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Rebalancing the Asymmetric Nature of International Investment Agreements?

Kluwer Arbitration Blog - Mon, 2018-04-30 01:40

Kun Fan

ITA

In the context of the backlash against investor-state dispute settlement (“ISDS”), one of the main criticisms is the asymmetric nature of investment treaties, which impose numerous obligations on the States, but do not seem to hold corporations accountable for the social, environmental and economic consequences of their activities. Some recent developments reflect a redirection away from a sole focus on investor protection, and a move towards a more balanced approach, by respecting States’ regulatory space and introducing a more tenable link between business and human rights and investment treaty instruments.

One attempt to balance between investment protection and the right to regulate is to provide a carve-out for regulatory measures. For instance, some recent treaties, including in Trans-Pacific Partnership (“TTP”)1)Annex 9-B of the TPP. jQuery("#footnote_plugin_tooltip_5231_1").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, The Canada-European Union (EU) Comprehensive Economic and Trade Agreement (“CETA”)2)Article 28 of the CETA. jQuery("#footnote_plugin_tooltip_5231_2").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, China-Korea Free Trade Agreement3)Annex 12-B, 3(b) of the China-Korea Free Trade Agreement. jQuery("#footnote_plugin_tooltip_5231_3").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });, exempt non-discriminatory regulatory measures for lawful public welfare objectives (public health, safety and environment) from the indirect expropriation obligations. China-Australia Free Trade Agreement (“ChAFTA”)4)Article 9.11 of the ChAFTA. jQuery("#footnote_plugin_tooltip_5231_4").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); takes a step further to provide that non-discriminatory measures for legitimate public welfare objectives are not subject to the ISDS claims. If the respondent deems that its disputed measure falls within such a carve-out, it could deliver a notice elaborating the basis for its position to the claimant and non-disputing party, which is referred to as the “public welfare notice”. This notice will lead to a 90-day consultation between the respondent and non-disputing party, during which the dispute resolution procedure will be suspended. The public welfare notice contained in the ChAFTA is an innovative approach and serves as a strong safeguard for State’s regulatory autonomy.

Another development is the emphasis on corporate social responsibility (“CSR”), human rights and sustainable development in some recent treaties. For instance, the Dutch model BIT 2004 in its preamble recognizes that “the development of economic and business ties will promote internationally accepted labour standards” and that “these objectives can be achieved without compromising health, safety and environmental measure of general application”5)Preamble of the Austrian Model BIT 2010. jQuery("#footnote_plugin_tooltip_5231_5").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });. The Dutch government has also linked the OECD guidelines to export credits. Investors that want to have their capital needs insured by the government are obliged to sign a declaration of intent that they will endeavor to implement OECD guidelines.

The Austrian Model BIT 2010 states the commitment to “achieving these objectives in a manner consistent with the protection of health, safety, and the environment, and the promotion of internationally recognised labour standard”, and emphasizes “the necessity for all governments and civil actors alike to adhere to UN and OECD anti-corruption efforts, most notably the UN Convention against Corruption (2003)”. It further acknowledges that “investment agreements and multilateral agreements on the protection of environment, human rights or labour rights are meant to foster global sustainable development and that any possible inconsistencies there should be resolved without relaxation of standards of protection”.6)See “Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad”. jQuery("#footnote_plugin_tooltip_5231_6").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Since 2010, Canada has also included a voluntary CSR provision in the Bilateral Investment Treaties (“BITs”) it signs, emphasizing that “each Party should encourage enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate internationally recognized standards of CSR their practices and internal policies, such as statements of principle that have been endorsed or are supported by the Parties. These principles address issues such as labour, the environment, human rights, community relations, and anti-corruption”.

The India Model BIT (draft) issued in March 2015 (“The Indian Model BIT March Draft”) goes further by providing for positive obligations on investors and their investments, in terms of obligation against corruption, obligation to comply with the provisions of Host State’s law on taxation, obligation to compliance with the Law of Host State, including, among other things, environmental law applicable to the investment and its business operations; law relating to conservation of natural resources, law relating to human rights; relevant national and internationally accepted standards of corporate governance and accounting practices.7)Articles 9, 11 and 12 of the Indian Model March Draft. jQuery("#footnote_plugin_tooltip_5231_7").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_7", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); 
Compliance with these positive obligations is necessary to benefit from the provisions of this Treaty.8) Article 9 of the Indian Model March Draft. jQuery("#footnote_plugin_tooltip_5231_8").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_8", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Significantly, it also allows the State to initiate a counterclaim against the Investor or Investment for a breach of these positive obligations before a tribunal and seek as a remedy suitable declaratory relief, enforcement action or monetary compensation.9) Article 14.11 of The Indian Model March Draft. jQuery("#footnote_plugin_tooltip_5231_9").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_9", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

In December 2015, the Indian Ministry of Finance released an updated and approved version of the Indian Model Bilateral Investment Treaty (“Indian Model BIT December Version”). The final December 2015 model took a number of steps back from the March 2015 draft by diluting or entirely removing several noteworthy provisions, although a few interesting features remain. For instance, CSR provision is incorporated, though in a much softer language, providing that “investors and their enterprises operating within its territory of each Party shall endeavour to voluntarily incorporate internationally recognized standards of CSR in their practices and internal policies, such as statements of principle that have been endorsed or are supported by the Parties. These principles may address issues such as labour, the environment, human rights, community relations and anti-corruption.”10)Article 12 of the Indian Model BIT December Version. jQuery("#footnote_plugin_tooltip_5231_10").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_10", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The Ministry of Finance confirmed that the Indian Model BIT will be used as the starting point for the negotiation of all standalone BITs and the investment chapters of Free Trade Agreements.

