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Proskauer Bolsters National Litigation Practice With Addition of Jonathan Weiss - PR Newswire (press release)

Google International ADR News - Wed, 2018-06-27 08:10

Proskauer Bolsters National Litigation Practice With Addition of Jonathan Weiss
PR Newswire (press release)
We handle complex matters in state and federal courts; domestic and international arbitrations; alternative dispute resolution proceedings; and administrative regulatory tribunals. Additional information about the Firm can be found at www.proskauer.com ...

New CAA chief vows 'proportionate' enforcement of PTRs - Travel Weekly UK

Google International ADR News - Wed, 2018-06-27 05:46

Travel Weekly UK

New CAA chief vows 'proportionate' enforcement of PTRs
Travel Weekly UK
For consumers, he said it was important for the CAA to improve awareness of Atol and extend Alternative Dispute Resolution schemes. On technology, Moriarty said ... “Aviation and travel are by definition international businesses,” he said. “We are one ...

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HKIAC’s New Belt and Road Programme: Does More Need to be Done?

Kluwer Arbitration Blog - Wed, 2018-06-27 05:04

Stephanie Tang

Linklaters

On 26 April 2018, HKIAC announced its new “Belt and Road Programme” which consists of an industry-focussed Belt and Road Advisory Committee and an online resource platform dedicated to Belt and Road disputes. This is a welcome development in light of the ICC Court’s formation of their own Belt and Road Commission in March (see relevant blog post here), but could the capabilities of the HKIAC’s online resource platform be improved in light of the HKIAC’s premier role in the Belt and Road disputes arena?

By way of background, the Belt and Road Initiative is a push by the Chinese government to invest around US$900 billion in infrastructure along the land-based “Silk Road Economic Belt” and the oceangoing “Maritime Silk Road”, both of which consist of several routes from China through countries including Turkey and Kenya all the way to Italy and the United Kingdom. In total, the initiative will span over 60 countries and will generate investment in roads, railways, ports and other facilities. Chinese construction firms will be cooperating with other international firms in a variety of jurisdictions on a plethora of different contracts. The potential for dispute resolution work is great, and the arbitral institutions are already competing to be the best placed forum to secure their share of the pie.

In the commentaries, HKIAC is a firm favourite. Reasons for this include Hong Kong’s proximity to China while being a separate administrative region; Hong Kong’s stable and independent common law legal system and pro-arbitration judiciary; and Hong Kong being home to multilingual legal and commercial professionals who are familiar with foreign investments and working with Chinese companies. HKIAC itself reports that in 2017 it saw 55% of its arbitrations involving a Mainland Chinese party and one-third of its cases between a Mainland Chinese Party and a Belt and Road jurisdiction in 2017.

Therefore, it comes as no surprise that HKIAC is keen to put itself forward as the premier forum for the resolution of Belt and Road disputes. In line with this aim is the formation of a HKIAC Belt and Road Advisory Committee composed of experts from the finance, infrastructure, insurance, construction and maritime sectors. A full list of members can be found here.

Nevertheless, it could be argued that HKIAC’s new online resource platform might benefit from some improvements. A few suggestions are set out below:

1. Belt and Road Knowledge Database: Currently this is a list of links to publications broadly categorised under ‘Investment and Trade Opportunities’, ‘Dispute Resolution’, ‘Regulatory & Compliance’ and ‘Useful Websites’. Although such broad categorisations may have been sufficient when the resources were sparse, the list is now becoming a little cumbersome. A more user-friendly interface organised around the potential problems that practitioners may face, and which can be surveyed ‘at a glance’, would add value to this useful resource.

2. Model Clauses for Belt and Road Contracts: Currently the HKIAC model clauses for Belt and Road contracts refer disputes directly to arbitration, without recourse to mediation. It is possible that the model clauses on this site would gain greater traction if they included a ‘hybrid’ method combining both mediation and arbitration. In Asia, there is a longstanding culture of mediating disputes, especially when arbitration may still be perceived as expensive and detrimental to commercial relations. As Guiguo Wang, President of the International Academy of the Belt and Road, has put it, conciliation is an “Eastern value and tradition”. Notably, the Supreme People’s Court of China (SPC) is interested in promoting mediation for Belt and Road disputes, as evidenced by the SPC’s endorsements at the September 2017 International Mediation Conference in Hangzhou, China. Further, the Hong Kong government has championed mediation for Belt and Road disputes, as can be seen in its development of an online mediation and arbitration tool, eBRAM.hk, and the discussion at the October 2017 Belt and Road Summit of model Belt and Road dispute resolution clauses that provide for mediation, then arbitration. Finally, the Hong Kong-based think tank, International Academy of the Belt and Road, has published a “Dispute Resolution Mechanism for the Belt and Road Initiative” that proposes a unified dispute resolution clause requiring negotiation and mediation before arbitration. Consistency where possible in relation to model clauses would be ideal for legal certainty in a multifarious legal landscape for Belt and Road disputes.

3. Belt and Road Events: Currently this is a list of events that HKIAC have hosted or will host in various jurisdictions with a very brief description of each. Perhaps each description would be improved by including links to meeting minutes, a video of the lecture or even a transcript, where appropriate. As it stands, it serves only as a log, where otherwise it could itself serve as a useful resource for Belt and Road practitioners across the jurisdictions who seek to stay in the know of how this premier arbitral institution views the various issues and challenges that the Belt and Road initiative presents.

Considering HKIAC’s prime position as an arbitral institution for Belt and Road dispute resolution, its current efforts to support participants with its new Belt and Road Programme are to be welcomed. HKIAC should be encouraged to build on its resources, especially in relation to its database, model clause provision and record of Belt and Road events. It would be safe to say that for the disputes rolling through, the more equipped practitioners are now, the more streamlined resolution will be for Belt and Road disputes in the years to come.

To make sure you do not miss out on regular updates on the Kluwer Arbitration Blog, please subscribe here.

More from our authors: International Arbitration and the Rule of Law
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Haynes and Boone adds four lawyers to international energy team - World Pipelines

Google International ADR News - Wed, 2018-06-27 04:30

World Pipelines

Haynes and Boone adds four lawyers to international energy team
World Pipelines
“Melanie, Markus, Robert and Ryan have extensive experience in international arbitration, litigation and all forms of alternative dispute resolution across a range of sectors, which will greatly benefit our clients across the globe,” said Haynes and ...

