Feb 23, 2015 - Barry is a member of the Lexis®PSL Arbitration and Dispute Resolution teams. He also contributes to the
LexisNexis Arbitration
A LexisNexis mini-mag helping arbitration lawyers stay up to date Spring 2015
The Health of International Arbitration: Counterpoise and Common Sense William W. Park Where next for International Arbitration? Interim measures in Hong Kong—court types and procedure Produced in partnership with Peter Chow & Felicia Cheng of Squire Patton Boggs (Hong Kong) The School of International Arbitration—30 years at the forefront Flowchart on procedure under the LCIA Rules Lexis®PSL Arbitration The pros and cons of the scrutiny of arbitral awards Philip Clifford and Oliver Browne, Latham & Watkins LLP
From the Editor Welcome to the second edition of LexisNexis Arbitration, produced to celebrate the QMUL School of International Arbitration (the SIA)’s 30th Anniversary Conference, ‘The Evolution and Future of International Arbitration: The Next 30 Years’, which Lexis®PSL Arbitration is supporting as a media partner. This mini-magazine provides a flavour of some of the LexisNexis UK products and services relevant to arbitration lawyers. It also features interviews with distinguished members of the SIA’s faculty and leading international arbitration practitioners in which they discuss the school and consider some of the conference’s key themes. The profile of international arbitration (and investment treaty arbitration) has never been higher. As a true alternative to court proceedings, in particular for the resolution of complex, high value, cross-border disputes, international arbitration is embraced by parties from around the world and across a wide spectrum of sectors. The practice of arbitration is also no longer niche: as Professor Emmanuel Gaillard delineated at the 2014 Freshfields Arbitration Lecture, the social field of international arbitration is packed with many players, from parties to publishers, who all contribute to its shape and development. International arbitration and investment treaty arbitration are also attracting more attention from outside the legal profession not all of which is positive, with criticisms being levelled for, amongst other things, a perceived lack of transparency in the process and poor diversity. The last 30 years have witnessed significant changes to arbitral law and practice, from emergency arbitration to the emergence of ethical codes for counsel, and while the future appears bright, we can expect to encounter challenges along the way as international arbitration adjusts to its growing user base. Keeping up with the latest changes can be tricky to manage. This is where we can help. LexisNexis has an experienced team of in-house lawyers working closely with leaders in the field of arbitration, both external authors and editorial board members, to provide you with the most informative and practical content to ensure you are up to date.
Contents LexisPSL 3 LexisPSL Arbitration 4 LexisPSL Arbitration: Meet the team 7 The Health of International Arbitration: Counterpoise and Common Sense William W. Park 8
Interim measures in Hong Kong—court types and procedure Produced in partnership with Peter Chow & Felicia Cheng of Squire Patton Boggs (Hong Kong)
10 14 18
The School of International Arbitration—30 years at the forefront Flowchart: LCIA Rules (2014) procedure Where next for International Arbitration?
Blog 6 16
Arbitration blog The pros and cons of the scrutiny of arbitral awards Philip Clifford and Oliver Browne, Latham & Watkins LLP
New Law Journal 24
Recasting the arbitration exception? Barry Fletcher, LexisPSL Arbitration and Dispute Resolution
Lexis Library 27
LexisLibrary Civil Procedure
My email address is below: please let me know what you think of the magazine and whether there are any areas that you’d like me to cover in the next edition. Barry Fletcher Solicitor Lexis®PSL Arbitration and Dispute Resolution
[email protected]
Editorial Editor: Barry Fletcher Production Editor: Rachel Buchanan Design: LexisNexis Creative Solutions Offices: Lexis House, 30 Farringdon Street, London, EC4A 4HH Tel: 020 7400 2500 Reproduction, copying or extracting by any means of the whole or part of this publication must not be undertaken without the written permission of the publishers. This publication is intended to be a general guide and cannot be a substitute for professional advice. Neither the authors nor the publisher accept any responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this publication. 2
LexisPSL Arbitration LexisPSL Arbitration is an online practical guidance product for arbitration lawyers, which provides a range of procedural and substantive guidance on domestic, institutional, ad hoc, international and industry-specific arbitration law and practice.
Our Practice Notes set out key principles and procedures, supported by authority, with practical examples and related documents are highlighted to enable quick progression to other relevant material and further reading links take you through to deeper commentary in LexisLibrary. Our Practice Notes are supported by Checklists, Flowcharts and Precedents, and we provide updates and analysis of the key decisions and developments in international and domestic arbitration. LexisPSL Arbitration has an in-house legal team with extensive arbitration and dispute resolution experience dedicated to producing content specifically for busy practitioners. This experience, combined with hundreds of customer interviews, has shaped our practical guidance on arbitration issues. We built and continue to develop our product with the assistance of arbitration experts from across the globe. Our recognised contributors and authors, as well as our Consulting Editorial Board, include many of the world’s leading arbitration practitioners.
To find out more, visit lexisnexis.co.uk/Arb30/PSL
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LexisPSL
Our content is written and structured to reflect how lawyers approach arbitration issues in practice. For example, our institutional arbitration content addresses each stage of arbitrating pursuant to the key institutional rules in a suite of Practice Notes so that the information you need is readily accessible when you need it.
LexisPSL Arbitration: Meet the team Barry Fletcher
Catherine Reeves
Lexis PSL
Barry specialises in international commercial arbitration and has a background in general commercial litigation. He trained and then practised at Jones Day before joining Pinsent Masons. In practice, Barry’s work included general commercial, aviation and IT arbitrations, under international arbitral rules, involving UK and international clients. He also has a background in general commercial, civil fraud and IT litigation, including experience before the High Court. Whilst in private practice, Barry worked with a broad range of clients from both the private and public sectors. Barry is a member of the Lexis®PSL Arbitration and Dispute Resolution teams. He also contributes to the LexisNexis Dispute Resolution Blog and New Law Journal on litigation and arbitration matters.
Catherine has been closely involved in the development and running of the LexisPSL Arbitration module since 2011. She has a background in international commercial arbitration under leading institutional rules such as the ICC and LCIA as well has conducting ad-hoc arbitrations under the Arbitration Act 1996. Catherine’s work has included telecoms and infrastructure arbitrations involving parties from America, Africa, Egypt as well as the UK. Catherine also has experience of small and large-scale commercial litigation for a variety of clients including those in the retail, automotive and construction industries as well as acting for the U.S. Government. Catherine trained at Linklaters and practiced at Howes Percival and Nabarro. Catherine was actively involved in Nabarro’s arbitration practice including presenting training sessions both internally and for CLT on dispute resolution, ADR and focussing on arbitration. Catherine is a member of the LCIA Young International Arbitrators Group and has participated as a panel-member for the ICC Young Arbitrators’ Forum.
Neil Smith
Janna Purdie
Neil is a commercial and corporate dispute resolution specialist having qualified at Linklaters. He has experience of a broad range of disputes representing individuals, owner managed businesses and multinational corporates during fee earning roles in the commercial litigation departments of Charles Russell, Travers Smith Braithwaite and Denton Wilde Sapte. Neil’s expertise includes high value breach of contract claims, complex aviation disputes, breach of trust/fiduciary claims, breach of warranty claims, unfair prejudice, injunctive relief and international arbitrations. Neil has also taught Civil Litigation at BPP Law school. Neil joined Lexis®PSL as the head of Dispute Resolution from Clyde & Co where he was responsible for the firm’s national legal training programme.
Janna is a dispute resolution lawyer with a Masters in Construction Law and Dispute Resolution. During her time in private practice at both Herbert Smith and Dentons she worked on complex international disputes, both litigation and LMAA arbitrations, dealing with technical cross border issues. Janna deals primarily with cross border issues within Lexis®PSL; specifically at the moment Brussels I (recast) but has also been actively involved with the Jackson Reforms. She heads up a LexisNexis costs team which addresses current costs issues facing the profession, was involved in the new J codes consultation and was a contributing author for the Cook on Costs supplement dealing with the Jackson reforms. Janna is a frequent contributor to the legal and professional press, including the New Law Journal and Counsel magazine.