Norway first attempted to incorporate by reference a CSR-style provision in its draft Norwegian Model BIT (2007), stating that “parties agree to encourage investors to conduct their investment activities in compliance with the OECD Guidelines on Multinational Enterprises and to participate in the UN Global Compact”.11)Article 32 of the draft Norwegian Model BIT 2007. jQuery("#footnote_plugin_tooltip_5231_11").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_11", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Subsequently, the government withdrew its draft Model BIT in 2009, following widespread public criticism. Built on the previous draft in 2007, Norway reintroduced its new draft Model BIT in May 2015. The shift from a sole focus on investment protection is reflected in the preamble of the Norwegian Model BIT 2015, which emphasized the “importance of CSR”, and reaffirmed “their commitment to democracy, the rule of law, human rights and fundamental freedoms in accordance with their obligations under international law, including the principles set out in the United Nations Charter and the Universal Declaration of Human Rights”, as well as the commitment to prevent and combat corruption. The Norwegian Model BIT 2015 expressly preserves the States’ right to regulate for the protection of health, safety, human rights, labour rights, resource management or environmental concerns, and precludes states from waiving or derogating from such measures as an encouragement of investment. It also reserves the state’s right to adopt or enforce measure necessary to protect public morals or to main public order; to protect human, animal or plant life or health, and to protect the environment.12) Articles 12, 11 and 24 of the draft Norwegian Model BIT 2015. jQuery("#footnote_plugin_tooltip_5231_12").tooltip({ tip: "#footnote_plugin_tooltip_text_5231_12", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

The above developments propose some novel reforms, reflecting the aim of promoting alignment of international investment agreements with sustainable development objectives. It remains to be seen whether these countries or their treaty partners will seek to incorporate those more progressive features in the forthcoming treaty negotiations, how foreign investors will react to these instruments, and what the potential business costs of doing this are.

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References   [ + ]

1. ↑ Annex 9-B of the TPP. 2. ↑ Article 28 of the CETA. 3. ↑ Annex 12-B, 3(b) of the China-Korea Free Trade Agreement. 4. ↑ Article 9.11 of the ChAFTA. 5. ↑ Preamble of the Austrian Model BIT 2010. 6. ↑ See “Doing Business the Canadian Way: A Strategy to Advance Corporate Social Responsibility in Canada’s Extractive Sector Abroad”. 7. ↑ Articles 9, 11 and 12 of the Indian Model March Draft. 8. ↑ Article 9 of the Indian Model March Draft. 9. ↑ Article 14.11 of The Indian Model March Draft. 10. ↑ Article 12 of the Indian Model BIT December Version. 11. ↑ Article 32 of the draft Norwegian Model BIT 2007. 12. ↑ Articles 12, 11 and 24 of the draft Norwegian Model BIT 2015. 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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Photo Album: 2018 ABA SDR Conference

ADR Prof Blog - Sun, 2018-04-29 18:54
Continuing my tradition, I took photos of folks at the recent ABA Section of Dispute Resolution conference. You can click here to see the photo collections I previously posted, along with an explanation of what they represent. Below are pictures from the conference, which are limited to shots (1) of people with whom I happened … Continue reading Photo Album: 2018 ABA SDR Conference →

Latest Developments of Arbitration in the DIFC: On Arbitrability and Status as a Conduit

Kluwer Arbitration Blog - Sat, 2018-04-28 17:32

Gordon Blanke

To readers of this Blog, the Dubai International Financial Centre (DIFC) is well known as an arbitration-friendly seat of arbitration in its own right. Developments there are fast apace and have more recently given rise to two challenge actions that, in turn, have raised considerations of arbitrability within the DIFC and the status of the DIFC Courts as a conduit jurisdiction. Both of these challenges arose within the context of applications for recognition and enforcement of DIFC-LCIA arbitration awards before the DIFC Courts. In both instances, the DIFC Courts dismissed the challenge as unmeritorious and proceeded to recognition and enforcement without further ado.

In the first case, which dates back to 2016 (but has only been reported on the DIFC Court website most recently) (see Gauge Investments Limited v. Ganelle Capital Limited [2016] DIFC ARB 003/2016), Sir Richard Field rejected the award debtor’s challenge to the effect that the subject matter of the arbitration was non-arbitrable and that the award violated UAE public policy. For the avoidance of doubt, the disputed arbitration was seated in the DIFC and governed by DIFC Law on merits and procedure under the auspices of the DIFC-LCIA. In brief, the Sole Arbitrator rejected all Gauge’s pleaded breaches of the regulatory rules of the Dubai Financial Services Authority (DFSA) and Gauge’s claims for civil law remedies under Arts 65 and 94 of the DIFC Regulatory Law (see DIFC Law No. 1 of 2004), i.e. a declaration that the parties’ underlying debt advisory agreement was null and void and an award of compensation for the various pleaded breaches.

Justice Sir Field, in turn, was unimpressed by the award debtor’s argument that the Sole Arbitrator’s findings violated basic principles of arbitrability and UAE public policy and that the award therefore had to be refused enforcement under Art. 41(2)(b)(i) and (iii) of the DIFC Arbitration Law. In Field’s self-explanatory assessment:

“43. Plainly, steps or proceedings taken by the DFSA and the FMT [the Financial Markets Tribunal] under their enforcement, disciplinary and adjudicative powers will not be undertaken in arbitration proceedings. This is so, first, because it is inconceivable that the DFSA and the FMT would agree to perform these functions through the medium of arbitration and, second, because as matter of statutory interpretation, neither the DFSA nor the FMT can delegate to an arbitral tribunal their enforcement, disciplinary and adjudicative powers. Does it follow that where a user of financial services relies on regulatory breaches to found a private civil remedy under Article 65 or Article 94 in arbitration proceedings that such proceedings are non-arbitrable and/or contrary to the public policy of the UAE?