The Binding Nature of Provisional “Recommendations” in ICSID Arbitration

Kluwer Arbitration Blog - Wed, 2018-06-27 03:07

Ylli Dautaj and Bruno Gustafsson

Introduction

Pursuant to Article 47 of the ICSID Convention, an ICSID Tribunal may “recommend any provisional measures which should be taken to preserve the rights of either party”. The use of “recommend” is concerning. Its lack of imperative character triggers a debate on whether ICSID provisional measures have legally binding effect, i.e. require mandatory state compliance. Quite controversially, numerous ICSID tribunals have rendered binding provisional measures to suspend domestic criminal investigations or proceedings.1)See following cases for discussions on suspending criminal procedures through provisional measures: Border Timbers Ltd. V. Republic of Zimbabwe, ICSID CASE NO. ARB/10/25, Directions Concerning Claimants’ Application for Provisional Measures of 12 June 2012 (June 13, 2012); Caratube International Oil Company LLP v. Republic of Kazakhstan, ICSID Case No. ARB/13/13, Decision on the Claimants’ Request for Provisional Measures, (Dec. 4, 2014); City Oriente Ltd v. Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador) (Ecuadoran) ICSID case No. ARB/06/21; Italba v. Oriental Republic of Uruguay ICSID Case No. ARB/16/9 Decision on Claimant’s Application for Provisional Measures and Temporary Relief (Feb. 15, 2017); Nova Group Investments, B.V. v. Romania, ICSID Case No. ARB/16/19; and Teinver S.A., Transportes de Cercanías S.A. v. The Argentine Republic, ICSID Case No. ARB/09/1, Decision on Provisional Measures (Apr. 8, 2016). jQuery("#footnote_plugin_tooltip_4620_1").tooltip({ tip: "#footnote_plugin_tooltip_text_4620_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Thereby, some arbitrators have designated to themselves an implicit or de facto authorization to render orders, even such that extensively interfere with state sovereignty.

The issue of whether these orders are binding in nature rests upon an inherent give-and-take conflict between (1) honoring state sovereignty, and (2) making investor-state arbitration investor-friendly and an effective dispute resolution mechanism. A perfect illustration of this tension comes to light when a tribunal orders a provisional measure to suspend a criminal investigation or procedure.

However, at the outset it should be known that since Maffezini v. Spain (ICSID Case No. ARB/06/21, Decision on Request for Provisional Measures (Oct. 28, 1999) 5 ICSID Rep. 387 para 9. (2002)), there is a generally held view that provisional measures in ICSID are binding. For example, the Tribunal in City Oriente v. Ecuador held that “[f]rom a substantive view, the difference between a recommendation and an order is mainly a question of terminology. [And even] where named recommendation, a decision on provisional measures is substantially binding.”2)City Oriente Ltd v. Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador) (Ecuadoran) ICSID case No. ARB/06/21 Decision on Provisional Measures (Nov. 19, 2007), para. 52. jQuery("#footnote_plugin_tooltip_4620_2").tooltip({ tip: "#footnote_plugin_tooltip_text_4620_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The crux of the matter is, however, that these orders are not explicitly supported in the relevant text.

Provisional measures can secure the efficiency and fairness of the arbitration proceeding

In general, provisional measures lie on the premise that the proceedings should be fair and efficient. Accordingly, the use of provisional measures may be connected to the due process requirements of equal treatment and the right to be heard. This is a natural result of the “judicialization” of investor-state arbitration. And whether – and why – judicialization of arbitration is a bad thing, we can leave for another day. Nonetheless, the tribunal’s authority to render binding provisional measures have oftentimes been described as indispensable in order to uphold arbitration as a fair and efficient way of dispute resolution.3)See Gary Born, International Commercial Arbitration 2425 (2d ed. 2014). jQuery("#footnote_plugin_tooltip_4620_3").tooltip({ tip: "#footnote_plugin_tooltip_text_4620_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

To illustrate the complicated balance between state sovereignty and efficiency we wish to address whether an ICSID tribunal has the authority to suspend domestic criminal procedures. How have previous tribunals justified an “order” suspending criminal investigations or procedures under the ICSID framework?

In Quiborax S.A. v. Plurinational State of Bolivia, ICSID Case No. ARB/06/2, Decision on Provisional Measures (Feb. 26, 2010), the Tribunal stated that Article 47 of the ICSID Convention and Rule 39 of the ICSID Arbitration Rules give the tribunal wide discretion to render provisional measures. (para. 105) The Claimant claimed compensation for the revocation of eleven mining concessions. Some years into the arbitration, Bolivia initiated criminal proceedings on the allegations that the main shareholders of Quiborax had forged documents in order to become “protected investors” under the Bolivia-Chile BIT. Bolivia’s Ministry for Foreign Affairs ordered an audit. The Bolivian authorities reviewed corporate documentation and “noted irregularities,” and brought proceedings regarding “forged documents.” (paras 22-45) The Claimants alleged that the criminal proceedings constituted litigation tactics aiming towards limiting their access to important documents.

The Tribunal concluded that the Claimant had met the requirements for suspending the criminal proceedings, viz. had managed to prove: (1) an existence of rights requiring preservation; (2) existence of urgent protection; and (3) necessity of the provisional measure.(paras 113-165)

In Hydro S.r.l. v. Republic of Albania the Claimant initiated an ICSID arbitration against Albania for alleged breaches of commitments relating to electricity generation enterprises in the host-state. Subsequently, Albania sought to extradite two of the Claimants from the UK on the alleged basis of money laundering and fraud. The Claimants sought an interim measure requesting Albania to desist its action. The Tribunal recommended Albania to (a) suspend the criminal proceedings until the issuance of a final award and (b) take necessary actions to suspend the extradition proceedings.4)Hydro S.r.l. v. Republic of Albania, ICSID Case No. ARB/15/28, Order on Provisional Measures (Mar. 3, 2016), para 5.1. jQuery("#footnote_plugin_tooltip_4620_4").tooltip({ tip: "#footnote_plugin_tooltip_text_4620_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The Tribunal first determined whether there was a sufficient basis for it to decide the questions subject of the request for a provisional measure.(para. 3.9) It went on to assess the “appropriate test” to be applied i.e. whether the application was (1) necessary to protect the applicant’s rights; (2) urgent; and (3) proportionate. (para 3.11) The Tribunal was satisfied that the conditions were met and, therefore, saw “no difficulty in recommending an order”. (para. 3.18-20)

Is the word “recommendation” coincidental?

The non-binding language in Article 47 of the ICSID Convention reflects that investor-state arbitration is tainted with issues of state sovereignty. Schreuer wrote that “a conscious decision was made not to grant the tribunal the power to order binding [provisional measures].”5)Christoph H. Schreuer, The ICSID Convention: A Commentary 758 (2001) jQuery("#footnote_plugin_tooltip_4620_5").tooltip({ tip: "#footnote_plugin_tooltip_text_4620_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Furthermore, Redfern and Hunter wrote that: “[t]he use of the word ‘recommend’ in this context stems from the concern of the drafters of the ICSID Convention to be seen as respectful of national sovereignty by not granting powers to private tribunals to order a state to do or not do something on a purely provisional basis”.6)Alan Redfern & Martin Hunter, Law and Practice of International Commercial Arbitration 333 (4th ed. 2004). jQuery("#footnote_plugin_tooltip_4620_6").tooltip({ tip: "#footnote_plugin_tooltip_text_4620_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

This sheds light upon what should be an obvious notion of textual legal understanding; namely, that the text is supreme and prevails. The explicit choice of words in the convention indicates that provisional measures were not meant to have legally binding effect.

