fakkan Court of Appeal (the “Court of Appeal”) to recognize and enforce a foreign arbitral award issued under the Rules of the London Court of International Arbitration (“LCIA”) in London, UK, (the “LCIA Award”) on the basis that it had not been granted exequatur by the English Court before being enforced in the UAE.

The FCC found that (i) the Court of Appeal’s ruling amounted to a “double-exequatur” requirement, which was abolished by the NYC; and (ii) the lower court’s refusal to recognize and enforce the LCIA Award was due to its misinterpretation of the term “authenticated” set forth in sub-paragraph (a) of Article IV(1) of the NYC which states that:

To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply:
(a) The duly authenticated original award or a duly certified copy thereof.

In the FCC’s view, the Court of Appeal had confused the meaning of the term authentication (an international certification comparable to a local notarization/legalization of any document) with the meaning of enforceability/exequatur set forth in Article 4 of the Geneva Treaties.2) The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927, the predecessors of the NYC. jQuery("#footnote_plugin_tooltip_3499_2").tooltip({ tip: "#footnote_plugin_tooltip_text_3499_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The requirement for a leave for exequatur from the court under whose law the award was made was abrogated by Article VII(2) of the NYC, and hence the ruling of the Court of Appeal contradicts the prevailing legal position in the UAE.

The FCC confirmed that, pursuant to Article 238 of the UAE Civil Procedures Code, the UAE courts are bound by the NYC. In this matter, the FCC stated verbatim that:

The argument based on which the lower court rejected the recognition and enforcement of the said award was because it was not granted exequatur in the country where it was issued, and, is therefore, unlawful. This is because of the term authentication, which caused confusion in the mind of the lower court, does not mean ratification of the award and granting it exequatur as per the meaning taken from article 236 of the Civil Transactions Law, rather, it means authentication or legalization as required for the official documents issued by a foreign country and invoked within the State, and since the appealed judgement had a contrary opinion, it shall be declared as a wrongful application of the law, which prevented the lower court to adjudicate the case in its proper legal scope and under the provisions of the NYC mentioned above, the Court of Appeal has erred in its judgment and therefore, it must be overturned. (emphasis added)

The Evolution of the Double-Exequatur Concept: The Geneva Convention

As for the concept of double-exequatur, it should be noted that Article 4(2) of the 1927 Geneva Convention required the party relying upon an award or seeking its enforcement to supply, inter alia, “[d]ocumentary or other evidence to prove that the award ha[d] become final […] in the country in which it was made”.

While Albert Jan van den Berg explains3) Albert Jan van den Berg, The New York Convention of 1958: An Overview in (Emmanuel Gaillard & Domenico Di Pietro (eds), Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice (Cameron May 2008) 61 jQuery("#footnote_plugin_tooltip_3499_3").tooltip({ tip: "#footnote_plugin_tooltip_text_3499_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); that:

The NYC’s predecessor, the Geneva Convention of 1927, required that the award had become ‘final’ in the country of origin. The word ‘final’ [used in Article 4(2) of the Geneva Convention of 1927] was interpreted by many courts at the time as requiring a leave for enforcement (exequatur and the like) from the court in the country of origin. Since the country where enforcement was sought also required a leave for enforcement, the interpretation amounted in practice to the system of the so-called “double-exequatur”. The drafters of the NYC, considering this system as too cumbersome, replaced the term “final” in Geneva Convention, qualifying the award, with the word “binding” in NYC. Accordingly, no leave for enforcement in the country of origin is required under the New York Convention. This principle is almost unanimously affirmed by the courts.

The meaning of the term authentication stated in sub-paragraph (a) of Article IV(1) of the NYC was clarified by the FCC as per the meaning of the UAE statutes, especially Article 13 of the UAE Law of Evidence, in addition to the legal precedents explaining the meaning of the authentication of documents. Indeed, authentication shall be executed as per the Hague Convention of 1961 or as per the UAE modalities and requirements through which a document issued in a foreign country shall be certified i.e., by a solicitor or a notary public and by the respective Foreign Ministry. This interpretation is almost unanimously affirmed by the UAE courts.

The Position under the NYC

As a reminder, the NYC was established as a result of dissatisfaction with the Geneva treaties of 1923 and 1927, and one of the basic actions contemplated by it is the abrogation of the double-exequatur requirement. Article VII(2) of the NYC states that:

[t]he Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 shall cease to have effect between Contracting States on their becoming bound and to the extent that they become bound, by this Convention.

Moreover, pursuant to Article IV of the NYC, the arbitral award creditor is required to provide the court with only two documents (with translations certified by an official or sworn translator or by a diplomatic or consular agent if either document is not made in an official language of the country in which the award is relied upon):

(a) The duly authenticated original award or a duly certified copy thereof; and
(b) The original agreement referred to in Article II or a duly certified copy thereof.

Therefore, pursuant to Article IV of the NYC, enforcement of a foreign award is not conditional upon presentation by the award creditor of proof that the award is final and enforceable in the country of the seat, as the drafters of the NYC did not set such a requirement. Rather, it is for the party resisting recognition and enforcement to provide such proof as clearly required in Article V(1)(e) of the NYC which states:

1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

(e) The award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

Conclusions

Taken in the round, it is clear that Article V(l)(e) and Article VII(2) of the NYC were drafted with a view to put an end to the mechanism of double-exequatur required by Article 4 of the Geneva Treaties, by which a party seeking recognition and enforcement of a foreign award had to prove, among other conditions, that the award had become “final” in the country of the seat.

Indeed, Article V(l)(e) of the NYC allows national courts to refuse the recognition or enforcement of an award if the party resisting enforcement establishes that the award: (a) has not yet become binding on the parties; or (b) has been set aside or suspended. Thus, the binding character of a foreign arbitral award in the hand of a creditor seeking recognition and enforcement in the UAE shall not depend on an exequatur by the courts of the country of the seat.

References   [ + ]

1. ↑ Pieter Sanders, Quo Vadis Arbitration?: Sixty Years of Arbitration Practice, A Comparative Study (Kluwer Law International, The Hague 1999) 67-69; Gary B. Born, The New York Convention: A Self-Executing Treaty (2018) 40 MJIL 116,119 (accessed on 3 January 2019) 2. ↑ The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927, the predecessors of the NYC. 3. ↑ Albert Jan van den Berg, The New York Convention of 1958: An Overview in (Emmanuel Gaillard & Domenico Di Pietro (eds), Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice (Cameron May 2008) 61 function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Arbitrability of IP Disputes in India – A Blanket Bar?

Sat, 2019-03-09 01:00

Saniya Mirani and Mihika Poddar

Arbitration of IP disputes has inherent advantages of saving time and costs and ensuring confidentiality while also maintaining long-term business relations (see here). In India, arbitration will be especially useful in light of the enormous pendency of judicial cases.

However, arbitrability of any subject-matter is dictated by a country’s public policy. In India, what forms part of arbitrable subject-matter is determined as per the test laid down in the Booz Allen Case, expanded upon by the Ayyasami Case. The following two categories of disputes are thereby inarbitrable in nature:

  1. Disputes involving the adjudication of actions in rem as opposed to actions in personem, such as, disputes relating to criminal offences, guardianship matters etc. (hereinafter, the first test of arbitrability);
  2. Disputes arising out of a special statute, which are reserved for exclusive jurisdiction of special courts, such as, matters reserved for small causes courts1) Natraj Studios Private Ltd v. Navrang Studios & Another, 1981 AIR 537 jQuery("#footnote_plugin_tooltip_7053_1").tooltip({ tip: "#footnote_plugin_tooltip_text_7053_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); (hereinafter, the second test of arbitrability). (See here and here)

These tests evince that arbitrability is dependent upon the nature of the claim made in a dispute, i.e., whether the claim is in rem or statutory in nature. This principle should guide the arbitrability of IP disputes too.

 

The IP Regime in India: A Primer

Before understanding the arbitrability of IP disputes, it is essential to understand the functioning of IP regime in India. The scope of this article is limited to analysing arbitrability of patent, copyright and trademark regimes. These regimes allow a “statutory monopoly” to be given to the creator of an intangible asset, conferring an exclusive right to exploit it. There are corresponding statutory remedies to enforce this right. For instance, there exist statutory remedies for infringement of copyright, trademark and patent.2) See, Chapter XII, Copyright Act, 1957; Section 135, Trade Marks Act, 1999; Chapter XVIII, Patents Act, 1970. jQuery("#footnote_plugin_tooltip_7053_2").tooltip({ tip: "#footnote_plugin_tooltip_text_7053_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); As per the statute, these remedies must be granted by civil courts. The statutory mention of courts, as a forum to grant these remedies, creates the first hurdle in arbitrating IP disputes.

 

Lack of a Supreme Court precedent settling the issue

The Supreme Court of India has not conclusively settled the issue of arbitrability of IP disputes. In the Ayyasami Case, patents, trademarks and copyrights were listed in the category of inarbitrable disputes. However, the main issue before the court was of arbitrability of fraud (discussed here and here). Thus, categorization of IP disputes as inarbitrable was only obiter dictum. Therefore, this decision cannot be read to bar arbitrability of IP disputes.

 

Different positions of Indian High Courts

Both the aforementioned tests of arbitrability have been used to hold IP disputes inarbitrable. In the Mundipharma Case, the issue was whether a claim of ‘copyright infringement’ was arbitrable. The Delhi High court held the dispute to be inarbitrable given that infringement of copyright is a statutory claim, having definite statutory remedies that are to be granted exclusively by civil courts. This ruling thus seems to echo the second test of arbitrability that bars arbitrability of disputes arising out of special statutes which are reserved exclusively for civil courts.

Subsequently, in the SAIL Case [Suit No. 673/2014], a claim of ‘trademark infringement’ was held to be inarbitrable by Bombay High Court reasoning, “the rights to a trademark and remedies in connection therewith are matters in rem and by their very nature not amenable to the jurisdiction of a private forum chosen by the parties”. Accordingly, the dispute was held to be inarbitrable on the basis of the first test of arbitrability that makes actions in rem inarbitrable.

The Eros Case brought about the first winds of change to this negative trend. The Respondent was granted a copyright license to distribute the Petitioner’s films. The license contained an express negative covenant which prohibited the use of copyrighted films upon termination of contract. Respondent violated this term. Thus, the Petitioner initiated arbitration for ‘violation of the contractual covenant’ – a claim although sourced purely in contract, still required an infringement of copyright to be established.

The Bombay High Court held for the first time that it would be too broad, impractical and against all commercial sensibilities to hold that the entire realm of IP disputes is inarbitrable. Accordingly, the case rightly noted the nuance that that IP disputes arising purely out of contracts are arbitrable because they are actions in personam, i.e. “one party seeking a specific particularized relief against a particular defined party”. Thus, the case applied the first test of arbitrability. The court went a step ahead to state that, a finding of infringement had to be made for proving such a contractual breach and that an arbitrator was empowered to make such a finding of infringement as ‘infringement’ can only be in personam. Thus, an infringement claim could now be determined by arbitration.3) Note that this ratio had been upheld by an earlier case from the same high court called Eurokids International Media Ltd. v. Bhaskar Vidyapeeth Shikshan Sanstha (2015) 4 Bom CR 73. However, Eurokids case was never referred to by EROS, as should have been done in light of the precedential system followed by India. jQuery("#footnote_plugin_tooltip_7053_3").tooltip({ tip: "#footnote_plugin_tooltip_text_7053_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

However, even when the dispute is in personam, the second test of arbitrability can be applied, to hold the disputes arising out of special statutes as inarbitrable. This test was refuted in EROS reasoning that the statute nowhere provides that the court is an ‘exclusive’ forum, and thus, arbitration should be allowed. We argue that the holding of inapplicability of the second test was correct. The second test is applied where there is an underlying public policy objective in keeping disputes in the hands of courts. For instance, labour disputes are made inarbitrable by Industrial Disputes Act, 1947, for the reason that a public fora can address the power imbalance prevalent between employers and employees in labour disputes. However, in such IP disputes, similar considerations are not always in play. Thus, the EROS decision rightly refuted the second test of arbitrability.

Since the Eros and Euro Kids cases, other IP disputes that are purely born out of such negative covenants in contracts have also been upheld as being arbitrable.4) Deepak Thorat v. Vidli Restaurant Limited, 2017 SCC OnLine Bom 7704 jQuery("#footnote_plugin_tooltip_7053_4").tooltip({ tip: "#footnote_plugin_tooltip_text_7053_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

 

Analysis and conclusion

In earlier cases of Munidpharma and SAIL, where arbitrability of IP disputes was tested, the petitioners raised statutory claims of infringement of copyright/trademark, and expected statutory or public law-based remedies in return. Thus, the only gamut of IP disputes whose arbitrability had been tested hitherto were those that were purely born out of IP statutes. However, IP disputes are not merely statutory, but can be contractual as well.5) In some cases, an entire contract may be about an IP right. For instance, license agreements, joint research and development agreements, etc. In other cases, the IP rights may form a part of a larger commercial transaction, such as, mergers, acquisitions, distribution agreements. jQuery("#footnote_plugin_tooltip_7053_5").tooltip({ tip: "#footnote_plugin_tooltip_text_7053_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); With increase in quantum and complexity in commercial transactions, the arbitrability of purely contractual IP disputes arose very recently in recently in the EROS and Eurokids cases. These cases have rightly not applied SAIL’s holding about the inarbitrability of purely statutory I.P. claims to contractual IP claims.

Thus, as per the current position in India, there is no blanket bar on arbitrability of IP disputes. Instead, arbitrability is determined on the basis of nature of claims raised. Disputes of royalty, geographical area, marketing and other terms of the license agreements, which are purely contractual, would be arbitrable. Parties in India can and should freely arbitrate such disputes. However, a dispute of validity/ownership of an IP right should be decided by the court/assigned public administration, for the dispute would result in a judgement affecting the general public’s right to use the respective asset.

The position of infringement claims is dependent upon each case. Statutory infringement simpliciter would not be arbitrable in accordance with the Mundipharma and SAIL cases; while infringement arising purely out of contract will be arbitrable in accordance with EROS, Euro kids cases. However, often as is the case, if a counter-claim about the validity of IP right is raised against an infringement claim, the counter-claim needs to be resolved by the court for it would then be an action in rem. Pending such resolution, the arbitration may be stayed.