[…]

46. As exemplified by Khorafi et al v (1) Bank Sarasin-Alpen (ME) Ltd and (2) Bank J Safra Sarasin Ltd (formerly Bank Sarasin & Co Ltd) (CFI 026/2009 and CA 003/2015), Articles 65 and 94 of the Regulatory Law contemplate proceedings before a DIFC Court to which the DFSA is not a party and in which private civil remedies are sought on the back of breaches of DFSA rules and regulations. In my judgment, such civil claims are arbitrable and are not contrary to the public interest of the UAE. They do not trespass on or conflict with the public functions of the DFSA. A party to an arbitration asserting a civil contract remedy founded on a regulatory breach or breaches would remain free to present a complaint to the DFSA and the DFSA would remain free of its own motion to investigate the breaches relied on in the arbitration proceedings and to bring disciplinary proceedings if thought appropriate. The doctrine of res judicata would not apply since the former proceeding will have involved a private civil claim, whilst the other will have been in the nature of public disciplinary/enforcement proceedings.”

In other words, absent any statutory prohibition to the contrary, the civil law consequences of any DFSA regulatory matters are clearly arbitrable under DIFC Law. Arbitration in this sense provides an alternative to recourse to the otherwise competent DIFC Courts.

The second case (see ARB 006/2017 – Isai v. Isabelle, Amended Orders with Reasons of H.E. Justice Omar Al Muhairi, dated 28 February 2018) invites re-consideration of the proper competence of the DIFC Courts as a conduit. I have discussed the concept and role of the DIFC as a conduit jurisdiction in a number of previous blogs (most recently, see http://arbitrationblog.kluwerarbitration.com/2017/12/18/difc-courts-conduit-saving-grace-just-lifeline/) and will not repeat this here. Suffice it to recall that previous reporting has raised concerns that the days of the DIFC as a conduit may be counted. Al Muhairi’s findings in Isai v. Isabelle give hope that the DIFC Courts’ role as a conduit jurisdiction has been granted a new lease of life, at least for purposes of recognition and enforcement of DIFC-LCIA awards rendered in onshore Dubai (irrespective of the location of assets of the award debtor, i.e. whether on- or offshore).

More specifically, Al Muhairi did not hesitate to confirm the concurrent jurisdiction of the onshore Dubai and the offshore DIFC Courts for recognition and enforcement of a DIFC-LCIA award rendered in onshore Dubai (as the seat of the arbitration) even absent any assets of the award debtor offshore. In doing so, Al Muhairi rejected the award debtor’s application for dismissal of the awards creditor’s application for recognition and enforcement before the DIFC Courts. Al Muhairi had no doubt that the DIFC Courts had proper jurisdiction to recognise and enforce the subject DIFC-LCIA award by virtue of Art. 42(1) of the DIFC Arbitration Law, which empowers the DIFC Courts to recognise as binding any arbitral award “irrespective of the State or jurisdiction in which it was made”. The Judge correctly identified as a “gateway” for the Court’s jurisdiction Art. 5(A)(1)(e) of the Judicial Authority Law (which confers exclusive jurisdiction on the DIFC Courts to hear and determine any action over which the Courts have jurisdiction in accordance with DIFC Laws and Regulations) read together with Art. 8(2) of Dubai Law No. 9 of 2004, as amended by Dubai Law No. 7 of 2011 (which requires the DIFC Courts’ jurisdiction to be determined by reference to DIFC Laws) (paras 13-16). Pursuant to Al Muhairi, neither the Judicial Authority Law nor the DIFC Arbitration Law contained any requirement for a connection with the DIFC as a pre-requisite for the DIFC Courts’ competence to hear an action for recognition and enforcement (para. 16). Instead, he relied upon Art. 7 of the Judicial Authority Law to emphasise the concurrent jurisdiction of both the onshore and offshore courts, terming the two courts’ jurisdictions “complementary”:

“In enacting Article 7 of the Dubai Judicial Authority Law, the legislators contemplated that both the DIFC Courts and the Dubai Courts would have power (in appropriate cases) to ratify (or recognise) arbitral awards. There is no conflict between the jurisdiction of the two courts, as is reflected in the complementary relationship highlighted by Article 7 of the Judicial Authority Law.” (para. 20)

Importantly, Al Muhairi was clear that the onshore Dubai and offshore DIFC Courts have “concurrent but separate jurisdiction” (para. 22) to hear applications for recognition and enforcement on- respectively offshore:

“18. It is clear that the DIFC Courts and Dubai Courts cooperate to facilitate the recognition and enforcement of arbitral awards and it is customary, as evidenced by the legislation above, that both the DIFC Courts and Dubai Courts may recognise and/or enforce the same arbitral award.
19. Additionally, the jurisdiction of the DIFC Courts does not deprive the Dubai Courts of any jurisdiction which they may have in respect of the recognition and enforcement of arbitral awards pursuant to Articles 31 and 236 of the UAE Civil Procedure Code [establishing the Dubai Court’s jurisdiction].
20. Not only are the jurisdiction of the DIFC Courts and the jurisdiction of the Dubai Courts in relation to the recognition and enforcement of an arbitral award mutually exclusive, they are also complementary.”
This, no doubt, was intended to serve as a timely reminder that the onshore and offshore courts form part of the same family of UAE courts, ordained by the Ruler of Dubai: There is no judicial hierarchy between the onshore Dubai and offshore DIFC Courts; each is properly competent to determine the limits of its own jurisdiction. Art. 7 of the Judicial Authority Law, in turn, establishes the mutual bond of trust that holds the on- and offshore limbs of the Dubai judicial system together to form part of an integrated whole.