However, it is not inconceivable that a tribunal may render binding provisional measures in order to safeguard the procedural integrity or the parties’ duty of “good faith”. Allegedly, this should be implied from the text of the ICSID Convention, in part and in whole. In a similar vein, it may be argued that the concept of “state sovereignty” should not force tribunals to tie their hands when serious interference with the arbitration is making the procedure unfair at best, or a nullity at worst. How convincing this argument is – and how far a tribunal can go – should be left for the arbitration community to decide. Nevertheless, decisional law is not binding in investor-state arbitration and, therefore, the decision should be reflected in rules or statute form.

Concluding remarks

The host-state, in its capacity as a sovereign, can interfere with the arbitration in a myriad of ways. For example, a state can utilize its prosecutorial powers in order to frustrate the arbitration by putting immense pressure on the investor. However, it is questionable whether an ICSID tribunal may redress such behavior by “ordering” a provisional measure that interferes with state sovereignty.

Mechanisms that secure procedural efficiency and due process are essential for maintaining investor-state arbitration as the dominant forum for adjudicating investment disputes. As a corollary, it is arguably necessary to grant the arbitrators some scope of authority to make compulsory decisions throughout arbitral proceedings. Nonetheless, the authority of the tribunal to render provisional measures in investor-state arbitration is dependent on the state giving up some traditionally sovereign features.

The drafting states to the ICSID Convention did not attribute a legally binding effect to provisional measures. Therefore, ICSID tribunals treating provisional “recommendations” as binding orders may undermine textual interpretation and state sovereignty. Above all, a lack of textual adherence may impede clarity, consistency and foreseeability.

As a result, provisional “orders” may carry a risk of causing states to question the legitimacy of investor-state arbitration as a valid regime for resolving investment disputes. Moreover, decisions lacking textual authority might discourage states from compliance. Eventually, the lack of textual adherence and interpretation may prove damaging for the sustainability of investor-state arbitration. 

To make sure you do not miss out on regular updates on the Kluwer Arbitration Blog, please subscribe here. 

References   [ + ]

1. ↑ See following cases for discussions on suspending criminal procedures through provisional measures: Border Timbers Ltd. V. Republic of Zimbabwe, ICSID CASE NO. ARB/10/25, Directions Concerning Claimants’ Application for Provisional Measures of 12 June 2012 (June 13, 2012); Caratube International Oil Company LLP v. Republic of Kazakhstan, ICSID Case No. ARB/13/13, Decision on the Claimants’ Request for Provisional Measures, (Dec. 4, 2014); City Oriente Ltd v. Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador) (Ecuadoran) ICSID case No. ARB/06/21; Italba v. Oriental Republic of Uruguay ICSID Case No. ARB/16/9 Decision on Claimant’s Application for Provisional Measures and Temporary Relief (Feb. 15, 2017); Nova Group Investments, B.V. v. Romania, ICSID Case No. ARB/16/19; and Teinver S.A., Transportes de Cercanías S.A. v. The Argentine Republic, ICSID Case No. ARB/09/1, Decision on Provisional Measures (Apr. 8, 2016). 2. ↑ City Oriente Ltd v. Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador) (Ecuadoran) ICSID case No. ARB/06/21 Decision on Provisional Measures (Nov. 19, 2007), para. 52. 3. ↑ See Gary Born, International Commercial Arbitration 2425 (2d ed. 2014). 4. ↑ Hydro S.r.l. v. Republic of Albania, ICSID Case No. ARB/15/28, Order on Provisional Measures (Mar. 3, 2016), para 5.1. 5. ↑ Christoph H. Schreuer, The ICSID Convention: A Commentary 758 (2001) 6. ↑ Alan Redfern & Martin Hunter, Law and Practice of International Commercial Arbitration 333 (4th ed. 2004). 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: International Arbitration and the Rule of Law
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Travel couple fall foul of British Airways 'cheap ticket' cancellations - TTG

Google International ADR News - Wed, 2018-06-27 01:55

TTG

Travel couple fall foul of British Airways 'cheap ticket' cancellations
TTG
Anthony Vale, international account director UK and Ireland at Movenpick Hotels and Resorts, booked tickets with Netflights earlier this month to travel to Dubai from Manchester on December 21 with his travel agent partner and children. Vale said the ...

Haynes and Boone Expands International Dispute Resolution Practice by Hiring Four-Lawyer London Team - Global Banking And Finance Review (press release)

Google International ADR News - Tue, 2018-06-26 23:55

Global Banking And Finance Review (press release)

Haynes and Boone Expands International Dispute Resolution Practice by Hiring Four-Lawyer London Team
Global Banking And Finance Review (press release)
“Melanie, Markus, Robert and Ryan have extensive experience in international arbitration, litigation and all forms of alternative dispute resolution across a range of sectors, which will greatly benefit our clients across the globe,” said Haynes and ...

ADR Faculty Opening at Georgia State

ADR Prof Blog - Tue, 2018-06-26 17:34
From Doug Yarn: Below is information on an ADR faculty position at GSU Law.  This is a great place.  Collegial faculty, terrific students, wonderful location, etc.  Fertile ground for an ambitious individual just starting or in mid-career.  And yes, we have air conditioning.  Feel free to contact me with any questions you have. Best to … Continue reading ADR Faculty Opening at Georgia State →

Mediation Settlement Enforcement Protocol Approved

Business Conflict Blog - Tue, 2018-06-26 07:59

Deborah Masucci, Chair of the International Mediation Institute, advises:

“Yesterday [25 June 2018],during the 51st Session of UNCITRAL, the final drafts were finalized for a Convention on the Enforcement of Mediation Settlements and a Model Law for the same.  The drafts are being referred to the Commission for adoption later this year. The Group also approved a resolution to name the Convention the “Singapore Mediation Convention” with a signing ceremony expected in Singapore in 2019.  This action concludes three years of vigorous debate and acknowledges the role of mediation for dispute settlement in cross border dispute resolution. ”

Congratulations to all whose diligence and persistence has led to this welcome outcome.

Women group condemn plateau killings, caution against inciting statements. - Vanguard

Google International ADR News - Tue, 2018-06-26 07:47

Vanguard

Women group condemn plateau killings, caution against inciting statements.
Vanguard
Para -Mallam said the use of Alternative Dispute Resolution (ADR) technique was more appropriate for sustainable conflict management, adding that she had offered shelter to 10 displaced women and children. She said the State security apparatus, ...

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LNBA opens Legal Aid Clinic in Bong - The New Dawn Liberia

Google International ADR News - Tue, 2018-06-26 04:24

LNBA opens Legal Aid Clinic in Bong
The New Dawn Liberia
Bong is the third county to benefit from this pilot project initiated by the LNBA with help from the United States Agency for International Development (USAID) Legal Professional Development and Anti-Corruption Program in Liberia (LPACE). The second of ...