Ruth Pratt
Virginia Jones
Ruth specialises in general corporate and commercial dispute resolution with particular experience in shareholder disputes, fraud and warranty claims. Ruth trained and qualified at Berwin Leighton Paisner where she remained in practice for ten years. Her work has involved project managing large-scale cases to trial in the chancery and commercial courts. Ruth was actively involved in in-house training with a particular focus on all aspects of evidence gathering and production, including authoring a user-manual on E-disclosure. She is also a contributor to the New Law Journal.
Virginia specialises in general domestic and international commercial litigation, arbitration and alternative dispute resolution (ADR). Virginia trained and qualified with Pinsent Masons, where she remained in practice for over two years, before moving to Marriott Harrison where she continued in practice for a further seven years. Virginia has acted in a variety of general commercial disputes covering areas such as intellectual property, fraud, defamation, misrepresentation, breach of contract, debt recovery, breach of restrictive covenants and company and shareholders’ disputes.
Melissa Jones
Rachel Buchanan
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Melissa specialises in general commercial litigation and alternative dispute resolution. Melissa trained at Jaques & Lewis (now Eversheds) and subsequently practiced at Stephenson Harwood and Herbert Smith (now Herbert Smith Freehills) before moving to BPP Law School to teach on the Legal Practice Course. Melissa has been a professional support lawyer for over 10 years, firstly at Nabarro, where she set up the PSL function, and then at DAC Beachcroft, where she was responsible for drafting current awareness briefings for both lawyers and clients, writing dispute resolution articles for the firm and external publications, providing internal training and assisting with business development.
Rachel is the Dispute Resolution blog’s technical editor. Rachel qualified as a dispute resolution solicitor and worked in private practice before joining LexisNexis. In addition to contributing to the Dispute Resolution blog, she also writes content for the Business of Law blog, the Future of Law blog and Halsbury’s Law Exchange.
Consulting Editorial Board 4 New Square
Latham & Watkins (London)
Stewarts Law
Leigh-Ann Mulcahy QC
Philip Clifford
Philippa Charles
Debevoise & Plimpton LLP
Olswang
Wilmer Cutler Pickering Hale And Dorr
Sophie Lamb
Andrew Aglionby
Steven Finizio
King & Spalding
Stephenson Harwood
Winston & Strawn (London)
Ruth Byrne
Louis Flannery
Joseph Tirado
39 Essex Street
Lexis PSL
Contributing Authors Herbert Smith Freehills (Bangkok)
David McLean
David Sandy
Alexandra Bodnar
Claudia Salomon
Basil Woodd-Walker
Hannah McCarthy
Vanina Sucharitkul
Maples And Calder (Dublin)
Starr & Partners
Jonathan Bellamy
Hogan Lovells (Hong Kong)
Brian Clarke
Charles Spragge
John Tackaberry QC
Amy Lo
Malachi Sweetman
Stephenson Harwood
Stephen Kosmin
Independent Authors And Arbitrators
Mayer Brown
Louis Flannery
Laurence Burger
Alison Barker
Stewarts Law
Bob Ashcroft
Philippa Charles
Tom Duncan
Vinge (Stockholm)
Nabarro
James Hope
Sophie Davies
Vinson & Elkins (London)
John Rogerson
Mark Beeley
Andrew Taplin
Sarah Stockley
Olswang
Vinson & Elkins (Houston)
Katerina Maidment
Jason Espersen
Jeremy Mash
Robert Reyes Landicho
King & Spalding (Houston)
Queen Mary, University Of London
Timothy Tyler
Kevin Mohr
Professor Catherine Rogers
Kobre & Kim
Harris Bor
Rajah & Tann LLP
Shaun Wu
Ng Kim Beng
Wilmer Cutler Pickering Hale And Dorr
Lalive (Geneva)
Avinash Pradhan
Sarah Wheeler
Bernd Ehle
Steven Finizio
Christophe Guibert de Bruet
Sheppard Mullin Richter & Hampton LLP (Beijing)
Werner Jahnel
James Zimmerman
Joseph Tirado
Samuel Moss
Simpson Grierson (Wellington)
Matthew Page
Noradèle Radjai
Tim Stephens
Winston & Strawn (Hong Kong)
Latham & Watkins (London)
Simmons & Simmons
David Hall-Jones
Oliver Browne
Jayne Bentham
Gary Zeng
Philip Clifford
David Bridge
zeiler.partners (Vienna)
Latham & Watkins (New York)
Kirsten Kitt
Dr Michael Nueber
David Brynmor Thomas Adam Robb 4 New Square Anneliese Day QC Richard Liddell Thomas Ogden Daniel Saoul George Spalton Appleby Sharmilla Bhima Malcolm Moller Ashurst (Singapore) Ben Giaretta Bryan Cave Marianna Rybynok Irina ymczyszyn Clifford Chance Marie Berard Grant Thornton Nick Andrews Sandy Cowan Bruce Keeble Sterl Greenhalgh Herbert Smith Freehills (Sydney) Leon Chung
Hoi-Yee Roper Ben Sanderson Peter McQueen Hew Dundas Yaraslau Kryvoi KIAP (Moscow) Mikhail Samoylov King & Spalding Ruth Byrne
Wilberforce Chambers
Winston & Strawn (London)
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Arbitration blog
Blog
We carefully select the need to know developments that are interesting and important for arbitration practitioners. From updates and the latest guidance, commentary on procedure and discussion of events and conferences, all arbitration content can be found under the Arbitration tab of the Dispute Resolution blog. Our articles are written by our in-house lawyers, supported by guest contributions from leading practitioners and industry experts. And follow us on Twitter:
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To find out more, visit lexisnexis.co.uk/Arb30/Blog 6
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The Health of International Arbitration: Counterpoise and Common Sense William W. Park
Lexis PSL
Essay for Queen Mary University of London School of International Arbitration’s 30th Anniversary William W. (Rusty) Park, Professor of Law, Boston University; President, London Court of International Arbitration; General Editor, Arbitration International. Copyright © 2015 William W. Park In large measure, the value and health of arbitration depend on a delicate counterpoise among competing goals that include procedural fairness, efficient decision-making, and substantively correct results on the merits of the disputes. The arbitrator seeks to ‘get it right’ not by an endless search for absolute truth, such as might exist in the eyes of God, but through reaching a reasonable view of what happened, what the contract says, and what the law provides. The decision-making process implicates evaluation of witness testimony, documents and legal authority. Once an award has been rendered, national courts can play a significant role in reviewing the decisions in order to monitor basic procedural fairness and respect for arbitral jurisdiction. However, the judiciary would not normally second-guess conclusions on the substantive merits of those questions which the parties submitted for determination by the arbitrators. Debate on the right mix of these objectives often gets derailed by focus on the last disappointing experience of whoever takes the debating floor. Human nature being what it is, a quest for sensible equilibrium does not always present itself with the same rhetorical flourish as more extreme perspectives. A corporate executive who has just lost a case might lament that ‘bad’ awards cannot be appealed on their merits. Yet that same business manager, prevailing in a hard-fought arbitration, may feel grievance at the very thought of any ground for reversing his company’s victory
through challenge to the arbitrator’s decision. Understandably, the executive will focus more on the award’s immediate effect on corporate profits, and less on how to articulate general annulment standards that promote an optimal balance among award finality, legal certainty and the integrity of proceedings. Likewise, one in-house counsel might complain about the cost of discovery in her latest arbitration, while another grumbles that the arbitrator in a different proceeding was too stingy with document production. Each takes a position understandable from the perspective of her litigation strategy. Yet in drafting future agreements, neither may be willing to add contract language to clarify, limit or augment the role of information exchange, from fear of what such provisions would mean for the company’s next dispute. In considering how various practices and policies affect the future of private dispute resolution, common sense and even-handedness normally pay greater dividends than ideology and rhetorical flourish, even if the latter garner greater applause. In this connection, the Queen Mary University School of International Arbitration has played a vital role in bringing together for measured discussion the various stakeholders in the process: scholars, advocates, legislators and judges, all of whom have enhanced arbitration’s contribution to aggregate social and economic cooperation. William W. Park
To find out more about LexisPSL Arbitration, or to have a free trial, visit lexisnexis.co.uk/Arb30/PSL
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Interim measures in Hong Kong—court types and procedure Lexis PSL
Produced in partnership with Peter Chow & Felicia Cheng of Squire Patton Boggs (Hong Kong)
This Practice Note sets out the interim remedies available to a tribunal in a Hong Kong seated arbitration under the Hong Kong Arbitration Ordinance, Chapter 609 (AO).
