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Hong Kong Arbitration Week Recap: Is Arbitration Sustainable?

Wed, 2019-10-23 18:01

Felicia Cheng and Dominique Yong

Introduction

The fourth annual Harbour Lecture took place on 21 October 2019, with hundreds of attendees packed into the Eaton Club, Hong Kong to hear a thought-provoking lecture delivered by Sophie Lamb QC, global co-chair of the international arbitration practice at Latham & Watkins.

The theme of this year’s lecture was whether arbitration is sustainable. The premise was the necessary and unavoidable disruption (a ‘great transition’ of sorts) that will affect not only the arbitration industry, but life and business more broadly. Ms Lamb used the UN’s Sustainable Development Goals (“SDGs”) as a loose framework to take the audience through a wide array of topics and ideas, from crowd-funded robot arbitrators to climate change, rapid urbanisation, and a growing ‘silver economy’.

Each audience member will have been informed and inspired by the lecture in their own way. This recap sets out some of the key issues discussed by Ms Lamb, as well as the authors’ impressions and concluding thoughts.

 

Climate change and business

It is no surprise that environmental, social and governmental (“ESG”) issues have made it to the top of the corporate agenda. The World Economic Forum has identified extreme weather and climate change policy failures as among the gravest threats to the global economy.

Undoubtedly, the effects of the climate crisis and strain on resources, including loss of biodiversity, will impact business and relationships. Examples given in the lecture include shifts in the ‘users’ of international arbitration such as energy companies; necessary updates in the law to deal with arguably increasing foreseeability of ‘extreme’ events; and the need for financing from private sources, noting already the innovation of ‘green bonds’ as a collective response.

Moving on to the role of company directors, Ms Lamb shared that there have been calls (including from Lord Sales, Justice of the UK Supreme Court) for company law to require directors to have regard to climate change effects and adopt climate risk management as part of their fiduciary duties. This may involve greater reliance on soft laws and best practice, the importance of which has become generally-accepted over recent decades. On the latter, a balance must be struck between letting companies pursue commercial objectives and also allocating responsibility for the consequences if companies fail to account for ESG factors in their decision making.

On investment law, changes to the ESG context may necessitate shifts in the concepts of ‘investors’ and ‘investments’. The investment arbitration sector faces numerous challenges including the need to counter the public perceptions that ‘justice is being privatised’, that investment arbitration is to blame for regulatory chill, and a general sentiment of anti-globalisation as well as opposition to trade deals. In addition, the status of intra-EU investment law remains in a state of flux with the consequences of the Achmea decision still transpiring.

 

Diversity and equality

Diversity and equality are specifically identified as SDGs, and have been in the spotlight in the arbitration sector for some time, especially given the historical lack of both in the industry demographics. Ms Lamb considered it undeniable that gender equality and diversity are vital for the health, sustainability and legitimacy of arbitration, particularly in light of the increasing diversity in users of arbitration.

On gender equality, statistics show that there is still some way to go to achieve equality. Whilst LCIA figures show that women represented 43% of all arbitrators selected by the LCIA Court in 2018, this can be compared with a figure of 23% of appointments overall, suggesting that parties and counsel may lag behind the LCIA in pursuing equality. ICC figures in 2018 are lower, with 27.6% of appointments made by the ICC Court and 18.4% overall being of women.

Ms Lamb identified that another challenge to diversity and equality lies in the difficulty of procuring one’s first appointment as arbitrator. In particular, the market tendency to carry out extensive due diligence on prospective arbitrators and the emphasis on past experience means that the pool of candidates will be limited instead of expanded. This is exacerbated by the IBA Guidelines on Conflicts of Interest in International Arbitration, which Ms Lamb considered do not reflect the realities of modern law firms and require urgent attention to address, for example, ways that firms can manage potential conflicts by implementing information barriers and protocols.

Ms Lamb suggested that these structural barriers could be ameliorated by, for example, allowing junior arbitrators to shadow experienced arbitrators on a disclosed basis in order to gain practical experience and increase prospects of future appointments; a concept that was enthusiastically received by the audience.

 

Technology and data protection

Technology in the arbitration sector has had a slow start, with most arbitration hearings still relying on voluminous hard copy bundles. Although technology has been used to assist with research, document review, discovery, bundles and translation, it is typically limited to fairly pedestrian tasks.

Ms Lamb pointed out that there is a clear opportunity to adopt much more sophisticated uses of technology, and this has already been done in certain sub-sectors. Businesses such as eBay already use artificial intelligence for dispute resolution, which involves using an algorithm to generate a suggested settlement figure and allows the business to process an extremely high volume of disputes. This type of technology use is particularly suitable for low value and/or routine disputes. Various US government entities also have online dispute resolution platforms for tax and traffic matters.

Ms Lamb gave illustrations of other potential uses of technology such as using Blockchain to authenticate evidence, algorithms to process high volumes of data, and to calculate pricing or quantum in gas and construction disputes. Technology may also assist in mitigating the environmental impacts of modern international arbitration, which involves copious amounts of travel, for example by opting for virtual hearing rooms.

 

Concluding thoughts

In addition to the broad categories of disruption and progress mentioned above, Ms Lamb commented that there exist other challenges to the future of arbitration such as the emergence of regional international commercial courts (particularly in financial centres), as well as the rise of mediation including the Singapore Convention on Mediation and increasing tendency of parties to opt for a commercially pragmatic rather than legal solution.

As climate change related disputes increase, particularly energy, construction and land use disputes, this will affect various aspects of the arbitration industry. Arbitration is uniquely placed to adapt to these effects, including allowing the choice and application of specified governing laws including climate change instruments, and the choice and appointment of arbitrators and experts with climate change and scientific expertise.

The arbitration industry must persist and do more to achieve gender equality and diversity. This should be viewed as vital to the health and sustainability of the industry. Practical measures such as allowing juniors to shadow arbitrators and updating the IBA Guidelines on Conflicts of Interest in International Arbitration would be moves in the right direction.

Use of technology must be embraced and not feared. That said, opportunities to embrace technological advancement must be accompanied by measures to manage associated and new risks. Data protection and cybersecurity risk management programmes should be implemented such as contractual protection, staff training, and policies for detection and analysis, breach management and containment, and PR and dispute resolution strategy.

 

More coverage from Hong Kong Arbitration Week is available here.

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Hong Kong Arbitration Week Recap: The Future of Arbitration in Hong Kong

Tue, 2019-10-22 18:00

Joyce Leung, Joanne Lau and Nicole Tsui

As Hong Kong Arbitration Week 2019 hits the midway point, we asked three next-generation arbitration practitioners: how do you see the future of arbitration in Hong Kong?

These are their answers:


Joyce Leung:
As a construction lawyer, I am seeing an increase in arbitrations arising from the construction sector in light of the completion of a number of major infrastructure projects in Hong Kong. Apart from local projects, disputes have also arisen on projects under the Belt and Road initiative. Coupled with the developments in the Greater Bay Area, there are significant opportunities for Hong Kong as an arbitration forum going forward.

There are speculations that the proposed security of payment legislation, which introduces statutory adjudication as a dispute resolution mechanism to increase cash flow in the construction industry, would significantly reduce the amount of arbitrations in Hong Kong as overseas experience suggests that parties tend to accept the adjudicator’s decision as final.  My view is that whilst this may be true for smaller disputes, parties would probably still refer disputes which are more complex or of higher value to arbitration.

There have been a number of welcoming developments this year which will help boost Hong Kong’s attractiveness and competitiveness as a seat for arbitration. The third party funding provisions of the Arbitration Ordinance (Cap. 609) came into full operation on 1 February 2019, giving parties comfort that third party funding of arbitration in Hong Kong is not prohibited by the common law doctrines of maintenance and champerty. Further, by virtue of a unique arrangement between the Mainland and Hong Kong which came into effect on 1 October 2019, the Mainland courts may order interim measures in support of institutional arbitrations seated in Hong Kong. There is currently no such arrangement for arbitrations seated in other foreign jurisdictions, giving Hong Kong a further competitive edge.

Despite the dark times that Hong Kong has been experiencing in the past months, I think the future of arbitration in Hong Kong remains bright.

 

Joanne Lau: I have every confidence in the future of arbitration in Hong Kong even though it is not without its challenges.

The biggest challenge that Hong Kong faces is perhaps one of perception. Given the complicated socio-political environment, it is important that Hong Kong is able to defend itself against any perception that it is no longer a safe and reputable jurisdiction for conducting arbitration.

Taking a fact-based approach, I do not consider the future of arbitration in Hong Kong to have been undermined. The HKIAC remains very well-regarded with increasing caseload and constant self-improvements, such as the 2018 revision to the HKIAC Rules. Arbitration-related judgments have shown that the Hong Kong courts remain neutral and pro-arbitration. The legal infrastructure is sound. Changes have been introduced to the Model Law-based Arbitration Ordinance over the years in response to evolving demands, including with respect to emergency arbitration and third party funding. There is also a vibrant community of arbitration practitioners, with a number of high profile events being held in Hong Kong, including the Hong Kong Arbitration Week now in its eighth year, the ISDS Reform Conference earlier this year and the ICCA Congress coming up in 2022. A significant recent development is the Mutual Arrangement on Interim Measures which Joyce mentioned.