Al Muhairi’s Order in Isai v. Isabelle has to be saluted for its attempt to redress the proper balance of the judicial relationship between the onshore Dubai and offshore DIFC Courts with a measure of encouraging sobriety and to breathe life back into the DIFC Courts’ status as a conduit jurisdiction. Essentially, absent a pending challenge before the Dubai Courts, an onshore DIFC-LCIA award may be properly subject to an application for recognition and enforcement before the DIFC Courts (irrespective of the absence of assets of the award debtor from the DIFC). For the avoidance of doubt, the seating of the arbitration onshore does not prevent recognition and enforcement offshore. That said, had the award creditor applied for a challenge onshore pending the application for recognition and enforcement offshore, Al Muhairi may have considered adjournment of the application by virtue of Art. 44(2) of the DIFC Arbitration Law, or a refusal to enforce the subject award under Art. 44(1)(a)(v) of the DIFC Arbitration Law in the event that the award had been nullified before the onshore courts. This, no doubt, would have been a natural consequence of the operation of the principle of mutual recognition under Art. 7 of the Judicial Authority Law. Al Muhairi was not prepared to give deference to a prospective challenge onshore especially in circumstances where there had been ample time (10 months) for mounting such a challenge. Al Muhairi’s assessment will sit well with the 4-month time-limit introduced for onshore challenge actions by the draft UAE Federal Arbitration Law (which is expected to enter into force later this year).

By way of conclusion, it is encouraging to see the resolve with which the DIFC Courts deal with matters of recognition and enforcement. Vexatious arguments going to the arbitrability and/or public policy will not be entertained, demonstrating the arbitration-friendliness with which the DIFC Courts approach such questions. Equally, the DIFC Courts will not lightly give up their status as a conduit jurisdiction. It is telling in this context that it is a local resident judge, Al Muhairi, who obtained his judicial formation onshore, that turns out one of its most ardent supporters!

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Seminar on Alternative Dispute resolution held in Hyd - Web India 123

Google International ADR News - Sat, 2018-04-28 11:04

Seminar on Alternative Dispute resolution held in Hyd
Web India 123
Section 89 CPC gave the provision of three mechanisms for dispute resolution namely Arbitration and Conciliation, Mediation and Judicial Settlement of cases, Justice Ramalingeswara in his inaugural address at a seminar on 'Alternative Dispute ...

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Seminar on Alternative Dispute resolution held in Hyd - UNI - United News of India

Google International ADR News - Sat, 2018-04-28 09:57

Seminar on Alternative Dispute resolution held in Hyd - UNI
United News of India
Uniindia: Hyderabad, Apr 28 (UNI) Justice A Ramalingeswara Rao at the High Court of judicature at Hyderabad for Telangana and Andhra Pradesh on Saturday ...

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Seminar on Alternative Dispute resolution held in Hyd - United News of India

Google International ADR News - Sat, 2018-04-28 09:52

Seminar on Alternative Dispute resolution held in Hyd
United News of India
Hyderabad, Apr 28 (UNI) Justice A Ramalingeswara Rao at the High Court of judicature at Hyderabad for Telangana and Andhra Pradesh on Saturday said the mechanism of mediator in dispute resolution is not new by quoting Lord Krishna as first mediator ...

Cruising Around Investment Cases Against the Caribbean Islands

Kluwer Arbitration Blog - Fri, 2018-04-27 20:00

Anne-Sophie Gidoin

Cruising around investment cases against the Caribbean islands is not only a recreational journey.  It is also an informative one.  This article aims at presenting key observations made during this journey.

As mentioned in a previous publication, since 1973, the sovereign islands of the Caribbean Sea, have concluded over 140 international investment agreements.  The ICSID Convention is in force in all islands except Antigua & Barbuda, Cuba, Dominica, and the Dominican Republic.

The following table lists the 17 investment arbitrations identified to date against the Caribbean islands:

Table of cases (click here)

In these cases, investors based their claims on either contracts or investment treaties.  They invoked BITs, the Dominican Republic-Central America Free Trade Agreement (“DR-CAFTA”), or the Free Trade Agreement between the Dominican Republic and the Caribbean Community (“DR-CARICOM”).

Among these 17 cases, 5 settled, 2 were dropped, 2 tribunals declined jurisdiction, and 4 are pending, including at the annulment stage.  All 5 awards rendered on the merits were decided in favor of the State.

 

Disputes tainted by environmental issues 

Investment disputes against the Caribbean islands mostly concern the Oil, Gas & Mining, Electricity, Power & Other Energy, and Real Estate sectors.

Three recent cases show the importance of environmental issues:

  • In Allard, the claimant alleged that Barbados’ failure to take necessary and reasonable environmental protection measures destroyed the value of his investment in the Graeme Hall Nature Sanctuary, an eco-tourism project on the wetlands on Barbados’ South Coast. However, the tribunal dismissed the claims for lack of evidence of environmental damage during the investment timeframe.
  • In Corona, the investor sought to invest close to Sanchez, in the Samaná region in the Dominican Republic, to mine for aggregate materials to be shipped to the US. This project was allegedly hindered by the denial of environmental approvals.  The tribunal declined jurisdiction without deciding the relevant environmental issues.
  • In Ballantine, investors in an exclusive housing project on the Jamaca de Dios community in the Dominican hills of Jarabacoa claimed that they did not obtain environmental approval to develop the higher portion of their property, where most valuable residences were to be located. Proceedings are pending.

 

Jurisdictional objections allow DR-CAFTA interpretation

Out of these 17 Caribbean cases, the Corona and the Cable Television of Nevis tribunals have declined jurisdiction.  The jurisdictional objection in Ballantine is still pending.