Customary International Law Claims in Contract-based Arbitration

Kluwer Arbitration Blog - Tue, 2018-06-26 02:33

Patrick Fox and Alexey Vyalkov

Three Crowns LLP

Without the rights and protections of a treaty, a foreign investor who suffers a wrongful act at the hands of a host State traditionally has no legal standing to pursue an international claim against that State.1) Case Concerning the Barcelona Traction, Light & Power Company Limited (Belgium v Spain) (Second Phase) [1970] ICJ Rep 3, 44. jQuery("#footnote_plugin_tooltip_7212_1").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Instead, the investor must rely on the diplomatic intervention of its home State to protect the investor’s interests—a corollary to the widely-accepted view that a State’s obligations under international law may be engaged only by other States. However, in 1987, Stephen Schwebel argued that private parties in contract-based arbitrations may pursue certain customary international law claims in their own name.2) E.g., denial-of-justice claims: see S Schwebel, International Arbitration: Three Salient Problems (Grotius Publishing 1987) ch 2. jQuery("#footnote_plugin_tooltip_7212_2").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Decades on, there are now several examples of contract-based arbitrations – under both ad hoc and institutional rules – where investors have sought to invoke a State’s breach of the minimum standards of treatment under customary international law as a separate head of claim.3) Channel Tunnel Group Limited and France-Manche SA v Secretary of Transport of the United Kingdom and Secretary of Transport of France (PCA Case No. 2003-06) Partial Award, 30 January 2007, (Eurotunnel); Dunkwa Continental Goldfields Limited & Continental Construction and Mining Company Limited v The Government of the Republic of Ghana (ICC Case No. 18294/ARP/MD/TO) Award, 9 July 2015 (Dunkwa); Biloune and Marine Drive Complex Ltd v Ghana Investments Centre and the Government of Ghana (UNCITRAL) Award on Jurisdiction and Liability, 27 October 1989, 95 ILR 184 (Biloune); Cambodia Power Company v Kingdom of Cambodia (ICSID Case No. ARB/09/18) Decision on Jurisdiction, 22 March 2011, (Cambodia Power); Caratube International Oil Company LLP & Mr Devincci Salah Hourani v Republic of Kazakhstan (ICSID Case No. ARB/13/13) Award, 27 September 2017, (Caratube II). jQuery("#footnote_plugin_tooltip_7212_3").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Such claims have presented few jurisdictional problems in contract-based ICSID arbitrations, given that Article 25 of the ICSID Convention allows any kind of legal dispute to be referred to the Centre, so long as that dispute arises “directly out of an investment” and other jurisdictional preconditions are satisfied. But international claims pursued outside of the ICSID regime raise additional and fundamental issues of international legal theory, such as the power of private parties to pursue international claims where that power has not been delegated through a treaty analogous to the ICSID Convention, or the need to exhaust local remedies in the absence of a provision to the effect of Article 26 of the ICSID Convention.

Still, international claims in both ICSID and non-ICSID arbitrations present a number of common issues, and it is here that we would like to add a few thoughts. Kate Parlett has previously summarised as follows:

the starting point of the analysis must be the scope of consent given in the arbitration clause. In a claim brought pursuant to a contract, it might also be relevant to consider the applicable law of the contract, since that law might incorporate customary international law.4) K Parlett, Claims under Customary International Law in ICSID Arbitration (2016) 31(2) ICSID Review 434. jQuery("#footnote_plugin_tooltip_7212_4").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Section A of this blog suggests an alternative approach to interpreting an arbitration clause for the purpose of determining whether the scope of the clause encompasses customary international law claims. The essence of this approach is that any such interpretation should be consistent with and draw upon the developed jurisprudence for other types of non-contractual claims in contract-based arbitrations. Section B draws attention to the apparently-overlooked question of whether the tribunal has the power to decide if a particular standard of customary international law is incorporated into the law governing the contract.

A. Customary International Law Claims as Non-Contractual Claims for the Purpose of Determining the Scope of the Arbitration Clause

A tribunal’s jurisdiction is limited by the scope of the parties’ consent in the arbitration agreement, which establishes the subjective arbitrability of a claim. An arbitration agreement may be drafted expressly to include (or to exclude) customary international law claims, in which case it is suggested that the tribunal must apply the principle of lex specialis and decide its jurisdiction ratione materiae accordingly. Absent an express enunciation, however, the question arises as to what contractual language will allow a tribunal to hear such claims (with the caveat that principles of interpretation are determined by the applicable law). Once examined, parallels may be drawn with other non-contractual claims brought under similar contractual language.

In Eurotunnel, the tribunal concluded that it lacked jurisdiction to consider customary international law claims extrinsic to the provisions of a concession agreement. The jurisdiction clause provided that “any dispute between the [parties] relating to this Agreement” would be submitted to arbitration,5) Eurotunnel (n 3) para 97. jQuery("#footnote_plugin_tooltip_7212_5").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); but the tribunal held that its jurisdiction was limited to claims implicating the rights and obligations of the parties under the concession agreement. The contract in Dunkwa featured a similarly broad arbitration clause, covering “[a]ll claims … arising, whether directly or indirectly out of, or in connection with” a Ghanaian-law-governed project agreement.6) Dunkwa (n 3) para 337. jQuery("#footnote_plugin_tooltip_7212_6").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Contrary to Eurotunnel, however, the tribunal acknowledged that this formulation could include non-contractual claims (the implication being that the tribunal may have found jurisdiction ratione materiae over claims for wrongful expropriation under customary international law). In Biloune, the investor’s claim for violation of his human rights was found to be beyond the tribunal’s jurisdiction on the wording of an arbitration clause which provided that “[a]ny dispute … in respect of an approved enterprise … may be submitted to arbitration”.7) Biloune (n 3) 188. jQuery("#footnote_plugin_tooltip_7212_7").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_7", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

In the context of ICSID arbitration, the tribunal in Cambodia Power found that it had jurisdiction to hear customary international law claims where three English-law-governed contracts referred to “any dispute or difference aris[ing] out of or in connection with” the relevant contract.8) Cambodia Power (n 3) para 336. jQuery("#footnote_plugin_tooltip_7212_8").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_8", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Moreover, the claimant was able to bring customary international law claims notwithstanding the designation of English law as the rules of law agreed by the parties pursuant to Article 42 of the ICSID Convention. The same interpretation of Article 42 was applied in Caratube II, where the jurisdiction clause covered “all disputes arising from the Contract”9) Caratube II (n 3) para 27. jQuery("#footnote_plugin_tooltip_7212_9").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_9", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); and the tribunal found, notwithstanding the choice-of-law clause, that it would be inconsistent with the aims of the ICSID Convention to disregard customary international law.