Hong Kong’s unique position lies in the fact that it is part of China but that it nevertheless differs from China in various ways, most significantly by its separate legal and judicial system. The future of arbitration in Hong Kong will depend on how well Hong Kong is able to capitalise on its special relationship with Mainland China whilst ensuring that the distinctiveness of Hong Kong as a leading international arbitration venue in its own right is also maintained and conveyed.

 

Nicole Tsui: I see a bright future for Hong Kong as a seat of arbitration. The arbitration market is busy and the number of disputes arbitrated in Hong Kong has remained at a consistently high level for the last five years. Due to foreign exchange and other regulatory restrictions in Mainland China, Hong Kong remains China’s bridge to the world and has always been the go-to seat for PRC-related disputes that are eligible for arbitration offshore. Hong Kong is seeing an increasing number of disputes involving Mainland Chinese entities being referred to arbitration. I believe that this upward trend will continue as Chinese outbound investment activity increases.

In addition, I expect that we will see an increase in the number of PRC-related disputes arbitrated in Hong Kong for two further reasons:

  • First, the PRC Supreme People’s Court has incrementally liberalized the types of disputes that are eligible for arbitration outside Mainland China, including some between wholly foreign-owned enterprises registered in Chinese FTZs. Hong Kong is a natural offshore seat for these disputes.
  • Second, there is the arrangement between Hong Kong and Mainland China on interim measures referred to by my co-contributors.

For these reasons, and because of the unique benefits that Hong Kong offers (including our multi-lingual legal profession, highly independent judiciary, and geographical proximity to Mainland China), I expect that Hong Kong will maintain and consolidate its position as one of the world’s leading arbitral seats in the future.

 

More coverage from Hong Kong Arbitration Week is available here.

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Hong Kong Arbitration Week Recap: Has the Proliferation of Institutional Rules Caused International Arbitration to Lose Its Way?

Mon, 2019-10-21 18:01

Sian Knight and Ben Bury

Introduction

Even a cursory analysis of the history of the procedural rules of leading arbitral institutions demonstrates that procedural rules are increasing in number and becoming ever more comprehensive in their scope. Institutional rules now cover, largely without exception, joinder, consolidation, emergency arbitrator provisions, and expedited procedures. And adding to this, as institutions seeking to adapt to global developments, such as the growth of Belt and Road Initiative (BRI) disputes, the pressure for more rules seems inescapable.

Has this increasing breadth of rules created a bewildering morass? Or is it the reality that arbitration institutions are required to expand their procedural tools in order to effectively manage increasingly complex disputes, including those involving multiple parties and arbitration agreements.

On Monday, October 21, Holman Fenwick Willan LLP hosted a panel event on the topic of proliferation of institutional rules as an affiliated event of Hong Kong Arbitration Week 2019 (Chatham House Rules invoked).

This blog post provides an overview of the main themes addressed in the wide-ranging discussion.

 

The interplay and choice between institutional rules in contrast to ad hoc rules

The panel discussion raised the point that institutional rules exist to provide structure and form to arbitrations, and can be thought of as readily understandable means of setting out the rules of the ‘arbitration’ game.

In practical terms, arbitral rules provide institutions with the means to offer a raft of valuable services, ranging from appointment of arbitrators to consolidation of arbitrations. In that sense, choosing administered arbitration subject to institutional rules can operate as a comprehensive and structured alternative to the skeletal procedural provisions generally found in local arbitration laws.

It was discussed that having said that, where appropriate, parties may prefer “ad hoc” arbitrations subject to local legislation over administered arbitrations. However, Ad hoc arbitration is not devoid of structure. It instead takes its form according to the law of the seat, and it is certainly open to parties to agree to a set of rules to supplement underlying legislation, such as the use of LMAA rules in such context. With an experienced arbitral tribunal, ad hoc arbitration can be a genuine and viable alternative to institutional arbitration.

 

The role of institutional rules in the parties’ choice of institution

Further in the discussion, the point was made that regardless of preferences, the decision between ad hoc or administered arbitration should be carefully considered. In the same vein, parties opting for administered arbitration should spend time selecting the right rules, i.e., ones that are fit for purpose in the context of a specific reference, since the rules provide essential procedural framework for an arbitration and will have a significant impact on the conduct of proceedings.

That said, there is not always the luxury of time or influence of a party over which rules to choose in the arbitration agreement when a commercial deal is cut. Arbitration agreements are often “11th hour” clauses in contracts, meaning that they are drafted at the last minute without sufficient regard to their wording.

On this point, the panel explained that, in practical terms and to the extent parties consider the drafting of their arbitration clauses, that parties are more likely to pay attention to the seat of the arbitration rather than which institutional rules to apply. Further, if an institution is deliberately chosen, it is often on the basis of its experience with institutions in terms of their administration of comparable disputes. This is reflected in the results of the Queen Mary University of London 2018 International Arbitration Survey, which confirms that the HKIAC, SIAC, ICC, LCIA and SCC are still the most preferred institutions based on ‘general reputation and recognition‘.

 

The process and development of current institutional rules

Against this background, one may wonder why arbitral institutions seek to create new rules to adapt to change.

The panel discussed that there is no doubt that they do. By way of example, the HKIAC 2018 Administered Arbitration Rules undoubtedly put in comprehensive work in revising its Rules. New provisions have been introduced to recognise the pressure points in existing rules, and to seek input and consensus from the breadth of the interested arbitration community before embarking on change, which is a process not undertaken lightly.

There is nonetheless a point to make on whether institutions are creating new rules to cater for the changing needs of the parties.

Looking ahead to the future development of arbitration practice, we may reasonably expect more attention to be paid to environmental concerns. Many have taken the decision now to commit to the Green Pledge on arbitration. And looking even further ahead, we wonder how long it would take before the traditional physical hearing is defunct and be replaced with a virtual environment. This poses the question – should rules cater for this?

Leaving to one side was an academic discussion of the respective role of arbitration soft law, and the mandatory application of national law, as well as current concerns over the scope of institutional rules which go to the core of the arbitral process. For example, multi-party provisions may have to address concerns over fair treatment of all parties to an arbitration in terms of appointment of arbitrators.

The panel also discussed how the proliferation of rules may impact enforcement as a favourable award is only a good result when it translates into an enforceable award.

 

The role of an arbitrator and the strengths of the arbitral process

The panel concluded the session by discussing the role of an arbitrator. No consideration of institutional rules would be complete without doing so.

The panel expressed the view that although institutional rules may well facilitate the arbitration procedure, they are not the only factor at play. It was noted that the strength of an arbitral process is also heavily influenced by the caliber of the arbitrator pool in the respective seat.

An example would be, where parties have expressly committed to the use of expedited procedures or emergency arbitrator provisions, arbitrators are expected to be able to utilise the applicable provisions fully in order to drive the proceedings forward without delay.

 

More coverage from Hong Kong Arbitration Week is available here.

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Hong Kong Arbitration Week Recap: Private Equity, Financial Services and Insurance Disputes – Don’t Hesitate to Arbitrate!

Mon, 2019-10-21 01:30

Jake Lowther

Introduction

Kicking off Hong Kong Arbitration Week (“HKAW”) 2019 on Sunday was a joint seminar hosted by KCAB INTERNATIONAL and Freshfields Bruckhaus Deringer (“Freshfields”) titled: “Private Equity, Financial Services and Insurance Disputes: Don’t hesitate to arbitrate!” The seminar was an Oxford-style debate of the motion: “this house believes that private equity, financial services and insurance disputes are uniquely unsuited for arbitration.”

The speakers were divided by sector, with Sue Hyun Lim (KCAB INTERNATIONAL), Nick Lingard (Freshfields) and SeungMin Lee (Shin & Kim) in support of the motion and Dana MacGrath (Bentham IMF), Simon Powell (Powell Arbitration) and Yong Wei Chan (Freshfields) opposed. John Choong (Freshfields) acted as moderator.

Before beginning the debate, a poll of the audience revealed only 22% were in favour of the motion that arbitration is unsuitable for private equity, financial services and insurance disputes.

 

Financial services

With a “heavy heart”, Ms Lim began the debate with four key arguments for why financial services disputes are not suited to arbitration.

First, “if it ain’t broke, don’t fix it.” Financial services litigation has a long history that yielded a wealth of expertise and binding precedents. This provided stability and consistency for the parties which are essential conditions for investment. Court litigation minimizes the real risk of anarchic, conflicting decisions.

Second, “why settle for second-best?” Ms Lim wondered why parties would choose arbitration when the courts provide more comprehensive interim relief and comparative ease to join parties and consolidate claims.

Third, “what are you getting yourself into?” Ms Lim pointed to the lack of accountability when it comes to arbitrators. Judgments are publicly available, providing insight into judges’ reasoning. Arbitrators lack the same level of transparency and accountability. It can lead to counsel running “everything but the kitchen sink” arguments at the expense of efficiency of time and cost.

Fourth, “show me the money!” Ms Lim reminded the audience that arbitration is often neither faster nor cheaper than litigation. Financial services stand to lose due to the lack of early dismissal procedures in arbitration. Despite their “broad discretion” arbitrators typically suffer from “due process paranoia” that leads to lengthier proceedings in arbitration, adding to the expense.