The most striking jurisdictional objections are those which require the interpretation of DR-CAFTA:

  • In Corona, the tribunal declined jurisdiction under Article 10.18.1, which provides for a 3 years time bar to submit a claim, from the date on which the claimant first acquired, or should have first acquired, knowledge of the breach alleged and knowledge that the claimant or the enterprise incurred loss or damage. This tribunal considered the submission of the US as a non-disputing party dated 11 March 2016, which commented on the interpretation of DR-CAFTA’s statute of limitation rule.  A similar time-bar was raised (but dismissed) in Allard, pursuant to Article XIII.3.d of the Barbados – Canada BIT.  In Ballantine, the Dominican Republic equally alleged that some of the investors’ claims violate the same rule.  The Corona precedent has since been relied on by the Aaron C. Berkowitz, Brett E. Berkowitz and Trevor B. Berkowitz v Republic of Costa Rica tribunal, in its Interim Award of 30 May 2017, which declined jurisdiction on certain claims.
  • In Ballantine, the Dominican Republic alleged that the claimants’ “dominant and effective nationality” was Dominican (not US) at the time of the alleged violations and at the start of the proceedings, in breach of DR-CAFTA Article 10.28. In its Procedural Order No. 2 dated 21 April 2017, the tribunal refused to bifurcate this issue, which remains pending.

 

Re-litigation of contract claims impossible in new treaty arbitration

Only 5 investment tribunals rendered awards on the merits against Caribbean islands, i.e. in Allard, Grynberg, RSM Grenada, RSM St Lucia and F-W Oil.  The 2 RSM awards are not public, and annulment proceedings are pending in RSM St Lucia.

Though it may pertain either to jurisdiction or to the merits, the Grynberg tribunal’s rejection of the claimants’ claims as “manifestly without any legal merits” pursuant to Article 41.5 of the ICSID Arbitration Rules, is interesting.  In this treaty-based case, the investor submitted claims that had already been decided in RSM Grenada, a previous contract-based arbitration.  The Grynberg tribunal refused to re-litigate conclusions of fact or law concerning the parties’ contractual rights that had already been determined by a prior tribunal.  Several ICSID tribunals then referred to this case, in particular NAFTA-based Apotex Holdings Inc. and Apotex Inc. v The US.

 

Cost decisions penalize non-complying and unsuccessful investors

On 13 August 2014, the majority of the RSM St Lucia tribunal ordered the claimant to post security for costs in the form of an irrevocable guarantee for USD 750,000 to cover St Lucia’s potential legal costs.  The RSM St Lucia tribunal notably considered similar requests filed and denied in the RSM Grenada and the Grynberg cases, where RSM reportedly failed to reimburse Grenada’s costs.  The claimant’s failure to comply with the tribunal’s order resulted in the conclusion of the proceedings.  As the first ICSID decision ordering a claimant to pay security for costs, RSM St Lucia has been heavily relied upon.  However, since St Lucia, no respondent State has been granted security for costs.

Claimants have also been subject to penalizing cost decisions when “unsuccessful”.  For example, in Grynberg, the tribunal awarded all costs to Grenada, as the claimant was attempting to re-litigate claims that had been decided in previous contract-based proceedings.  In Silverton, the tribunal awarded all costs to the Dominican Republic after the claimant withdrew its claims, considering the claimant the “unsuccessful party” under Article 42.1 of the UNCITRAL Rules.

This Caribbean journey ends with memorable observations regarding the importance of environmental issues, the interpretation of the 3 years statute of limitations under DR-CAFTA, the articulation between treaty and contract claims, and the tribunal’s power to order security for costs to the claimant.  So far, all cases have turned in favor of the States, but time will tell if future disputes leave the Caribbean islands intact.

 

The views set forth in this post are the personal views of the author and are not intended to reflect those of her employers or clients. The author wishes to thank Mr. Victor Choulika for his assistance in preparing this article. 

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Summarising as a Practice in Effective Communication

Communication and Conflict Blog - Fri, 2018-04-27 11:24
This page describes the practice and purpose of summarising in effective interpersonal communication and conflict resolution.

France: Renewed Interest In French Class Actions? - Mondaq News Alerts

Google International ADR News - Fri, 2018-04-27 05:21

France: Renewed Interest In French Class Actions?
Mondaq News Alerts
... number, among them, of associations having sufficient funds to conduct class actions; (ii) time-consuming procedure; (iii) difficulties in qualifying the heads of damages; (iv) competition from other legal instruments, such as joint actions by ...

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The Present and Near Future of New Technologies in Arbitration: If not Us, Who? If not Now, When?

Kluwer Arbitration Blog - Fri, 2018-04-27 02:19

Pratyush Panjwani

With the focus of the arbitral community being taken over by the recent discourse surrounding an important branch of international arbitration, i.e., investor state dispute settlement, after the 6 March 2018 Judgment of the Court of Justice of the European Union in Case C-284/16, Slowakische Republik v Achmea BV, there may be a risk today, more than ever, of overseeing what the seemingly distant future holds for international arbitration practitioners. Indeed, a singularly unwavering concentration on the “present” of arbitration practice, without adequate focus on its “future”, is, to a certain extent, emblematic of the issues that have ended up afflicting arbitration practice. However, while the present is sitting the test of time, it is even more critical now to have one eye focused on, and prepared for, the future of this dispute resolution mechanism.

 

With this aim in mind, on 23 February 2018, the Club Español de Arbitraje, Belgium Chapter (“CEA”) organized its Third Annual Conference, hosted and sponsored by Stibbe and FTI Consulting, relating to the topic of “The present and near future of new technologies in arbitration”. The Conference held itself true to the (almost prognostic) words of Mr. Alexis Mourre, which were quoted by Mr. Mathieu Maes during his introductory remarks at the Conference, whereby he alerted us to the fact that “[t]here may be no more relevant topic [today] than this one for the future of dispute resolution”. Indeed, the increasing relevance of this topic has been alluded to by many others recently, including in a post highlighting the 10 hot topics for discussion in arbitration for the year 2018. This hypothesis was afforded credence by the variety of participants that the CEA’s Conference saw, on both sides of the panel, ranging from arbitration practitioners, enthusiasts and aspirants to representatives from arbitral institutions and the community of technical experts, particularly from the field of data science.