This position on arbitrability will ensure a balance of rights between inventor/author and the general public, with inventor/author retaining the right to arbitrate contractual rights and courts retaining jurisdiction over claims that affect the general public. Such a balance is desirable for effective functioning of the IP regime as well. The possibility of easy dispute resolution would encourage inventors. Retaining the courts’ jurisdiction over matters where the public’s right to use copyrighted works and patented inventions is affected, would also ensure a robust public domain and safeguard public interest.

References   [ + ]

1. ↑ Natraj Studios Private Ltd v. Navrang Studios & Another, 1981 AIR 537 2. ↑ See, Chapter XII, Copyright Act, 1957; Section 135, Trade Marks Act, 1999; Chapter XVIII, Patents Act, 1970. 3. ↑ Note that this ratio had been upheld by an earlier case from the same high court called Eurokids International Media Ltd. v. Bhaskar Vidyapeeth Shikshan Sanstha (2015) 4 Bom CR 73. However, Eurokids case was never referred to by EROS, as should have been done in light of the precedential system followed by India. 4. ↑ Deepak Thorat v. Vidli Restaurant Limited, 2017 SCC OnLine Bom 7704 5. ↑ In some cases, an entire contract may be about an IP right. For instance, license agreements, joint research and development agreements, etc. In other cases, the IP rights may form a part of a larger commercial transaction, such as, mergers, acquisitions, distribution agreements. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Section 1782 Discovery For Use In Private Arbitrations: The New York Saga Continues

Fri, 2019-03-08 03:00

Lucas Bento

United States Code Section 1782 has become the weapon of choice for international litigants seeking discovery in aid of foreign proceedings. Section 1782 allows an “interested person” (such as a foreign litigant) to apply for discovery over a person or entity “found” in the U.S. “for use” in a proceeding “in a foreign or international tribunal.” Significant uncertainty exists, however, in whether Section 1782 discovery can be sought for use in a private arbitration abroad.  In a prior Kluwer Arbitration Blog post, I reviewed a decision of the U.S. District Court of the Southern District of New York (“SDNY”) that granted an application for Section 1782 discovery for use in a foreign arbitration governed by the London Maritime Arbitration Association (“LMAA”).

While the Second Circuit has not weighed on this issue post-Intel (the leading Supreme Court case on Section 1782), a recent decision from the SDNY provides some additional insight on how New York federal courts interpret the statute, particularly in light of Second Circuit precedent (“NBC”) holding that Section 1782 does not apply to proceedings before private arbitral panels—until now one of only two circuit court decisions addressing the issue.  That precedent was called into question by a passage in Intel that parenthetically quoted a law review article authored by Professor Hans Smit—one of the principal advisers to Congress on the drafting of Section 1782—that included arbitration proceedings in an illustrative list of “tribunals.”1) See Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 258 (2004); citing Smit, International Litigation under the United States Code, 65 Colum. L.Rev. 1015, 1026–1027, and nn. 71, 73 (1965) jQuery("#footnote_plugin_tooltip_6829_1").tooltip({ tip: "#footnote_plugin_tooltip_text_6829_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

In Children’s Investment Fund, the SDNY declined to follow NBC by holding that an arbitration governed by the London Court of International Arbitration (“LCIA”) rules fall within the purview of Section 1782.  The applicants were investors in a group of Mauritius private equity funds that were formed to invest in real estate in India.  Disputes eventually arose relating to the management of the funds, and the applicants initiated a series of actions in Mauritius, India, and an LCIA arbitration in the United Kingdom.  The applicants subsequently filed a Section 1782 application seeking discovery over certain individuals and entities in the United States for use in those foreign proceedings, including the LCIA arbitration.

In considering the threshold issue of whether an LCIA tribunal qualifies as a “foreign or international tribunal” under Section 1782, the SDNY noted that “the question of whether a private, foreign arbitration panel satisfies the ‘for use’ requirement of § 1782 is unsettled in th[e] [Second] Circuit.”  While the Court explicitly acknowledged NBC, it went on to note that “five years after NBC…. the Supreme Court cited an article by Professor Hans Smit including the text, ‘the term ‘tribunal’ includes investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts.”

In noting that the Second Circuit has not considered whether a private arbitration tribunal satisfies the “for use” requirement since Intel, the SDNY sided with the U.S. District Court of the Northern District of Georgia, which held that NBC no longer applies since Intel.  The Court consequently found that

“a private arbitration tribunal is a ‘proceeding in a foreign or international tribunal’ for the purposes of § 1782; therefore, the LCIA satisfies this statutory requirement.”

The decision is significant for foreign litigants who wish to use Section 1782 to obtain evidence from persons that “reside” or are “found” in New York for use in a foreign private arbitration.  It departs from the “shadow” of NBC and falls more heavily within the gravitational pull of the “weight of Intel” and the district court decisions citing Intel for the proposition that Section 1782 authorizes discovery for use in private arbitral proceedings.  While other SDNY decisions have also recently gone the other way,  perhaps the time is ripe for the Second Circuit to finally weigh in on the issue.

 

Lucas Bento FCIArb FRSA is the author of The Globalization of Discovery under 28 U.S.C. § 1782: Law and Practice (Kluwer Law International, forthcoming 2019).  He is a Senior Associate at Quinn Emanuel Urquhart & Sullivan and President of the Brazilian-American Lawyers Association.  The views expressed in this post are the author’s personal views, and do not reflect the opinions of Quinn Emanuel, its clients, or of the Brazilian American Lawyers Association.

References   [ + ]

1. ↑  See Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 258 (2004); citing Smit, International Litigation under the United States Code, 65 Colum. L.Rev. 1015, 1026–1027, and nn. 71, 73 (1965) function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Revised ICC Note to Parties and Tribunals: Will Publication of Awards Become the New Normal?

Wed, 2019-03-06 22:09

Ben Jolley and Oliver Cook

Herbert Smith Freehills

ICC’s updated guidance to parties

On 20 December 2018 the International Court of Arbitration of the International Chamber of Commerce (ICC) published an updated Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (Note). The Note, which came into effect from 1 January 2019, introduces a number of significant updates to the ICC’s practical guidance on its Rules of Arbitration.1) These updates include new guidance on data protection, clarifications on disclosures by arbitrators and additional guidance for treaty-based arbitrations. jQuery("#footnote_plugin_tooltip_9361_1").tooltip({ tip: "#footnote_plugin_tooltip_text_9361_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Amongst these updates, the ICC’s new opt-out approach to the publication of awards will be of particular interest to users of international arbitration, many of whom have chosen this method of dispute resolution for its privacy and perceived confidentiality.  Some users may also be surprised to learn of this change, which came in through an updated practice note rather than via a formal amendment to the ICC Rules.

This article will examine the ICC’s new approach, and the practical considerations it raises for users of ICC arbitration. Ultimately, while we consider the ICC’s new approach to publication will have benefits for users of arbitration and tribunals, it remains to be seen whether parties will support the ICC’s attempts to make information about its awards more widely-accessible.

 

Revised approach to publication of awards

The ICC’s new approach to the publication of awards is set out in paragraphs 40 to 46 of the Note. The ICC considers that the publication and dissemination of information about arbitration is an “instrumental factor” in facilitating the development of world trade. (paragraph 40 of the Note)  It is in this context that the ICC has adopted the following approach:

  • ICC awards made from 1 January 2019 may be published.
  • The Secretariat will inform parties at the time of notification of awards, that the award may be published in its entirety no less than two years after notification. Parties are able to agree to publication in a shorter or longer time period.
  • Any party may, at any time before publication, object to publication or require that the published version of an award be anonymised or pseudonymised.
  • If a party objects to publication or requires that the award be anonymised or pseudonymised, the award will either not be published, or will be published in a restricted format.
  • If there is a confidentiality agreement in place covering the arbitration or specific aspects of the arbitration or award, publication of the award will be subject to the parties’ specific consent (opt-in to publication rather than opt-out).
  • Aspects of awards that refer to personal data may be anonymised or pseudonymised by the Secretariat to comply with applicable data protection regulations.
  • The Secretariat retains the discretion to exempt awards from publication.

This approach to publication will apply to all future ICC awards, including those issued under arbitrations commenced before 1 January 2019. Importantly, although publication is the default position, the new approach does provide parties with an opt-out mechanism. Where any party objects to publication, the award will simply not be published (or will be anonymised or pseudonymised if that is what a party requires). While the other party might want to challenge non-publication for strategic or other reasons, the Note (perhaps unsurprisingly) does not provide any process by which a party may object to non/limited publication once requested.

Given the relative ease with which parties are able to achieve non-publication via the opt-out process, and present attitudes towards publication of awards, it is possible that the new approach to publication will not significantly increase the number of awards that are published, in the immediate future.

The Note does not set out a process or protocol for anonymisation or pseudonymisation of awards.  This lack of guidance on restricted publication of awards may simply reflect the notion that each case may have different requirements.  However, the extracts from over 600 awards contained in the ICC Dispute Resolution Library, may provide some insight for parties into how the Secretariat may approach restricted publication.

 

What does this mean for users of arbitration? 

For most users of international arbitration the prevailing sentiment is likely to be against publication of awards in full.  Although the new approach does provide protections for those who do not want their awards to be published, the presumption in favour of publication may be of concern to some of the ICC’s users.  It is, of course, possible to foresee a situation arising where a party inadvertently fails to opt out – leading to publication of an award where the party would not otherwise have actively consented to publication.

At a practical level, for parties who are engaged in ongoing ICC arbitrations, it will therefore be important to consider:

  • whether their arbitration agreement includes any restrictions on the publication of any award, or confidentiality provisions that may restrict the ICC from making public the existence of the arbitration or publishing the award;
  • whether the terms of reference or procedural orders issued by the Tribunal include any restrictions on the publication of any award, or confidentiality provisions that may restrict the parties and the ICC from making public the existence of the arbitration or publishing the award; and
  • whether to write to the Tribunal and the ICC Secretariat opting out of potential publication of any final award in advance, so as to avoid possible publication via a failure to raise an objection at a later stage.

For parties currently negotiating ICC arbitration clauses in contracts, it may be wise to consider including a confidentiality provision that will operate to restrict or prevent publication of any award up front, if confidentiality is desired.  Likewise, parties may also want to revisit standard form ICC arbitration clauses and consider the inclusion of this type of confidentiality provision or otherwise address the publication of awards in their arbitration agreements.

It is fair to say that there are potential benefits of disseminating information about arbitrations more generally.  Most users will know that the ICC already publishes extracts from some awards through its ICC Dispute Resolution Library, mentioned above. These extracts are classified according to the procedural points they address.

However, having access to a greater number of previous awards – which might include rulings on the application of the ICC Rules, other procedural points or even substantive legal issues – would undoubtedly be of value to practitioners and tribunals, and could provide parties with more certainty about particular questions of law and procedure. In turn, wider publication of awards, with appropriate anonymisation where required, might go some way to address the concerns some have raised as to the potential of private arbitration to affect detrimentally the development of the rule of law and international commerce.2) See, for example, the 2016 BAILII Lecture by then Lord Chief Justice of England and Wales, Lord Thomas. jQuery("#footnote_plugin_tooltip_9361_2").tooltip({ tip: "#footnote_plugin_tooltip_text_9361_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });  It is certainly true that one of the commonly-cited advantages of international arbitration generally is the privacy and confidentiality that the process affords,3) In the Queen Mary University of London 2018 International Arbitration Survey, 36% of respondents indicated these to be amongst the most valuable characteristics of international arbitration. jQuery("#footnote_plugin_tooltip_9361_3").tooltip({ tip: "#footnote_plugin_tooltip_text_9361_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); and it could be argued that the ICC’s new approach is not necessarily incompatible with those two attributes (although awards in some sectors may clearly not lend themselves to publication even with anonymisation or pseudonomisation).

Ultimately, while the ICC’s continued focus on transparency is to be lauded, whether or not this will lead to an increased number of awards being published will depend on the approach taken by users of arbitration.  Given how highly privacy and confidentiality is valued for users of arbitration at present, it may require a significant change in attitude for publication to become widely accepted. Many users may well make opting out of publication their default approach. It is also possible that given the opt-out framework some parties may unwittingly fail to object to publication and some awards may be published where parties never expected them to see the light of day. At this stage there appears to be no way back, as there is no provision in the Note for published awards to be withdrawn from the ICC database.

References   [ + ]

1. ↑ These updates include new guidance on data protection, clarifications on disclosures by arbitrators and additional guidance for treaty-based arbitrations. 2. ↑ See, for example, the 2016 BAILII Lecture by then Lord Chief Justice of England and Wales, Lord Thomas. 3. ↑ In the Queen Mary University of London 2018 International Arbitration Survey, 36% of respondents indicated these to be amongst the most valuable characteristics of international arbitration. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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The European and Singapore International Commercial Courts: Several Movements, a Single Symphony

Wed, 2019-03-06 01:19

Ioana Knoll-Tudor

Jeantet

A 2018 study commissioned by the European Parliament’s Committee on Legal Affairs concluded that the EU should seek to establish a “European Commercial Court” at the level of the EU1) Study for the European Parliament’s Committee on Legal Affairs (JURI Committee), Building Competence in Commercial Law in the Member States, authored by Prof. Dr. Giesela Rühl, published on 14 September 2018 and available here. jQuery("#footnote_plugin_tooltip_3750_1").tooltip({ tip: "#footnote_plugin_tooltip_text_3750_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); to provide commercial parties with an alternative to both the courts of the Member States and international commercial arbitration. This recommendation echoes the global competition that has arisen in the past years for the resolution of international disputes. A number of jurisdictions across the world launched initiatives to position themselves as new hubs for the resolution of international commercial disputes by establishing specialized English-speaking courts with specific, more flexible procedural rules. This post provides a short overview of the projects to create international commercial courts (“ICCs”) that currently exist in Europe.