Types of interim measures Section 45 of Arbitration Ordinance, Chapter 609 (AO) sets out what interim measures a court may order. This excludes: • orders under AO, s 60, which deals with relevant property, and inspection, photographing, preservation, custody, detention, sale, samples, observations and experiments in respect thereof. Relevant property is property the subject of the arbitral proceedings, or property in relation to which a question has arisen in the arbitral proceedings. For a discussion on s 60 orders, see Practice Note: Interim measures in Hong Kong—court remedies involving property • security for costs, discovery, interrogatories and evidence by affidavit (article 17(2) of the United Nations Commission on International Trade Law (the Model Law as given effect by AO, s 35(1) specifically excludes those interim measures that may be ordered under AO, s 56) This is as a result of court ordered interim measures being further defined to mean the same as those referred to in the Model Law. art 17(2) as given effect by AO, s 35(1) which deals with arbitral tribunal ordered interim measures: Interim measures that would be covered by AO. s 45 include: • freezing of assets—the interim measures intended to be covered by the Model Law, art 17(2) as given effect by AO, s 35(1) and thus AO, s 45 includes not only those directly related to assets under dispute, but also freezing of assets generally, namely, Mareva injunctions. In Tiong King Sing a Mareva injunction was ordered under AO, s 45 albeit on the facts, it was ultimately discharged. See also Katran Shipping • other interim injunctions—see AO, s 45(9); Prema Birkdale case; sections 21L and 21M of the High Court Ordinance, Chapter 4 (HCO) and section O 29, r 1 of the Rules of High Court, Chapter 4A (RHC). See also: -- Keep Bright, in which the court declined to modify an interlocutory injunction to restrain the defendants, inter alia, 8
from disposing of relevant shares pending arbitration in the context of a dispute concerning whether an agreement for sale and purchase of shares had expired—see: Keep Bright v Super Auto Investments (unreported), HCCT 16/2010, [2012] HKCU 113 (not available in Lexis®Library) -- for an English case in this context, see National Insurance, in which an interim injunction for return of documents by the defendant agent was granted in the context of a claim by the claimant insurer that the delegation agreement (containing an arbitration clause) had been terminated -- in another English case, Starlight Shipping, an interim anti-suit injunction was granted restraining pursuit of court proceedings in China in light of an arbitration clause in a bill of lading providing for arbitration in England (in light of the specific English statutory provision relied upon in the case, such an injunction was held to be for the purpose of preserving assets, assets including a chose in action such as the right to have disputes referred to arbitration) -- in New Zealand in Safe Kids, the interim injunction under consideration was to restrain the defendants from operating an after school children’s care programme in alleged breach of restraint of trade clauses and misuse of confidential information. The interim injunction sought was ultimately declined, as while a serious question to be tried was shown, the balance of convenience did not justify the injunction— see: Safe Kids v McNeill [2010] NZHC 605 (not available in Lexis®Library) • Anton Piller orders and orders analogous to the same ‘designed to preserve evidence to be used in the arbitration’ (see: The Lady Muriel [1995] 2 HKC 320, paras 323–324—(not available in Lexis®Library) but excluding those covered by AO, s 60 which deals with relevant property (interim measures under AO s 45 are defined to so exclude as discussed above). An Anton Piller order is a form of mandatory interim injunction requiring the respondent to permit the claimant or certain persons to enter upon the respondent’s premises to inspect, seize and remove evidence into safe custody and is thus covered by AO, s 45. However, it might also be covered by AO, s 60. Under AO s 60, the court may make an order
to preserve relevant property including evidence. That said, AO, s 60 appears to provide for narrower relief in that the documents sought to be preserved must be capable of specific description (see English case: Assimina Maritime), para 14. As for the order under consideration in The Lady Muriel itself, namely, permitting inspection of a vessel in the context of a charterparty dispute as to the seaworthiness of the vessel, this would now be covered by AO, s 60. See Practice Note: Interim measures involving property—court.
• furnishing of sufficient security or failing which, interim attachment of the respondent’s property pending arbitration where he/she is about to dispose of his/her property or remove the same from the jurisdiction with intent to obstruct or delay execution of any award (RHC, O 44A, r 7) • garnishee order with money to remain in court pending outcome of arbitration—see Trade Fortune v Amalgamated Mill Supplies [1994] 113 DLR (4th) 116; 89 BCLR (2d) 132. 1994 CANLII 845 (BC SC), a Canadian case based on the Model Law, art 9 (not available in Lexis®Library). Note, however, HCO, s 21, which deals with attachment of deposit accounts in authorised financial institutions, is subject to the rules of court and RHC, O 49 only provides for garnishee proceedings post court judgment. It remains to be determined by the court whether an interim measure in the form of a garnishee order pre-award would be available in Hong Kong under AO, s 45—see: Annotated Ordinances of Hong Kong, commentary on the Model Law, art 9 as given effect by AO, s 21, para 21.07 • delivery up of specific property (other than land) to the party claiming recovery of the same subject to payment into court by that party where the other party claims to be entitled to retain such property by virtue of a lien or security for a sum of money (RHC, O 29, r 6) • appointment of receiver (HCO, s 21L and RHC, O 30) • it was held to be open to the plaintiff to apply for an interim measure pending arbitration in the form of an order for payment of retention money under construction contracts into a separate bank account opened in the defendant’s name and an injunction restraining the defendant from dealing with the money paid in until further order— see: Zhong You (China) Design Co v Fuyuan Landmark (Shenzhen) Ltd [1996] 2 HKC 342 (not available in Lexis®Library) Where the measure in question is known to law in terms of being available in support of a court action under the HCO or RHC as cited above, such provisions and rules (and case law and commentary thereon) can provide guidance as to applicable principles for grant of the relevant interim measure in support of arbitration. It was held in Prema Birkdale, in the context of the predecessor s 2GC, Arbitration Ordinance, Chapter 341 on which AO, s 45 is based, that the court must still abide by the general principles governing the grant of interim
However, the jurisdiction and application procedure remains as provided for by AO, s 45 and RHC, O 73 respectively (procedure is discussed below).
Interim measures in support of arbitrations outside Hong Kong For a variety of reasons a court may be asked to order an interim measure in support of an arbitration seated outside Hong Kong (for example if the asset in question is in Hong Kong). In support of arbitration overseas, it is expressly provided that an interim measure may only be granted if of a type known to law.
Procedure Application to the court for an interim measure is to be made by originating summons (RHC, Appendix A, Form No. 10) or summons to the judge in charge of the Construction and Arbitration List. A reminder that matters relating to the AO should be heard by the judge in charge of the Construction and Arbitration List was given inVibroflotation, para 265 (RHC, O 73 rr 1, 2). If the interim measure sought is in support of arbitral proceedings outside Hong Kong, RHC, O 73, r 4, provides that O 29, rr 1–4, 7(1), 7A and 8 apply as appropriate. These rules deal with interim and interlocutory injunctions and other relief in support of court actions (O 29, rr 1 and 2(3) are discussed above). The provision for application as appropriate is necessary because the RHC deal with some matters relevant to court actions only and not arbitration such as O 29, r 2(5), which deals with case management summonses and O 29, r 2(6), which deals with acknowledgment of service of writs and originating summonses (RHC, O 73, r 7). Where applicable, the application may be served out of the jurisdiction with leave of the court. As an interim measure is usually sought in urgent circumstances, an applicant should take note to apply for this leave at the same time as applying for the relevant interim measure. More detail on procedure is contained in: Interim injunctions from the Hong Kong courts.