In response, an “at ease” Ms MacGrath begged to differ. She conceded that the courts are good, but pointed to the fact that the parties’ choice to arbitrate is not about courts not working, but the parties making a specific choice to arbitrate due to its advantages. In the US, the courts can be much slower and more expensive than arbitration. The lack of finality in court litigation is a distinct disadvantage.

Ms MacGrath stated that the lack of precedents is an unlikely risk and may even be healthy. A better result may be derived from arbitrators deciding on each case according to its merits. Further, confidentiality remains a hallmark of arbitration. In today’s world of “trial by Twitter”, the ability for financial services providers to keep their disputes private is invaluable.

Ms MacGrath pointed to the various institutional rule changes to facilitate joinder and consolidation as evidence of arbitration doing the “best it can”. She stated it is a rare case where there are non-parties that cannot be joined to an arbitration. She also pointed to the increasing accountability of arbitrators amidst the increasing publication of awards. As for delay, Ms MacGrath made the point that all arbitration participants share responsibility, but institutions are increasingly vigilant in enforcing efficiency.

 

Private Equity

Mr Lingard began by sharing insights into the private equity mindset. It is a fast moving business with fundraising, deployment and realization typically taking place in short time frames. Clients expect a high degree of responsiveness and Mr Lingard suggested that an arbitral tribunal is never sufficiently responsive. He referred to an arbitration in which the proceedings closed in June 2018, but the award is still pending.

Mr Lingard acknowledged the expedited procedures offered by many arbitral institutions, but made the point that the relevant monetary thresholds are too low to be of much use in private equity transactions. While arbitration may be all about obtaining monetary relief, the possibility of court-ordered freezing or relief injunctions with teeth is arguably more useful to private equity clients. The stylistic aspects of arbitration and its effect on enforceability will typically generate a “you’re kidding me” from clients.

Mr Lingard also referred to private equity claimants preferring an advantageous exit from investment terms in disputes, such as the ability to force an IPO as opposed to damages. Finally, Mr Lingard questioned the appropriateness of arbitration particularly for non-arbitrable claims in relation to minority shareholder oppression or insolvency.

In response, Mr Powell promised to be the audience’s “guardian angel” following the previous “hogwash”. Private equity moves fast, but arbitration is speedy, efficient and institutional rules provide adequate interim measures to the parties. It is responsive to the needs of the parties. As a result, it is continually improving. While a delay of over a year is unacceptable, he pointed to various rule revisions enshrining tight time frames for awards. Mr Powell also referred to the support from commercial courts for arbitration, excepting the limited non-arbitrable matters. He stated that judges can lack the expertise to decide matters in private equity, especially when compared to party-appointed arbitrators with private equity backgrounds.

 

Insurance

Ms Lee began by discussing the origins of insurance as a means of spreading risk from the individual to the wider community, ensuring a speedier recovery after an unpredictable event. This is a relationship that should be treated different from other contractual relationships. She stated that arbitrators in insurance disputes may have a predisposition towards insurers, who will be more likely to appoint arbitrators in the future. Arbitration’s flexibility has a downside in insurance disputes, where the insurers tend to be able to manipulate the arbitration agreement in their favour, causing delays and limits to remedies.

Ms Lee pointed out that through arbitration, insurers can avoid class actions. Given the multitude of policy holders with similar contracts, the lack of judicial interpretation is a disadvantage to expediency and consistency in decision making and avoids public scrutiny. Ms Lee concluded by stating that arbitration risks the foundations of insurance, where fairness, mutual trust and the promise of compensation after an insurable event should be preserved.

In response, Mr Chan defended the suitability of arbitration by pointing out that partisan arbitrators who favour insurers risk their reputations and future appointments, particularly in the face of increasingly tight institutional rules. By contrast, the tenure of judges limits accountability, because judges generally have their positions till retirement. Further, the resources of an insurer can have a similar impact in litigation, where delay and other strategies can limit a policyholder’s relief. But unsatisfied customers can always switch insurers.

As for limited legal development, this is not a problem for liability insurance, where bypassing the courts has little negative effect on the public interest. Mr Chan referred to the use of the “Bermuda Form” in response to asbestos litigation, applying New York law to the contract and English law to the arbitration agreement. This avoided the problem of jury-awarded damages that was pricing insurers out of the market, leading to under-insurance. Here, arbitration came to the rescue. However an audience member made the point that a lot of Bermuda Form arbitration is spent on contractual interpretation, all of which remains confidential and cannot assist future parties. This led to a wider audience-led discussion on the importance of increasing the anonymizing and publication of arbitral awards where possible.

 

Comments

After an entertaining and engaging debate, the audience had the opportunity to vote once more. It is perhaps unsurprising that the results of the second vote revealed that the number of audience members who agreed with the motion nearly doubled to 42%.

Those who spoke in support of the motion made frequent reference to broader public policy questions, the lack of precedent, biased arbitrators, Warren Buffet and even the protection of the rule of law. Such arguments can easily tug at the heartstrings and their broad, nebulous nature makes them harder to rebut.

Yet the result arguably suggests that arbitration is no less suited to such financial services, private equity or insurance disputes than other mechanisms of dispute resolution, but there are expectations that arbitration must continue to take advantage of opportunities to improve, particularly in respect to efficiency, cost and transparency. As is so often the case, it is not so much whether arbitration is or is not suited to such disputes, but rather “it depends” and should be assessed on a case by case basis.

 

More coverage from Hong Kong Arbitration Week is available here.

More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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UNCITRAL and Investment Arbitration Reform: A Little More Action

Mon, 2019-10-21 01:00

Malcolm Langford

UNCITRAL’s Working Group III on investor-state dispute settlement (ISDS) assembled in Vienna last week to consider a raft of reforms concerning investment arbitration. The fifth session in this process, governments surprised many by finalising quickly a medium-term work plan and commencing deliberations with a pragmatism that has proved often elusive. To be sure, not all states are enamoured with the agenda. Some prefer the current system, others wish its abandonment. However, the working group can boast now that it is able to advance sensitive negotiations with a certain degree of concreteness and consensus. This blog post sums up the legal and policy developments of the week and ends with a reflection on the politics.

 

1. A medium-term plan

The session kicked off on Monday with a discussion of how to sequence the consideration of the five initial reform topics identified in the New York session in April 2019. These themes ranged from a code of conduct and third-party funding to adjudicator appointment, shareholder claims and an advisory centre. By early Tuesday morning, the Chair had secured consensus on a medium-term work plan. Although, it was achieved despite creative attempts to slow the process down, including a proposal for a verbatim reading of all 23 written state submissions.

The medium-term plan foresaw a staggered discussion. Firstly, three topics were slated for immediate discussion: the establishment of an Advisory Centre on International Investment Law; a code of conduct for arbitrators and judges, and third-party funding. The choice of the advisory centre appeared unusual given its late entry into the reform agenda. Nonetheless, it proved a suitable curtain opener given the support for the proposal in the room. Secondly, a set of mostly structural topics were scheduled for the January 2020 session in Vienna. These are the appellate mechanism, a standing multilateral investment court, and the selection and appointment of arbitrators and judges. Thirdly, a grab bag of other issues was pencilled in for the New York session (30 March to 3 April 2020). This includes reflective loss for shareholder claims but also counter-claims, dispute prevention and the overall reform instrument/s.

 

2. Advisory Centre on International Law

After achieving consensus on the work plan, discussion on an advisory centre commenced immediately. State after state took to the floor to announce support, highlighting the paradox that ISDS cases are often more factually complex and lengthier than WTO cases, but only the latter has an advisory centre. Moreover, developing countries consistently lose ISDS cases more often than developed countries and empirical research suggests that one cause is the lack of quality legal assistance.

However, states were divided on the design of a new centre, especially questions such as: Who would benefit? What services would be provided? And how would it be set up? There was a clear consensus that the prime beneficiaries should be low-income countries. However, some states and observers proposed that the centre help also small and medium enterprises (SMEs) and middle income states under certain conditions (e.g., through limited or partly remunerated support). The likely extent of resources for the centre hung heavily over the discussion of what services would be provided. States agreed on the importance of pre-dispute technical assistance and capacity building, while some were adamant that the centre should also provide representation. The advisory centre was envisaged as an intergovernmental body but with sufficient independence to ensure legitimacy, and  could be funded through contributions by members states and user fees where appropriate. The UNCITRAL Secretariat was asked to begin preparatory work on a full proposal.

 

3. Code of Conduct

The discussions on the code of conduct attracted an equally strong degree of consensus with an emphasis on establishing a ‘binding code’. This implied a focus on developing rules rather than guidelines, and precipitated a certain degree of concreteness in some proposals. However, states were partly divided in how they envisaged the code’s architecture. Some championed a single rulebook for all arbitrators and eventual judges in ISDS. Others contended that structural reforms such as a court or appellate review would solve some or many of the current problems with arbitrator conduct, necessitating a less demanding or different code. For example, a standing judiciary and rigorous pre-appointment procedures could solve independence-based concerns with double hatting and impartiality concerns with issue conflicts. States were also unclear on who would be covered, with proposals for a separate code of conduct for counsel. To complicate matters further, ICSID is further ahead in developing a declaration of ethics, and the eventual product is likely to be influenced significantly by their deliberations and vice-versa.