ICCs are a rather recent phenomenon. To the exception of the historical London Commercial Court (“LCC”) set up in 1895, all the other ICCs were established in the last four years: the Singapore International Commercial Court (“SICC”) on 5 January 2015, the Chamber for International Commercial Disputes of the District Court of Frankfurt/Main (“Frankfurt ICC”) on 1 January 2018, the International Chamber of the Paris Court of Appeal (“CICAP”)2) The Protocols on Procedural Rules Applicable to the International Chambers of the Paris Commercial Court and of the Court of Appeals of Paris (available here). jQuery("#footnote_plugin_tooltip_3750_2").tooltip({ tip: "#footnote_plugin_tooltip_text_3750_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); on 7 February 2018, and the Netherlands Commercial Court (“NCC”)3) The Rules of Procedure for the International Chamber of the Amsterdam District Court and the Amsterdam Court of Appeal (available here). jQuery("#footnote_plugin_tooltip_3750_3").tooltip({ tip: "#footnote_plugin_tooltip_text_3750_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); on 1 January 2019. The Brussels International Business Court (“BIBC”) should become operational by 2020.

Unlike commercial arbitration which operates as a private form of dispute resolution, the ICCs have systematically been incorporated within the national judicial order, save for the BIBC. The LCC is a sub-division of the Queen’s Bench Division of the High Court of Justice, one of the superior courts of England and Wales. The SICC operates as a division of the Singapore High Court, the lower section of the Supreme Court of Singapore. The Frankfurt ICC was established as a specialized chamber of the Frankfurt High Court (Landgericht Frankfurt am Main).

The French and Dutch courts, for their part, offer access to an ICC, both in the first instance and at the appeal level. Decisions rendered by the International Chamber of the Paris Commercial Court and the NCC District Court can thus be appealed directly in front of the CICAP and the NCC Court of Appeal, whose judgments can ultimately be challenged before the French Court of Cassation and the Dutch Supreme Court, respectively.

Finally, the BIBC will not be integrated into the national judicial system, following the Belgian Government’s intent to have it serve as a semi-permanent jurisdiction, acting on an ad hoc basis, and hear and decide cases at first and last instance, with no appeal possible (but for very limited exceptions).

  • Jurisdiction

ICCs have a rather wide jurisdiction, which does not come as a surprise considering that their purpose is to attract as many disputes as possible in relation with international actors and businesses. The jurisdiction of the LCC thus extends “to any claim relating to the transaction of trade and commerce”4) Rule 58.1(2) of the Civil Procedure Rules. jQuery("#footnote_plugin_tooltip_3750_4").tooltip({ tip: "#footnote_plugin_tooltip_text_3750_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); and that of the Paris international chambers to any “transnational commercial disputes”5) Article 1 of the Protocol on Procedural Rules Applicable to the International Chamber of the Paris Commercial Court and of the Protocol on Procedural Rules Applicable to the International Chamber of the Paris Court of Appeal. jQuery("#footnote_plugin_tooltip_3750_5").tooltip({ tip: "#footnote_plugin_tooltip_text_3750_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });. The jurisdiction of the Singaporean, German, Dutch and Belgian ICCs are, in contrast, subject to cumulative conditions, which all include at least the two following criteria: (i) the international and commercial nature of the dispute, and (ii) the parties’ express agreement on the jurisdiction of the specialized chamber. Further, under the rules applicable to both the Frankfurt ICC and the NCC, the dispute must not fall under the special jurisdiction of another chamber or court, and the parties must have agreed for the proceedings to be in English.

It shall be noted that the SICC and the NCC also have jurisdiction to adjudicate annulment actions brought against international arbitration awards. Although this jurisdiction is mentioned in the CICAP Protocol, the CICAP does not deal with this type of actions at this stage.

Parties’ agreement on the jurisdiction of the relevant ICC is thus a key element to have a dispute adjudicated before it. Some ICCs even provide standard jurisdiction clauses.6) Standard jurisdiction clauses notably exist for the SICC, the Paris international chambers, and the NCC. jQuery("#footnote_plugin_tooltip_3750_6").tooltip({ tip: "#footnote_plugin_tooltip_text_3750_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); However, if the jurisdiction of the Paris international chambers “may” result from a contractual clause it can also, in the first instance, be the consequence of a formal distribution of the dispute by the Enrollment Chamber.

  • Judges

Once a dispute has been referred to an ICC, the case will usually be submitted to a panel of three judges, except when provisions allow for the possibility to have a sole judge (as is the case, for instance, before the SICC and the International Chamber of the Paris Commercial Court). As an exception, the LCC sits with eight judges. Not all ICCs require the same qualifications and experience from their judges and, when applicable, draw a distinction between judges sitting in first instance and those sitting on appeal.

Indeed, first instance ICCs are usually composed of lay judges. As such, the International Chamber of the Paris Commercial Court is only composed of non-professional judges appointed by their peers, who are experienced in international business practice and who are used to the practice of the English language.

By contrast, at the appeal level, the LCC, the SICC, the CICAP and the NCC are exclusively composed of professional judges. Interestingly, the Singaporean court may even comprise international judges from both civil law and common law traditions (such as Lord Neuberger of Abbotsbury and Dominique T. Hascher).

Finally, cases brought before the Frankfurt ICC and the BIBC will, for their part, be submitted to a mixed panel, composed of one professional judge and two lay judges, knowledgeable about business affairs and business law.7) In the case of the BIBC, the professional judge will be a judge from the Court of Appeal of Brussels while the two lay judges will be selected from a list of Belgian and foreign specialists in international commercial law, and will be nominated after selection by an independent committee. jQuery("#footnote_plugin_tooltip_3750_7").tooltip({ tip: "#footnote_plugin_tooltip_text_3750_7", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

  • English language

Amidst all these characteristics, one of the important innovations brought by the ICCs is, undoubtedly, to allow the use of the English language during proceedings. But for England and Wales and Singapore, such feature is an exceptional departure from the rule of having proceedings held in the jurisdiction’s official language.

The use of the English language, however, varies from jurisdiction to another. Thus, before the Frankfurt ICC, the use of English is possible if the parties have expressly agreed whereas, before the NCC, English is the official language of the proceedings unless the parties unanimously request the tribunal to allow the use of the Dutch language for one party or for the entire proceedings. Accordingly, in the abovementioned circumstances, before the Frankfurt ICC and the NCC, the entire proceedings – including oral hearings, written submissions, evidence, as well as the final judgment – may be conducted in English.

In France, procedures before the Paris ICCs can be conducted in English save for the procedural acts (written submissions, judgments) which must be drafted in French (the judgment can be delivered together with a sworn translation in English). Experts, witnesses and parties may be heard in their language with a simultaneous translation provided at the requesting party’s expense.

  • Procedure

Although ICCs such as London, Singapore and Frankfurt are subject to rules of procedure commonly applicable in their respective legal orders8) Respectively, the England & Wales Civil Procedure Rules, the Singapore Supreme Court of Judicature Act, and the German Code of Civil Procedure. jQuery("#footnote_plugin_tooltip_3750_8").tooltip({ tip: "#footnote_plugin_tooltip_text_3750_8", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, the French and Dutch ICCs adopted a specific set of procedural rules.

Indeed, in an effort to provide international actors with features of common law and international arbitration proceedings, the Paris ICCs and the NCC have established bespoke procedures that are deliberately flexible, while remaining within their national procedural framework. As such, at the outset of procedures before the Paris international chambers, a mandatory procedural timetable will be established. Before the CICAP, further conferences will even be held at various stages of the proceedings between the judges and the parties to confirm the parties’ agreement on various procedural issues. In addition, a large place is given to testimonial evidence, allowing for witnesses and experts cross-examination as well as questions by the judges. As recently announced by François Ancel, president of the CICAP, the provisions of the Protocols will soon be supplemented by a detailed procedural guide for the use of parties. Among other things, parties should be provided with the opportunity to prepare a joint memorandum listing the agreed points and those that remain contentious, as well as a joint file of documents and exhibits.

Likewise, the NCC has aligned its dedicated rules of procedure with elements from international arbitration proceedings, such as the IBA Rules on the Taking of Evidence in International Arbitration, and allows the conduct of hearings to be tailored to the parties’ interests and preferences. As noted by the Explanatory note to the NCC Rules of Procedure, parties may make agreements regarding an evidentiary hearing for the examination of witnesses or experts, which the court will consider in its case management decisions.9) Rules of Procedure for the International Chamber of the Amsterdam District Court and the Amsterdam Court of Appeal, Annex I, Article 8.5. jQuery("#footnote_plugin_tooltip_3750_9").tooltip({ tip: "#footnote_plugin_tooltip_text_3750_9", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Applicable rules may also result from a deliberate choice. Procedures before the BIBC, for instance, will be based on the UNCITRAL Model Law on International Commercial Arbitration, thus offering many features traditionally associated with arbitration.

  • Costs

As regards the costs of proceedings before the ICCs, in some jurisdictions, costs are the same as before ordinary tribunals and courts (which is notably the case in France and in Germany), while other jurisdictions have introduced higher costs before such specialized chambers. Thus, registration fees amount to £10,000 (approx. €11,400) before the LCC, S$8,000 (approx. €5,200) before the SICC, €15,000 before the NCC District Court and €20,000 before the NCC Court of Appeal. By contrast, costs in France remain exactly the same, namely, €74.50 for a summons before the International Chamber of the Paris Commercial Court and €225 per party before the CICAP.

  • Legal representation by a foreign counsel

In France and in the Netherlands, foreign lawyers will be able to represent their client before the ICCs only after concluding a cooperation agreement with a lawyer registered at the respective national bar. Before the SICC, foreign lawyers who have obtained a full registration can act directly and represent their client throughout the proceedings (partial registration only gives the right of representation on foreign law matters).

If competition was existing so far between the various jurisdictions as seats of arbitration, this rivalry will now also be a reality for national courts that have established ICCs. These specialized chambers present common characteristics but also specific features that allow international parties to choose the best option for the settlement of each of their disputes. Each jurisdiction is thus creating its own movement within the symphony of international dispute resolution – let’s take our seats, listen to the concert, and hope that the sound is right!

References   [ + ]

1. ↑ Study for the European Parliament’s Committee on Legal Affairs (JURI Committee), Building Competence in Commercial Law in the Member States, authored by Prof. Dr. Giesela Rühl, published on 14 September 2018 and available here. 2. ↑ The Protocols on Procedural Rules Applicable to the International Chambers of the Paris Commercial Court and of the Court of Appeals of Paris (available here). 3. ↑ The Rules of Procedure for the International Chamber of the Amsterdam District Court and the Amsterdam Court of Appeal (available here). 4. ↑ Rule 58.1(2) of the Civil Procedure Rules. 5. ↑ Article 1 of the Protocol on Procedural Rules Applicable to the International Chamber of the Paris Commercial Court and of the Protocol on Procedural Rules Applicable to the International Chamber of the Paris Court of Appeal. 6. ↑ Standard jurisdiction clauses notably exist for the SICC, the Paris international chambers, and the NCC. 7. ↑ In the case of the BIBC, the professional judge will be a judge from the Court of Appeal of Brussels while the two lay judges will be selected from a list of Belgian and foreign specialists in international commercial law, and will be nominated after selection by an independent committee. 8. ↑ Respectively, the England & Wales Civil Procedure Rules, the Singapore Supreme Court of Judicature Act, and the German Code of Civil Procedure. 9. ↑ Rules of Procedure for the International Chamber of the Amsterdam District Court and the Amsterdam Court of Appeal, Annex I, Article 8.5. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Need for Overhaul of the Costs Regime in Indian Arbitration Law

Tue, 2019-03-05 02:00

Badrinath Srinivasan

A legal regime which asks the victim of a frivolous legal proceeding to subsidise the costs of the perpetrator is unjust and is bound to provide incentives for more frivolous proceedings. For a long time, Indian arbitration law had been providing such incentives for a party to make frivolous objections to the arbitration agreement or the arbitral award. The Law Commission of India sought to change this state of affairs through its 246th report and recommended certain changes to the Arbitration and Conciliation Act, 1996 (“1996 Act”). Pursuant to the recommendations, the Indian legislature enacted the Arbitration and Conciliation (Amendment) Act, 2015 (“2015 Act”) attempting to update the law on costs in line with the best international practices.

This post argues that even after the 2015 amendments, there has not been a marked change in the way in which courts award costs following best international practices such as the principle that costs follow the event.

 

Statutory Provisions on Costs in Arbitration

Section 31(8) of the 1996 Act as originally enacted dealt with costs in arbitration proceedings. Precedents that evolved therefrom led to a dissatisfied state of affairs regarding the regime on costs allocation in arbitration and arbitration related court proceedings (See, Ernst & Young LLP, Emerging Trends in Arbitration in India, p. 20). The chief complaint was that the provision was too open textured and allowed unnecessarily enormous discretion in awarding of costs. In most cases, tribunals and courts failed to award costs and provide reasons for their decision. An empirical survey suggested that in about 90% of the arbitrations, the parties had to bear either their own costs or half of the total arbitration costs, irrespective of the outcome of the arbitration.

Consequently, the winning party lost substantial money towards costs incurred due to the arbitral proceedings and was not compensated for considerable expenses incurred in arbitration related court proceedings such as proceedings relating to appointment of arbitrators, application for interim measures, and so on. Frequent judicial interference in arbitration also provided incentives for a party to delay or frustrate efficient settlement of disputes. A party so delaying or frustrating the proceedings was not made to bear the costs expended by the winning party and the winning party was not fully compensated for the costs incurred owing to the censurable conduct of the losing party.

This state of affairs was incongruent with best international arbitration practices. After numerous calls for reforms, the Law Commission of India in its 246th Report sought an overhaul of the existing provision on costs.

 

Law Commission’s Recommendations on Costs

The Law Commission of India submitted its 246th report, where it specifically pointed out the need for amending the law on costs. The Commission noted the potential for significant increase in costs in arbitration proceedings, which, according to the Commission necessitated the law on allocation of costs to be clear and predictable. For these reasons, the Commission recommended that the loser-pays principle should be normally followed by tribunals and courts hearing arbitration related court proceedings while allocating costs.

Primarily, two justifications were offered for by the Commission for this recommendation: One, it is only just that the losing party which dragged the other party to court/ arbitration or which set up unjust defences compensates the winning party for the losses incurred in resolving the issue in courts or before the tribunal. The second justification offered by the Commission was that from an economic point of view, the loser-pays principle provided an “efficient deterrence against frivolous conduct and furthers compliance with contractual obligations.” (Para 23)

Further thereto, the Law Commission recommended insertion of Section 6A to the 1996 Act containing a detailed provision on costs. Thus, it would appear that the objective of the Law Commission’s recommendations on costs was to introduce a “costs follow the event” regime and that in all arbitration related proceedings, the tribunal or the court, as the case may be, should ordinarily adhere to this principle. However, the manner in which Section 6A is a cause for concern (as will be seen in the later part of this post).