No appeal A decision, order or direction of the court ‘under this section’ or AO, s 45 is not subject to appeal. However, the English case of Cetelem, paras 25, 28 has construed the words ‘under this section’ to mean that if the court makes an order not within its jurisdiction, in other words, it could not, as opposed to should not, have made it, there may be appeal of such an order. It remains to be seen whether Cetelem will be applied in Hong Kong in this regard. English cases have persuasive effect in Hong Kong, if the reasoning is applicable (AO, s 45(10)). For a discussion on the jurisdiction and power of the Hong Kong courts to grant interim measures including the circumstances in which they may be ordered, see Practice Note: Interim measures from the Hong Kong court.
This is an example of the hundreds of Practice Notes available on LexisPSL Arbitration. The text highlighted in red (with the exception of the headings) indicates links through to other content in the online version of LexisPSL Arbitration.
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• security for amount in dispute—the power of the court to order the same was previously expressly provided for in the predecessor s 2GC(1)(a), Arbitration Ordinance (Chapter 341), but the said provision has not been adopted in the current AO. That said, the court might have jurisdiction to order comparable measures such as for a specific fund to be paid into court or otherwise secured where the right to the fund is in dispute (RHC, O 29, r 2(3)). In the case of admiralty proceedings, the court may stay the same and refer the parties to arbitration conditional upon the giving of security for the satisfaction of any award, or any property already arrested or bail or security given may be retained as security for the satisfaction of any award (AO, s 20(6)). Note that a tribunal, as opposed to a court, might have a wider power to order security for the amount in dispute in circumstances similar to those in the English case The Angelic Grace. The Court of Appeal held that it was open to the tribunal to make issue of an award to the charterer claimants conditional upon their provision of security for the amount of the award. In this case, the owner respondents had claims against the charterers in two other arbitrations based on two other charter-parties between the same parties and in relation to the same ship and such claims were substantially more than the award amount
injunctions and other interim relief (as applicable to court actions); on the facts of the case, this meant that the court must still apply American Cyanamid principles of serious question to be tried and balance of convenience in determining an application for an interim injunction in support of arbitration—see: Prema Birkdale Horticulture (Macau) Ltd v Venetian Orient Ltd , para 488.
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The School of International Arbitration —30 years at the forefront The School of International Arbitration (the SIA) at the Centre for Commercial Law Studies, Queen Mary University of London (QMUL) turns 30 this year. Ahead of the 30th Anniversary Conference, ‘The Evolution and Future of International Arbitration: The Next 30 Years’, distinguished members of the SIA’s faculty and leading arbitration practitioners discuss the school and its position on the field of international arbitration. Professor Julian Lew QC Head of the SIA and arbitrator at 20 Essex Street Professor Loukas Mistelis Director of the SIA and the Clive M Schmitthoff Professor of Transnational Commercial Law and Arbitration Professor Stavros Brekoulakis Professor in International Arbitration and Commercial Law at the SIA Dr Debbie De Girolamo Senior lecturer in law at QMUL Professor Phillip Capper Partner and head of international arbitration at White & Case in London Dr Laurence Shore International arbitration specialist and a partner in Herbert Smith Freehills’ New York City office Dr Stefan Kröll International arbitrator, lecturer and co-director of the Willem C. Vis Arbitration Moot Alexis Mourre Partner at Castaldi Mourre & Partners and vice president of the ICC International Court of Arbitration
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The SIA was founded in 1985 to promote advanced teaching and research in the law and practice affecting international arbitration. What were the founders’ aims? How have they been achieved?
The SIA was established to promote advanced teaching and research in the law and practice affecting international arbitration. The SIA has moved from the instruction of small groups of students to teaching around 120 postgraduates a year from across the world. The SIA, its faculty and students, including our 30 PhD completions, have made important contributions to the science of arbitration and it is our aim to continue the pursuit of excellence in this field. Director of the SIA, Professor Loukas Mistelis, also considers the school’s history and discusses the breadth of the SIA’s teaching and research programmes: The founders’ aims were to create a focal point for the advanced study and research of international arbitration. In 1985, international arbitration was not recognised as an independent research area and was either aligned to civil procedure or international business law. Now it is firmly on the curriculum, at least at postgraduate or masters level, of most prominent law schools in the world—a testament to the global acceptance of the founding idea of the SIA. I joined the SIA in 1998 and became its Director in 2003. Since 1985, QMUL and the SIA introduced several new courses, have developed a specialist LLM programme, a pioneering postgraduate diploma, a postgraduate distance learning programme, a successful PhD programme (with 30 PhD completions so far) and a series of workshops, seminars and conferences. We have also developed critical mass with ten members of staff for the arbitration programme and less reliance on adjunct faculty.
How has the teaching of international arbitration changed over the course of the SIA’s history? Professor Stavros Brekoulakis: The teaching of arbitration has become more specialised and diverse in the last 30 years. For a start, there was no teaching of international arbitration (at least at a university level) when the SIA was established in 1985. QMUL was the first university to include an international arbitration course in its LLM programme. In fact, it continued to be the only law school teaching international arbitration until the early 2000’s, when a number of law schools in London, Europe and in the US started offering courses on international arbitration. Furthermore, while originally only international commercial arbitration was taught, today a number of specialised arbitration courses are offered. At the SIA, for example, we teach courses on international commercial arbitration, international construction arbitration, investment arbitration including dispute resolution in WTO, energy arbitration, ADR, and we are in the process of introducing courses in insurance arbitration and shipping arbitration. Universities are responding to the needs of the market and the new LLM students who have become increasingly more sophisticated. While originally LLM students would mainly choose one general course on international arbitration as part of their commercial or business law LLM studies,
Professor Mistelis also considers how teaching at the SIA has evolved: To begin with, our postgraduate student numbers were small (20 or so students) and drawn from Europe and the UK. Our main arbitration course has now more than 120 students and the specialist courses around 50 each. In addition to lectures/seminars, we now offer tutorials and classes, which are recorded and available online. We also have an innovative class materials website. We also focus on a number of extramural activities which complement the main academic teaching. Professor Lew QC highlights how, over the last thirty years, the SIA has moved with development of international arbitration: Teaching and research at the SIA has adapted to the significant development of international arbitration since 1985. International arbitration offers international businesses with a true alternative to resolving commercial disputes through court proceedings. Recognition of this fact is reflected in the proliferation and growth of international arbitral institutions across the world where parties can have their disputes heard and resolved in private rather than feeling constrained to litigate in centres traditionally associated with a Western world view. Our teaching and research moves with, and contributes to, the development of international arbitration as a progressive form of dispute resolution. Senior lecturer at QMUL, Dr Debbie De Girolamo, discusses the SIA’s links with practice and the strengths of its academic staff: With the growth and predominance of international arbitration processes in complex commercial disputes, teaching methods have benefitted from an integration of practitioner and academic approaches. The academics from the SIA are also well-respected arbitrators and as such, provide valuable practical insight to the application of academic theories. Furthermore, as a result of the good relationships SIA has developed with commerce and legal practice, experienced legal counsel, corporate executives and arbitrators deliver lectures, engage in panel discussion and offer mentoring and training opportunities.
