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The Interpretation of the New York Convention by the UAE Courts: a Geneva Flavor?

Kluwer Arbitration Blog - Sat, 2019-03-09 21:19

Abdelhak Attalah

Introduction

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

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

Recent UAE Case Law on Double-Exequatur

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

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

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

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

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

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

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

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

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

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

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

The Position under the NYC

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

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

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

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

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

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

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

Conclusions

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

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

References   [ + ]

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

ADR Prof Blog - Sat, 2019-03-09 16:39
I received the following email from Bill V. Mullen, Professor of American Studies, Purdue University, Vice-president of Purdue AAUP: American Association of University Professors members in Indiana have won another victory to reclaim Purdue University for students, not corporate profit. After mounting pressure from an Indiana AAUP statewide campaign, the Kaplan-run Purdue University Global has … Continue reading Purdue Global Agrees to End Use of Mandatory Arbitration for Student Complaints →

World Mediation Forum Part 2: Italy, Poland, China, India, France… and Even Texas!

Business Conflict Blog - Sat, 2019-03-09 13:02

At the 26th convening of the UIA World Mediation Forum in Zurich on March 5-6, 2019, a panel on whether mediation should be compulsory, among representatives of France, the US, Switzerland, and Italy, wrestled with intriguing philosophical considerations.  Is compulsory court annexed ADR inconsistent with the principle of judicial access?  Should conciliation, rather than mediation, be compulsory with respect to municipal or other citizen concerns?  Is compulsory mediation of parental concerns about children’s education more advisable than compulsory mediation of business-to-business concerns? 

Catherine LeClerq of Armand Avocats in Paris made a strong argument for compulsory mediation of disputes between state employees and administrative agency employers, a plan that has been experimentally introduced in 2016. 

Pasquale Orrico, of Arlenghi Agostini Avvocati in Milan, updated the complex and pervasive (one might say overreaching) compulsory mediation regulations in Italy.  Topics subject to compulsory mediation in Italy include real estate, tenancy, business lease, banking, and insurance. The only thing compulsory, however, is a first meeting; if, after a mediator explains the process, the parties decline to engage in mediation, then they are relieved of any further obligation and may proceed with their lawsuit.  In that sense, it seems to mandate compulsory awareness, consideration, and intentional rejection of mediation, rather than compulsory participation in the process itself.  Clients as well as attorneys must attend this first meeting.  As a result of this regimen, between 160,000 and 190,000 mediations per year are reported by the Italian Ministry and Justice; the number of settlements resulting from these mediations (i.e., sessions held as a result of these first meetings) is between 40-45%.  The mediations are conducted by bar associations, chambers of commerce, and other entities.  Voluntary mediation has risen 14% during this period – an interesting side-effect. 

Katarzyna Przluska-Ciszewska, President of the Polish Bar Council Mediation Center, reported on a confusing current proposal by the Polish Ministry of Justice addressing family law and divorce proceedings.  It requires, before formal filing of a divorce action, an informational conference meant to encourage reconciliation and, if not possible, outlining plans for child custody and financial support.  These matters must be notarized or officiated by a court in order to be enforceable – agreements met as a result of private mediation are not enforceable.  The proposal is that couples be informed of the “social consequences of the breakdown of the marriage” and the availability of “therapy and other means of family support.”  Part of this support is family mediation which, if not mandatory, is strongly brought to the parties’ attention.  If mediation is elected, the mediator presents to the court a “report containing the results of the mediation” as well as confirmation that the parties have been advised of the “social consequences” of the divorce.  Only after this report is delivered may a petition for divorce be initiated.  Thus, the mediator is a vessel to convey the concern of the state, rather than facilitating an autonomous decision by the parties.  Katarzyna added concern that the use of the term “mediation” to describe this process threatens the understanding and acceptance of compulsory commercial mediation, which is also being considered in Poland. 

Jeff Abrams of Houston, Texas, related the rise of compulsory mediation in that state.  Key developments were legislative action to empower judges to require mediation prior to scheduling trials; training respected leaders in the legal community as mediators; presenting judges with the efficacy of using these mediators; maintaining metrics of early use of mediation in the original jurisdictions to measure its effectiveness in reducing dockets; and “scaling” the system to courts across the state.