 

Section 31A of the 1996 Act (as amended in 2015)

Based on the recommendation of the Law Commission and an ordinance, the Indian Parliament enacted the Arbitration and Conciliation (Amendment) Act, 2015, and the same was brought into force with effect from 23 October 2015.

The amended Act contains detailed provisions on costs in Section 31A, which is similar to Section 6A suggested by the Law Commission. Section 31A(1) empowers the court or arbitral tribunal, as the case may be, to award costs in relation to any proceeding under the 1996 Act. It reads:

In relation to any arbitration proceeding or a proceeding under any of the provisions of this Act pertaining to the arbitration, the Court or arbitral tribunal, notwithstanding anything contained in the Code of Civil Procedure,1908, shall have the discretion to determine— (a) whether costs are payable by one party to another; (b) the amount of such costs; and (c) when such costs are to be paid…

The wordings of Section 31A(1) is a cause for concern. The use of the word “discretion” could be construed to mean that the Court or the tribunal has the option to choose not to pass any order on costs.

Similar is the case of Section 31A(2) as well. It reads:

If the Court or arbitral tribunal decides to make an order as to payment of costs,— (a) the general rule is that the unsuccessful party shall be ordered to pay the costs of the successful party; or (b) the Court or arbitral tribunal may make a different order for reasons to be recorded in writing.”

This sub-section begins with the term “if” as if to suggest that making an order as to payment of costs is a matter of choice of the Court or the arbitral tribunal, as the case may be. This construction is incongruent to the purpose for which the new regime on costs was introduced, as noted by the Law Commission.

A perusal of the decisions in the post-2015 suggest that there has not been a change, especially by the courts, in awarding of costs. This leads to the inference that the introduction of Section 31A was a pointless exercise.

The recent decision of Larsen and Toubro Limited Scomi Engineering BHD vs. Mumbai Metropolitan Region Development Authority (03.10.2018 – SC): MANU/SC/1151/2018 is a typical example where the court did not even deal with costs in a petition for constituting the tribunal. The petition was ultimately dismissed on the ground that the arbitration was not an international commercial arbitration warranting constitution of the arbitral tribunal by the apex court rather than by the relevant High Court.

 

Proposed Amendments

The Arbitration and Conciliation Bill, 2018, which is now under consideration in the Indian Parliament does not seek to address this issue.

Therefore, it is suggested that amendments to Section 31A should be made in the current round of reforms to provide the following:

  • The Court or the tribunal shall make an order as to payment of costs.
  • The general rule for the tribunal and the Court should be that the unsuccessful party should be ordered to pay costs of the successful party.
  • The Court or the tribunal may depart from the above general rule for reasons to be recorded in writing.

Towards this end, a new sub-section in the form of Section 31A(1A) has to be introduced along the following lines: “The Court or arbitral tribunal shall make an order as to payment of costs while making a determination under this Act: Provided that the Court or arbitral tribunal shall have the discretion to postpone the order as to payment of costs at the time end of the proceedings before it.

Consequently, the phrase “If the Court or arbitral tribunal decides” at the beginning of Section 31A(2) should be amended to read: “Where the Court or arbitral tribunal decides”.

 

Closing Remarks

International practice suggests that arbitral tribunals and courts hearing arbitration related matters award reasonable costs in favour of the winning party. In some countries, courts award costs on indemnity basis in respect of unsuccessful challenges to arbitration agreements and arbitral awards and also in unsuccessful petitions for refusal to recognise or enforce awards. Indemnifying the winning party for costs incurred in such cases makes sense.

Unfortunately, Indian courts and tribunals not only fail to award indemnity costs in deserved cases but do not even award reasonable costs in favour of the winning party as provided under the statute book. Hence, it is important that the 2018 Amendment Bill clarifies the intent behind the enactment of Section 31A by amending the law as suggested above. This will ensure that the legal costs of the party initiating frivolous legal proceedings stalling the arbitration process is not subsidised by the victim of such proceedings.

In order for India to achieve the objective of becoming a prominent global centre for dispute resolution, it is of fundamental importance that courts and the arbitral tribunals allocate costs in accordance with best international practices.

This post is based on the ideas that were mooted in a paper presented at a conference in 2017 and can be accessed from here.

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The Path for Online Arbitration: A Perspective on Guangzhou Arbitration Commission’s Practice

Sun, 2019-03-03 21:00

Chen Zhi

In recent years, the combination of arbitration and technology has raised great concerns among international arbitration community. Much discussion has centred on online arbitration and use of artificial intelligence in arbitration.

In China, the rapid growth of electronic business (including but not limited to internet consumer applications and mobile financial services) has posed challenges to traditional arbitral procedures. Further, to overcome difficulties under current arbitral legislation framework which has been seen by some to be rigid, centralized and too similar to the judicial process, several arbitration institutions in Mainland China have endeavored to introduce the latest technology to make arbitral proceeding more flexible, efficient and time-effective. China Guangzhou Arbitration Commission (“GZAC”) is one such institution.

 

GZAC and Online Arbitration

GZAC was one of the first seven arbitration institutions founded after the enactment of 1994 Arbitration Law. It was founded shortly after on August 29, 1995.

In 2007, GZAC commenced its study on online arbitration. Seven years later, it launched an unprecedented project to transform itself into an online arbitration institution. Dozens of experienced IT engineers were retained and assigned into groups to develop the online arbitration system. Unlike other institutions which have generally chosen to cooperate with third party service providers, GZAC employed its own technical team, IT engineers and programmers dedicated to developing GZAC’s online arbitration system.

On September 24, 2015, GZAC organized China Internet Arbitration Alliance, gathering more than 100 entities including arbitration institutions, universities, enterprises and social groups to promote online arbitration. On October 1, 2015 GZAC issued its first Online Arbitration Rules, which was the first set of arbitral rules in Mainland China with specific reference to how an arbitration can be run online. In October 2016, a new system named Arbitration Cloud Platform 1.0 was released. The Arbitration Cloud Platform 1.0 was one-stop online service for arbitration conducted entirely online including case filing, delivery of materials, constitution of tribunal, holding the hearing, examining evidence, drafting and rendering of an award, etc.. In 2017 and 2018, the Arbitration Cloud Platform was upgraded to a newer version.

Compared with the traditional arbitration, my view is that GZAC’s online arbitration is more cost-effective and efficient because: (i) it is paperless; (ii) time limit for answer, constitution of tribunal has been vastly narrowed for the wide use of electronic delivery; (iii) documentary-only arbitration is by default but even if a hearing is needed, it is also more convenient to arrange an online conference; and (iv) in 2018, Arbitration Cloud Platform 2.0 allows for cases with similar scenario and same legal issues to be filed, managed and decided on batches, under which an award can be generated automatically and dispatched after the approval of tribunal.

Since then, the caseload of GZAC has skyrocketed. In 2017, it accepted 89,530 cases, among which 70,079 follow the online arbitration process entirely. In 2018, the number of online arbitrations handled by GZAC increased to 166,634 with the total dispute sum of RMB 9.5 billion (approximately USD 1.4 billion).

 

New Challenges, New Chances

With great success come new challenges. At the very beginning, some local courts declined to enforce awards rendered in the online arbitration process for various reasons. For example, several courts had rejected award enforcement by applying 2012 Civil Procedure Law which has vastly narrowed down the use of electronic delivery. Those courts held that GZAC failed to “appropriately notify” the respondent1)For example, in 2018 Xiang 08 Zhi No. 55(September 20,2018), Zhangjiajie Intermediate People’s Court of Hunan Province opined that delivery of arbitral award was not compatible with Civil Procedure Law, and hence refused to enforce an online award by GZAC. jQuery("#footnote_plugin_tooltip_2047_1").tooltip({ tip: "#footnote_plugin_tooltip_text_2047_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, and hence vacated the award on breach of due process basis.

Fortunately, the situation has changed. On February 23, 2018, the Supreme People’s Court issued a specific judicial interpretation concerning enforcement of arbitral award (Provisions of the Supreme People’s Court on Several Issues Concerning the Enforcement of Arbitral Award referred to as “Enforcement Provisions”). Article 14(2) of Enforcement Provisions arguably gives judicial recognition of the validity of notice provisions stipulated in arbitration rules2)Article 14 does not specify online arbitration. It uses the general heading of “arbitration rules” but online arbitration rules fall within the scope of “arbitration rules”. jQuery("#footnote_plugin_tooltip_2047_2").tooltip({ tip: "#footnote_plugin_tooltip_text_2047_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, even though such a measure is technically incompatible with Civil Procedure Law and other regulations. However, I think it is still premature to say that electronic delivery has been entirely legitimised because on one hand, Enforcement Provisions are not binding in setting aside proceedings. Hence, sufficient engagement and dialogue between competent courts and arbitration institutions is still necessary to ensure the effectiveness and enforcement of an award rendered in an online arbitration.

Another challenge is the competition brought by other dispute resolution fora. In 2017, China established its pilot Internet Court in Hangzhou. In 2018, Internet Courts of Beijing and Guangzhou were formed with the strong support from the Chinese government. Apart from the courts, e-commerce giants such as Alibaba, Jingdong, etc. have also established their own online dispute resolution system to cope with the simple and small claims. This came about because of Article 63 of E-Commerce Law which came into effect on January 1, 2019 and has empowered e-commerce operators to build their own dispute resolution system.

Against this backdrop, GZAC launched two initiatives in 2018. First is the proposed revision of GZAC’s Online Arbitration Rules, which: (i) broadened the scope of application of online arbitration, under which GZAC and the tribunal are vested with the power to decide on the appropriateness of the case for resolution by online arbitration; (ii) introduced new technologies into arbitral proceedings, for instance, the rules require tribunals to examine the authenticity of electronic signature while being conscious of the common use of technologies such as time-stamp and block-chain technologies. The appointing authority may also decide on the arbitrator appointment by referring to big data results; and (iii) incorporated some of the latest thinking in international arbitration such as making sole arbitrator as the default number of arbitrator. The revised rules have been released in draft format and are now in the consultation process with the public.

Second, on 28 September 2018, GZAC, along with its partners, has released a new e-commerce platform named Dashizhiyue Intellectual Transaction Platform, a B2B supply-chain platform providing a one stop service for storage of transaction records, storage of evidence, legal advice, identity of parties and determination of the dispute. It is noteworthy that the transaction records and related materials would have been stored by the third party service providers before any dispute commences hence it will be not necessary for parties to furnish evidence themselves. Dashi dispute resolution platform would be able to automatically collate the relevant evidence and forward them to parties after the commencement of the dispute resolution proceeding.

 

The Future of Online Arbitration in China

The decentralization, in-territoriality and ubiquity are inherent features of online transaction and these may well require more than the traditional dispute resolution mechanism. The traditional way to run an arbitration may satisfy such requirements, but is far from enough in my view.

I see much in the future of Online Arbitration, but there is still much to do. First of all, arbitration institutions and practitioners should deepen their cooperation to make China a more arbitration-friendly jurisdiction. In 2019, the establishment of China Arbitration Associate which has long been suspended is likely to restart. This will be a good chance to make the voice of arbitration society more influential. Second, a successful online arbitration mechanism requires support from law firms, technical corporations, e-commercial operators and governmental sectors. Last, arbitration institutions in Mainland China should provide more efficient, convenient and user-friendly online service.

Moving forward from online arbitration, institutions in Mainland China like GZAC are likely to explore unchartered waters like artificial intelligence arbitration. With the help of most advanced technologies, the AI arbitrator can learn, automatically review and decide a case. It is not likely that AI arbitrator will operate without the need for a human but it can enhance the efficiency and quality of arbitration.

References   [ + ]

1. ↑ For example, in 2018 Xiang 08 Zhi No. 55(September 20,2018), Zhangjiajie Intermediate People’s Court of Hunan Province opined that delivery of arbitral award was not compatible with Civil Procedure Law, and hence refused to enforce an online award by GZAC. 2. ↑ Article 14 does not specify online arbitration. It uses the general heading of “arbitration rules” but online arbitration rules fall within the scope of “arbitration rules”. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Approaches to Arbitration in Australia and Singapore

Sun, 2019-03-03 01:00

Cameron Ford and Andrew Foo

The different approaches to arbitration between courts in Australia and Singapore have been illustrated in two cases in the last 2 years – KVC Rice Intertrade Co Ltd v Asian Mineral Resources Pte Ltd [2017] SGHC 32 and Hursdman v Ekactrm Solutions Pty Ltd [2018] SASC 112. The Singapore approach typified by KVC is to give judicial support to arbitration and take a pragmatic, commercial, common-sense, approach. The Australian attitude can be far more legalistic, ignoring practical realities and the desirability of encouraging arbitration.

Of course, not every purported arbitration agreement should be enforced. If a clause is truly defective, the arbitral award obtained thereunder may be unenforceable under the laws of the enforcing state.1) Nigel Blackaby et al, Redfern and Hunter on International Arbitration (Oxford University Press, 5th Ed, 2009) at [4.43]. jQuery("#footnote_plugin_tooltip_6989_1").tooltip({ tip: "#footnote_plugin_tooltip_text_6989_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

 

The Singapore approach

Singapore’s approach has been noted on this blog, and was articulated by the Court of Appeal in Insigma Technology Co Ltd v Alstom Technology Ltd2) Insigma Technology Co Ltd v Alstom Technology Ltd [2009] 3 SLR 936 at [31]. jQuery("#footnote_plugin_tooltip_6989_2").tooltip({ tip: "#footnote_plugin_tooltip_text_6989_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });:

…where the parties have evinced a clear intention to settle any dispute by arbitration, the court should give effect to such intention, even if certain aspects of the agreement may be ambiguous, inconsistent, incomplete or lacking in certain particulars…so long as the arbitration can be carried out without prejudice to the rights of either party and so long as giving effect to such intention does not result in an arbitration that is not within the contemplation of either party.

In KVC, the court enforced a bare arbitration clause that said:

The Seller and the Buyer agree that all disputes arising out of or in connection with this agreement that cannot be settled by discussion and mutual agreement shall be referred to and finally resolved by arbitration as per Singapore Contract Rules.