What distinguishes the SIA from other institutions in this field? Professor Phillip Capper, head of international arbitration at White & Case, provides his views on the SIA’s proposition: The SIA is, on any view, the world leader in this field. Not only is it long established but it has consistently attracted a multinational, multijurisdictional course group. It has also had a rich and successful stream of doctoral candidates over the years—including Professor Brekoulakis—who have made a great contribution to the field. Professor Brekoulakis provides an insider’s view on what makes the SIA different: The SIA is the first school dedicated to the teaching and studying of international arbitration. There are two features that distinguish the SIA from other institutions in this field. First, we offer the widest range of international arbitration courses. While many schools teach commercial and investment arbitration, very few teach construction arbitration or energy arbitration or shipping arbitration, and I believe no other school offers all these options together. Secondly, while arbitration in most schools is taught by adjunct professors, arbitration at the SIA is mainly taught by full-time professors, who are dedicated to the teaching of international arbitration and fully engage with students in classroom as well as in a wide range of arbitration related activities, such as the Willem Vic Moot Court, the Frankfurt Moot on Investment Arbitration etc. In addition, we have adjunct professors, from law firms, such as Audley Sheppard QC, who give a number of guest lectures every year and provide students with unique insight in the practice of arbitration. Dr Laurence Shore, partner at Herbert Smith Freehills, offers his expert view on the SIA’s strengths: Three things, in my view, distinguish the SIA from other institutions. 11
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In anticipation of the conference, Professor Julian Lew QC, founder and Head of the SIA, reflects on the school’s origins and its place on the field of arbitration: International arbitration has developed significantly since I conceived the idea to establish a specialist school within the Centre for Commercial Legal Studies (CCLS). In 1980, Sir Roy Goode founded the CCLS to reflect commercial law’s academic importance and contribution to global business and government. At that time, the study and practice of international arbitration had not attained its current mature form: I was one of only a few practitioners in London to specialise in international arbitration work, and there were no university programmes dedicated to arbitration teaching and research. I recognised international arbitration’s great potential and, with Professor Goode’s support, we established the SIA in 1985, the first of its kind and the forerunner for other programmes around the world. I have been the Head of the SIA and involved with teaching our students ever since.
today students tend to prefer specialised LLM degrees, such as an LLM in international dispute resolution, with three dispute resolution modules.
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First, the SIA was first, and it properly enjoys first-mover advantage. That is to say, principally through the foresight of Professor Lew, the SIA led the arbitration community in establishing international arbitration as a field of academic study at the highest levels of legal scholarship. To be sure, other law schools (though not many) provided the opportunity for an advanced degree in which a student could write a thesis on an arbitration topic. However, the SIA pioneered in establishing a centre at which the entire focus would be on arbitration scholarship. Second, while many institutions that have followed the SIA can be proud of their outstanding scholars, the SIA still stands at the head of the pack in consistently providing thought leadership in the field and drawing arbitration scholars from around the globe. Here, in addition to Professor Lew, mention must be made of the brilliance and energy of Professor Loukas Mistelis, who expertly drives the academic mission of the SIA. Third, the SIA, uniquely in my view, prepares its students for careers as arbitration practitioners—ie as counsel presenting cases—while also maintaining an emphasis on scholarly achievement. Thus, the SIA provides a double service to international arbitration: it advances arbitration scholarship at the same time that it prepares lawyers for serving clients involved in international transactions. Dr Stefan Kröll: the SIA was one of the first institutions to offer arbitration classes at an academic level. It combined considerable practical experience with academic excellence. The unique blend of both has been a characteristic of the SIA ever since. It is today still one of the few institutions which bases its courses on an own treatise prepared with the needs of students in mind. All lecturers combine a wide knowledge about the theory of arbitration with considerable practical experience. The combination of both is also one of the hallmarks of the tutorials which supplement the lectures and deepen the knowledge obtained during class. In addition, the SIA is still one of very few institutions which does not only offer a general course in arbitration but where students can also take specialised classes on important areas where arbitration plays a role, such as construction and investment. There the procedural aspects are supplemented with the most relevant questions of substantive law. Professor Mistelis: I think it must be the commitment of the institution to have a large group of full time members of staff in the specialist area. All members of staff teach and research in arbitration and most also have experience in practice, research and practice-experience-led teaching. Our staff have a clear focus on comparative and international law. The SIA also has more than 3,000 alumni and a great deal of support for the SIA globally. The SIA has also been the home of a number of significant seminars and conferences, and has produced a large number of publications on a regular basis. Alexis Mourre: The SIA is probably the more global of the arbitration schools, and the more open to practice with a true international perspective. Dr Debbie De Girolamo: The quality of the academic staff in the SIA is second to none. As the leader in its field, the SIA is the go-to institute in the field for students, academics and practitioners. The SIA has successfully integrated excellence in research with recognition of the reality of practice. For example, its series of surveys conducted in partnership with professional firms provide cutting edge insights into the development of arbitration trends. There often exists a gap between academia and practice, however, the SIA has built a solid bridge between the two, recognising that theory lives through practice and practice develops through theory.
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We asked distinguished international arbitration specialists for their views on the SIA’s reputation. Here’s what they said. Dr Laurence Shore: As a practitioner you can be sure that students who have successfully completed the arbitration classes at the SIA have a very solid understanding of arbitration both in relation to practice as well as in relation to the underlying legal theories. Although I of course cannot speak for the wider arbitration community—I am only one voice among many—I can at least offer my impression that the wider community considers the SIA to play a key role in advancing international arbitration scholarship, influencing the adoption of best practices in arbitration, and assisting LLM students in improving their abilities to serve their clients in international arbitration cases. Alexis Mourre: The SIA is perceived as a highly performing institution not only for training, but also for research and global thinking on the future of arbitration. International arbitrator Dr Stefan Kröll highlights the SIA’s contribution to international arbitration research and scholarship: The SIA has a very good reputation in the arbitration community, both for the research done under the roof of the SIA as well as for its teaching. In particular, the empirical research done by the SIA is widely used and quoted in practice as well as in academia. Furthermore the various series maintained by the directors of the SIA at Kluwer and OUP contain very good treatises on topical issues in international commercial arbitration as well as investment arbitration. Professor Phillip Capper, partner at White & Case, discusses his firm’s strong relationship with the SIA: In addition to its academic and scholarly work, along with creating a grateful community of graduates now practising in the field around the world, the SIA has been very focused on supporting and contributing directly to the practice of arbitration. Perhaps the best example is the very highly regarded International Arbitration Survey, which we have been pleased at White & Case to have sponsored and been closely involved with in 2010 and 2012. We are currently working on our third survey with the SIA, which this time focuses on improvements and innovations in international arbitration. We look forward to releasing the results later this year.
How important are alumni to the SIA’s present and future? Professor Stavros Brekoulakis, Professor at the SIA, stresses the importance of alumni: Alumni are an extremely important asset for the SIA. Thousands of students from all over the world have graduated in the 30 years of the SIA, and they are now established arbitration practitioners, arbitrators, judges, in-house counsel, arbitration institution officers and academics. Incidentally, the Alumni and Friends of the School of International Arbitration (AFSIA) joins the celebrations for the 30th Anniversary of the SIA by organising its second global conference on 22 April 2015, with the participation of an excellent group of SIA Alumni speakers. Dr Debbie De Girolamo echoes Professor Brekoulakis’ views: The SIA’s alumni are critical for the continuing development of the SIA as a leader in this field. The SIA recognises that students of today become respected colleagues of tomorrow. Alumni stay in touch and often participate in SIA’s teaching activities, provide professional development opportunities for current students, and are available to provide advice and mentorship to the SIA student body and faculty alike. Professor Loukas Mistelis offers praise for the SIA’s long-standing alumni organisation: We encouraged students to organise an alumni association in 2003 and they have created an admirable network centred on AFSIA with a good number of national committees and academic and professional activities. The most rewarding part is that AFSIA is a self-governed association bringing together alumni and friends of the SIA.
What lies in the SIA’s future? Members of the SIA’s faculty share their thoughts on what we can expect from the SIA in the years to come. Professor Julian Lew QC: The SIA will continue to grow and will adapt to changes in the field of international arbitration. It is our aim to remain at the forefront of international arbitration’s development by providing innovative courses with strong links to those in practice and contributing to the science of arbitration.
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Professor Brekoulakis: The SIA’s future is exciting with new courses and ground-breaking research. A number of empirical surveys on international arbitration are underway, while all members of the SIA are in the course of publishing monographs, books and articles on a wide range of topics and arbitration fields. At the SIA we are always willing to explore new ideas and pursue original lines of inquiries. We are working hard to contribute to the teaching and the studying of international arbitration with the same rigour and enthusiasm exhibited since the foundation of the SIA in 1985. Professor Loukas Mistelis: Apart from the new LLM in Paris, we plan to strengthen the distance learning programme, introduce some professional courses and collaborate with institutions in Latin America and Asia. We are committed to the same culture of research-led teaching, strong research ethos, production of high level publications as well as creating better career opportunities for our students. Dr Debbie De Girolamo: The SIA will continue to provide leading research and support new advances in the field. For example, in the area of disputing processes, it has introduced negotiation theory into its curriculum, an offering which is rare at other law schools in Europe. It has also established a successful LLM programme in energy and natural resources law. It will continue to develop such cutting edge programmes while continuing to advance trend-setting research.