Cezary Rogula, of Krakow, Poland, and Jennifer Lygren, of Geneva, Switzerland, reported on the application of mediation to administrative and quasi-public contexts.  Jennifer explained an initiative involving regulation of financial institutions – mainly brokerages – with an eye to financial protection.  Investors may use ADR to pursue errors or misfeasance of financial service providers through legislated processes.  It requires a qualified mediator (skilled both in financial instruments and in mediation) to oversee the process.  Private mediation bodies are currently competing to fashion proposals for the government to approve their administration of the process.  A claimant client must first attempt direct negotiation and the request must come before any arbitration or other adjudicative proceeding.  The process is funded by the financial industry participants, and participation is mandatory.   Typical banking activities are not included – the scope is limited to executing securities orders, offering investment advice, managing portfolios, etc.  Cezary discussed mediating disputes involving public authorities, as part of the Polish code of administrative procedure.  The process has a goal, not of coming to a settlement agreement, but an “arrangement” by which the authority will deal with the private party on an ongoing basis.  Proceedings are not public, and the mediator is a potential witness in any ensuing court actions.  An example is the registration of a trademark.  A private publisher of magazines confronted difficulty in registering the titles of those magazines as trademarks – an administrative decision.  The mediation process allowed the presentation of factual, marketing, and expert evidence and informal discussion.  Of 29 proposed trademarks, 12 were successfully registered as a result of this process, to the client’s satisfaction.  The process allowed the airing of both the agency’s and the petitioner’s concerns, and the result was understood rather than resented or coerced.  A second example was made involving construction, with building permit, historical preservation, and zoning issuance.

A panel addressed the application to mediation of concepts of marketing and economics.  Thiruvengadam B.C., of Bangalore, India, reminded the group that demand arises from necessity – if litigation is necessary and arbitration is merely an option (even a luxury), where does mediation lie?  Indian judges dispose of an average of 1,000 cases per year, and 10,000,000 cases are filed in Indian courts each year.  The judicial system is complex, and it takes 10-20 years for litigation to yield a final outcome.  Citizens therefore either give up or use alternatives to litigation – mosques, associations, mafia or other unconventional processes.  Court-annexed mediation was first introduced in 2000; by now, 120 cases, on the average, are referred to mediation each day with a success rate of 69%.  The quality of court-annexed commercial centers has been questioned (court-annexed mediation is free and mediators receive low fees) and there is a move to outsource mediation to private institutions.  Gerard Kuyper of Brussels evoked the classic supply/price/demand curve and suggested that the market of justice has a strict and unmodified supply line, with price determined only by demand.  Yet individual behaviors within this market are wildly different – Belgium has litigation at the amount of 7 to 1,000 but Netherlands less than one per 1,000.  Another related metric is time to resolution – Belgium has clearance of 100 days and far longer for Netherlands.  Gerard suggested that dispute behaviors are seldom rational and instead involve cognitive dissonances such as risk/loss aversion and emotional, rather than economic, choices.  David Lutran of Paris encouraged the presentation of mediation as a product competing with — rather than complementing — others on the market, subject it to marketing analysis such as providing for the economic welfare of the customer.  These considerations may include user assessment of the likelihood of satisfaction at trial or in other processes.  The attraction of disputants to traditional justice is fundamentally irrational, and distinctly branding mediation would seem to hinge on appeal to similarly emotional characteristics.  The mythology of the judge as a cultural figure is unique – mediators cannot hope to compete.  Put otherwise, the image of a blindfolded woman holding a balance and promising fairness through the dispassionate application of social norms is far stronger than the image of a handshake.  David suggested that emphasizing neutrality, expectations, control and the wide scope of potential outcomes are possibly effective branding approaches.  Emphasis should be placed on getting what a party wants, rather than defeating another party – that is, seeking self-interested profit from the conflict rather than a pursuit of Justice.”  The underlying approach is to satisfy the customer by proposing a process better designed to meet the customer’s own goals.  Mediation is not a deviate of institutional justice, but a direct method of obtaining stated economic goals in a rational, self-interested manner that is designed to accurately reflects the stakes involved.