The clause did not specify the place of arbitration, mechanism for constituting the tribunal, or the applicable arbitration rules.

Nonetheless, the court held that the clause was a valid arbitration clause which was capable of being performed, and that the court could assist with appointing arbitrators to ensure the parties’ intentions for arbitration were not defeated. The court said at [71]:

…a Singapore court would be prepared to step in to directly appoint an arbitrator, provided the dispute had some connection with Singapore…such a decision could be justified either on the basis of contract law…with the appropriate use of implied terms…or as an exercise of the court’s inherent jurisdiction to prevent injustice.

This, the judge said, was “consistent with Singapore’s public policy (which includes strong support for the smooth functioning of international arbitration) and jurisprudence (which recognises the common law right…of access to justice, including the maxim ubi jus ibi remedium3) “Where there is a right there is a remedy”. jQuery("#footnote_plugin_tooltip_6989_3").tooltip({ tip: "#footnote_plugin_tooltip_text_6989_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });)”.

As previously discussed on this blog, the Singapore courts find many friends in adopting a pro‑arbitration policy, including the Swedish courts and the Swiss courts.

 

The Australian approach

Compare that approach with that in Hurdsman which, while admittedly dealing with a different aspect of arbitration agreements, perhaps illustrated the underlying philosophy. The court in Hurdsman refused to enforce the following clause:

28.3         If the parties have been unable to resolve the Dispute within the Initial Period, then the parties must submit the Dispute to a mediator for determination in accordance with the Rules of the Singapore International Arbitration Centre (Rules), applying South Australian law, which Rules are taken to be incorporated into this agreement.

28.4         A party may not commence court proceedings in respect of a Dispute unless it has complied with this clause 28 and until the procedures in this clause 28 have been followed in full, except where:

28.4.1     the party seeks injunctive relief in relation to a Dispute from an appropriate court where failure to obtain such relief would cause irreparable damage to the party concerned; or

28.4.2     following those procedures would mean that a limitation period for a cause of action relevant to the issues in dispute will expire.

The problematic word was the reference to a mediator rather than an arbitrator. The contract in question followed a memorandum of understanding (MOU) which stipulated ‘arbitration in accordance with the rules of the Singapore International Arbitration Centre (SIAC)’.

However, the court held that it was not obvious on the face of the agreement that the word ‘mediator’ was intended to be ‘arbitrator’, that the agreement was neither one to arbitrate or mediate, and that the submission to the jurisdiction of South Australian courts would have no work to do if Clause 28.3 were an agreement to arbitrate.

It is not difficult to imagine how this clause would have been dealt with in Singapore.

First, the clear arbitration agreement in the MOU strongly suggests the parties intended for arbitration. No reason was suggested why the parties would change their minds between the MOU and the contract.

Second, the words ‘for determination’ following ‘mediator’ strongly indicate arbitration over mediation. There is nothing a mediator determines; whereas arbitrators determine disputes by delivering an award. Curiously, the judgment makes no mention of this phrase.

Third, the reference to ‘the Rules of the [SIAC]’ strongly indicates arbitration. This is because the SIAC publishes rules for arbitration, not mediation.

Fourth, contractual submission to courts is not a contraindication of arbitration. Such clauses still have work to do where arbitration is validly chosen. It is common for parties to submit to the jurisdiction of named courts, while stating that disputes are to be resolved by arbitration. The MOU itself contained submission to the courts of South Australia, “subject to arbitration“.  Where that occurs, submission to jurisdiction indicates the seat of the arbitration and hence the courts which would supervise the arbitration by appointing arbitrators, granting interim measures, etc.4) Jeffrey Waincymer, Procedure and Evidence of International Arbitration (Wolters Kluwer 2012) at [3.5]. jQuery("#footnote_plugin_tooltip_6989_4").tooltip({ tip: "#footnote_plugin_tooltip_text_6989_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Fifth, while the right to commence court proceedings to avoid the expiration of limitation periods sat more comfortably with the clause being a mediation agreement (since commencing arbitration typically satisfies limitation concerns), this arguably reflects parties’ ignorance of arbitration. Here, under the principle of effective interpretation, the courts should salvage the true intentions of parties, even if distorted by infelicitous drafting.5) Insigma v Alstom [2009] 3 SLR(R) 936 at [39]. jQuery("#footnote_plugin_tooltip_6989_5").tooltip({ tip: "#footnote_plugin_tooltip_text_6989_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

The court’s decision effectively sanctioned a violation of the parties’ agreement, by allowing the plaintiff to pursue court proceedings without first commencing either mediation or arbitration. Perhaps this flows from the defendant dropping its contention to replace ‘mediator’ with ‘arbitrator’ in Clause 28.3.

In contrast, in another Singapore decision, the Singapore court said it would be prepared to replace the word ‘umpire’ in an arbitration clause with the word ‘president’ (BNP v BNR [2018] 3 SLR 889).

The court said this would give effect to the parties’ intention for arbitration and “make such an arbitration workable and feasible”.

The court ultimately dismissed the challenge against the tribunal’s jurisdiction, which was made on the basis that while the clause provided for the third arbitrator to “act as an umpire”, the third arbitrator was acting as president.

Based on KVC and BNP, it seems a Singapore court would uphold the clause in Hurdsman as a workable arbitration agreement.

 

Conclusion

Professor Waincymer has proposed on this blog that a court hearing an application to stay court proceedings in favour of arbitration should “simply ask whether a reasonable tribunal hearing all evidence could find validity”. He submits that this fits the deferential approach courts should adopt, pursuant to the UNCITRAL Model Law and New York Convention.

Professor Waincymer’s proposal may have made a difference in Hurdsman.

This is because  in Hurdsman, there was “some ambiguity” in the clause: the court noted it was “neither this nor that…not quite an arbitration agreement and not quite a mediation agreement”.

However, the court did not, it appears, have the benefit of seeing witnesses cross-examined, or a full body of relevant material. This is not surprising. As Professor Waincymer notes:

…presentation and testing of detailed evidence via contemporaneous documents and cross-examination of witnesses would not be the norm…there would invariably be reluctance to allow a full hearing with cross-examination, or allow for the generation of a full body of relevant material evidence …

The court was therefore tasked with deciding the matter without a full appreciation of the facts.

Under Professor Waincymer’s approach, the court may well (a) have accepted that a reasonable tribunal hearing all the evidence (unlike the court, which only heard some evidence) could find that the clause was a valid arbitration agreement, and (b) therefore granted a stay in favour of arbitration.

However, until Professor Waincymer’s approach is accepted, parties should beware the different levels of scrutiny their dispute resolution clauses may face in different courts.

Parties should seek appropriate early advice, to avoid unnecessary skirmishes and unpredictable decisions. Such ‘fights over where to fight’ are like being stuck on a disrupted Tube service – time‑consuming, but largely avoidable, if you had only planned your route more carefully.

 

Clifford Chance Asia is a Formal Law Alliance in Singapore between Clifford Chance Pte Ltd and Cavenagh Law LLP.  The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Clifford Chance, nor those of its clients.

References   [ + ]

1. ↑ Nigel Blackaby et al, Redfern and Hunter on International Arbitration (Oxford University Press, 5th Ed, 2009) at [4.43]. 2. ↑  Insigma Technology Co Ltd v Alstom Technology Ltd [2009] 3 SLR 936 at [31]. 3. ↑ “Where there is a right there is a remedy”. 4. ↑ Jeffrey Waincymer, Procedure and Evidence of International Arbitration (Wolters Kluwer 2012) at [3.5]. 5. ↑  Insigma v Alstom [2009] 3 SLR(R) 936 at [39]. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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A Comparison of the IBA and Prague Rules: Comparing Two of the Same

Sat, 2019-03-02 02:05

Sol Argerich

On December 2018, the Prague Rules on the Efficient Conduct of Proceedings in International Arbitration (“Prague Rules”) were released. (For related posts on the Prague Rules on Kluwer Arbitration Blog click here, here, here, and here.)

The Prague Rules aim to increase efficiency and reduce costs in arbitral proceedings. The project arose from a general dissatisfaction with both the costs of arbitration and the length of proceedings. Drafters believe that one of the causes of this is that, generally, tribunals are not sufficiently proactive in providing cost efficient and time-saving procedures.

The drafters proposed the Prague Rules as an alternative to the well-known and commonly adopted IBA Rules on the Taking of Evidence in International Arbitration (“IBA Rules”). The note following provides an analysis of the main differences (and similarities) between the IBA Rules and the Prague Rules.

Application

The Prague Rules are intended as a framework providing guidance to conduct effective arbitration proceedings. They do not replace institutional rules which govern arbitral procedure and are only applicable upon the parties’ agreement or at the arbitral tribunal’s own initiative after consultation with the parties and, even then, only to the extent to which the parties have agreed (see Prague Rules, Article 1). In practice, although unlikely, a tribunal could apply the Prague Rules without party consent under Article 1.2.

The IBA Rules, on the other hand, provide that they may be adopted in whole or in part by the parties and tribunals. There is no specific provision for the tribunal adopting the IBA Rules of its own initiative.

Key differences

The key underlying difference between the IBA Rules and the Prague Rules is that while the IBA Rules were intended to create a level playing field in international arbitration, it is commonly believed that they are more aligned with common law. In contrast, the Prague Rules openly adopt a more inquisitorial approach more in line with the civil law tradition. This below illustrates, by way of comparative charts, the four main issues addressed by the Prague Rules:

1. A Proactive Arbitral Tribunal: Arbitrators should be active both in the taking of evidence and in fact finding to speed up proceedings.

In sum, the Prague Rules contain unequivocal provisions on how the tribunal should be active. Yet, the IBA Rules also encourage the tribunal to adopt a proactive attitude.

2. Document production: The drafters of the Prague Rules criticise the current IBA-style practice of document discovery arguing that it is highly time and cost consuming. The Prague Rules, following the civil law style, limit document production.

3. Number of witnesses: Another proposed solution to reduce the duration of arbitral proceedings under the Prague Rules is that the tribunal will have the final say regarding the number of witnesses to be heard throughout the proceedings. While under the IBA Rules, the tribunal has no say over this matter.

4. Examinations of witnesses: Despite the criticism of the cross-examination of witnesses in arbitration, the drafters of the Prague Rules retained the cross-examination process in the new Rules. However, provisions that tend to avoid lengthy hearings were included. The Prague Rules even suggest not having a hearing, and when possible, resolving the dispute on a document basis only (Article 8.1).

Innovations

The Prague Rules included two other provisions that are not addressed in the IBA Rules and may not be familiar to common law practitioners:

    1. ‘Iura Novit Curia’ principle (Article 7). This maxim demands for proactive arbitrators who are able to spot and determine the applicable law on their own initiative and thus apply provisions that were not set out by the parties. This requires prior consultation with the parties; furthermore, the tribunal must seek the parties’ views on those legal provisions it intends to apply.
    2. Assistance in Amicable Settlement (Article 9). Unless the parties object the tribunal may assist the parties in reaching an amicable settlement. This alternative dispute resolution mechanism can be used at any stage of the proceedings. Where that no agreement is reached, the arbitrator who acted as mediator may (a) continue as an arbitrator (parties’ written consent is required) or (b) terminate his/her mandate.

Even though common law practitioners may not be familiar with this mechanism, it is interesting to note that it is used in other jurisdictions, specifically Asia. Similar provisions are contained in the HKIAC Rules 2018 (Article 13.8) and in the China International Economic and Trade Arbitration Commission (Article 47).

Conclusion

On the whole, even when there are some differences in procedures under the two sets of rules, the Prague Rules do not present a radical change. However, these changes and innovations could have an impact on the costs and the duration of the proceedings.

Will the Prague Rules yield better results overall? We will have to wait for the Prague Rules to be put into practice in order to fully analyse their impact on international arbitration.

 

This post is an expression of the author´s personal opinion, the views expressed here do not reflect Clyde & Co’s position.

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Reflections on Default Number of Arbitrators under Expedited Procedure Rules

Thu, 2019-02-28 21:00

Wei Sun

In this post, I will compare and discuss the expedited procedure rules (“EP Rules”) used by various arbitral institutions in deciding on a default number of arbitrator(s) for such expedited procedure.

A core concern of Article V(1)(d) of the New York Convention is how to weigh between party autonomy and institutional control in arbitration proceedings. Arbitration practitioners may recall the failed attempt by Noble Resources International Pte. Ltd. (“Noble Resources Case”) to enforce a SIAC award a few years back.

That award was rendered under the old SIAC Arbitration Rules’ EP Rules though. In its Arbitration Rules 2016, SIAC made a detailed regulation on EP Rules by adding two new sub clauses [Rule 5.3 and Rule 5.4]. In particular, Rule 5.3 stipulates that “By agreeing to arbitration under these Rules, the parties agree that, where arbitral proceedings are conducted in accordance with the Expedited Procedure under this Rule 5, the rules and procedures set forth in Rule 5.2 shall apply ‘even in cases where the arbitration agreement contains contrary terms.’”1)Rule 5.2(b) prescribes that “the case shall be referred to a sole arbitrator, unless the President determines otherwise” jQuery("#footnote_plugin_tooltip_4431_1").tooltip({ tip: "#footnote_plugin_tooltip_text_4431_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Under the 2016 Rules, the sole arbitrator is the default in expedited procedure, and parties are deemed to accept the default if they choose SIAC, whose arbitration rules refer to the application of the EP rules if certain conditions are met, albeit their agreement otherwise.

In my view, this approach is a bit too hardline: when parties choose a certain set of arbitration rules, they have to accept all of them, without any deviations by agreeing otherwise. This might be detrimental to party autonomy, which is considered the foundation of arbitration, and the flexibility of arbitration procedure, which is a key factor of arbitration’s success as an internationally preferred method of dispute resolution.