What can attendees expect from the conference? The 30th anniversary conference takes place between Sunday 19 and Tuesday 21 April 2015 and offers an impressive programme. Professors Mistelis, Lew and Brekoulakis discuss what will be on offer. Professor Mistelis: We hope to provide high-level global thought leadership. Diverse panels will explore how arbitration has evolved over the past 30 years and where things are moving in the next 30 years. It will address both theoretical and practical aspects of arbitration. In addition there will be an AFSIA conference on the 22 April 2015 and a celebration of the SIA and arbitration generally. Professor Lew QC: Among many other things, the conference will explore, discuss and identify whether or not the next 30 years will prove as dynamic as the preceding 30. It is an exciting, but also challenging, time for international arbitration and the conference will provide an opportunity to explore current issues of importance and look to the future. Professor Brekoulakis: The attendees should expect an exciting debate on the most important topics in international arbitration currently by a group of highly distinguished arbitration lawyers and scholars. Our aim is to go beyond the usual agenda of arbitration conferences, and explore new topics in different formats (keynote speech, individual presentations, roundtable and interactive panels), while appealing to both arbitration practitioners and academics. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
To find out more about LexisPSL Arbitration, or to have a free trial, visit lexisnexis.co.uk/Arb30/PSL
Links to biographies: Professor Julian Lew QC www.20essexst.com/member/julian-dm-lew Professor Loukas Mistelis www.law.qmul.ac.uk/staff/mistelis.html Professor Stavros Brekoulakis www.law.qmul.ac.uk/staff/brekoulakis.html Dr Debbie De Girolamo www.law.qmul.ac.uk/staff/degirolamo.html Professor Phillip Capper www.whitecase.com/pcapper/#.VQll946sXTo Dr Laurence Shore www.herbertsmithfreehills.com/people/laurence-shore Dr Stefan Kröll www.rechtsanwalt-kroell.de/en/ Alexis Mourre www.castaldimourre.com/en/alexis-mourre/
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Flowchart: LCIA Rules (2014) procedure
Note: • the tribunal may provide additional directions as to any part of the written stage of the arbitration, particularly where there are multiple claimants, respondents or any cross-claim between two or more claimants/respondents (LCIA, art 15.6) • if the respondent fails to submit a Statement of Defence, or the Claimant fails to submit a Statement of Defence to Cross-claim, or if, at any time, any party fails to comply with LCIA, art 15 or an order of the tribunal in relation to the presentation of its written case, the tribunal may nevertheless proceed with the arbitration and make one or more awards (LCIA, art 15.8)
Before commencing the arbitration • Consider any applicable limitation periods that affect when the claim needs to be issued • Consider whether all claims that you wish to raise in LCIA arbitration are covered by the arbitration agreement which refers the dispute to arbitration • Consider where the award may be likely to be enforced and whether any steps are required to protect any assets, for example a freezing injunction • Consider the provisions for appointment of the tribunal. If there are to be party-appointments then contact potential arbitrators to assess their suitability and availability and for them to confirm their independence
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• Start to collate all the evidence you are likely to need including preserving any electronic evidence that may be required
Emergency measures • A party may apply for expedited formation of the tribunal (Art 9A) or the appointment of an Emergency Arbitrator (Art 9B).
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• An emergency application should be filed with a copy of the Request for Arbitration
Commencing the arbitration • A Request for Arbitration is sent to the Registrar (Art 1) • Article 1 sets out what the Request must contain • A registration fee must be paid at the time of filing the Request (Art 1.1(vi) and Schedule of Costs). If the fee is not paid the request will not be treated as having been delivered.
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Responding to the arbitration • The respondent has 28 days from receipt of the Request by the Registrar to send a written Response to the Registrar (Art 2) • Article 2 sets out what the Response must contain, including an indication of whether any cross-claim will be brought (and such cross-claim to include any counter claim (Art 2.1(iii))
Deposits
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• The LCIA will require a deposit on costs from both parties. This may be one or several payments on account (Art 24)
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This flowchart outlines the sequence of steps to be followed under the written stage of an LCIA arbitration, pursuant to art 15 of the LCIA Rules (LCIA, art 15) (in force effective 1 October 2014) in default of agreement between the parties or order of the tribunal.
• If one party does not pay, the LCIA may request the deposit from the other party in order for the arbitration to proceed (Art 24.4)
Appointing the tribunal • If the arbitration agreement provides for party nomination of arbitrators, the parties must provide their nominee’s details to the Registrar along with the Request (if the claimant) or the Response (if the respondent) (Arts 1.1(v), 2.1(v)). The LCIA will appoint the arbitral tribunal (taking into account any written agreement or joint nomination by the parties) (Art 5.7). • If the parties have not provided for appointment of the tribunal then the LCIA will appoint a sole arbitrator unless it determines that a threeperson tribunal is appropriate in the circumstances (Arts 5.6, 5.8) • If the LCIA is to make the appointment, it will do so promptly after receipt of the Response or, if there is no Response, after 35 days following the commencement date (Art 5.6)
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• The LCIA has an expedited formation procedure if needed. A party who requires this must apply to the LCIA in writing and provide the Request (if made by a claimant) and the Response (if made by a respondent), delivered or notified to all the other parties (Art 9A)
Jurisdiction • Consider whether there is a challenge to be made to the jurisdiction of the tribunal • The tribunal has the power to rule on its own jurisdiction (kompetenz-kompetenz) but this must be addressed as soon as the grounds for challenge are known and not later than the Statement of Defence or Statement of Defence to cross-claim (Art 23)
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• While the LCIA rules do not provide for a preliminary meeting, it would be usual for the tribunal to hold one to agree directions (so far as possible) and make procedural orders
• Within 28 days of notice from the Registrar of the tribunal’s formation, the claimant must send its election to have its Request treated as its Statement of Case, or its Statement of Case to the Registrar. The Statement of Case sets out in sufficient detail the facts and contentions of law on which it relief and the relief claimed (Art 15.2)
• Within 28 days of receipt of the claimant’s Statement of Case (or notice of the claimant’s election to treat its Request as its Statement of Case but this is unusual), the respondent shall file its election to have its Response treated as its Statement of Case, or Statement of Defence setting out in sufficient detail the facts on contentions of law in the Statement of Case it admits or denies and the grounds for doing so and what other facts and contentions of law it relies on (Art 15.3) • Within 28 days of receipt of the Statement of Defence the claimant must file a Statement of Reply (Art 15.4) • If the respondent has made a counterclaim it must file a Statement of Case on that counterclaim at the same time as the Statement of Defence and within 28 days of receipt the claimant shall reply in the form of a Statement of Defence to Cross-claim (Arts 15.3, 15.4). If the claimant’s Statement of Reply contains a Statement of Defence to Cross-claim, the respondent must file its Statement of Reply to the Defence to Cross-claim within 28 days (Art 15.5) • All Submissions shall be accompanied by all essential documents on which the parties rely
• Once the facts of the case are know you should consider whether it would be appropriate to apply for security for costs or any other interim conservatory measure (Art 25)
Evidence • The tribunal may (and usually does) order that witness evidence be served (usually in the format of witness statements) (Art 20)
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Security for costs and other interim measures
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• The tribunal may continue with the arbitration even if a party fails to file its Statement of Defence or Defence to counterclaim (Art 15.8)
• Witness statements should be signed (parties often use a Statement of Truth or equivalent) • It is for the tribunal to determine how the witness evidence will be presented and when it will be exchanged (Art 20.3) • Any party may request that another party’s witness(es) attend the hearing to give oral testimony and be cross-examined (Art 20.4)
The hearing • Unless the parties have agreed a documents-only procedure, any party may request an oral hearing (Art 19)
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• The tribunal may appoint an expert witness (Art 21). If a party requests, or the tribunal feels it necessary, the expert may attend one or more hearings
• The tribunal fix the date, form, content, procedure, time limits and place of the hearing (Art 19.2). Given the number of people usually involved in arbitrations, this should be agreed as far in advance as possible, preferably at the preliminary hearing
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• All hearings shall be in private unless the parties agree otherwise (Art 19.4)