States were largely in agreement on what themes should appear in a code of conduct. This included a relatively high degree on consensus on the need for detailed disclosure requirements by arbitrators as well as concrete rules to ensure efficiency. Some states mooted a limitation on the number of cases. However, there was a clear divide on other aspects. The most notable concerned ‘double hatting’, whereby arbitrators act as counsel in other ISDS cases. Some delegates expressed support for a complete ban on arbitrators acting as counsel, such as can be found in the code for the Court of Arbitration for Sport (S19). Others thought it should extend to all other ISDS roles, such as expert witness and advisors (with Chile pointing to its 2017 FTA with Argentina). Yet, others called for transitional rules such as a transition period or a ceiling on the number of cases. This could allow more young, female and non-Western nationals to transition more easily from counsel work into arbitral work.

Significant time was also devoted to enforcement mechanisms. Some states emphasised the importance of reputational sanctions, such as transparent and public listings of non-compliance. Others pointed to the need for material incentives, such as loss of fees. The UNCITRAL Secretariat will now proceed to develop a proposal in collaboration with ICSID.

 

4. Third-party funding

 The final topic for reform was third-party funding. The mere definition of the phenomenon bedevilled the earlier discussion in New York, and this partly continued in Vienna. Did third-party funding include contingency fee arrangements for law firms? Did it cover non-profit forms of support, including to states? There were three camps. Firstly, states concerned mostly with the potential for conflict of interest with arbitrators defined third-party funding narrowly and advocated light-touch regulation. Secondly, states worried about perverse incentives – such as unwillingness to settle – defined it more broadly and advocated stronger regulation. Finally, those that viewed third-party funding as a generator of frivolous claims and inconsistent with the raison d’etre of investment treaties (promotion of investment) were more inclined to adopt a wide definition and call for prohibition.

The result was a series of reform proposals scattered along a spectrum. Some called for ‘prohibition’ with exceptions for impecunious claimants that lacked access to justice. Access to third-party funding would be conditional though on claims not being frivolous and speculative and funders not possessing a portfolio targeted at particular states. The majority of states favoured ‘regulation’, citing contractual liberty and access to justice, especially for SMEs. The key for these states was disclosure. However, there was disagreement over the necessary breadth of disclosure, especially the terms of the funding agreement.

Appropriate and proportionate sanctions were advocated. Some states pushed for strong material penalties such as payment of legal costs and annulment of cases, while some observers and states noted the unintended consequences of draconian rules, such as pushing the practice further underground. Indeed, the lack of transparency around contemporary third-party funding also led the Chair to call for all actors to share more data with the Secretariat or the ISDS Academic Forum on the frequency of use, the amount of funding, the reasons for funding, and how often it benefits SMEs. The Secretariat was asked to work with a broad and flexible definition of third-funding funding, develop a suite of options for regulation and control, and consider a separate code of conduct for funders.

 

5. Damages and Multilateral Convention Procedural Reform

 The substantive discussions closed on Thursday with a brief consideration of two additional issues. The first was damages. States such as Nigeria and Pakistan noted their experience in facing multi-billion dollar ISDS awards and questioned the consistency and justification for different valuations methods. The issue will be returned to in April 2020 and there is high likelihood that the working group consider procedural reforms to ensure, at least, greater consistency in damages calculation. Likewise, there was a brief discussion of an eventual single instrument, a so-called Multilateral Convention on Procedural Reform, which will be discussed in forthcoming EJIL:Talk! blogs by Anthea Roberts and Taylor St. John. The idea is that states could opt into certain reforms but not be required to swallow the whole package. Significant time will be devoted to this eventual reform structure in April 2020.

 

6. Plenary politics

Turning to the politics, previous WGIII sessions have been dominated by a mix of confrontation with cooperation. Last week proved more conciliatory. Only a handful of states sought to put spokes in the wheels of progress and the discourse of both states and observers was more moderate, with fewer charged, direct and open attacks. The reason is most likely the focus on concrete topics, as dissent was channelled into substance rather than form. It may have also been the assemblage of personalities that were present this time. Yet, whether this bonhomie survives the more contentious topic of a multilateral investment court in January remains to be seen. Moreover, some of the nit-picking on the adoption of the medium-term plan and sessional report spells some danger for a speedy review of draft treaty text.

There were two other political developments of note. First, continuing a trend, states from the Global South became significantly more active. They made longer and considered interventions on virtually every topic under consideration. Sometimes they mobilised in coalitions – e.g. when eight African states joined a common procedural statement with the European Union – but mostly articulated their own independent positions on a range of topics. The result is the emergence of subtle majority coalitions on distinct issues that partly complicates attempts at broad categorisations. Moreover, states such as Brazil and South Africa, which seek a more paradigmatic move away from ISDS, engaged more fully in various incrementalist and systemic reform discussions this session as they bide their time to speak to their own proposals such as dispute prevention in April 2020.

Second, the voice of investors and practitioners was more strongly heard in the room compared to the last few sessions. A range of associations representing companies and counsel made submissions. Although these groups varied considerably in their emphasis. The Practitioner’s Forum and ITA offered support to the advisory centre; others offered rigorous defences of third-party funding on the basis it provided access to justice; and others cautioned on moving too quickly to ban double hatting given the potential side effects on diversity. One group EFILA organised a side event primarily devoted to highlighting the dangers of a multilateral investment court and the virtues of the current system.

However, other long-standing observers moved to place more focus on provision of research and written submissions. The ISDS Academic Forum launched seven papers on the WGIII topics, the university centre CCSI and civil society organisations IIED and IISD made four joint written submissions, and the Permanent Court of Arbitration secretariat sought to provide statistics on the murky topic of third-party financing. Pluricourts provided statistics on the topics at hand and was asked to follow up with statistical analysis on new topics.

 

7. Conclusion

Channelling Elvis Presley, the UNCITRAL WGIII rapporteur at the close of the previous New York session noted the importance of ‘a little less conversation, a little more action’. The WGIII session last week represented a clear maturing of the ISDS reform process. States were able to identify both areas of agreement and disagreement such that the Secretariat could begin to draft reform options and even treaty text. While states have only been hastening slowly until now, they displayed for a few days at least a potential to engage in a little more action.

 

Malcolm Langford, Professor of Law, Unviersity of Oslo. He attends UNCITRAL Working Group III as Chair of the ISDS Academic Forum and a representative of Pluricourts, University of Oslo. He writes here in his independent academic capacity.

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Interviews with Our Editors: In Conversation with Joe Liu of Hong Kong International Arbitration Centre

Sat, 2019-10-19 17:00

Benson Lim (Associate Editor) and Kiran Nasir Gore (Associate Editor)

Joe is the longest-serving counsel in HKIAC, having been at HKIAC since January 2014. He holds LLMs from New York University and London School of Economics and Political Science. His previous stints included private practice as well as that in SIAC. In January 2019, he was appointed as the Deputy Secretary-General of HKIAC.

Our Blog is providing live coverage of HK Arbitration Week for the second year running. It is therefore apt that we kick off our coverage with our interview with Joe on the same day that HK Arbitration Week 2019 kicks off for its 8th edition.

 

  1. Tell us about how you started in arbitration. What advice do you have for young practitioners seeking to chart a path in arbitration?

I started my career at the Singapore International Arbitration Centre (“SIAC”) where I administered cases under the SIAC Rules or UNCITRAL Rules. I then did a legal internship at the Permanent Court of Arbitration and later worked as part of the Global Arbitration Group at Allen & Overy in Hong Kong. I joined HKIAC in January 2014.

There are many ways of planning a career in arbitration. Interning or working in a junior role at an international arbitral institution or within the arbitration group of a reputable law firm, or working as tribunal secretary to an experienced arbitrator, are all good ways to get into the arbitration circle. I would encourage young practitioners to gain experience in arbitral institutions, private practice and as tribunal secretary if possible, as they all offer different and valuable perspectives and help young practitioners better understand the practice of arbitration. Making yourself known and recognised in the market is also critical. To achieve that, young practitioners should actively participate in networking events, publish articles and prepare themselves well for every public speaking opportunity.

 

  1. In 2018, HKIAC handled 265 new arbitrations where more than 70% of the cases had at least one party not from Hong Kong. The total amount in dispute was USD6.7 billion. In your view, how would you describe HKIAC’s global standing amongst other arbitration institutions?

HKIAC is a leading arbitral institution with its unique strength and focus. Based on the Queen Mary and White & Case survey, HKIAC has been voted among the top four arbitral institutions in the world since 2015. I think there is no question about HKIAC’s global reputation and its experience in dealing with international commercial disputes. HKIAC has a multi-national and multi-lingual secretariat, guided by strong governing bodies, to handle a large amount of international arbitrations with a proven record of enforcement.

Compared with other international arbitral institutions, HKIAC has unrivalled experience in disputes involving mainland Chinese parties. It is the institution of choice where a mainland Chinese party and a non-mainland Chinese party are looking for alternatives to their home turfs. The Hong Kong-Mainland China arrangement on court-ordered interim measures in aid of arbitral proceedings (the “Arrangement”) further strengthens HKIAC (and Hong Kong)’s position to handle arbitrations between these parties.