Similarly, the newly revised 2017 ICC Arbitration Rules achieve effectively the same result. The relevant provisions provide that “The court may, notwithstanding any contrary provision of the arbitration agreement, appoint a sole arbitrator.” [Article II Appendix VI of the ICC’s EP Rules]. In particular, Article 30 of the ICC Rules provides that “By agreeing to arbitration under the Rules, the parties agree that this Article 30 and the Expedited Procedure Rules set forth in Appendix VI (collectively the ‘Expedited Procedure Provisions’) shall take precedence over any contrary terms of the arbitration agreement”.2)Also, in a press release dated 4 November 2016, ICC stated that “Under the Expedited Procedure Rules, the ICC Court will normally appoint a sole arbitrator, irrespective of any contrary term of the arbitration agreement.” jQuery("#footnote_plugin_tooltip_4431_2").tooltip({ tip: "#footnote_plugin_tooltip_text_4431_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

As a contrast, the 2018 HKIAC Rules has opted for a different approach. The HKIAC rules provide that “the case shall be referred to a sole arbitrator, unless the arbitration agreement provides for three arbitrators.” [Article 42.2(a)]. Also, “If the arbitration agreement provides for three arbitrators, HKIAC shall invite the parties to agree to refer the case to a sole arbitrator. If the parties do not agree, the case shall be referred to three arbitrators.” [Article 42.2(b)].

Similar to the HKIAC Rules, the CIETAC Rules provides that “Unless otherwise agreed by the parties, a sole-arbitrator tribunal shall be formed in accordance with Article 28 of these Rules to hear a case under the Summary Procedure.” [Article 58]

The above institutional rules demonstrate two different approaches to the procedure of expedited proceeding: SIAC and ICC seem to treat the procedures in EP Rules superior than the arbitration agreement while HKIAC and CIETAC put more emphasis on party autonomy. Although it is unknown whether the Noble Resources Case will be recognized by the Chinese Court if the 2016 SIAC Arbitration Rules applies, Chinese courts attach importance to party autonomy. In Noble Resources Case, the court put a lot emphasis on party autonomy, holding that the parties’ particular agreement on a procedural matter is superior to the provisions in the arbitration rules. It is therefore suggested for foreign arbitrators and arbitration institutions to be cautious about parties’ agreement, especially when the party expressed its concerns on the special arrangement on procedural matters during arbitration proceedings.

References   [ + ]

1. ↑ Rule 5.2(b) prescribes that “the case shall be referred to a sole arbitrator, unless the President determines otherwise” 2. ↑ Also, in a press release dated 4 November 2016, ICC stated that “Under the Expedited Procedure Rules, the ICC Court will normally appoint a sole arbitrator, irrespective of any contrary term of the arbitration agreement.” function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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The Future of ISDS: Can’t See the Wood or the Trees

Thu, 2019-02-28 02:00

Maarten Draye and Emily Hay

On 22 November 2018, the Belgian Ministry of Foreign Affairs, Foreign Trade and Development Cooperation hosted a High Level Event on the Reform of Investment Protection. Distinguished panellists from arbitral institutions, international organisations, academia, civil society, arbitration users and legal practitioners presented diverse views on the need for reform of the system of investor-State dispute settlement (“ISDS”), the progress of current reform efforts, and the potential multilateral investment court (“MIC”). These insightful contributions surveyed the many and varied perspectives from which to view the current state of ISDS, and its future. At the end of the day, however, the distinct impression was that the various stakeholders in this debate are talking at cross-purposes, making it difficult to see either the wood or the trees.

Status of Current Reform Initiatives

A first wave of reforms is undertaken by ICSID. Meg Kinnear, Secretary-General of ICSID explained that the fourth comprehensive reform of the ICSID arbitration rules is well underway. The proposed amendments were published in August 2018, and are open for comment by States and the public until 28 December 2018. A vote on the amendments to the rules is expected in 2019 or 2020.

In order to keep ICSID’s procedural rules fit-for-purpose, there is a range of proposed reforms, including:

  • a new provision for consolidation or coordination of like cases;
  • an obligation to disclose the existence and source of third party funding;
  • strong provisions in favour of greater transparency of awards, decisions, and orders, including deemed consent and the publication of excerpts; and
  • the availability of expedited procedures, anticipated to be useful in particular for small and medium enterprises.

The reform proposals are based on ICSID’s day-to-day experience in the management of cases, which puts it in a unique position to know what works and what does not. See more details on the proposed reforms here.

In parallel, UNCITRAL has tasked its Working Group III to study ISDS reform. Anna Joubin-Bret, Director of the International Trade Law Division at UNCITRAL, reported that at its thirty-sixth session in November 2018, Working Group III completed the second phase of its mandate, reaching consensus that reform is desirable to address concerns about the current system of ISDS. These concerns fall into three broad categories:

  • lack of consistency, coherence, predictability and correctness of arbitral decisions by ISDS tribunals;
  • concerns about arbitrators and decision makers, including lack of independence and impartiality, limitations in challenge mechanisms, lack of diversity, and qualifications; and
  • concerns regarding the costs and duration of proceedings.

The next and third phase of the work of Working Group III will be to discuss and determine what reforms should be developed to address the specific concerns. Due attention will be given both to concerns based on facts, as well as concerns based on perception. See the draft report of the thirty-sixth session of Working Group III here.

Ms. Joubin-Bret emphasised that this Working Group is a government-led process. This reflects the fact that it was States who initiated the design of the current system, and in her view they should be the ones to reform it.

Which Reforms, Why and How?

According to some stakeholders in civil society who voiced their objections during the event, the question should not be what reforms to undertake, but whether we should rather abolish the system of investor protection altogether. The concerns of these groups are more existential and question why investors should receive favoured treatment. Their assertion that investors are offered protection which is not available in other areas such as human rights, climate, labour rights, etc., may very well be on point. It risks, however, throwing away the baby with the bath water.

While it is difficult to measure the immediate impact of bilateral investment treaties on the levels of foreign investment, Patrick Baeten, Deputy GC at Engie, pointed out that investors want certainty and will always look at the level of investment protection when investigating long-term commitments. He predicted that, failing adequate protection (regardless of its form), investment gaps would not be filled, or at least not at the same cost. Moreover, many speakers, including James Zhan, Senior Director of Investment and Enterprise at UNCTAD, pointed out that the current discussion on reform should not be limited to ISDS or other issues of procedure, but also include substance. Treaties can be revised to include obligations for investors which can be enforced by host States.

For those who accept that investment protection should continue to exist in one form or another, there remains a great variance in opinions on the level of reform to ISDS necessary. For some practitioners, the system is imperfect but with some self-regulating tweaks could be sufficiently improved. Others propose largely maintaining the current system, but adding an appeal mechanism to address issues of consistency, predictability and correctness. Those in favour of a more dramatic rethink may support an MIC, or some form of court with international jurisdiction in combination with recourse to domestic courts. Reference was made to the recent report by the IBA on “Consistency, efficiency and transparency in investment treaty arbitration”, which details some of the challenges facing ISDS and proposes solutions to foster the legitimacy of the system.

In her keynote speech, European Commissioner for Trade Cecilia Malmström expressed the EU’s view that the MIC is the only option on the table that can effectively address these concerns. According to the EU, only a permanent body to resolve investment disputes can create predictability and consistency, bring about the necessary expertise in the system, effectively address costs and duration, and assure equal representation. The EU plans to put forward this idea at the multilateral level during the next phase of UNCITRAL Working Group III’s discussions.

Does an MIC Address the Concerns Raised?

At the time of the conference, no detailed proposals for an MIC had been made public. It was therefore unclear what form the court would take, whether it would be an independent institution in its own right, or whether it would make use of the secretariat and facilities of other institutions which already exist. It was further unknown what kind of judges would sit on the court, how they would be appointed, and what rules would govern their service.1)Meanwhile, on 18 January 2019, the EU submitted two papers containing concrete reform proposals to UNCITRAL. jQuery("#footnote_plugin_tooltip_7392_1").tooltip({ tip: "#footnote_plugin_tooltip_text_7392_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Even speaking in general terms, many speakers doubted whether an MIC could address the concerns with the current ISDS system that have been identified. The speakers therefore advocated that, at this stage, full consideration should be given to all potential reform options, and to measure those options against the objectives sought to be achieved. Professor Loukas Mistelis of Queen Mary University pointed out that, if an MIC is created, one option could be to maintain the current system of ISDS, with the MIC to function as an appellate body.

A further question lingers over the feasibility of bringing an MIC into existence in the current global climate, in which multilateralism already faces serious challenges, and a number of other multilateral efforts in the economic sphere have stalled or are dysfunctional.

Again recalling the importance of substantive standards, several contributions also highlighted that while proposed reforms to ISDS are mainly procedural, the importance of the nature and wording of standards of treaty protection should not be underestimated. Mr. Zhan of UNCTAD pointed out that the overwhelming majority of ISDS cases are brought under old generation treaties. In this connection, Professor Bernard Hanotiau of Hanotiau & van den Berg commented that divergent treaty wording, some of which is unclear or inconsistent with other treaties, is often the very reason why ISDS tribunals reach different interpretations of treaties in different cases.

Conclusion

This event illustrated once more how divided different participants in the debate are on the issue of ISDS, and more generally, on investor protection. At the same time, it demonstrated the need for a continued exchange of views in pursuit of solutions that cater to diverse stakeholders.

Civil society groups question the existence of an entitlement to investor protection itself. This approach does not seem to be shared by most lawmakers. However, the EU, one of the main political forces in the debate at UNCITRAL, has made it clear that it sees an MIC as the only way forward.

Meanwhile, practitioners acknowledge to varying degrees that change is necessary, but point out that an MIC will likely fail to address many of the concerns with ISDS. Indeed, it may create new ones. At this stage, it seems doubtful that such technical remarks will fall on fertile soil, since the idea of an MIC which has been planted by the EU appears cultivated in large part on political ideology.

While States are legitimately in the driver seat of ISDS reform, discussions between experts and lawmakers must continue, in order to benefit from the input of those with daily experience of legal practice and procedure. In this way, every potentially viable variety of tree will be given due consideration before a decision is made whether to replant the forest entirely, or whether to seek better results through forest management.

References   [ + ]

1. ↑ Meanwhile, on 18 January 2019, the EU submitted two papers containing concrete reform proposals to UNCITRAL. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Should Arbitral Institutions Have Diplomatic Immunity?

Wed, 2019-02-27 01:00

Christine Sim (Assistant Editor for Southeast Asia)

In November 2018, the former director of the Asian International Arbitration Centre (AIAC) in Kuala Lumpur resigned from his role after being arrested on suspicions that he paid past and present ministers bribes to renew his role at the AIAC.

His lawyer argued before Malaysian courts that, by virtue of his role at AIAC, he is protected by diplomatic immunity under Malaysia’s 1992 International Organisations (Privileges and Immunity) Act and the Vienna Convention on Diplomatic Relations (18 April 1961) (Vienna Convention). As a result, he cannot be arrested, detained or subject to criminal jurisdiction in Malaysia. He was detained for investigations briefly, but released, not subject to bail on 21 November 2018.

Are arbitral institutions and their officers entitled to diplomatic immunity?

 

Legal Regime for Diplomatic Immunity of Arbitral Institutions

Under international law, the question whether an international organization enjoys diplomatic immunity depends on treaties with the host State and customary international law.1) Josef L. Kunz, ‘Privileges and Immunities of International Organizations’ American Journal of International Law, vol. 41, No. 4 (Oct., 1947), pp. 828-862; Michael Wood, ‘Do International Organizations Enjoy Immunity under Customary International Law?’ in Immunity of International Organizations (Brill, 2015), pp 29-60. jQuery("#footnote_plugin_tooltip_5379_1").tooltip({ tip: "#footnote_plugin_tooltip_text_5379_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Under the Vienna Convention, immunity from criminal jurisdiction is complete. But the Vienna Convention does not apply to international organizations. As provided in the Commentary:

‘Apart from diplomatic relations between States,there are also relations between States and international organizations. […]However, these matters are, as regards most of the organizations, governed by special conventions.’

Under domestic law, States have enacted legislation regarding diplomatic immunity for international organisations. In Malaysia, the applicable law cited by Rajoo is the Malaysian 1992 International Organisations (Privileges and Immunity) Act. In the United States, the 1945 International Organizations Immunities Act applies to protect international organizations and their officers from U.S. search and seizure laws.

The Permanent Court of Arbitration (PCA) has a treaty with the Netherlands concerning their headquarters. It provides that the PCA shall be immune from legal processes and its property shall be inviolable. The PCA also has several Host Country Agreements, providing privileges and immunities to its staff, adjudicators and participants in PCA-administered proceedings. The International Chamber of Commerce (ICC) Court of Arbitration is part of the ICC, a non-governmental business organization, organized under the laws of France. It does not have the same treaties setting out diplomatic immunity protections as the PCA.

According to the AIAC, it was established under the Asian African Legal Consultative Organization (AALCO), an international organization comprising 47-member states from across the region, and that:

“Formed pursuant to the host country agreement between Malaysia and AALCO, the AIAC is a not-for-profit, non-governmental international arbitral institution which has been accorded independence and certain privileges and immunities by the Government of Malaysia for the purposes of executing its functions as an independent, international organization.”

 The extent to which officers of arbitral institutions are protected by diplomatic immunity depends on the same legal framework above.

Officers of arbitral institutions perform a great variety of roles, including registering the case, appointing arbitrators, making procedural decisions, facilitating the hearing, drafting or editing the award, and promoting the arbitral institution to users.

Generally, the diplomatic immunity enjoyed by the arbitral institution would extend to the officer when he acts on behalf of the institution. The key requirement is that the arbitral institution’s officer was acting within the scope of his role and in the exercise of his functions. But what happens when the officer is accused of corruption or bribery?

 

Corruption and Bribery in Arbitral Institutions

 Suspicions of corruption and bribery raise the temptation to lift diplomatic immunity for international organizations.

In such cases, there is a delicate balance between the need to investigate corruption and bribery and giving the international organization space to conduct activities that may be against the interests of a host State. For arbitral institutions, this includes the freedom to issue awards directly against the host State.

On the one hand, corruption suspicions should be investigated effectively. Allegations of corruption can seriously tarnish the reputation of the arbitral institution, its panel of arbitrators and affect the respect for its awards in enforcement proceedings around the world.

On the other hand, the ability of a State to create obstacles in the way of a tribunal’s work, interfere with legal proceedings and gain access to confidential information, simply by starting a corruption investigation, poses a significant risk to the sanctity of due process.

The balance may be shifted if the arbitral institution’s treaty with the host State requires that the institution respects domestic laws. For diplomats, Article 41(1) of the Vienna Convention provides:

Without prejudice to their privileges and immunities, it is the duty of all persons enjoying such privileges and immunities to respect the laws and regulations of the receiving State.