The above examples demonstrate that tribunals have not been entirely consistent in assuming jurisdiction over customary international law claims under broadly-drafted arbitration agreements. Moreover, this inconsistency does not sit easily alongside the position widely (although not universally) taken in respect of other non-contractual claims, e.g. tort, unjust enrichment, or statutory claims, which most tribunals have agreed to hear under arbitration clauses with similar broad wording.10) See, e.g., G Born, International Commercial Arbitration (Second Edition) (Kluwer 2014) 1345–1355. jQuery("#footnote_plugin_tooltip_7212_10").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_10", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); While the scope of even broadly-worded arbitration clauses must be determined with reference to the principles of interpretation existing in the applicable law, there appears to be no reason to differentiate between customary international law claims and other non-contractual claims for the purpose of this interpretation exercise. On the contrary, it seems only consistent for tribunals either to allow customary and other non-contractual claims to be heard under broadly-worded clauses, or to disallow both. Thus, when analysing whether a customary international law claim falls within the scope of an arbitration clause, it is submitted that tribunals should take into consideration the much richer jurisprudence pertaining to the permissibility of other non-contractual claims under broadly-worded clauses.

B. The Power of the Tribunal to Decide on the Incorporation of a Customary International Law Standard into the Law Governing the Contract

To the extent that a choice of national law to govern the contract may indeed suffice to open the door to claims based on customary international law, a number of issues remain to be resolved for such claims to be sustained. Kate Parlett has written that, for the purpose of presenting a customary international law claim in a contract-based arbitration:

(i) the relevant customary standard of treatment should be incorporated in the body of municipal law chosen to govern the contract;
(ii) the standard relied on should indeed be of customary nature; and
(iii) this standard should be capable of being invoked by the private party in its own capacity.11) Parlett (n 4) 441–447. jQuery("#footnote_plugin_tooltip_7212_11").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_11", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

To these three important prerequisites one might add a further issue of incidental nature. As noted by Dr Parlett, for a customary international law claim in contract-based arbitration to be successful, the customary rule relied on should form part of the body of national law applicable to the contract. However, as a matter of jurisdiction, it is not always clear, first and foremost, whether the arbitral tribunal should have the power to decide if the invoked rule of supposedly-customary nature forms part of the national law chosen by the parties. This issue appears analogous to the one debated by Jan Paulsson and Pierre Mayer—namely, whether an arbitral tribunal should be deemed competent to exclude certain rules from the body of substantive law agreed by the parties where such rules are demonstrated to be in contradiction with the constitution of the State of the agreed applicable law.12) J Paulsson, Unlawful Laws and the Authority of International Tribunals (2008) 23(2) ICSID Review 215; P Mayer, L’arbitre International et la Hiérarchie des Norms (2011) 2 Revue de l’Arbitrage 361; JS Betancourt, Understanding the ‘Authority’ of International Tribunals: A Reply to Professor Jan Paulsson (2013) 4(2) Journal of International Dispute Settlement 227. jQuery("#footnote_plugin_tooltip_7212_12").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_12", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

By analogy with the Paulsson / Mayer debate, one may be naturally inclined to answer the above threshold question with reference to the powers of the court of the State of the agreed applicable law. In this respect, the courts of some (not necessarily monist) legal systems are completely autonomous in deciding whether the relevant customary rule forms part of the national law. However, the courts of other (not necessarily dualist) legal systems may be prevented from deciding such issues altogether as a matter of law, or be allowed to resolve them only where the parliamentary body explicitly permits it.13) See AJ Belohlavek, “Czech Republic” in D Shelton, International Law and Domestic Legal Systems (OUP 2011) 202; EA Alkema, “Netherlands” in ibid, at 420. jQuery("#footnote_plugin_tooltip_7212_13").tooltip({ tip: "#footnote_plugin_tooltip_text_7212_13", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); At the same time, if the arbitral tribunal holds that it lacks jurisdiction to decide on the incorporation of the invoked customary rule in the substantive law chosen by the parties, it may thereby fail to determine the content of the applicable law and, accordingly, violate its duty to apply the law. This is therefore a further issue capable of determining the fate of a customary international law claim in a contract-based arbitration, which in our view merits further consideration.

Patrick Fox is an associate at Three Crowns LLP. Alexey Vyalkov is a trainee at the Stockholm Chamber of Commerce. The views expressed in this post are the authors’ personal views and do not necessarily reflect those of Three Crowns LLP or the Stockholm Chamber of Commerce.

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References   [ + ]

1. ↑ Case Concerning the Barcelona Traction, Light & Power Company Limited (Belgium v Spain) (Second Phase) [1970] ICJ Rep 3, 44. 2. ↑ E.g., denial-of-justice claims: see S Schwebel, International Arbitration: Three Salient Problems (Grotius Publishing 1987) ch 2. 3. ↑ Channel Tunnel Group Limited and France-Manche SA v Secretary of Transport of the United Kingdom and Secretary of Transport of France (PCA Case No. 2003-06) Partial Award, 30 January 2007, (Eurotunnel); Dunkwa Continental Goldfields Limited & Continental Construction and Mining Company Limited v The Government of the Republic of Ghana (ICC Case No. 18294/ARP/MD/TO) Award, 9 July 2015 (Dunkwa); Biloune and Marine Drive Complex Ltd v Ghana Investments Centre and the Government of Ghana (UNCITRAL) Award on Jurisdiction and Liability, 27 October 1989, 95 ILR 184 (Biloune); Cambodia Power Company v Kingdom of Cambodia (ICSID Case No. ARB/09/18) Decision on Jurisdiction, 22 March 2011, (Cambodia Power); Caratube International Oil Company LLP & Mr Devincci Salah Hourani v Republic of Kazakhstan (ICSID Case No. ARB/13/13) Award, 27 September 2017, (Caratube II). 4. ↑ K Parlett, Claims under Customary International Law in ICSID Arbitration (2016) 31(2) ICSID Review 434. 5. ↑ Eurotunnel (n 3) para 97. 6. ↑ Dunkwa (n 3) para 337. 7. ↑ Biloune (n 3) 188. 8. ↑ Cambodia Power (n 3) para 336. 9. ↑ Caratube II (n 3) para 27. 10. ↑ See, e.g., G Born, International Commercial Arbitration (Second Edition) (Kluwer 2014) 1345–1355. 11. ↑ Parlett (n 4) 441–447. 12. ↑ J Paulsson, Unlawful Laws and the Authority of International Tribunals (2008) 23(2) ICSID Review 215; P Mayer, L’arbitre International et la Hiérarchie des Norms (2011) 2 Revue de l’Arbitrage 361; JS Betancourt, Understanding the ‘Authority’ of International Tribunals: A Reply to Professor Jan Paulsson (2013) 4(2) Journal of International Dispute Settlement 227. 13. ↑ See AJ Belohlavek, “Czech Republic” in D Shelton, International Law and Domestic Legal Systems (OUP 2011) 202; EA Alkema, “Netherlands” in ibid, at 420. 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: International Arbitration and the Rule of Law
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EA Court of Justice: sensitization must be stepped up - The New Times

Google International ADR News - Mon, 2018-06-25 15:09

The New Times

EA Court of Justice: sensitization must be stepped up
The New Times
Arbitration is one of the modes of Alternative Dispute Resolution (ADR) contrary to the classic mechanism of dispute settlement through litigation. Under the EAC Treaty, ... It is an international court with a regionally-focused jurisdiction. More ...