HKIAC is also rapidly gaining traction in Russia due to its recent status as a permanent arbitral institution in Russia. HKIAC is the first non-Russian arbitral institution to acquire such a status and is now able to administer a range of Russian-related disputes under Russian law which cannot be submitted to institutions without the status.

 

  1. What do you think will be the key challenges to HKIAC in the next 5 years? What is HKIAC doing to be future-proof?

Each institution has its own challenges. I think one challenge for HKIAC is to address untrue perceptions. One of them concerns the neutrality of HKIAC in disputes between Chinese and non-Chinese parties. Having worked at HKIAC for over five years, I can confirm that HKIAC has acted impartially and independently in all cases and there have been no instances in which HKIAC’s operations are subject to external interferences. I think another challenge is the perception of HKIAC being merely a Hong Kong arbitral institution. In my view, HKIAC is more than a Hong Kong institution. It is well-placed to handle disputes anywhere in the world with or without connections with Hong Kong or China.

HKIAC has an extensive outreach programme to raise awareness of, among other things, who we are and what we do. I believe dialogue and information are effective means to tackle untrue perceptions. For those who continue to hold these perceptions, I hope they are willing to have a direct dialogue with us or try to use HKIAC’s services and let the experience speak for itself.

 

  1. This year, Hong Kong has seen protests which were initially against the extradition bill evolve quickly into protests arising out of broader political sentiments from its people. A newspaper editorial described Hong Kong’s current situation as Hong Kong being once “again at a crossroads”. With that backdrop, do you see arbitration in HK at the crossroads? Do you think there are broader challenges to the future of arbitration in HK?

Hong Kong has faced other challenges in the past. However, the city showed extraordinary resilience to overcome those challenges and remains as a global financial centre and a regional legal hub. Hong Kong has recently climbed into the top three in World Economic Forum’s competitiveness rankings and its judicial independence continues to be ranked among top ten in the world.

Hong Kong has a strong legal system and it remains so despite political developments. This is also true in respect of arbitration in Hong Kong. Protests do not affect Hong Kong’s arbitration framework or judicial support for arbitration, or the way how arbitral proceedings are conducted in Hong Kong. I believe every challenge is an opportunity for Hong Kong to demonstrate itself as a tried and tested venue for resolving disputes.

Looking ahead, I think there are more opportunities than challenges for Hong Kong arbitration. For example, the Arrangement provides a strong incentive for businesses to choose Hong Kong as the seat of arbitration for disputes involving mainland Chinese parties. I anticipate more initiatives to be introduced to make Hong Kong a more attractive place to arbitrate in the coming years.

 

  1. ICC’s Alexis Mourre suggested an international accreditation procedure for arbitral institutions at the Atlanta International Arbitration Society’s Hendrix Lecture. In his view “flawed institutions” will taint the legitimacy of the arbitration institution system as a whole. What do you personally think of his suggestion?

If “an international accreditation procedure for arbitral institutions” refers to “institutional self-regulation through a common framework such as IFCAI” mentioned in Mr. Mourre’s speech, I think it is a well-intended suggestion but may face several issues of implementation like those associated with other proposals of creating a global standard by a soft law making body.

The first difficulty is how to define the “common framework”. Every jurisdiction has its own framework on the establishment and functions of an arbitral institution. Such a framework may differ significantly from one jurisdiction to another and the differences may be well justified given the legal and cultural environment of each jurisdiction. Therefore, defining a common framework that is acceptable to most, if not all, jurisdictions may be a challenge.

The second difficulty is what happens if the common framework is not complied with. If there is no meaningful means to enforce a common standard at international and national levels, it would have limited effect on the issue of “flawed” institutions.

 

  1. Do you think HKIAC’s Panel of Arbitrators will one day include an AI arbitrator?

I am open to consider all possible means to enhance efficiency and cost-effectiveness of international arbitration including the use of technology.

With respect to the use of artificial intelligence (“AI”), I have some scepticism towards the idea of replacing human arbitrators with AI but I find it easier to accept that it may be useful for AI to undertake certain work on behalf of an arbitral tribunal, acting effectively as tribunal secretary.

If one day AI proves to be a feasible and reliable tool to facilitate the conduct of an arbitration, I do not think it would be a bad idea to allow AI to be made available on a panel or otherwise as an option for parties to agree upon to undertake appropriate tasks as tribunal secretary or even arbitrator.

 

  1. Finally, it feels from our introduction like you have been with HKIAC for a lifetime! Tell us your most surreal experience ever at HKIAC or describe the most intriguing person you met whilst at HKIAC.

My most surreal experience at HKIAC is to see people using the rules and services I helped develop.

More coverage from Hong Kong Arbitration Week is available here.

This interview is part of Kluwer Arbitration Blog’s “Interviews with Our Editors” series – past interviews are available here.

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The Consequences of the Non-Disclosure of Conflict of Interest on the Enforceability of Awards: The German Stance

Sat, 2019-10-19 00:00

Viktoria Schneider and Nils Schmidt-Ahrendts

Arbitrators and tribunal-appointed experts are at all times obliged to disclose any and all circumstances that might give rise to doubts as to their impartiality and independence. This is one of the most fundamental duties to safeguard the legitimacy of arbitration. Yet, what are the consequences if they fail to do so?

This question has kept two German courts, the Higher Regional Court Karlsruhe (‘OLG Karlsruhe’) and the German Federal Court of Justice (‘BGH’), busy for six years, but now the question appears to be appropriately solved – better late than never!

 

Background

The DIS arbitration, which triggered the above-mentioned court proceedings, started as early as 2010 and it involved two parties that were in dispute as to the root cause of the defects of their jointly manufactured products.

In 2011, the DIS tribunal, with the consent of the parties, appointed a publicly certified expert to examine this issue. In 2013, based on the expert’s report, the DIS tribunal issued its award in which it held that the defects were 100% caused by one of the parties.

Still, in 2013, the defeated party requested the annulment of the award before the OLG Karlsruhe. Among others, it argued that the expert on whose report the arbitral tribunal had based its decision had failed to disclose that his direct superior at the expert company had previously been working for more than 20 years for the other party and only recently started to work for the expert company. Moreover, it claimed that it had discovered this former working relationship only after the award had been rendered. The winning party, in turn, opposed the request for annulment by applying for a declaration of enforceability instead.

What followed were joint annulment/enforcement proceedings that ultimately produced not one, but four German court decisions, two by the OLG Karlsruhe and two by the BGH, on the key legal question: What are the consequences for the enforceability of the award if an arbitrator or tribunal-appointed expert fails to disclose circumstances which may call into question their independence or impartiality?

 

OLG Karlsruhe: Annulment Only in Exceptional Circumstances1)OLG Karlsruhe, Decision of 18 December 2015, 10 Sch 12/13. jQuery("#footnote_plugin_tooltip_3631_1").tooltip({ tip: "#footnote_plugin_tooltip_text_3631_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

In December 2015, after two years of proceedings, the OLG Karlsruhe decided the issue for the first time – it declared the award enforceable and rejected the request for annulment.

In line with a judgement of the BGH from 19992)Bundesgerichtshof, Judgement of 04 March 1999, III ZR 72/98. jQuery("#footnote_plugin_tooltip_3631_2").tooltip({ tip: "#footnote_plugin_tooltip_text_3631_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, the OLG Karlsruhe argued that, in light of the res judicata nature of an award, any failure to disclose that becomes known only after the award is issued, warrants its annulment only in very exceptional circumstances, i.e. in a case of obvious and severe bias. The OLG Karlsruhe held that this was not the case here, as only the superior and not the expert himself had worked for a party and the superior’s involvement in the expert report was unclear.

 

BGH: Overturning Former Jurisprudence3)Bundesgerichtshof, Decision of 02 May 2017, I ZB 1/16. jQuery("#footnote_plugin_tooltip_3631_3").tooltip({ tip: "#footnote_plugin_tooltip_text_3631_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

In May 2017, after reviewing the OLG Karlruhe’s decision, the BGH set it aside and remitted the case to the OLG Karlsruhe.

The BGH expressly relinquished its case law from 1999 on which the OLG Karlsruhe had relied. It held that any failure to disclose, regardless when it becomes known, means that the arbitration has not been conducted in accordance with the German lex arbitri and, thus, warrants annulment if it affected the award. According to the BGH, such effect is deemed to exist if the non-disclosed circumstances would have been sufficient to successfully challenge the arbitrator or expert during the arbitration, which is the case if those circumstances give rise to justifiable doubts as to their impartiality and independence. The res judicata principle does not justify retaining the previous threshold of ‘obvious and severe’ bias because an award will only become res judicata once declared enforceable.

However, based on the (undisputed) facts available to the BGH, it could not decide whether there had even been a failure to disclose, let alone one with the required effect on the award. Thus, it remitted the case to the OLG Karlsruhe requesting it to reopen the case in order to establish these, in the BGH’s view, material facts and render a new decision.