When should an arbitral institution’s officer be prosecuted for corruption? If an officer of an arbitral institution was not serving in his official capacity when committing the acts of corruption, he should not be entitled to diplomatic immunity.

Whether an official acted outside his official capacity in each instance would depend on the court’s interpretation of the facts. For instance, if a court finds that the arbitral institution’s officer was acting only in his interest by offering or soliciting bribes, it may be possible to conclude that he was not performing the institutional functions. However, there may be factual situations where it would be far more difficult to distinguish between the institution’s officer’s official duties and acts performed for only in his own interest. This difficulty is reflected in the debate currently before the International Law Commission on expressly excluding corruption and bribery from diplomatic immunity.

 

Should arbitral institutions and their officers enjoy diplomatic immunity?

First, the rationale for granting diplomatic immunity to international organizations is to enable them to fulfil their functions independently, by preventing member states and, particularly, the host State from exerting undue influence.2) Philippa Webb, ‘The Immunity of States, Diplomats and International Organizations in Employment Disputes: The New Human Rights Dilemma?’ (2016) 27 (3) European Journal of International Law 745–767p 762. jQuery("#footnote_plugin_tooltip_5379_2").tooltip({ tip: "#footnote_plugin_tooltip_text_5379_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); It is particularly important, that international organizations that sit in judgment of States enjoy the highest form of protection from State interference. If arbitral institutions were vulnerable to interference from their host State’s criminal investigations, these institutions would find it difficult to administer cases against State-related parties.

Second, we may draw parallels to arbitrators being granted immunity from liability under arbitration rules.3) See Asif Salahuddin, ‘Should arbitrators be immune from liability? Arbitration International, Volume 33, Issue 4, 1 December 2017, Pages 571–581. jQuery("#footnote_plugin_tooltip_5379_3").tooltip({ tip: "#footnote_plugin_tooltip_text_5379_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Arbitrators enjoy civil immunity so that they may sit in judgment of a State or State-related party in a neutral manner. Similarly, arbitral institutions and their officers should be free from the criminal or civil interference or other influences of that State.

Third, the officers of arbitral institutions need to be granted diplomatic immunity in order to carry out their duties. Especially in the case of investor-State arbitration, the officers of the arbitral institution cannot be subject to interference from the host State. The Secretariat of the International Centre for the Settlement of Investment Disputes (ICSID) would find it very difficult to do their jobs if they were vulnerable to investigations and detention by a respondent State. The ICC Court of Arbitration would have difficulty exercising certain key functions, such as appointing arbitrators and deciding on consolidation of arbitration proceedings, if its members were subject to the constant threat of investigations by State authorities. When an arbitral institution’s officers are conducting adjudication-related activities, especially against a State, these functions should be protected by diplomatic immunity.

These compelling justifications are akin to arguments regarding diplomatic immunity for State diplomats. If diplomats are not granted immunity, they would be vulnerable to interference by host States, frustrating important diplomatic functions of negotiations, representation and secrecy of communications with their home State. But many have pointed out that the latitude granted to diplomats has led to abuse of diplomatic immunity, and in recent years, people have started calling for such abuse to stop by restraining the scope of diplomatic immunity.

Could the institution be found responsible? In the context of a State’s diplomat, a corrupting State could be held responsible as a matter of State responsibility for the actions of its corrupting diplomat.4) See Draft articles on Responsibility of States for Internationally Wrongful Acts, with commentaries (2001), footnote 150 jQuery("#footnote_plugin_tooltip_5379_4").tooltip({ tip: "#footnote_plugin_tooltip_text_5379_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

To conclude, the question whether an arbitral institution and its officers are entitled to diplomatic immunity in cases or corruption will depend on the presence of host State treaties and domestic laws on diplomatic immunity. However, arbitral institutions and host States should consider amending their treaties and domestic laws to expressly exclude corruption and bribery from diplomatic immunity.

References   [ + ]

1. ↑ Josef L. Kunz, ‘Privileges and Immunities of International Organizations’ American Journal of International Law, vol. 41, No. 4 (Oct., 1947), pp. 828-862; Michael Wood, ‘Do International Organizations Enjoy Immunity under Customary International Law?’ in Immunity of International Organizations (Brill, 2015), pp 29-60. 2. ↑ Philippa Webb, ‘The Immunity of States, Diplomats and International Organizations in Employment Disputes: The New Human Rights Dilemma?’ (2016) 27 (3) European Journal of International Law 745–767p 762. 3. ↑ See Asif Salahuddin, ‘Should arbitrators be immune from liability? Arbitration International, Volume 33, Issue 4, 1 December 2017, Pages 571–581. 4. ↑ See Draft articles on Responsibility of States for Internationally Wrongful Acts, with commentaries (2001), footnote 150 function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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The Trajectory of International Arbitration in Latin America and Current Trends in ISDS

Tue, 2019-02-26 02:19

Ana Toimil Cervantes and Alexander David Barnes

Young ITA

On 7 February 2019, Young ITA Talks Mexico conference addressing investor-state dispute settlement (“ISDS”) in Latin America was organized at Greenberg Traurig S.C.’s Mexico City office.1) While the content and subject-matter of this report stem from the discussions at the #YoungITATalks event, the views and analysis expressed herein are those of the authors. jQuery("#footnote_plugin_tooltip_8138_1").tooltip({ tip: "#footnote_plugin_tooltip_text_8138_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The panellists, including leading practitioners and government officials, discussed the development of and approaches to international arbitration and ISDS in Latin America, and how these are influenced by divided global political stances.

Traditionally, Latin America has been renowned for its scepticism of and disengagement with ISDS. After the famous “Tokyo No” meeting in 1964, all Latin American countries voted against the ICSID Convention. Brazil, the largest economy in Latin America, has still never signed the ICSID Convention, and controversially it also did not ratify the BITs it had entered into. Indeed, in Brazil it is considered unconstitutional to provide investment protections to foreign investors that do not exist for Brazilian investors.

Until recent times, this Latin American posture against foreign investor protections was in clear contrast to the one adopted in Europe and the U.S., which have always been considered strong proponents of ISDS. The very origin of treaty-based ISDS was the result of the lobbying of European-based multinational companies for protection against the expropriation of their assets in the developing world. Kabir Duggal, of Arnold & Porter LLP, opined that a significant degree of the Latin American apathy for ISDS was due to the broadly-held view that the US and EU dominated the system to the exclusion of developing states.

Moving into the early 1990s, however, most Latin American countries showed some signs of softening their stances towards ISDS and started entering trade agreements with investment protections and BITs. Ecuador, for instance, entered into 26 of the 29 BITs in its history from 1993 to 2002.

Various recent events have, however, raised concerns about the new course that not only Latin American countries are taking, but also Europe and the U.S.

In Europe, the Achmea decision of the European Court in 2018 and the subsequent termination of all intra-EU BITs have caused significant upheaval. The EU now proposes a multilateral investment court, but it remains far from clear whether this will come to fruition. Brazil, Chile and India have each already rejected the proposal, and it has attracted strong criticism in academic circles and among many stakeholders. The US, too, in coordination with its increasingly inward-looking policies, has left the TPP and is presently replacing NAFTA with the new USMCA. The latter is particularly flavoured with the current US regime’s desire to keep investment domestic, as it provides for no ISDS between Canada and the US and a differentiated scope of investment protections between Mexico and the US, which are indeed less favourable provisions for foreign investors than the ones under NAFTA.

In Latin America, we have seen the denunciation of the ICSID Convention by Bolivia (2005), Ecuador (2009) and Venezuela (2012), and both Ecuador and Bolivia have torn up their BITs. Of the aforementioned 29 Ecuadorian BITs, according to Investment Policy Hub, only three remain in force. Dra. Blanca Gomez de la Torre, of González, Peñaherrera & Asociados, observed that, as of today, the Ecuadorian government’s sole option (under their Constitution) is to individually agree investment contracts with investors. The denunciation of ISDS mechanisms has also been accompanied by more restrictive reforms to the mechanisms that remain in force. For instance, the New Bolivian Arbitration Act, enacted in 2015, allows foreign investment only in certain public sectors and orders that all investment arbitrations be seated in Bolivia.

While certain stakeholders consider the present climate to represent an ongoing withdrawal from ISDS and a regression to the Calvo doctrine, Imad Khan, of Hogan Lovells, expressed a more optimistic outlook regarding its future in Latin America. Rather than a withdrawal from ISDS, he considered that states are engaging in a ‘renegotiation’ of it. He noted that because most BITs were entered in the 1990s, it makes sense for states to now redefine the rights, obligations and remedies of investors to better suit them in 2019. This viewpoint finds support in the fact that Chile, Mexico and Peru recently entered CPTPP, and also that both Ecuador and Bolivia have recently drafted Model BITs. He also noted that in the discussions regarding the proposed amendments to the ICSID Rules, Argentina and Costa Rica have been active in suggesting reforms to limit legal fees that investors may incur and to increase transparency requirements for proceedings, respectively.

It is also worth noting that not all Latin American states have gone about such remodelling of their ISDS landscapes. Mexico, more so than most, has recently demonstrated no shortage of support for ISDS. Hugo Romero, of the Mexican Ministry of Economy, stressed that in negotiating USMCA Mexico gave the protection of FDI a high priority and that it continues to view ISDS as valuable in contemporary treatymaking. This is reflected in the ISDS provisions it played a role in negotiating in CPTPP and USMCA, and that in August 2018 Mexico finally ratified the ICSID Convention.

All of this suggests that many Latin American states are seeking to improve the system, not to reject ISDS altogether.

Nevertheless, globally there has been a recent reduction in investor protections. Aside from a growing tide of nationalism, the second panel of the Young ITA Talk suggested that reductions in investor protections also have something to do with changing attitudes among states to the effects that having such protections have.

Patrick Pearsall, of Jenner & Block LLP, observed that when ISDS came to prominence the prevailing attitude was that such protections provide guarantees for foreign investors that positively engender FDI. 30 years on, he says this so-called ´Washington Consensus’, has eroded, and that they are now wise to the fact that the existence of a lucrative opportunity (oil, gas, etc.) is what overwhelmingly draws investment. ISDS protections are no longer seen as key. The example of Brazil offers credence to that view. Despite its general aversion to protecting foreign investors with ISDS mechanisms, as recently as 2017 Brazil received USD 62.7 bn in FDI, becoming the state with the world’s 7th highest FDI inflow (World Investment Report, 2018

Kate Brown, of DLA Piper, however, explained that while investor protections do not lead investors to positively decide to invest, the cost of investment is much higher if protections are not provided for. In that sense, their lacking is only a good reason to decide not to invest in a given state. Mr. Pearsall also noted that without investment treaties governments would instead face the reality of engaging in “gunboat diplomacy” – which was common before ISDS was created.

In this respect, a possible radical change is coming for ISDS system instead of a disappearance from it. Mr. Pearsall suggests that this is likely to consist in the system shifting away from the private sector to become a truly public international law system. This change will, he says, be triggered by states’ influence on the system, resulting from their increasing sophistication on the area.

When this will happen and the features that this changed-ISDS system will have remain to be seen. For now, stakeholders have more questions than answers.

 

References   [ + ]

1. ↑ While the content and subject-matter of this report stem from the discussions at the #YoungITATalks event, the views and analysis expressed herein are those of the authors. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Arbitration in Colombia: A Recent Ruling Confirms the Country is an Arbitration Friendly Forum

Sun, 2019-02-24 22:05

Felipe González Arrieta

During the last years, Colombia has been taking steps forward towards the consolidation of the country as an attractive forum for international arbitration.1)For a more detailed analysis, see: F. González Arrieta; “Arbitration in Colombia: Two Steps Forward and one Backwards” TDM 5 (2016), www.transnational-dispute-management.com; available at: www.transnational-dispute-management.com/article.asp?key=2382 jQuery("#footnote_plugin_tooltip_8154_1").tooltip({ tip: "#footnote_plugin_tooltip_text_8154_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Within this context, the Supreme Court of Justice (the “Court”), Colombia’s highest judicial body in civil and commercial matters, has issued a recent ruling on an annulment action dated 19 December 20182)See Consorcio Ferrovial – Sainc v. Carbones del Cerrejón Ltd., Corte Suprema de Justicia [Supreme Court of Justice], Sala de Casación Civil [Civil Chamber], 19 December 2018, Ruling No. SC5677-2018, M.P. Margarita Cabello Blanco. jQuery("#footnote_plugin_tooltip_8154_2").tooltip({ tip: "#footnote_plugin_tooltip_text_8154_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, which has reaffirmed all of these efforts.

In 2012, Cerrejón, a multinational mining company with operations in Colombia, and Ferrovial-Sainc (“CFS”), an international construction consortium, entered into a contract for the construction of marine works and structures. After some disputes arose within the performance of the contract, CFS initiated an ICC arbitration, with seat in Colombia and Colombian law applicable to the merits. CFS claimed that the contract had terminated and sought damages. Cerrejón filed a counterclaim asking the tribunal to find that the contract had not ended, that CFS had abandoned the works, that a limitation of liability clause was null, and that it was entitled to damages. In 2017, the tribunal issued its award dismissing all the claims brought by CFS and awarding Cerrejón all the damages it sought, approximately in the amount of US$ 40 million.

CFS then moved to have the award annulled based on the following grounds under the Colombian Arbitration Act (Law 1563 of 2012): (i) it was unable to present its case , because the arbitral tribunal had allegedly incurred in nine evidentiary omissions; (ii) the award contained decisions beyond the scope of the arbitration agreement, since the tribunal did not rule in accordance with Colombian law, as provided by the arbitration agreement; (iii) the procedure was not in accordance with the arbitration agreement, since a written witness statement was not excluded, even though such witness did not appear at the hearing, which, in its opinion, was contrary to Procedural Order No. 1; and, (iv) the award was contrary to Colombian international public policy, as the alleged omissions of evidence had led to a de facto defect (“vía de hecho”)3)In Colombia, in order for an award or a judgement to be subject to a writ for the protection of fundamental rights (“tutela”), a de facto defect (“vía de hecho”) is needed. jQuery("#footnote_plugin_tooltip_8154_3").tooltip({ tip: "#footnote_plugin_tooltip_text_8154_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, which, in international arbitration, would amount to a violation of Colombian international public policy.