A successful Mediation Forum was made even more successful with a panel on “Users of Mediation,” featuring Jean Marguerat of Froriep Legal SA in Geneva, Torsten Bartsch of Caterpillar Sarl, Laurent DeVille of Froriep, and Franz Wiehler of Siemens AG.  Torsten presented an unscientific survey of Lake Geneva-based general counsel, asking the preferred ways to deal with disputes.  By far the most favored was direct conversations between the parties.  There was little difference between arbitration and litigation, except in terms of certainty of results. Arbitration was preferred only in highly technical matters.  Franz concentrates on conflict identification and management within the enterprise.  He finds that identifying and assisting team members’ conflicts can add strength and value to a team.  He considers the greatest roadblock to corporate use of mediation to be awareness of its attributes and possibilities.  Laurent reports that a GC’s recommendation to a Board to engage in mediation is met with skepticism based on unfamiliarity, placing pressure on the GC that the outcome be favorable.  Cost is less the issue than outcomes.  In particular, a question is raised how an external facilitator can progress negotiation more effectively than an informed internal company representative.   He also noted that, based on his experience of practicing for 10 years in Japan, the cultural expectations of participants must be respected.  Dispute avoidance in Japan is a matter of dignity, reflecting a duty to behave in a certain way.  This is particularly true in family and labor cases.  Mediation is offered through a Mediation Court, and the process is formal, conducted by non-lawyers seeking consensus rather than vindication of rights. 

The final speaker at the Forum was Wang Fang, Deputy Secretary General of the Mediation Center of the China Counsel for Promotion of International Trade in Beijing.  She was introduced by Clarisse von Wunschheim of Altenburger Ltd, who encouraged a realistic view of the ascendency of the economies of Russia, India and China, which have real-world aggressive aims and real-world associated business disputes.  And, when considering China, size matters: Civil and commercial disputes brought to the courts in China in 2018 approximated 8,800,000.  Clarisse believed that the preferred method of commercial dispute resolution is arbitration using administered rules other than CIETAC.  She considers that co-mediation of commercial disputes between Chinese and Western parties to be essential – that it is practically impossible for a single mediator to serve both parties possessing such distinctive cultural predispositions.  Wang Fang reviewed the history of commercial mediation in China, which is intrinsic to the economy of the society and took institutional form in the early years of the Republic, starting in 1902 through Chambers of Commerce such as the one in Shanghai established in 1912.  Current government policies strongly support both domestic and cross-border mediation as part of what Wang Fang terms a policy of “diversified dispute resolution mechanisms.”  The Belt/Road mechanism has created occasions for increased attention to rapid dispute resolution mechanisms, most recently statements emanating from a January 23, 2018 reform committee and a similar notice dates January 12, 2017 concerning intellectual property rights.  She also emphasized the importance of strategic partnerships with non-Chinese commercial mediation centers, and agreed with the idea that co-mediation has an important role in addressing commercial disputes.   Most of CCPIT’s caseload of 2,000 cases per year continue to be internal, but joint centers with Italy, US, South Korea, Malaysia and other markets signify growth in international mediations.  CCPIT also hosts an International Mediation Summit annually since 2016.  The 2019 Summit will be held in October 16-18 in Chongqing.

This event attracted over 100 delegates from 20 countries in five continents.  We worked hard and played hard. The 27th meeting of UIA World Mediation Forum is scheduled for January 17-18, 2020 in Milan.  I have already marked my calendar.

26th UIA Mediation Forum: Developments in Switzerland

Business Conflict Blog - Sat, 2019-03-09 03:58

The UIA World Mediation Forum convened its 26th meeting in Zurich on March 8-9, 2019.  As usual, however interesting the many presentations were, the meeting was especially marked by the opportunity to continue friendships with mediators from around the world, and to forge new relationships.

Appropriately, the first session set forth the “Swiss Dispute Resolution Landscape.”  Forum President Fabienne van der Vleugel moderated a panel of regional leaders.  Jean-Christophe Barth is by profession a banker and by inclination Co-President of the Swiss Chamber of Commercial Mediation.  The Chamber was established in 1997 and has 230 commercial mediators.   He notes that 98% of the Swiss economy are SMEs, and it is a formidable task to introduce them to the relatively unconventional method of amicable dispute resolution.  Court rules introduce mediation as an option, but the culturally fragmented nature of Swiss society, as well as the efficiency of business courts, militate against broad up-take of commercial mediation.  He proposed that mediation is an “unrecognized value driver” to businesses.  Andrea Staubli, President of the Swiss Federation of Mediation Associations (SDM-FSM), described the consolidation of various mediation associations under the common umbrella of the Federation and the institution of quality training protocols.  There are now 1,500 mediations among the 22 associations in the Federation.  These include commercial, family, construction and other mediation focuses, in various languages and approaches.  The Federation accredits and certifies both training courses and individual mediators.  Among the metrics she offered were that 70% of mediations settle, and that 80% of mediations extend over 1-5 sessions.  Urs Weber-Stecher, a member of the SCAI Arbitration Court, reported on that organization’s efforts in mediation.  He reviewed the benefits of the SCAI Rules of International Arbitration, including an arbitration-friendly judicial system (resulting in vacatur in only 7% of appeals).  He decried the traditional disconnect among commercial mediators and commercial arbitrators, suggesting that benefits might accrue from more cooperation among these professional communities, including hybrid processes.  SCAI reports 70-80 arbitrations and 7-10 mediation cases per year. Finally, Roman Manser, President of the Mediation Commission of the Swiss Bar Association (SAV-FSA), explained that mediation – regulated in Germany and Austria – is not centrally regulated in Switzerland, placing on professional associations the responsibility to promulgate rules and competency guidelines.  The Swiss Bar Association issues certification to mediators after the completion of certain hours of training.