 

The keynote address, titled “Algocracy in Arbitration”, was delivered by Ms. Sophie Nappert, who has been a vocal embracer of the impact of new technologies on arbitration.1)Sophie Nappert and Paul Cohen, Case Study: The Practitioner’s Perspective, in Maud Piers, Christian Aschauerp (eds), Arbitration in the Digital Age: The Brave New World of Arbitration (CUP 2018), p. 126 jQuery("#footnote_plugin_tooltip_2787_1").tooltip({ tip: "#footnote_plugin_tooltip_text_2787_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The term (“algocracy”), she explained, was a derivative of two terms, i.e., “algorithm” and “democracy”. Ms. Nappert took us through various ongoing developments being conducted in the field of artificial intelligence (“AI”), which, together with the internet, has created a democratic playing field for humans to operate and interact with technology. She spoke about how AI will soon leave a lasting impact on arbitration as a field of practice by introducing algorithmic decision making using machine learning software, which may possibly even reduce the work force involved in arbitration today. According to Ms. Nappert, the only aspect where human judgment still trumps algorithmic decision making is the more intangible values such as empathy, compassion and fairness. In light of this, she called upon the arbitration community to realize the opportunity that AI offers us to win back the trust in fellow humans, while simultaneously embracing the advancements in technology and keeping pace with them.

 

This speech created the perfect platform for the two panels of speakers that followed, with the first one focusing more on the present technologies being used in arbitration and the second one highlighting potential future technologies that may have an impact.

 

The first panel, moderated by Ms. Dodo Chochitaichvili and Mr. Maxime Berlingin (Fieldfisher), saw speeches from Ms. Erica Stein (Dechert LLP, Brussels), Mr. Matthew Buckle (Norton Rose Fulbright, London), Dr. Franz Stirnimann Fuentes (Froriep, Geneva) and Mr. Alexander Fessas (ICC Paris). Ms. Stein discussed how consent to arbitrate in today’s day and age can be given by and through digital means, such as by email correspondence, and whether and how such consent is recognized within the regime of Article II of the New York Convention 1958. She was followed by Mr. Buckle who advocated for a case-by-case approach in relation to admissibility of hacked information and documents as evidence in arbitration, taking us through various jurisprudential approaches in relation to this threshold question that touches upon parties’ good faith conduct. Thereafter, Mr. Fessas addressed the current use of technology in institutionally administered arbitration, and suggested that it is the need of the hour for arbitrators to polish their technological skillset with the ready help of arbitral institutions, while at the same time maintaining the parties’ fundamental expectations from arbitration and thus not using very costly and complicated technologies.

 

Lastly, Dr. Stirnimann’s particularly interesting presentation addressed the issue of confidentiality in the digital age, speaking about how confidentiality today has evolved from interpersonal confidentiality to technological confidentiality. In this regard, he suggested that as arbitration practitioners it is incumbent upon us to be aware of potential security hacks, of which law firms are often targets, establish security protocols at workspaces and train staff to this effect, and ensure a minimum level of virus protection. The concerns and the potential solutions highlighted by Dr. Stirnimann are extremely relevant in today’s day and age, given that the inclination to access, and the very accessibility, of metadata in legal documents, has been on the rise over the past few years, as law firms gain technological advancements. Notably, the concept of “metadata” has been succinctly explained in the ICC Commission’s on Managing E-Document Production, which described metadata in the following terms:
“‘Metadata’ is, literally, data about (electronically stored) data. Documents or files created on a computer will typically contain embedded information that is not readily apparent on the screen view of a file or in a printed version of the document or file. This secondary “metadata” is information about the electronic document or file that describes its characteristics, origins, or usage.”2)Cf. 4.8. Typical examples of metadata include editing changes or comments made to the document over time, the document’s author or the date and time of its creation etc. jQuery("#footnote_plugin_tooltip_2787_2").tooltip({ tip: "#footnote_plugin_tooltip_text_2787_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });
This discussion initiated during the first session made for the perfect ingredients that helped the second panel create a sumptuous amount of food for thought for the audience in order to comprehend and further explore the relationship between humans and technology.

 

The second panel, moderated by Mr. José Rafael Mata Dona and Ms. Niuscha Bassiri (Hanotiau & van den Berg), saw a more futuristic expedition into technological innovations undertaken by Mr. Erik Schäfer (Cohausz & Florack, Düsseldorf), Mr. Charles Raffin (Hardwicke, London), Dr. (Dr.) Meloria Meschi (FTI Consulting, Paris) and Mr. Mohamed S. Abdel Wahab (Zulficar & Partners, Cairo). Mr. Schäfer, taking a leaf from the recent ICC Report on Information Technology and International Arbitration, by the Commission co-chaired by him, discussed various technological innovations in recent years and their potential impact on arbitration in the near future. Touching upon aspects of AI that Ms. Nappert referenced, such as decision making through machine learning and portals for contract formation, Mr. Schäfer called upon practitioners, especially arbitral institutions, to take the lead in familiarizing themselves and the users of arbitration with these innovations. Thereafter, Mr. Raffin harmonized his speech with the discussions initiated by Dr. Stirnimann. He spoke about protection and acquisition of electronic evidence, taking us through the basics of the components of electronically stored information, such as metadata, and indicating avenues that can help protect such information from requests in document production procedures or otherwise.