Digital Business in the United Kingdom - Lexology

Google International ADR News - Mon, 2018-06-25 06:42

Digital Business in the United Kingdom
Lexology
International data transfers. What rules and restrictions apply to the cross-border transfer of personal data collected in the course of digital business? Under the current regime (ie, the regime governed by the Data Protection Act), transfers of data ...

The Belgian Government unveils its plan for the Brussels International Business Court (BIBC)

Kluwer Arbitration Blog - Mon, 2018-06-25 02:59

Guillaume Croisant

Background

In October 2017, in the wake of Brexit, Belgium was one of the first European jurisdictions to announce its intention to set up a specialised English-speaking court with jurisdiction over international commercial disputes, the Brussels International Business Court (“BIBC”).

The stated aim of this new court is to position Brussels as a new hub for international commercial disputes, in line with its international status as de facto capital of the EU and seat of many international companies and institutions (NATO, World Customs Organisation, Benelux, etc.). As discussed in previous posts on this blog, similar projects are ongoing in several jurisdictions throughout the EU, including France, the Netherlands and Germany.

An update version of the bill has been submitted to the Belgian Parliament on 15 May 2018, after that the Government’s initial draft faced criticisms from the High Council of Justice (relating to the BIBC’s independence and impartiality, its source of funding and its impact on the ordinary courts) and was subject to the review of the Conseil d’Etat.

The Belgian Government aims to have the BIBC up and running by 1 January 2020.

Jurisdiction

The BIBC will have jurisdiction over disputes:

  • which are international in nature, i.e. where (i) the parties have their establishment in different jurisdictions, (ii) a substantial part of the commercial relationship must be performed in a third country, or (iii) the applicable law to the dispute is a foreign law. In addition, another language than French, Dutch or German (Belgium’s official languages, which are already used before ordinary courts) must have been used frequently by the parties during their commercial relationship;
  • among “enterprises” (i.e. every entity pursuing an economic purpose, including public enterprises which provide goods and services on a market basis); and
  • provided that the parties have agreed to the BIBC’s jurisdiction before or after the crystallisation of their dispute.

Procedure

Subject to potential amendments in Parliament, the main procedural hallmarks of the BIBC can be summarised as follows:

  • the procedure will be conducted in English (notices and submissions, evidence, hearings, judgments, etc.);
  • the procedure will be based on the UNCITRAL Model Law on international arbitration;
  • the cases will be heard by ad hoc chambers of three judges, one professional and two lay judges (appointed by the president of the BIBC on the basis of a panel of Belgian and international experts in international business law), assisted by the Registrar of the Brussels Court of Appeal;
  • the BIBC will be granted the power to issue provisional and protective measures (including upon ex parte requests);
  • no appeal will be open against the BIBC’s decision (with the exception of an opposition/tierce opposition before the BIBC for absent parties/interested third parties, and a pourvoi en cassation on points of law before the Supreme Court);
  • the BIBC should be self-financing and the court fees are therefore going to be significantly increased (to around € 20,000/case).

A potential competitor to commercial arbitration?

It is clear from the above that the envisaged procedure before the BIBC, based on the UNCITRAL Model Law and drawn up for international commercial disputes, offers many features traditionally associated with arbitration (necessity for the parties to agree on its jurisdiction, specialised judges, absence of appeal, procedural flexibility, etc.), at a much lesser cost.

However, the BIBC will remain a State court. This means, in particular, that its judgments will not benefit from the recognition and enforcement regime of the 1958 New York Convention (although, where the defeating party will have assets within the EU, this consequence will likely be offset by the application of the Brussels I recast regulation). In addition, the BIBC will not offer two procedural hallmarks often perceived by commercial parties as significant advantages of arbitration over State court proceedings: the confidentiality of the hearing and judgment, and the possibility to appoint/nominate the judges who will hear the dispute.

As a result, it remains to be seen whether the BIBC, and similar English-speaking commercial courts which are being established in other jurisdictions, will become a competitor to international arbitration (especially for cases requiring cost-effective proceedings) or if they will merely attract commercial disputes which would have been heard by ordinary courts, potentially from across the Channel. In any case, parties are likely to await the successful completion of a few procedures before trusting these new commercial courts with their more crucial and complex disputes.

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EACJ: Sensitization must be stepped up - The New Times

Google International ADR News - Sun, 2018-06-24 17:25

The New Times

EACJ: Sensitization must be stepped up
The New Times
Arbitration is one of the modes of Alternative Dispute Resolution (ADR) contrary to the classic mechanism of dispute settlement through litigation. Under the EAC Treaty, ... It is an international court with a regionally-focused jurisdiction. More ...

Brace for Impact? Examining the reach of Achmea v Slovakia

Kluwer Arbitration Blog - Sun, 2018-06-24 03:33

Florian Stefan

Over the past two months, the judgment by the Court of Justice of the European Union (“CJEU”) in Slovak Republic v Achmea BV, hereinafter referred to as “Achmea”, has created much discussion among arbitration practitioners. Its reasoning and implications have already been addressed in several Kluwer Arbitration blog posts, available here, here and here. The overall consensus seems to be that the CJEU effectively put an end to investment treaty arbitration based on a bilateral investment treaty (“BIT”) between member states of the European Union (so-called “Intra-EU BITs”). But can the decision of the CJEU in Achmea really be applied to all Intra-EU BITs? A closer look at the Achmea judgment reveals that its reasoning is specific to the BIT in question and its general reach might be limited.

 

An Adverse Effect on the Autonomy of EU law?

The reasoning of the CJEU in Achmea is based on two assumptions. First, arbitral tribunals established under the bilateral investment treaty between the Kingdom of the Netherlands and the Czech and Slovak Federative Republic, hereinafter referred to as the “Netherlands – Slovakia BIT”, may interpret or apply EU law.[1] Second, arbitral tribunals constituted in accordance with the dispute resolution provision of the Netherlands – Slovakia BIT cannot be classified as a tribunal of an EU member state in the sense of Article 267 of the Treaty on the Functioning of the European Union (“TFEU”) and are thus not capable to request a preliminary ruling from the CJEU. It follows from these two assumptions that the CJEU would not be able to exercise its authority over disputes involving the application of EU law. As a consequence, the CJEU considered the arbitration clause in Article 8 of the Netherlands – Slovakia BIT to be incompatible with EU law.

With regards to the applicability of EU law Article 8 (6) of the Netherlands – Slovakia BIT is pertinent. The provision provides that arbitral tribunals shall decide on the basis of the law, taking into account in particular though not exclusively the law in force of the contracting party concerned, the provisions of the treaty, other relevant agreements between the contracting parties, the provisions of special agreements relating to the investment and the general principles of international law. Given that the law in force of the contracting party concerned is to be taken into account, which in the Achmea case was Slovakian law, and that EU law forms part of the law in force in every EU member State, the CJEU held that the arbitral tribunal may be called on to interpret or indeed to apply EU law.