This year the SCAI releases its new revision of Swiss Rules of Commercial Mediation.  SCAI Executive Director and General Counsel Caroline Ming joined attorney Kirstin Dodge of Hamburger AG to explain these new Rules. Revisions were meant to simplify and abbreviate the document itself; to clarify the system of fees owing to the institution and to the mediators; to address to possibility of hybrid (Arb-Med-Arb) processes; to satisfy international demands for certified mediated agreements; and for other reasons.  The Swiss Rules designate a “seat of mediation,” similar to international arbitration, designating the law that interprets the mediated agreement.  Interestingly, the Rules provide for entry of an agreement as an arbitral award, but only if the arbitration commenced prior to arriving at the agreement (in order that the arbitral award issue at the time a controversy is active).  The new Rules provide for a simplified procedure for matters involving less than CHF 50,000; certificates of mediation and of settlement agreements; and an advisory council to recommend outcomes of costs disputes or future modifications to the Rules.

Arbitrability of IP Disputes in India – A Blanket Bar?

Kluwer Arbitration Blog - Sat, 2019-03-09 01:00

Saniya Mirani and Mihika Poddar

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

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

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

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

 

The IP Regime in India: A Primer

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

 

Lack of a Supreme Court precedent settling the issue

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

 

Different positions of Indian High Courts

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

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

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

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

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

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

 

Analysis and conclusion

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

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

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

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

References   [ + ]

1. ↑ Natraj Studios Private Ltd v. Navrang Studios & Another, 1981 AIR 537 2. ↑ See, Chapter XII, Copyright Act, 1957; Section 135, Trade Marks Act, 1999; Chapter XVIII, Patents Act, 1970. 3. ↑ Note that this ratio had been upheld by an earlier case from the same high court called Eurokids International Media Ltd. v. Bhaskar Vidyapeeth Shikshan Sanstha (2015) 4 Bom CR 73. However, Eurokids case was never referred to by EROS, as should have been done in light of the precedential system followed by India. 4. ↑ Deepak Thorat v. Vidli Restaurant Limited, 2017 SCC OnLine Bom 7704 5. ↑ In some cases, an entire contract may be about an IP right. For instance, license agreements, joint research and development agreements, etc. In other cases, the IP rights may form a part of a larger commercial transaction, such as, mergers, acquisitions, distribution agreements. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
by Edited by Niuscha Bassiri, Maarten Draye
€ 185


Conoco wins US$9 billion in Venezuela claim

US oil company ConocoPhillips has been awarded nearly US$9 billion plus interest in an ICSID claim against Venezuela over the expropriation of oil assets in the Orinoco Belt, ending a fraught 12-year proceeding...

Conoco wins US$9 billion ICSID award against Venezuela

US oil company ConocoPhillips has been awarded nearly US$9 billion plus interest in an ICSID claim against Venezuela over the expropriation of oil assets in the Orinoco Belt, ending a fraught 12-year proceeding...

Who is sitting at ICSID?

The past two months have seen 15 panels formed at ICSID, including first-time appointments for Isabelle Coutant-Peyre, Nathalie Voser, Bo Nilsson, Pascal Hollander and Ioannis Vassardanis.   Since GAR’s...

Challenge against Vattenfall arbitrators rejected

UPDATED WITH LINK TO DECISION: Germany has failed to unseat all three members of an ICSID tribunal hearing a €4.7 billion claim claim filed by Swedish investor Vattenfall over the country’s phase-out of...