 

Mr. Raffin was followed by Dr. Meschi, the only data scientist on the panel. Dr. Meschi took the discussion on AI further by explaining the basics of machine learning and data mining. Interestingly, it was the data scientist on the panel that urged our legal minds to realize the importance of human empathy, by propositioning that while the software may be readily available and easy to use, it’s worth ultimately depends on the human behind the software. Mr. Wahab took on from this and concluded the discussions by highlighting the necessity of being techno-literate in today’s day and age, and the need to bridge the gap between AI and international arbitration, by acquainting oneself with technology.

 

With this exciting thought of embracing human empathy while simultaneously befriending technological advancements, the CEA’s Conference undoubtedly offered many practical insights as to the steps that need to be taken by the arbitral community in order to match pace with technology. Together with such insights, there was also a palpable sense of hope for a more nuanced and technologically sustainable future, which was most appropriately evidenced in the Star Trek quote that Ms. Nappert used to conclude her speech, albeit in reference to the practice of international arbitration – may it “live long and prosper”!

 

The views expressed in this article are solely the personal views of the author and in no way reflect the views of Hanotiau & van den Berg.

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References   [ + ]

1. ↑ Sophie Nappert and Paul Cohen, Case Study: The Practitioner’s Perspective, in Maud Piers, Christian Aschauerp (eds), Arbitration in the Digital Age: The Brave New World of Arbitration (CUP 2018), p. 126 2. ↑ Cf. 4.8. Typical examples of metadata include editing changes or comments made to the document over time, the document’s author or the date and time of its creation etc. 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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The post The Present and Near Future of New Technologies in Arbitration: If not Us, Who? If not Now, When? appeared first on Kluwer Arbitration Blog.

Indian Law Conclave at Jagran Lakecity University, Bhopal from 29th June – 1st July, 2018. - Live Law

Google International ADR News - Fri, 2018-04-27 02:07

Live Law

Indian Law Conclave at Jagran Lakecity University, Bhopal from 29th June – 1st July, 2018.
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Focus areas of the Conclave would be Alternative Dispute Resolution Mechanism, Constitutional Law, Corporate Law, Cyber Law, Intellectual Property Law, International Law, and Maritime Law. The event focuses not only on law students but also students ...

India: Arbitration In India – The Way Forward - Mondaq News Alerts

Google International ADR News - Thu, 2018-04-26 09:06

India: Arbitration In India – The Way Forward
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Google International ADR News - Thu, 2018-04-26 09:02

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Marcos G. Ronquillo Has Been Recognized Among the Top in His Industry by Noticed©
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Mr. Ronquillo's practice encompasses a broad range of civil litigation matters, including due diligence projects, government and public affairs, business law, as well as international arbitration and public infrastructure. Born in Tucson, Arizona, Mr ...

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Google International ADR News - Thu, 2018-04-26 08:59

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Wadia Ghandy Delhi head Kunal Vajani becomes independent counsel, possible barristry-style chamber
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About 25% of his current work was alternative dispute resolution, with the rest being litigation. “I was always very keen to go to a variety of courts. I don't remember a court that I have not gone and argued a matter in,” he said. The idea in starting ...

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Google International ADR News - Thu, 2018-04-26 07:52

UK: UK Government Launches Green Paper On Modernising Consumer Markets
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Keystone Law Group (KEYS) Announces Quarterly Earnings Results, Misses Expectations By $0.80 EPS
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It offers services in the areas of banking and finance, commercial, commercial property, construction and projects, corporate, data protection, dispute resolution, employment and immigration, EU and competition law, family and matrimonial, fraud and ...

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Newly-appointed Local Leaders Train in Conflict Management, Social Cohesion - Liberian Daily Observer

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Lajún Corporation v. The Dominican Republic: Admissibility Issues Just Around the Corner?

Kluwer Arbitration Blog - Wed, 2018-04-25 20:00

Danilo Ruggero Di Bella

This post gives a bird’s eye view of an   imminent investment arbitration and forecasts procedural and/or jurisdictional hurdles to the case, by analyzing the dispute resolution provision and relevant precedents, with the intention of highlighting recurring inconsistencies on a key procedural issue and urging for more predictable outcomes for the benefits of the stakeholders in the international arbitration industry. At the moment, the case is at its early stage, as its 3-month cooling off-period expired on March 19, 2018.

 

The looming arbitration

On 19 December 2017, Jamaican tycoon, Mr. Michael Lee-Chin, served the Dominican Republic with a notice of intent to arbitrate under the Caribbean Community-Dominican Republic Free Trade Agreement (CARICOM-DR FTA) over alleged treaty breaches concerning the management concession agreement for the landfill facility called Duquesa.

 

The background

In 2013, Mr. Lee-Chin acquired equity participation in Lajún Corporation, a Dominican company operating the landfill and waste-to-energy plant on the basis of a 10-year concession agreement awarded on 1 March 2007 by the Municipality of Northern Santo Domingo. Mr. Lee-Chin holds 90% equity participation in Lajún Corporation throughout two entities – another Dominican corporation (Wilkison Company) and a Panamanian company (Nagelo Enterprises) – whose majority shareholder is   Mr. Lee-Chin himself. The two entities supposedly hold title to the land where the landfill lied, however, the validity of the underlying land purchase and sale contract was challenged for alleged forgery.

Mr. Lee-Chin claimed that the Dominican Republic expropriated his investment in Duquesa, because the Municipality failed to abide by the concession agreement and apply the biannual increases to the tipping fees chargeable to the users for the disposal of the waste and the energy generated by the plant, and, ultimately, because on 27 September 2017 the High Administrative Court divested Lajún Corporation from the management of the Duquesa landfill, pending the decision on the breach of the concession agreement. Therefore, the Claimant seems to contend that the Dominican Republic had violated Article XI of the Annex III to the CARICOM-DR FTA for having expropriated his investment without a fair compensation, seeking compensation of more than US$ 300 million.