 

OLG Karlsruhe: Annulment Only in Case of Justifiable Doubts4)OLG Karlsruhe, Decision of 01 June 2018, 10 Sch 12/13. jQuery("#footnote_plugin_tooltip_3631_4").tooltip({ tip: "#footnote_plugin_tooltip_text_3631_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

As requested by the BGH, the OLG Karlsruhe reopened the case. By examining the expert and his superior as witnesses, it established that there actually had been a failure to disclose. When rendering his report, the expert had been aware of his supervisor’s previous work position. However, during the 20 years in which the superior had worked for one of the parties, he had not been involved with the product in dispute. Further, in line with the expert company’s internal rules, the superior had not influenced the expert’s substantive findings in any way, but had for organizational reasons merely signed the letter by which the report was transmitted to the arbitral tribunal and the parties. On this basis, the OLG Karlsruhe held that neither the mere failure to disclose nor the non-disclosed facts give rise to justifiable doubts as to the expert’s impartiality and independence or otherwise justify annulment. Thus, it again declared the award enforceable.

 

BGH: A Differentiated Approach5)Bundesgerichtshof, Decision of 31 January 2019, I ZB 46/18. jQuery("#footnote_plugin_tooltip_3631_5").tooltip({ tip: "#footnote_plugin_tooltip_text_3631_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

After yet another legal review, the BGH upheld the OLG Karlsruhe’s decision and, thus, declared the award enforceable for good.

In its decision, the BGH clarified under which circumstances the failure to disclose warrants the annulment of an award.

First, a mere failure to disclose, i.e. irrespective of the non-disclosed facts, only justifies an annulment if already such failure in itself shows the arbitrator’s or tribunal-appointed expert’s bias. In the BGH’s view, this is only conceivable in case of intentional concealment.

Second, in the absence of such intention, enforceability or annulment depends on an ex post analysis by the competent state court as to whether the arbitral tribunal would have decided that the non-disclosed facts give rise to justifiable doubts, if they had been duly disclosed already during the arbitration proceedings. In other words, in the BGH’s view, the standard to assess the enforceability or annulment of an award is, when dealing with a failure of disclosure, the same as the standard to challenge an arbitrator or expert during the arbitral proceedings.

This assessment is to be conducted from a ‘subjective-objective perspective’. Though the court must adopt the subjective perspective of the challenging party, it must thereby assume that, when confronted with the non-disclosed fact, this party would objectively appreciate all relevant facts in order to decide whether justifiable doubts exist. All relevant facts are not only the unduly concealed facts, i.e. the facts which the arbitrator or expert should, but did not disclose. Rather due regard has to be paid to all connected circumstances, i.e., circumstances that the parties and/or the challenged arbitrator/expert would have reasonably disclosed during the ‘challenge procedure’.

Thus, the BGH approved that the OLG Karlsruhe had examined the expert and his superior as witnesses.

 

Concluding Remarks

The fact that it took the claimant six years to enforce an award that had been issued after three years of arbitration, shows that the German ‘two-instance’ enforceability/annulment regime is not ideal and potentially in need for reform (although the present case is certainly an extreme scenario). Yet, more importantly, the two BGH decisions provide important guidance on the handling of non-disclosure cases.

On the one hand, annulment may well be a consequence of a failure of disclosure. Hence, any arbitrator and expert are well-advised to disclose rather too much than too little.

On the other hand, annulment is not an inevitability. Only in the extreme case of intentional non-disclosure, the non-disclosure in itself warrants annulment. In all other cases, the competent state courts are requested to do precisely what, in the BGH’s view, any arbitral tribunal or arbitral institution is required to do when deciding on challenges. Faced with the disclosure of a fact potentially impairing an arbitrator’s/experts’ independence and impartiality, they must establish, if required by taking evidence, all circumstances connected to the non-disclosed fact and submit them to careful appreciation from the perspective of a reasonably thinking challenging party.

Both BGH decisions are well in line with the IBA Guidelines on Conflict of Interest (2014), which also require a reasonable balance between the parties’ right to comprehensive disclosure and the defence of formalistic challenges. Hence, any party choosing Germany as the place of arbitration can be assured that – although it sometimes may take a while – it is still in the BGH’s truly ‘safe hands’.

References   [ + ]

1. ↑ OLG Karlsruhe, Decision of 18 December 2015, 10 Sch 12/13. 2. ↑ Bundesgerichtshof, Judgement of 04 March 1999, III ZR 72/98. 3. ↑ Bundesgerichtshof, Decision of 02 May 2017, I ZB 1/16. 4. ↑ OLG Karlsruhe, Decision of 01 June 2018, 10 Sch 12/13. 5. ↑ Bundesgerichtshof, Decision of 31 January 2019, I ZB 46/18. 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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Navigating Through Stormy Seas: The UK Supreme Court Hears the Micula Case

Fri, 2019-10-18 00:01

Ivaylo Dimitrov

Introduction

With less than a month to go before the latest EU-UK divorce date, the UK Supreme Court resumed its hearing in Micula et al. v Romania 2018/0177, relating to the enforcement of the widely discussed ICSID award against Romania. With the UK grappling with its future relationship with the EU, it is interesting timing for the UK’s highest court to consider the legal and policy intricacies arising from the intersection between the country’s domestic legal order and its EU and other treaty obligations. While separated by arguments and perspectives, the Micula brothers, Romania, and the EU have combined to serve up a host of delicate questions for the court to navigate.

 

The Micula Saga

Much has been written on the Micula saga, on this Blog particularly (see here). In a nutshell, after 8 years of ICSID arbitration proceedings in case ARB/05/20, brothers Viorel and Ioan Micula (the “Miculas”) obtained a EUR 330 million (post-interest) award against Romania, which they have been trying to enforce ever since. The enforcement entered into a new stage when, in 2015, the European Commission (“Commission”) determined that by paying the award Romania would breach EU rules on State aid (“Commission Decision”), effectively barring the State from honouring its obligations under the award. The Commission Decision also required Romania to recover any amounts already paid under the award, with interest, and found Miculas – together with the other claimant companies – jointly liable to repay the State aid any of them had received. Notwithstanding that decision, the Swedish investors continued to seek enforcement of the award in a number of jurisdictions, including the United States, Sweden, and the UK.

 

Recent Background Developments

The enforcement saga has been particularly active recently, with key events occurring in 2019. An outline of these developments helps to put the UK proceedings in context.

Firstly, in January 2019, the investors’ homeland court in Sweden – the Nacka District Court – declined to enforce the award. The Swedish court decided against allowing enforcement against Romania, ruling that this would sidestep the Commission Decision and so violate the principle of sincere cooperation. The Commission filed a brief urging the court to refuse enforcement.

Secondly, in June 2019, the EU General Court quashed the Commission Decision. The EU General Court found that the relevant facts predate Romania’s accession to the EU and that the Commission lacked competence to apply its Article 108 TFEU powers retroactively in this way. Further, the EU General Court found that the Commission‘s decision to classify the award of compensation as an advantage and aid within the meaning of Article 107 TFEU was unlawful as the facts underlying the award had occurred prior to EU law‘s entry into force in Romania.

Finally, in September 2019, the US District Court for the District of Columbia granted a petition to confirm the award in the US. Despite the Commission’s amicus curiae brief relying inter alia on the Achmea judgment to argue that the Miculas’ petition should be denied, the DC court declined to refuse confirmation. Romania instantly appealed the District Court’s decision before the US Court of Appeals for the DC Circuit.

 

Overview of the UK Proceedings

The UK enforcement proceedings started in the autumn of 2014 when the investors obtained a Registration Order. Under Section 2 of the UK Arbitration (International Investment Disputes) Act 1966, for the purposes of execution, a registered ICSID award has the same force and effect as a judgment of the High Court of England and Wales.

Following the Commission Decision, Romania filed a set aside application with the Commercial Court (a sub-division of the High Court). As an alternative to the set aside request, the State also asked the court to vary or stay the registration. In September 2016, the Miculas cross-applied for security. On 20 January 2017, the Commercial Court dismissed the set aside application but granted a stay of enforcement pending the outcome of the EU General Court proceedings for the annulment of the Commission Decision. The investors’ cross-application for security was dismissed.

On 27 July 2018, the UK Court of Appeal dismissed the Miculas’ appeal against the Commercial Court judgment in relation to the stay. However, the court granted the requested security and ordered Romania to provide GBP 150 million as a condition of the stay. The three Court of Appeal justices had different views on the interplay of: the enforcement regime under the ICSID Convention; the UK’s obligations under EU law; and the UK courts’ powers under the 1966 Act. However, while their reasoning differed slightly, the justices formed a 2 on 1 majority on the ruling that it is within the powers of the domestic court to temporarily stay the execution of the award pending the outcome of the proceedings in the EU General Court and that this is consistent with the ICSID Convention’s object and purpose.

Following the decision of the EU General Court in June 2019, Phillips J of the High Court issued a further order extending the stay pending the CJEU determination and ordering Romania to provide GBP 150 million security by 17 October 2019.

The UK Supreme Court hearing started on 18 June 2019 and continued for three days on 7-9 October 2019.