The award • The tribunal’s award will be in writing and state the reasons on which it is based (unless the parties have agreed otherwise) (Art 26.2) • The award will state the date when it is made, the seat, and shall be signed by the tribunal (or those assenting members) (Art 26.2) • The award is final and binding on the parties (Art 26.8) • Note: An LCIA Award precludes an appeal on a point of law under s 69, Arbitration Act 1996 (Art 26.8) • If there are any clerical errors in the award, these can be remedied by the tribunal (Art 27) by request from the parties within 28 days of receipt of the award
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Costs • The tribunal’s award on the dispute may not deal with costs. Instead it may invite submissions on costs and perhaps have a further hearing • The tribunal will issue a costs award specifying the total amount of the costs of the arbitration as determined by the LCIA and who shall bear those costs (Art 28.2)
Enforcement • The winning party should proceed to enforcement
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• The tribunal may also order that a party’s legal costs be paid by another party (Art 28.3) on such reasonable basis as it sees appropriate (Art 28.2)
• The award is final and binding on the parties (Art 26.8) 15
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Written statements
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Preliminary meeting and directions
Blog
The pros and cons of the scrutiny of arbitral awards Philip Clifford and Oliver Browne, Latham & Watkins LLP
Does scrutiny of an award enhance its quality and therefore effectiveness or does it just slow down the arbitral process and increase costs? Philip Clifford and Oliver Browne of Latham & Watkins’ London office argue the pros and cons. Article 33 of the 2012 ICC Rules of Arbitration (the ICC Rules) provides for draft awards to be submitted to the ICC’s International Court of Arbitration (the ICC Court), which may ‘lay down modifications as to the form of the award’ and draw a tribunal’s ‘attention to points of substance’. No ICC award can be rendered by a tribunal until it has been approved by the ICC Court ‘as to its form’. (Note, the 2013 Singapore International Arbitration Centre (SIAC) Rules contain a similar provision to Article 33, and a similar scrutiny process, but the focus of this note is on the ICC Rules). 16
The ICC Secretariat considers the scrutiny of draft awards to be a ‘cornerstone’ of the ICC Rules and ‘a distinctive feature of ICC arbitration’ which maximises ‘the legal effectiveness of an award by identifying any defects’ and which ‘improves the award’s general accuracy, quality and persuasiveness’ (see ‘The Secretariat’s Guide to ICC Arbitration’ – the ‘ICC Guide’- published by the ICC). On the other hand, some practitioners regard the requirement for the scrutiny of ICC awards to be a cumbersome process leading to unnecessary and unwelcome delays. Philip Clifford (PC) and Oliver Browne (OB) discuss these contrasting views:
Scrutiny of scrutiny
OB: Ensuring that awards are legally effective is clearly extremely important. It is also fair to say that there are a wide variety of tribunals, comprised of arbitrators of varying quality, and that minor mistakes in awards can be overlooked. The ICC Guide notes that this occurs relatively frequently (blaming the cause on inexperienced and/or overcommitted and/or careless arbitrators): it says that ‘it is rare that an award will not benefit from some scrutiny’. However, some other arbitral institutions have different, possibly less time consuming, vetting procedures to overcome minor issues as to form. Indeed, such minor issues can usually be addressed by providing arbitrators with a checklist to follow in relation to their awards (the ICC has its own such checklist for example). The concern with the ICC Court’s scrutiny process is that it goes much further that a mere ‘vetting’ and that it takes a long time. PC: The scrutiny of draft ICC awards is carried out by members of the ICC Court, which due to their limited availability, inevitably involves some delay. However, as a result of the quality of this review, ICC awards benefit from what the ICC Guide calls ‘an internationally recognised seal of approval, which may make awards less prone to challenge or annulment simply by virtue of being an ICC award’. It is clearly difficult to assess what effect the fact that the award has been scrutinised by members of the ICC Court may have in any given case but it is at least a potential benefit. OB: The additional scrutiny may well be beneficial in some cases, but when looked at overall is the time taken over the scrutiny in every case disproportionate to the additional benefits conferred in some cases? The process involves the responsible Counsel within the ICC reviewing and proposing comments on draft awards. The Counsel’s report is then vetted by the Secretariat’s management. The final report is provided to the ICC Court (usually to a weekly committee session, occasionally to a monthly plenary session). The ICC Court then agrees on the comments on the award to be transmitted by the Secretariat to the tribunal. The tribunal must then address the comments and re-submit the award. The new draft award may then have to go through the process again, depending on whether the original comments have been addressed. This whole process can take many weeks in practice. PC: The ICC Guide suggests that the scrutiny process normally takes two to three weeks. To the extent that it takes longer, that may be due to the complexity or the length of the award (both situations where parties may want greater scrutiny of an award). The choice of arbitrators is also clearly a significant factor in terms of the length of time the award drafting and review process takes. However, more experienced
OB: Going back to the concern over whether the scrutiny process goes too far. The ICC Court can draw a tribunal’s ‘attention to points of substance’. Does this mean, in reality, that you have third parties (unhelpfully described as a ‘Court’) effectively pitching in and commenting on the matters in dispute? Parties might be forgiven for thinking that the ICC Court, to an extent, becomes almost as an additional arbitrator. PC: The ICC Court does not decide any issues in dispute. It is not a ‘Court’ in the national court sense at all, and does not act (and does not purport to act) as a court of appeal when scrutinising awards. The ICC Court’s comments on points of substance include things like pointing out that the tribunal may have neglected an issue, or reached a decision on something not raised by the parties, or may not have provided sufficient reasons for a particular aspect of an award. Arbitrators may have made errors in relation to issues of costs and interest or in other mathematical calculations (being lawyers, rather than accountants, such mistakes are not uncommon). The ICC Court might also point out flaws in a tribunal’s reasoning, or contradictions / inconsistencies in the award. The aim is to ensure a legally enforceable award that is not obviously susceptible to challenge – not to second guess the tribunal. OB: Is there any significance in that respect in the amendments to the 2012 ICC Rules? The 1998 ICC Rules gave the ICC Court the power ‘without affecting the Arbitral Tribunal’s liberty of decision’ to draw the tribunal’s attention to points of substance. In the 2012 Rules, the reference to the tribunal’s ‘liberty of decision’ was removed. PC: It has always been clear, and remains clear, that the ICC Court’s power to make comments on points of substance is advisory only. A tribunal is not obliged to follow comments on substance and can reject the suggestions made by the ICC Court. Provided the reasons for the rejection are sensible, the ICC Court will ultimately approve the award – Article 33 only requires that the ICC Court approve an award as to form. OB: On balance then, are you in favour of the ICC scrutiny process? PC: Where parties are particularly concerned about ensuring that the arbitration process is as high quality as possible, and where any delays introduced into the process are not a huge source of concern, the ICC scrutiny process may well be worthwhile. Indeed, the ICC and its supporters have long considered that the scrutiny process is more advantageous than disadvantageous, which is why it remains a feature of ICC arbitration. That said, other institutions, such as the LCIA, are also very careful to control the quality of awards, without using such an intensive or protracted review process (and that is clearly perfectly sufficient in many cases). Ultimately, the quality of awards is mainly down to having good quality arbitrators in the first place and, if they make minor errors that need correction, this can usually be done without too much delay and inconvenience. By choosing the ICC Rules, parties select the high level of administration and careful scrutiny of draft awards that this entails, and they have to appreciate that this may also involve some additional time. Published February 23, 2015
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Blog
PC: The ICC Court’s scrutiny of draft awards reduces the scope for errors and helps to ensure that ICC awards are, at least as to their form, of a consistently high quality. This in turn reduces the need for applications for correction or interpretation of the awards, and potentially their susceptibility to challenge. Whilst good arbitrators will take care to ensure that their awards are well written, a review by someone who has not previously been involved in the arbitration (and so with a truly fresh pair of eyes) can often be beneficial. If awards regularly contain mistakes and/or are routinely subject to applications for correction or interpretation, that may undermine confidence in the arbitration process.
arbitrators who may produce the best first drafts may not also have the best availability, so there are many possible permutations.