In its ruling, the Court started its analysis by pointing out that Colombia, within the international arbitration framework, has adopted the most recent trends including Law 1563 of 2012, which is by and large based in the UNCITRAL Model Law. As such, the grounds for annulment are to be construed narrowly and, pursuant to article 107 of Law 1563, the Court may not enter into the merits of the dispute or into the evidentiary analysis of the tribunal. In this vein, the Court then defined the general scope of each of the grounds alleged by CFS as follows:

  1. A party was unable to present its case (Art. 108(1)(b), Law 1563 of 2012): this ground seeks to protect the right of the parties to be heard, to be treated equally and of due process. The Court clarifies, however, that the breach of due process, under this ground, must be substantial, this is, the alleged breach must be ostensible, flagrant, manifest and unreasonable, in addition to having a direct impact in the decision. As such, according to the Court, simple discrepancies or disagreements that may arise with the decision of the arbitral tribunal must be differentiated, since the latter is not enough to annul the award. Finally, the Court reminded the parties that the annulment judge may not, at any time, qualify the evidentiary analysis or motivation of the arbitral tribunal.
  2. The award contains decisions beyond the scope of the arbitration agreement (Art. 108(1)(c), Law 1563 of 2012): it refers to resolved claims which are out of the scope of the arbitration agreement. Therefore, the study of said ground must be based on an objective comparison between the arbitration agreement and the decisions embodied in the final award. However, the Court held that, based on this ground, one cannot seek to disqualify the merits of the reasoning made by the arbitrators or the considerations that served as motivation of the award, since this would correspond to an appeal rather than to an annulment action.
  3. The procedure was not in accordance with the arbitration agreement (Art. 108(1)(d), Law 1563 of 2012): this ground may be alleged when the arbitrators disregard, unjustifiably, the procedural guidelines established by the parties, provided that such omission is consistent throughout all the proceeding or that it is so serious that it may undermine due process. According to the Court, such irregularity has to be brought to the attention of the arbitral tribunal who has to reject such claim first, or else it is understood that the parties have waived their right to object.
  4. The award was contrary to Colombian international public policy (Art. 108(2)(b), Law 1563 of 2012): this ground seeks to protect the fundamental and guiding principles of the national legal system, such as the social and political order of the State, public liberties, or the right to have a procedure with full guarantees and respect of due process. Likewise, the Court emphasized that, unlike international instruments such as the New York Convention and the UNCITRAL Model Law, in Colombia the concept of public policy is that of “international public policy”, which restricts even more such concept and provides a more international vision, in accordance with current worldwide trends.

Once the Court reminded the parties what should be the general understanding of the previous grounds, it stated that the recourse filed by CFS was in fact an appeal in disguise which sought to reopen the merits of the dispute. As such, this alone would be enough to reject it. However, the Court entered into the analysis of each of the allegations made by the moving party finding, inter alia, that: (i) the tribunal ruled based on a comprehensive assessment of all the available evidence; (ii) the award did not contain decisions beyond the terms of the arbitration agreement and the tribunal ruled in accordance with Colombian law; (iii) the arbitration procedure was in accordance with the agreement of the parties; and, (iv) the award was not contrary to Colombia’s international public policy.

It is especially noteworthy the analysis made by the Court when it examined the allegation in the sense that the procedure was not in accordance with the arbitration agreement since the tribunal had allegedly taken into account a witness statement of a witness who had not appeared at the hearing. In this vein, the Court noted that the parties agreed to ICC Arbitration and, based on such rules, agreed, in Procedural Order No. 1, that all evidentiary matters would be governed by the IBA Rules on the Taking of Evidence in International Arbitration (the “IBA Rules“).

The Court pointed that, according to the IBA Rules, documents are an independent source of evidence, with an autonomous regulation, different from witness statements. In this respect, the Court noted that the allegations made by CFS were not regarding the probatory value given by the tribunal to the witness statement itself, but rather to the contemporaneous documents and letters that such witness had signed during the performance of the contract. Therefore, the fact that the witness did not appear at the hearing did not annul or exclude from the record those contemporaneous documents or letters that said witness had signed, as they constituted a different source of evidence that had nothing to do with its witness statement. The importance of this analysis is that the Court, in a prior ruling regarding the recognition in Colombia of a foreign award, had already used another soft law instrument, the IBA Guidelines on Conflicts of Interest in International Arbitration, in order to assess whether an international arbitrator had the duty to disclose the appointment of one of the party’s counsel, in another unrelated arbitration in which said arbitrator was, in turn, counsel for one of the parties.

From this specific ruling and prior case law, both within the context of annulment and recognition proceedings4)To date, there are ten different decisions within recognition of foreign awards proceedings and three within international awards annulment proceedings. jQuery("#footnote_plugin_tooltip_8154_4").tooltip({ tip: "#footnote_plugin_tooltip_text_8154_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, one may identify the following trends regarding the Court’s position towards international arbitration – all of which reflect that Colombia is giving steps in the proper way as an arbitration friendly seat:

  1. The only grounds to annul or decline the recognition of an international award are those provided for in Law 1563 of 2012, which mirror the UNCITRAL Model Law and the New York Convention, and are to be construed narrowly.
  2. The Court must take into account the most recent international trends in its analysis using, for example, soft law instruments such as the IBA Rules or the IBA Guidelines.
  3. National judges are prohibited from entering into the merits of the dispute or the analysis made by arbitral tribunals.
  4. The Court is pro-recognition and pro-arbitration and such principles must guide its study.
  5. The concept of public policy is that of international public policy and, as such, is restricted to those fundamental and guiding principles of Colombia’s legal system.
  6. For an award to be annulled or its recognition denied, the procedural irregularity has to be so serious as to effectively undermine due process. Specifically, as to an irregularity related to the procedure, such objection has to be raised before the arbitral tribunal or else the right to object is waived.

Despite the fact that the general prospect is positive, a couple of things still that have to be resolved before being able to fully list Colombia as an arbitration-friendly forum. For instance, the possibility for a party to file a writ for the protection of fundamental rights (“acción de tutela”) against an arbitral award. This, however, should be the subject of another post.

References   [ + ]

1. ↑ For a more detailed analysis, see: F. González Arrieta; “Arbitration in Colombia: Two Steps Forward and one Backwards” TDM 5 (2016), www.transnational-dispute-management.com; available at: www.transnational-dispute-management.com/article.asp?key=2382 2. ↑ See Consorcio Ferrovial – Sainc v. Carbones del Cerrejón Ltd., Corte Suprema de Justicia [Supreme Court of Justice], Sala de Casación Civil [Civil Chamber], 19 December 2018, Ruling No. SC5677-2018, M.P. Margarita Cabello Blanco. 3. ↑ In Colombia, in order for an award or a judgement to be subject to a writ for the protection of fundamental rights (“tutela”), a de facto defect (“vía de hecho”) is needed. 4. ↑ To date, there are ten different decisions within recognition of foreign awards proceedings and three within international awards annulment proceedings. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Summaries and Issues in the ICC Terms of Reference: The Right Level of Case Management

Sun, 2019-02-24 05:05

Marco Paoletti

What are Terms of Reference in the ICC Rules of Arbitration, and what are they for?

Article 23(1) of the 2017 ICC Rules provides

“As soon as it has received the file [of a new dispute] from the Secretariat, the arbitral tribunal shall draw up, on the basis of documents or in the presence of the parties and in the light of their most recent submissions, a document defining its Terms of Reference”.

These include such basic details as the parties’ names and contact details. But more substantively, Articles 23(1) (c) and (d) require:

“a summary of the parties’ respective claims and of the relief sought by each party, together with the amounts of any quantified claims and, to the extent possible, an estimate of the monetary value of any other claims” …

and

“unless the arbitral tribunal considers it inappropriate, a list of issues to be determined” …

Finally, the Terms of Reference include such further details as the source of the tribunal’s power to decide ex aequo et bono, where relevant. But it is the substantive elements listed above – the summary of claims and list of issues  – that concern us here.

Note that the tribunal drafts the Terms of Reference. The parties may sign their approval, and in any event the ICC gives its own imprimatur. It is, on its face, a reversal of party autonomy, or at least an outsourcing of autonomy by the parties’ own choice to incorporate the ICC Rules. The rules are there to keep things moving. If the parties do not keep things moving, the ICC will step in.

This is not a novelty; it was present at the creation of the ICC Rules in 1923.1)It existed at least as early as the 1927 Rules. Article 14(d) stated: “When the arbitrators or arbitrator have or has been appointed, the Court of Arbitration shall draw up a form of submission to arbitration which shall contain … Terms of reference, statement of the case, indication of the points at issue to be determined …” Appropriately, that requirement is now incumbent on the tribunal, not the ICC. jQuery("#footnote_plugin_tooltip_9440_1").tooltip({ tip: "#footnote_plugin_tooltip_text_9440_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); French law of the interwar period only permitted referral of current disputes to arbitration (a condition then common, and still preserved in certain Latin American jurisdictions). Terms of Reference allowed parties to construe arbitration agreements for future disputes as compromis for current disputes, in order to appease a requirement of French law.

So much for its historical origins; what of its current utility? The relative size of the Rules may give the impression that the ICC imposes more administrative layers on, and permits less party autonomy in, arbitrations under its auspices. Between Terms of Reference and institutional scrutiny of awards, the ICC seems to reserve to itself a role in proceedings so unlike the polite distance of most arbitral institutions. Yet, a brief examination of some of the more useful case management habits of common law courts offers useful comparisons with this hallmark of ICC arbitration. Civil law jurisdictions would doubtless offer equally useful analogies, but I speak from the experience of working in a common law court. Some of these insights may present a retrospective justification for this residually French aspect of ICC arbitral procedure.

Common Law Perspectives

Working in an Australian State Supreme Court, I witnessed several measures which the court took – not heavy-handedly, but with the parties’ managed cooperation – to improve the process of litigation.

First, the Court invited parties to prepare a list of issues agreed between the parties. Ideally, this was a series of “yes” or “no” questions that followed in a logical sequence. This was a proved strategy for forcing parties to reasonably agree on issues, and even abandon those legal arguments that deserve no consideration at trial, let alone at judgment. And because the questions aligned in a logical sequence, they revealed what did not need answers, depending on the answers to prior questions.

A second step – sometimes decisive – was to instruct the parties to attend a judicial mediation immediately after opening submissions on the first day of trial. This was the peak moment of the parties’ self-consciousness: they had been forced to state their case clearly, and their arguments crystallised in open court. The strength of the jurisprudence behind them was on fuller display than when the claim was first drawn, and each party had a proper grasp of the factual matrix, and the legal analysis that the other side would apply to it.

The common feature of these processes is that they force parties to perspicuously and exhaustively state the nature and measure of their case. This, in turn, is intended to make the parties apply an honest introspection to their own positions in fact and law. What is our legal argument? Does it apply to the facts? Are we even able to adequately prove these facts? This introspection, in turn again, is intended to ensure either that the parties take one more chance to mediate or otherwise settle their dispute; or if that is still not possible, that they proceed with efficiency and certitude.

Whatever latitude the oratory of barristers may seem to enjoy, common law courts generally discourage parties from raising substantive arguments in oral hearings that were not already foreshadowed in the statement of claim, just as a party in ICC arbitration can only do so at the tribunal’s (usually hesitant) discretion under Article 23(4). The twin function of this reluctance is to keep the curial or arbitral process in manageable bounds, and to avoid surprises.

Case Management, Whether You Like It or Not

The ICC Terms of Reference also keep order in the arbitration, and do so early enough to stop problems before they branch out and multiply (much like the procedural steps recommended in a recent Guide for In-House Counsel, also drafted by the ICC). In this respect they are similar to the common law procedural habits just described, i.e. they are not identical processes, but they achieve an identical purpose. They allow the tribunal to state matters clearly, and the parties’ cases reach that peak point at which they may either settle or progress efficiently. But there is one salutary difference: The Terms of Reference set reasonable parameters around the parties without compromising procedural flexibility, which is what makes international arbitration attractive . Used properly, the Terms of Reference may do for arbitration what the most prudent judicial supervision does for common law litigation. After all, Article 21 of the ICC Rules explicitly preserves the parties’ right to determine the arbitral procedure.

Moreover, arbitral awards need every measure available to them to be made impermeable to future challenge and thus to uphold the enforceability regime on which international arbitration so depends. If the arbitration agreement turns out to have been insufficiently clear on what the scope of the tribunal’s jurisdiction should be, the Terms of Reference can set these down with the benefit of hindsight, since they would be drafted with respect to the case at hand and not just to disputes generally arising out of the contract.

Thus the arbitrators’ own account of the issues – as hopefully agreed by the parties – will leave a more detailed description of the tribunal’s scope on the face of the record. This virtually eliminates a dissatisfied party’s ability to resist enforcement of an award by speciously invoking the New York Convention Article V(1)(c) prohibition on decisions dealing with “a difference not contemplated by or not falling within the terms of the submission to arbitration”. The Terms of Reference preserve the advantages of a general arbitration agreement, but further endow it with the advantages of a compromis in which those “terms of submission” are articulated in greater detail than any agreement to arbitrate future disputes.

Conclusion

But why ICC Terms of Reference? Why not choose other rules that let the parties draw up their own lists of issues? The mistake is to confuse helpful regulation with unhelpful straitjacketing.  The former may indeed rescue an arbitration from delays, volte-faces and challenges, which less detailed rulebooks may inadvertently encourage. The latter might arise if the tribunal misunderstands the issues at stake: but that would indicate a bigger problem with the tribunal, for which the ICC Rules can hardly be blamed.

We could even say that the most elastic arbitral rules – those that entrust crucial aspects of procedure and management to sensible agreement between the parties – are benefits that have to be earned by probity and experience. Where parties have long experience and an established relationship, they can be more readily trusted to resolve disputes by the avowedly flexible UNCITRAL Rules, or even by ad hoc arbitration. But where the parties are new to each other’s business and their aptitude at resolving disputes is untested, they may come to appreciate the more visible guiding hand of the ICC, like that of a commercial judge described above.

References   [ + ]

1. ↑ It existed at least as early as the 1927 Rules. Article 14(d) stated: “When the arbitrators or arbitrator have or has been appointed, the Court of Arbitration shall draw up a form of submission to arbitration which shall contain … Terms of reference, statement of the case, indication of the points at issue to be determined …” Appropriately, that requirement is now incumbent on the tribunal, not the ICC. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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