 

Issues Before the Supreme Court

There are two main issues before the UK Supreme Court: first, whether the High Court has the power to stay the enforcement of an ICSID award; and, second, where an ICSID award against an EU Member State has been stayed pending proceedings before the EU courts, whether the duty of sincere cooperation precludes an English court from ordering the State to provide security.

 

Parties’ Submissions

The Miculas

Counsel for the Miculas built their case on the fact that the ICSID Convention allegedly offers a self-contained system of review to the exclusion of any other remedies, and that the Micula award has already survived ICSID annulment proceedings.

Consequently, according to the Miculas, the ordered stay is against the object and purpose of the ICSID Convention as the Convention precludes further challenges and stays of enforcement.

The Miculas further argued that:

  1. The stay granted by the Court of Appeal is not a temporary stay of execution, as argued by Romania, but a stay of enforcement, which the court did not have the right to make under domestic law.
  2. There is no conflict between the UK’s duties under EU law and the enforcement of the award. Whether or not the ICSID Convention imposes obligations toward third countries is not a question of EU law. Even if there is a conflict, this is a matter of domestic law – it cannot be implied that the duty of sincere cooperation requires the English courts to wait for the CJEU’s ruling, especially since the obligations under the ICSID Convention are owed not only to Sweden as the investors’ host State, but towards all Contracting Parties.
  3. The Commission Decision has been annulled and the Commission has not sought interim measures staying the decision of the EU General Court. Therefore, there is no EU law duty that should be taken into account by the English court.

Romania

Romania, on the other hand, argued that the stay is essentially a temporary case management measure pending the final determination of the EU proceedings by the CJEU. Romania’s intention is to deal carefully and reasonably with that temporary measure.

Furthermore, Romania submitted that many other EU Member States have halted the enforcement of the award, including, of course, Sweden, which is the investors’ home country. If the UK court now decides otherwise, this would deprive the decisions of the other Member States courts of practical value. This, according to Romania, would not be sincere cooperation, but quite the opposite.

Regarding the annulment of the Commission Decision by the EU General Court, Romania’s case is that nothing has changed materially. The EU General Court’s conclusion that EU law does not apply has an interim character and there is a realistic possibility of its reversal in the second instance proceedings. Therefore, the risk of conflict between the UK’s obligations under EU law and the ICSID Convention still remains and requires the continuation of the stay until a final determination by the CJEU.

The Commission

The Commission’s intervention supported Romania’s case and concentrated mainly on the EU General Court judgment. The Commission argued that, regardless of the annulment of the Commission Decision, the UK’s obligations under EU law, and the duty of sincere cooperation specifically, are ongoing.

Counsel for the Commission also argued that, according to the EU General Court’s judgment and contrary to the Miculas’ submissions, the Commission has competence over Romania’s post-accession conduct. The judgment could even be considered an invitation to for the Commission to reassess the matter. Further, the Commission has good prospects to win the appeal reaffirming the legal force of its Decision.

 

Concluding Remarks

While acknowledging that its ruling is long-anticipated, the Supreme Court noted it could not guarantee a judgment before 31 October 2019. This raises the intriguing prospect of a Supreme Court ruling on the scope and substance of the UK’s EU law obligations at a point in time where such obligations have been ended as a result of a “no deal” Brexit.

Nevertheless, as well as this interesting timing, the legal and political ramifications of the Supreme Court’s decision are significant beyond even the wide margins of the Miculas’ dispute with Romania. The Court will have to carefully weigh a number of variables and possible consequences. It remains to be seen whether the UK Supreme Court’s decision in the Micula case would be a harbinger of how the post-Brexit dialogue between UK and EU courts will shape.

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The case for an Advisory Centre on International Investment Law

Thu, 2019-10-17 04:00

Karl Sauvant

In his post of 30 August 2019, Pablo Pérez-Salido discussed the proposal at UNCITRAL’s Working Group III for the establishment of an Advisory Centre on International Investment Law (ACIIL). This post seeks to make a case for such an Advisory Centre.1)This post is based on Karl P. Sauvant, “An Advisory Centre on International Investment Law: Key Features”, prepared for the Academic Forum on ISDS and available here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3450919#. jQuery("#footnote_plugin_tooltip_2147_1").tooltip({ tip: "#footnote_plugin_tooltip_text_2147_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); It complements the excellent Secretariat document on the same subject, which is the basis of the discussions in the Working Group III that began on 15 October 2019. More specifically, the present post makes three points on this subject, relating to the need for such a Centre; the scope of its work; and the way forward.

 

The need for an ACIIL

We know that the number of ISDS cases is now over 1,000, and we also know that the potential for many more cases is very high, among other things because the number of international investors is very high (well over 100,000), the number of foreign affiliates is very high (well over 1 million) and many of the 3,000-plus IIAs contain ISDS provisions.

At the same time, we know furthermore that there are many under-resourced developing countries that neither have the human resources to defend themselves adequately in international investment disputes, nor do they have the funds to hire international law firms to do so.

Hence, establishing an Advisory Centre on International Investment Law would be very desirable. It could be an independent international institution tasked with assisting under-resourced developing countries in defending themselves adequately in international investment disputes. The Advisory Centre on WTO law could serve as a precedent and model.

Establishing such a Centre would level the playing field and provide de facto access to justice to under-resourced developing countries. It would also strengthen the legitimacy of the international investment regime. (Establishing an Advisory Centre is independent from other needed reforms of the international investment regime.)

 

The scope of work of an ACIIL

The core competency of an Advisory Centre should be to represent, together with lawyers from the respondent States, under-resourced developing country respondents in international investment disputes and the immediate preparation of such disputes. There are three reasons for this focus:

  • First, while technical assistance is required across a wide range of issues related to the international investment regime, such assistance is available in a number of areas from both international organizations and other institutions. An example concerns trainings about issues that are addressed in international investment agreements. It would indeed be desirable to avoid duplicating the work of other organizations.
  • Second, there is currently no institution that provides assistance in the representation of respondents in international investment disputes—under-resourced developing countries are left entirely on their own if and when they face disputes. In other words, there is a real gap in the international investment regime that needs to be filled.
  • The third reason for which the core competency of an Advisory Centre should be to help developing countries to defend themselves adequately in international investment disputes is that—as is well-known—conducting such disputes is already very costly. Adding additional responsibilities to the mandate of a Centre might risk to overload the Centre’s mandate and, therefore, might risk making the establishment of the ACIIL so expensive that the funds cannot be raised to bring it into existence. (Of course, nothing would prevent States from widening the mandate of the Centre once it is up and running, in the light of experience gained.)

 

The way forward

Maybe the deliberations of Working Group III could benefit from an informal inter-sessional meeting that examines the many technical issues related to the establishment of an Advisory Centre. It could be helped in this work by the detailed scoping study being finalized by the CCSI for the government of the Netherlands. Perhaps such an event could be organized by interested countries and be held in a developing county. The outcome of such a meeting could then help the Working Group to arrive at a considered understanding of the issues involved.

Beyond that, and as a preparatory step, the UNCITRAL Secretariat—or the Academic Forum—could perhaps organize a webinar for interested government representatives to kick off the technical discussions.

In summary, I think there is a distinct need for establishing an ACIIL; it should have a clear focus on helping under-resourced developing countries in defending themselves adequately in international investment disputes; and it would be desirable if UNCITRAL’s Working Group III began as soon as possible the examination of the technical issues involved.

Establishing an Advisory Centre would close a real gap in the international investment regime; it would level the playing field for under-resourced developing countries, thus providing them with de facto access to justice; and it would strengthen the legitimacy of the international investment regime.

References   [ + ]

1. ↑ This post is based on Karl P. Sauvant, “An Advisory Centre on International Investment Law: Key Features”, prepared for the Academic Forum on ISDS and available here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3450919#. 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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Arbitrators’ Conflict of Interest: An Egyptian Perspective

Thu, 2019-10-17 02:00

Ibrahim Shehata

Introduction

An ongoing discussion in the world of international arbitration concerns the conflict of interest of arbitrators and how such issue should be addressed. In this regard, the Egyptian Court of Cassation has very recently enriched this discussion by evincing its perspective on this matter, particularly, with respect to the standard of impartiality and independence of arbitrators, and the parameters of the duty of disclosure of arbitrators.