On the other hand, the Municipality asserts that Lajún Corporation was not fulfilling its obligations under the concession agreement, causing environmental harms and jeopardizing the public health of the community living in Gran Santo Domingo. That’s why the City Council of Northern Santo Domingo authorized the Mayor, Mr. René Polanco, to take Lajún Corporation to the High Administrative Court to terminate the agreement for noncomplying with it.

After hearing both parties, the High Administrative Court provisionally transferred, by means of its ruling 2030-17, the management of the landfill to a committee formed by the Municipality and the Ministries of Environment and Public Health on 27 September 2017.

 

The Dispute Resolution Provision in the CARICOM-DR FTA

The investor-state dispute resolution mechanism contained in Article XIII of the Annex III to the Treaty invoked by the Claimant envisages three options (in case conciliation fails and once a 3-month cooling-off period has elapsed): the host-state’s courts, a domestic arbitration or an international arbitration. Should the parties to the dispute opt for international arbitration, then they may refer their differences to an ad-hoc single arbitrator or tribunal, to be appointed pursuant to a subsequent agreement or the UNCITRAL Arbitration Rules.

Even though no fork-in-the-road is expressively stated, because the outcome of each of these options final and binding effects, it is sensible to argue that the choice of one option precludes the others.

By entering an appearance as defendant and arguing the case about the concession agreement before the High Administrative Court of the Dominican Republic, and having the seized Court already issued a decision, the Claimant (in the forthcoming arbitration) might have tacitly chosen its option thereby waiving the two arbitration-based alternatives.

 

Relevant precedents: Roundabout or Fork-in-the-road?

Two main diverging lines of reasoning exist when it comes to allow or disallow a claimant to resubmit to an arbitral tribunal a dispute sharing the same background of a claim brought before a local court or previously adjudicated by another court or local arbitration.

One line of thinking revolves around the “triple identity test” and allows such a possibility as long as the claimant, the causa petendi and the petitum of the two disputes do not overlap. Therefore, even though the claimant and petitum in the two proceedings may often coincide, the causa petendi always differs, being rooted in special rights conferred on the basis of an international treaty and put forward as treaty claims (whilst in the court proceedings, the claimant would argue its case on the basis of national law provisions only). Some illustrative arbitral rulings of the application of the triple identity test are the 2003 Decision on Jurisdiction in Champion Trading Company, Ameritrade International, Inc. v. Arab Republic of Egypt (ICSID Case No. ARB/02/9), and CMS Gas Transmission Company v. The Republic of Argentina (ICSID Case No. ARB/01/8), and the 2004 Decision on Jurisdiction in Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic (ICSID Case No. ARB/01/3).

The other approach – which seems to be gaining ground based on the 2017 Award in Supervision y Control S.A. v. Republic of Costa Rica (ICSID Case No. ARB/12/4) –  relies on the “fundamental basis of a claim test”. According to this test, if the dispute before the national court and the one before the arbitral tribunal share the fundamental cause of the claim, seek substantially for the same effects and are submitted by two different claimants, one, however, controlling the other through equity participation, then the claims presented before the national court are the same as the ones presented before the arbitral tribunal. This line of reasoning strives to avoid contradictory rulings between a national court and an arbitral tribunal on essentially the same dispute. Other precedents in favor of the fundamental basis of a claim test are the 2014 Award in H&H Enterprises Investments, Inc. v. Arab Republic of Egypt (ICSID Case No. ARB/09/15) and the 2009 Award in Pantechniki S.A. Contractors & Engineers v. Republic of Albania (ICSID Case No. ARB/07/21).

Curiously enough, tribunals that spouse the “triple identity test” tend to consider this matter a question of jurisdiction or competence, whereas tribunals that adopt the “fundamental basis of a claim test” look at this issue as a question of admissibility. Consequently, the former usually come to the conclusion that they have jurisdiction over the dispute and adjudicate the case, while the latter conversely hold that the claims are inadmissible and dismiss the case because, even if they assert jurisdiction, they deem it inappropriate to hear claims already heard by another adjudicatory body.

 

Other two non-fully aligned concepts to weigh in

Another two questions may come into play and conflict with each other in this case and right on this procedural point, so it would be worthy to recall them:

  • On one hand, the well-established arbitrators’ Kompetenz-kompetenz principle, e. the arbitral tribunal’s power to hear and assess objections to its own jurisdiction;
  • On the other, the determination of the time by which jurisdiction must be challenged (in favor of another adjudicatory body) to prevent implied prorogation of jurisdiction is inherently a prerogative of the court first seized, which will make such a determination on the basis of its rules of procedure and can actually render any arbitration agreement inoperative by the subsequent conduct of the parties, pursuant to Article II(3) of the 1958 New York Convention. Such reference to national law and deference to the court seized have been also upheld by conventions assigning jurisdiction in civil and commercial matters among different States (such as the 1968 Brussel Convention and the 1988 Lugano Convention, respectively, recast into and amended by Brussel I-bis Regulation and the 2007 Lugano Convention). Under this approach, the ball might be sent back to the Dominican Court’s court, which will have to decide on the retention of its jurisdiction on the case.

 

Conclusion

Given the procedural and factual matrix of the imminent case as described above, the relevant dispute mechanism provision invoked and the conflicting arbitral precedents on this point, the looming arbitration in question may well fall within the applicability of either of such tests having to face the corresponding jurisdictional or procedural barrier. The choice of which test to deploy will ultimately rest with the arbitral tribunal, but equally the High Administrative Court might have its say on the case as to the viability of the arbitration agreement at this point in time.

 

The views expressed in this article are those of the author and DO represent those of the law firm Bottega DI BELLA.

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The post Lajún Corporation v. The Dominican Republic: Admissibility Issues Just Around the Corner? appeared first on Kluwer Arbitration Blog.

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Google International ADR News - Wed, 2018-04-25 12:03

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