Very often the CJEU follows the opinion of the Advocate General, but in the Achmea judgment it did not. Advocate General Wathelet, whose opinion is available here, held that disputes between investors and states to be settled under Article 8 of the Netherlands – Slovakia BIT do not concern the interpretation and application of EU law. In particular, the Advocate General considered EU law to have no impact on the substance of the dispute since the Claimant only invoked breaches of the BIT and neither party relied on provisions of EU law. Furthermore, the Advocate General held that arbitral tribunals constituted under Article 8 (6) of the Netherlands – Slovakia BIT are tribunals in the sense of Article 267 TFEU and are as such capable of referring a dispute to the CJEU for a preliminary ruling.

Although the Advocate General’s reasoning diverged from that of the CJEU, both departed from the same viewpoint, namely that EU Law could potentially be applied by an arbitral tribunal settling a dispute between an investor and a state under the Netherlands – Slovakia BIT. This seems reasonable since Article 8 (6) of the Netherlands – Slovakia BIT provides that the arbitral tribunal shall take into account the law in force of the contracting party concerned. Notably, the second question, i.e. whether an arbitral tribunal settling a BIT dispute is considered a tribunal in accordance with Article 267 TFEU, may only arise if the first question, i.e. whether EU law might be applicable, is answered affirmatively.

But what would be outcome if the provisions relating to applicable law were different? In particular, would the reasoning on the adverse effect of the arbitration clause on the autonomy of EU law still apply? If the arbitral tribunal were to decide the dispute pursuant to rules that do not touch upon EU law, it is difficult to imagine how the autonomy of EU law could potentially be endangered.

 

Different BITs, Different Laws

A cursory review of the provisions on the applicable law found in Intra-EU BITs shows that the presumption of a general reach of the Achmea decision on all Intra-EU BITs might be premature.

Whilst a considerable number of Intra-EU BITs indeed refer to domestic or national laws of contracting states, and in accordance with the reasoning of the CJEU thereby also to EU law, many do not. In fact, there are Intra-EU BITs that do not contain an explicit rule on the applicable law to be applied by the arbitral tribunal when deciding on a dispute between an investor and a contracting party. Still others do not provide for the applicability of domestic laws but for a decision in virtue of the provisions of the BIT and general principles of international law.

By way of example, the BIT concluded in 1997 between Greece and Estonia stipulates in Art 9 (4) that an arbitral tribunal settling a dispute between an investor and a contracting party “shall decide the dispute in accordance with the provisions of this agreement and the applicable rules and principles of international law”. Thus, the reasoning of the CJEU in Achmea, whereas the arbitral tribunal has to take into account EU law as part of the laws of the contracting states when ruling on possible violations of the BIT, could not be applied to a case under the BIT between Greece and Estonia.

The same holds true for the Energy Charter Treaty (“ECT”), which provides in Article 26 (6) that an arbitral tribunal deciding a dispute between an investor and a contracting party shall decide the issues in dispute in accordance with the ECT and applicable rules and principles of international law. Again, the concern of the court that its primacy on the interpretation of EU law would be endangered could not be per se an issue in a case under the ECT.

Interestingly, not even all of Slovakia’s BITs provide for the applicability of its domestic laws when deciding a dispute between an investor and a state. For instance, this is the case in the BIT concluded in 1990 between the United Kingdom and the Slovak Republic. Art 8 (3) of that BIT foresees that arbitral tribunals concerned with disputes between an investor and a host state, “shall, in particular, base its decision on the provisions of [the] Agreement”, without making any reference to domestic laws.

 

The Direct Impact is Technically Limited

There might be other ways for an arbitral tribunal constituted on the basis of an Intra-EU BIT to consider the applicability or interpretation of EU law. For instance, by holding that EU law forms part of the international legal order as held by the tribunal in Electrabel v Hungary,[2] or to consider it as a fact, as was the case in Micula v Romania,[3] where the EU accession of Romania played a considerable role in the considerations of the tribunal.

However, in the Achmea judgment the CJEU based its finding that EU law might be applicable or interpreted by the arbitral tribunal, on the explicit provision on applicable law of the Netherlands – Slovakia BIT. As the provisions on applicable law found in the close to 200 Intra-EU BITs differ, the reasoning of the CJEU itself limits the decision’s impact.

Technically, the Achmea judgment may only have a direct impact on those Intra-EU BITs that contain a similar rule on the applicability of domestic laws. For all others, there is no reason to automatically assume an adverse effect on the autonomy of EU law. Rather, the applicability of EU law needs to be examined on a case by case basis.

 

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[1]               The bilateral investment treaty between the Kingdom of the Netherlands and the Czech and Slovak Federative Republic entered into force in 1992. As a successor to the Czech and Slovak Federative Republic, the Slovak Republic succeeded to the latter’s rights and obligations under the treaty in 1993. In 2004 the Slovak Republic became a member of the European Union, thus making the Netherlands – Slovakia BIT an intra-EU BIT.

[2]               Electrabel S.A. v. Republic of Hungary, ICSID Case No. ARB/07/19, Decision on Jurisdiction, Applicable Law and Liability, 30 November 2012, para 4.122.

[3]               Ioan Micula, Viorel Micula, S.C. European Food S.A, S.C. Starmill S.R.L. and S.C. Multipack; S.R.L. v. Romania, ICSID Case No. ARB/05/20, Final Award, 11 December 2013.

 

 

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MPs square off over GM compo inquiry - Great Southern Weekender (press release)

Google International ADR News - Sat, 2018-06-23 02:38

MPs square off over GM compo inquiry
Great Southern Weekender (press release)
Ms Evers recommends that consideration be given to introducing an alternative dispute resolution service for farming communities where GM crops are grown. But Shooters, Fishers and Farmers Party (WA) MLC for Agricultural Region Rick Mazza ... “Growing ...

Arbitration under the Lebanese Public Private Partnership Law

Kluwer Arbitration Blog - Sat, 2018-06-23 02:31

Michel Nassar

Young ICCA

On 9 September 2017, Lebanon passed Law No. 48 “Regulating Public Private Partnerships” (“PPP Law”) ahead of the CEDRE Conference (acronym in French for “Economic Conference for Development, through Reforms and with the Businesses”) held in Paris on 6 April 2018. This conference brought USD 11 billion of funding for Lebanon’s infrastructure which is in a critical state.

This most awaited law is based on a draft prepared in 2010 by the Lebanese High Council for Privatization and Public Private Partnership (“PPP”). The law was finally enacted just in time for the CEDRE Conference. As PPP is the preferred vehicle for foreign investments, the new law paves the way for a more prevalent choice for arbitration as dispute resolution mechanism.