Section 1782 Discovery For Use In Private Arbitrations: The New York Saga Continues

Kluwer Arbitration Blog - Fri, 2019-03-08 03:00

Lucas Bento

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

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

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

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

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

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

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

 

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

References   [ + ]

1. ↑  See Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 258 (2004); citing Smit, International Litigation under the United States Code, 65 Colum. L.Rev. 1015, 1026–1027, and nn. 71, 73 (1965) function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
by Edited by Niuscha Bassiri, Maarten Draye
€ 185


South African oil company wins ICC award against Congo

A South African oil exploration company has reportedly been awarded US$617 million in an ICC claim against the Democratic Republic of the Congo over the state’s failure to honour two oil contracts. ...

Negotiation, Trump, and Lessons for the Future

ADR Prof Blog - Thu, 2019-03-07 10:49
Just wanted to highlight for everyone that the Negotiation Journal has published an amazing set of wide-ranging and interdisciplinary brief commentaries on Trump and negotiation in a special issue called Negotiation and Conflict Resolution in the Age of Trump.   You can find this at Wiley and a few of us have also posted our … Continue reading Negotiation, Trump, and Lessons for the Future →

The 2020 USNews Dispute Resolution Rankings

ADR Prof Blog - Wed, 2019-03-06 22:38
Today the USNews rankings of law schools and law school specialty programs were “leaked.”  That means they were distributed to law school deans to prepare their publicity statements, to trumpet the good and explain the bad.  And the specialty rankings were tabulated differently this year, requiring voters to rate every school for which they had … Continue reading The 2020 USNews Dispute Resolution Rankings →

Revised ICC Note to Parties and Tribunals: Will Publication of Awards Become the New Normal?

Kluwer Arbitration Blog - Wed, 2019-03-06 22:09

Ben Jolley and Oliver Cook

Herbert Smith Freehills

ICC’s updated guidance to parties

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

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

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

 

Revised approach to publication of awards

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

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

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

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

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

 

What does this mean for users of arbitration? 

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

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

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

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

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

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

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

References   [ + ]

1. ↑ These updates include new guidance on data protection, clarifications on disclosures by arbitrators and additional guidance for treaty-based arbitrations. 2. ↑ See, for example, the 2016 BAILII Lecture by then Lord Chief Justice of England and Wales, Lord Thomas. 3. ↑ In the Queen Mary University of London 2018 International Arbitration Survey, 36% of respondents indicated these to be amongst the most valuable characteristics of international arbitration. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
by Edited by Niuscha Bassiri, Maarten Draye
€ 185


Making Arbitration FAIR

ADR Prof Blog - Wed, 2019-03-06 19:29
Delighted to post from friend of the blog, Jean Sternlight: Those of us who have been around the block a few times are quite familiar with ye olde battle to defeat “mandatory” or “forced” or “cram down” arbitration in consumer, employment and other contexts.  I aimed my first shot at the practice in an article … Continue reading Making Arbitration FAIR →

GE wins award in Taiwan nuclear dispute

A subsidiary of General Electric has won US$158 million in an ICC claim against a Taiwanese government-owned utility over two reactors at a nuclear power plant that was scrapped in the wake of the Fukushima...

S.I. Strong Won Her Fourth CPR Award for Best Article of 2018

ADR Prof Blog - Wed, 2019-03-06 17:34
My colleague S.I. Strong received the Outstanding Professional Article Award for 2018 from the International Institute for Conflict Prevention and Resolution (CPR) for her article, Truth in a Post-Truth Society: How Sticky Defaults, Status Quo Bias, and the Sovereign Prerogative Influence the Perceived Legitimacy of International Arbitration, 2018 Univ. of Ill. L. Rev. 533 (2018).  … Continue reading S.I. Strong Won Her Fourth CPR Award for Best Article of 2018 →

Ontario Court Provides a Helpful Primer on Judicial Intervention in Arbitration Awards in Canada

International Arbitration Blog - Wed, 2019-03-06 14:17
In FCA Canada Inc. v. Reid-Lamontagne, Justice Spies of the Ontario Superior Court of Justice provided a helpful overview of the current state of the law in Canada...

Italian court allows enforcement against Kazakhstan

An Italian court has permitted Moldovan investors to enforce a US$530 million Energy Charter Treaty award against Kazakhstan despite the state’s allegations that it was obtained by fraud. In a ruling...

The European and Singapore International Commercial Courts: Several Movements, a Single Symphony

Kluwer Arbitration Blog - Wed, 2019-03-06 01:19

Ioana Knoll-Tudor

Jeantet

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

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

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

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

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

  • Jurisdiction

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

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

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

  • Judges

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

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

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

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

  • English language

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

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

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

  • Procedure

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

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

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

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

  • Costs

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

  • Legal representation by a foreign counsel

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

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

References   [ + ]

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