 

Egyptian Courts’ Perspective on Arbitrators’ Conflict of Interest 

To deliver the full picture regarding this discussion in Egypt, we have to begin with the Cairo Court of Appeal’s1)Cairo Appeal Challenge No. 29/ Judicial Year No. 131, Hearing Dated 4 August 2014. jQuery("#footnote_plugin_tooltip_5072_1").tooltip({ tip: "#footnote_plugin_tooltip_text_5072_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); – quite interesting – judgment in a different case. In 1998, the challenged arbitrator was a member of an arbitral tribunal. However, the arbitral tribunal in this case did not issue an award. This was because the competent court2)The competent court means the court referred to under article (9) of the Egyptian Arbitration Law, which would be either (a) Cairo Court of Appeal in case of International Arbitration; or (b) Territorially competent Court of Appeal in case of Domestic Arbitration. jQuery("#footnote_plugin_tooltip_5072_2").tooltip({ tip: "#footnote_plugin_tooltip_text_5072_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); had issued a judicial order terminating such arbitral proceedings for exceeding the time limit for rendering arbitral awards under the Egyptian Arbitration Law. This order was based upon article 45 (2) of the Egyptian Arbitration Law which empowers the competent court to issue a judicial order either: (i) extending the period of time for rendering the arbitral award, or (ii) terminating the arbitral proceedings. All this in case the arbitral tribunal has failed to issue its arbitral award within the time limit prescribed under article 45 (1) of the Egyptian Arbitration Law (i.e., 12 months plus a further extension of 6 months).3)It should be noted that this time limit for rendering arbitral awards does not apply where the parties have agreed otherwise (i.e., chose the rules of an arbitral institution). jQuery("#footnote_plugin_tooltip_5072_3").tooltip({ tip: "#footnote_plugin_tooltip_text_5072_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

More than a decade later, in 2013, the challenged arbitrator became, yet again, a member of another arbitral tribunal that was constituted to review the same dispute between the same parties. This time around, the arbitral tribunal was able to render its award which has prompted the challenging party to file an annulment action before the Cairo Court of Appeal. The challenging party has based its action for annulment on the ground that the arbitrator in question lacked the requisite impartiality and independence under the Egyptian Arbitration Law. The Cairo Court of Appeal, however, refused to annul the arbitral award. The Court made it clear that the duty of disclosure is only required when the arguably suspicious facts are not known to the challenging party. In this regard, the Court held that the fact the two arbitrations were between the same parties and were concerning the same dispute – undoubtedly – evidence the presumed knowledge of the challenging party of such facts and, therefore, the challenged arbitrator was not under any obligation to re-disclose these facts when he accepted the mission for the second arbitration. The Court added that the challenging party, in this case, has waived its right by failing to raise any challenges against the arbitrator in question within the time limit prescribed under the law.4)Supra note 1. jQuery("#footnote_plugin_tooltip_5072_4").tooltip({ tip: "#footnote_plugin_tooltip_text_5072_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Four years later, in July 2018, a contrasting fact pattern was presented to the Cairo Court of Appeal.5)Cairo Appeal Challenge No. 65/ Judicial Year 134, Hearing Dated 22 July 2018. jQuery("#footnote_plugin_tooltip_5072_5").tooltip({ tip: "#footnote_plugin_tooltip_text_5072_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); This time around, it was not known to the challenging party before the issuance of the arbitral award that the challenged arbitrator has acted previously as a legal counsel to the other party. The case recitals show that the challenged arbitrator also did not disclose such facts when he officially accepted his arbitration appointment. Yet, the Cairo Court of Appeal decided to reject this ground of annulment on the basis that such facts were presumably known to the challenging party before the issuance of the arbitral award. Therefore, according to the court, failing to object to such appointment before the issuance of the arbitral award has constituted a waiver of this right. In other words, the Cairo Court of Appeal has shifted the burden of proof to the challenging party, whereby the latter is the party under an obligation to prove that he did not know such suspicious facts before the lapse of the time limit prescribed under CRCICA rules for challenging arbitrators.

The Cairo Appeal judgment was further challenged before the Court of Cassation. Consequently, the Cassation Court decided to overrule the Court of Appeal judgment.6)Court of Cassation Challenge No. 18116/ Judicial Year No. 88, Hearing Dated 11 June 2019. jQuery("#footnote_plugin_tooltip_5072_6").tooltip({ tip: "#footnote_plugin_tooltip_text_5072_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The Cassation Court began, first, by elaborating the standard of impartiality and independence of arbitrators by stating that:

The arbitrator’s independence and impartiality means that the arbitrator has no implicit, material, or moral relation to any of the parties in a way that affects such impartiality and constitutes a flagrant & imminent threat real danger of bias, or raise justifiable doubts“.

Then, the Cassation Court made it crystal clear that the presumption of knowledge of the challenging party is only created when the challenged arbitrator discloses the relevant suspicious facts at the time of officially accepting his arbitration appointment; not the other way around. Accordingly, if the challenged arbitrator fails to prove that the challenging party already knows these suspicious facts, then it cannot be said that the challenging party has waived its right concerning this ground.

In light of the above, there are three (3) key takeaways, as follows:

  • The Egyptian Court of Cassation has aligned its views with international arbitration best practices when it defined the standard of arbitrators’ independence and impartiality as the one constituting “a real danger of bias”, or raising “justifiable doubts”.
  • The Egyptian Court of Cassation has deemed that the presumption of knowledge of the challenging party of any arguably suspicious facts arises only when the arbitrator in question discloses such facts at the time of accepting his appointment.
  • Egyptian Courts might rely on supporting facts other than the disclosure statement by the arbitrator in question to deduce whether the challenging party was aware of the relevant suspicious facts before the issuance of the arbitral award.

 

Conclusion

It is evident that the Egyptian Courts’ position is very much in line with best international practices when it comes to the issue of arbitrators’ conflict of interest. In the meanwhile, the International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration are increasingly used by the parties as well as arbitral institutions in Egypt. However, the author and another notable jurist7)Mohamed Abdel-Raouf, WORLD ARBITRATION REPORTER 2nd Edition (2019), page 26. jQuery("#footnote_plugin_tooltip_5072_7").tooltip({ tip: "#footnote_plugin_tooltip_text_5072_7", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); were not able to locate any Egyptian courts’ judgments featuring or referring to these guidelines.

The fact that the IBA guidelines are available in Arabic language could be a stepping stone towards promoting their utilization in Egypt and other Arab jurisdictions. However, translation does not always suffice. The IBA has to act more proactively towards endorsing these guidelines through organizing multiple events and roundtables with Egyptian and Arab Judges in that respect. This would immensely support the incorporation of these guidelines in the Egyptian and Arab arbitration landscape.

References   [ + ]

1. ↑ Cairo Appeal Challenge No. 29/ Judicial Year No. 131, Hearing Dated 4 August 2014. 2. ↑ The competent court means the court referred to under article (9) of the Egyptian Arbitration Law, which would be either (a) Cairo Court of Appeal in case of International Arbitration; or (b) Territorially competent Court of Appeal in case of Domestic Arbitration. 3. ↑ It should be noted that this time limit for rendering arbitral awards does not apply where the parties have agreed otherwise (i.e., chose the rules of an arbitral institution). 4. ↑ Supra note 1. 5. ↑ Cairo Appeal Challenge No. 65/ Judicial Year 134, Hearing Dated 22 July 2018. 6. ↑ Court of Cassation Challenge No. 18116/ Judicial Year No. 88, Hearing Dated 11 June 2019. 7. ↑ Mohamed Abdel-Raouf, WORLD ARBITRATION REPORTER 2nd Edition (2019), page 26. 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 Contents of the Brazilian Arbitration Journal, Volume XVI, Issue 63 (September 2019)

Tue, 2019-10-15 20:00

João Bosco Lee

In this edition of Brazilian Journal of Arbitration, the National Doctrine section presents Gustavo Scheffer da Silveira‘s considerations about the sentencing nature of the arbitrators’ decision on their own jurisdiction, as well as the legal regime to which the arbitral award is submitted. Also, Maria Beatriz Grella Vieira proposes some reflections on the objective arbitrability of disputes involving corporate resolutions composed by the vote of a public entity in its capacity of controlling shareholder of a mixed private-public ownership company. Lastly, Antonio Pedro Garcia de Souza and Raphael Rodrigues da Cunha Figueiredo examine the peculiarities surrounding the figure of the emergency arbitrator and the practical circumstances that make him or her a better alternative to the judiciary (or not).

In the International Doctrine section, Gabriele Ruscalla analyses the evolution of applicability concerning conciliation and mediation in disputes between States and investors.

In the National Judicial Case Law section, André Marini takes note of the decision of the New York State Supreme Court’s appeal division on the application and scope of the controversial doctrine of the manifest disregard of the law and its relation to the review of the merits of arbitral awards.

André Rodrigues Junqueira contributes to the Arbitral Awards section by commenting on the arbitration award of the well-known Libra Case, which dealt with claims subject to port sector regulation and the legal regime applicable to legal entities governed by public law.

Turning to the General Information section, Gabriela Barcellos Scalco reports the launch of the Brazilian Arbitration Committee (CBAr) library in the city of Porto Alegre; Egon Bockmann Moreira and Elisa Schmidlin Cruz present notes regarding Ordinance AGU No. 320/2019 and Decree SP No. 64.356 / 2019, regarding public-private arbitration; and Ricardo Dalmaso Marques analyzes Resolution No. 35/2019 of the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce (CAM / CCBC) on the transparency of the data of the arbitrators acting in their proceedings.

Rodrigo Octávio Broglia Mendes presents the classic doctoral thesis of Professor Luiz Gastão Paes de Barros Leães, ‘Essay on Commercial Arbitration’, as the Arbitration Classic of this edition.

Finally, the present edition presents reviews by João Ilhão Moreira, of ‘Key Duties of International Investment Arbitrators: A Transnational Study of Legal and Ethical Dilemmas’ by Kathia Fach Gomez, and by Fábio M.R. Cavalcante of ‘Tribunal Secretaries in International Arbitration’ by J. Ole Jensen.

Have a good arbitral reading!

João Bosco Lee, Director

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