1. The impact of the CEDRE Conference

Peter Mousley, a PPP specialist at the World Bank’s Beirut office, said in an interview: “Obviously [local banks] want to take informed risks.” Mousley continued: “Doing it in a PPP framework that takes proper account of the risks involved is liable to create a more enabling environment for infrastructure investment.”

The Secretary General of the High Council for Privatization and PPP, Ziad Hayek, explained in an interview that PPP is “a partnership in risks”. This means that the private company winning the PPP tender — depending on the terms of the agreement — might take on the risk of financing, constructing, and operating the project, while the government deals with revenue guarantees to the company, political risk, or environmental risk. “For each of these risks, then, [comes] a conversation about how you’re going to mitigate it,” Hayek says, adding that transparency is important in the tender process. Companies do not want to invest heavily in preparing for bids, i.e. designing the project and negotiating financing options with banks, which can be costly, if the evaluation methodology is not made public and the selection process is opaque.

Investors and fund managers such as those who were present at the CEDRE Conference have the option of investing in Lebanon or elsewhere. Invariably, they will look for jurisdictions that provide lucrative returns and low levels of risk.

2. Arbitration and public procurement projects before the PPP Law

Before the PPP Law was enacted, recourse to arbitration for local and foreign investors in procurement projects in Lebanon was limited mainly because it was subject to a lengthy authorization process, which often had a political connotation to it.

The Libancell and Cellis case in the early 2000’s serves as a prime example of how uncertain recourse to arbitration used to be. Those two mobile companies operated Lebanon’s first-generation mobile network. Their contracts provided for arbitration clauses. When the government moved to terminate the contracts prematurely the companies filed for arbitration.

Consequently, the State Council, Lebanon’s highest administrative court, issued an opinion according to which the arbitration clauses were null and void. Therefore, the state could not be party to the arbitration. Instead, the Council ruled that it had the competence of hearing cases against state-related entities. Despite this ruling, each investor ultimately won an award in CNUDCI proceedings under their respective country’s BIT with Lebanon.

In response, improvement was made with Law No. 440 of 29 July 2002, that amended Article 762 of the Lebanese Code of Civil Procedure, allowing recourse to arbitration in a dispute with a state-entity:

[…]

The State and public legal entities may resort to arbitration regardless of the nature of the contract in dispute.

[…]

the arbitration clause or the arbitration submission agreement included in the administrative contracts will only become effective after being approved by virtue of a decree issued by the Council of Ministers following the proposal of the competent Minister with regards to the State, or the proposal of the supervising authority with regards to public legal entities.

However, effective recourse to arbitration remained uncertain — even if included in a public procurement agreement, the validity of an arbitration clause continued to be subject to the issuance of a decree by the executive power. Thus, in absence of political approval, recourse to arbitration would be paralyzed.

3. The new PPP Law

The CEDRE Conference organized by France was the final turning point because it required Lebanon to establish a certain legal framework as a condition for being granted funding. The envisaged changes were, for instance, the enactment of a new water law; the appointment of the members of regulatory authorities for the telecommunications, energy and aviation sectors; and an effective sharing of risks between state and investor.

3.1. The PPP Law allows recourse to arbitration

Article 10 of the recent PPP Law explicitly authorizes recourse to arbitration in the Partnership Agreement (as defined in Article I of the law) to be concluded between the state-party and the investor:

[…]
The Partnership Agreement shall include the following:

[…]
15- The dispute resolution mechanism, which can include mediation and domestic and international arbitration.

Ziad Hayek highlighted at the Lebanon Investment in Infrastructure Conference held in Beirut on 6 March 2018, that the new PPP Law:

[…] has facilitated the participation of the private sector – in the full spirit of partnership. It did that by recognizing the need to share risks and mitigate them; by providing for local and international arbitration; by exempting project companies from regulations requiring Lebanese control, ownership and management; and by allowing project companies to benefit from the provisions of the existing laws of investment promotion and asset securitization.

Article 10 of the new PPP Law will allow investors to benefit more easily from a dispute resolution clause providing for arbitration in the Partnership Agreement, since the state-party won’t need a specific authorization to be able to resolve the dispute in arbitration.

Arbitration is now accepted by the Lebanese government as the impartial forum allowing for effective risk sharing between the state and the investor, assuring foreign investors.

However, the arbitration clause won’t be automatically included in the draft Partnership Agreement proposed by the project committee. Consequently, the investor will have to negotiate such a clause and its terms on a case by case basis.

3.2. The PPP Law secures investment law

As noted by Ziad Hayek, operating through a PPP vehicle should not prevent local and foreign investors to benefit from the protection granted under Law No. 360 of 16 August 2001 (“Investment Law”).

In that sense, Article 16 of the PPP Law provides that:

The provisions of this law shall not prevent the Private Partner and the Project Company from benefiting from the provisions of Law No. 360 dated August 16, 2001 and relating to the development of investments in Lebanon and from the provisions of Law No. 705 dated December 9, 2005 and relating to the securitization of assets.

The Investment Law provides investors with administrative and financial exemptions and facilities. Article 18 of the Investment Law also allows recourse to arbitration, although only after a lengthy authorization process.

This legal framework for investment protection granted by the new PPP Law and the Investment Law comes in addition to existing international agreements entered into by Lebanon.

4. Existing BITs and trade agreements

Lebanon’s substantial investment protection is finally fully efficient since an authorization by the executive power is no longer required to allow conducting an arbitration involving a state-party.

In addition, the country has signed so far fifty-four Bilateral Investment Treaties (“BIT”). The BITs provide primarily for fair and equitable treatment on a non-discriminatory basis, and for full protection and security of foreign investments in both countries.

Lebanon has also a long tradition of openness towards the international community having ratified several trade agreements with major trade partners, such as the Euro-Mediterranean Partnership Agreement (EMP), the Free Trade Agreement with the European Free Trade Association (EFTA), the Greater Arab Free Trade Area (GAFTA), the Unified Agreement for the Investment of Arab Capital in the Arab States, the Lebanon-US Trade and Investment Framework Agreement (TIFA), and the Lebanon-Turkey Association Agreement.

5. Conclusion

Even if the new PPP Law and the investment protection framework provide for protection for investors in Lebanon, it remains nonetheless subject to the condition that an appropriate and efficient jurisdiction can hear their claims should a dispute arise. Therefore, arbitration will be the preferred method of dispute settlement over litigation before the Lebanese courts.

Consequently, foreign investors that will operate in Lebanon should negotiate robust dispute resolution clauses in order to efficiently protect their investments. To this end, Article 10 of the PPP Law allows an escalation clause, which includes arbitration as ultimate recourse.

Throughout these projects, legal practitioners should advise their clients also taking into account sector specific regulations (e.g. energy, oil & gas and telecommunications) in order to offer the most suitable dispute resolution mechanism.

With the new PPP Law, Lebanon makes yet another step towards a more arbitration-friendly environment. However, further efforts are still needed in order to make recourse to arbitration a natural choice of dispute resolution. Investors should therefore pay special attention to dispute resolution clauses when negotiating a Partnership Agreement.

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