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Where next for International Arbitration? Ahead of the QMUL SIA’s 30th Anniversary Conference, ‘The Evolution and Future of International Arbitration: The Next 30 Years’, distinguished members of SIA’s faculty and leading arbitration practitioners reflect on their careers and discuss notable developments in international arbitration. Professor Stavros Brekoulakis Professor in International Arbitration and Commercial Law at the SIA Alexis Mourre Partner at Castaldi Mourre & Partners and vice president of the ICC International Court of Arbitration Nigel Rawding Dispute resolution partner at Freshfields Bruckhaus Deringer and head of the firm’s London-based international arbitration practice Dr Debbie De Girolamo Senior lecturer in law at QMUL Professor Julian Lew QC Head of the SIA and arbitrator at 20 Essex Street Christopher Newmark Partner/member Spenser Underhill Newmark LLP Professor Loukas Mistelis Director of the SIA and the Clive M Schmitthoff Professor of Transnational Commercial Law and Arbitration Dr Stefan Kröll International arbitrator, lecturer and co-director of the Willem C. Vis Arbitration Moot Professor Phillip Capper Partner and head of international arbitration at White & Case in London
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Which international arbitration development has surprised you most? Professor Stavros Brekoulakis has been impressed by the increasingly sophisticated resolution of complex international disputes: What has impressed me (rather than surprised me) most is how multipolar and complex dispute resolution has become at an international level.
This means that law firms have to be able to provide expertise in investment and commercial arbitration as well as in litigation, human rights, energy and other complex areas of international business transactions and disputes. Alexis Mourre, partner at Castaldi Mourre & Partners, focuses on a highly topical issue: Certainly the brutal backlash against investorstate dispute settlement (ISDS), in particular in the context of the Transatlantic Trade and Investment Partnership (TTIP) negotiations. Freshfields Bruckhaus Deringer partner Nigel Rawding considers how international arbitration shed its niche practice area status and also reflects on matters that, surprisingly, have changed little: My first exposure to international arbitration was in the early 1980s, at a time when it was still something of a niche practice area. Once hindsight is stripped away, it is the development of international arbitration into a mainstream practice area—and an essential skill set of disputes lawyers the world over—that has surprised me most. Over the last 30 years we have seen international arbitrations increase exponentially in number and value. This growth has been fuelled by an increase in international trade and a corresponding increase in the number of arbitration-friendly jurisdictions. Legislation based on the UNCITRAL Model Law has been adopted in a total of 97 jurisdictions and there are now 154 parties to the New York Convention. Since the early 1990s there has been a proliferation of BIT disputes, and corporates now regard maximising BIT protection as a key priority in structuring (or restructuring) investments. The players in international arbitration have also grown in number and location. International arbitration was previously the preserve of a select number of law firms operating largely out of Western Europe and the USA. Now, however, there are an ever increasing number of law firms developing their own specialist international arbitration teams, and arbitral institutions are opening offices in the Middle East, Asia and Africa. In his November 2014 Freshfields Arbitration Lecture, Professor Emmanuel Gaillard noted the roles played by a growing number of stakeholders such as court reporters, case management firms, publishers of international arbitration literature, third party funders, directories etc. Conversely, it is just as surprising that, despite this huge expansion of international arbitration, so little has changed in terms of the mechanisms and procedures used by tribunals and practitioners. While technology may have introduced new techniques to optimise the conduct of arbitration such as e-production and electronically searchable transcripts; the rudiments of marshalling facts, presenting legal arguments etc have changed very little. Plus ça change, as they say at the ICC.
Professor Julian Lew QC highlights the growth and diversification of international arbitration institutions: The speed at which regional centres for international arbitration have grown is significant. Traditionally favoured seats, such as London and Paris, are, for many parties and disputes, less attractive than they have been. Arbitral institutions such as the Singapore International Arbitration Centre (SIAC), the Hong Kong International Arbitration Centre (HKAC) and the Dubai International Financial Centre (DIFC) have experienced significant growth as more parties look elsewhere for the resolution of their disputes. Christopher Newmark partner at Spenser Underhill Newmark, received the first ICC emergency arbitrator appointment. Mr Newmark shares his views on this much-discussed development: When the ICC was considering whether or not it should add emergency arbitrator provisions to its 2012 arbitration rules, I was very sceptical as to the need for such provisions. In part, that scepticism came from my background as a lawyer based in London where the English courts have supported international arbitration proceedings by granting urgent interim measures where a tribunal is not in a position to grant the relief that is required (for example, where it has yet to be constituted). My view was that in London at least, a party needing an injunction would always be better served by the courts, since the courts are able to act immediately where the urgency so requires, can deal with ex parte applications, and can make orders that are enforceable against the parties to the arbitration and against third parties. Those seemed to me to be attributes that emergency arbitrator provisions would be unable to match. While I was persuaded that the utility of emergency arbitrator provisions was much greater in other parts of the world, I did not expect to see parties queuing up to use the new ICC emergency arbitrator procedures in London. I was therefore surprised to be contacted in late 2013 by the ICC Secretariat enquiring as to whether I was available to act as an emergency arbitrator in the first case brought under the ICC’s new rules. One of the key reasons for my selection was that the place of arbitration was London. Notwithstanding the availability of the English courts, the claimant had preferred to seek relief from an ICC emergency arbitrator than from an English judge. Other applications to an ICC emergency arbitrator in London-based arbitrations have followed, as have applications in other jurisdictions where the courts are regarded as being reliable when granting urgent interim measures. Notwithstanding the upfront cost of emergency arbitrator proceedings and the inherent uncertainty as to what standards an emergency arbitrator will apply, emergency arbitration proceedings are proving to be a tool that parties are finding useful. Given my initial scepticism, this has certainly been a surprise to me, though I do wonder whether the trend will continue once the prospects of success for such applications are better understood. Like Mr Newmark Professor Loukas Mistelis has found the emergence of emergency arbitration surprising:During the negotiation of the amendments to the UNCITRAL Model Law (adopted in 2006), the emergency arbitration was discussed in the periphery and my reaction was that arbitration should not try to emulate court proceedings by attempting to offer all services provided by national courts, particularly as obtaining emergency relief in many cases will be more expedient and effective when sought from a judge. However, the American Arbitration Association’s inclusion of emergency arbitration provisions had a catapult effect and many other institutions have adopted similar procedures (eg SCC, ICC, ICDR and LCIA). There are cases where going to court is not an option (eg for reasons of confidentiality or where the local courts are hostile to one or both parties) and emergency 19
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In the past, international disputes generally speaking used to be resolved either before arbitral tribunals or national courts. Today, we see—in an increasingly larger number of cases—different aspects of a single dispute to be submitted to a number of different dispute resolution fora. For example, different aspects of the Yukos dispute were submitted to a number of investment treaty arbitrations on the basis of a bilateral investment treaty (BIT), an Energy Charter Treaty arbitration, litigation before the national courts of Russia, the Netherlands and England, and even before the European Court of Human Rights. Another similar example is the Lago Agrio dispute between Ecuador and Exxon. Litigants are becoming increasingly sophisticated in their approach to disputes, and are willing to explore different dispute resolution avenues.
Dr Debbie De Girolamo: What has been most surprising is the extent to which international arbitration has become a primary adjudicatory process for the resolution of complex international commercial disputes, usurping the function of the court system in this regard.
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arbitration provisions can be useful. Further, the ICC has taken steps to ensure that those appointed as emergency arbitrators have the right experience for dealing with applications for emergency relief.
public policy and the exercise of sovereign discretion? People want to know more about who are deciding important disputes and how they are deciding these disputes.
It is also interesting to observe the expansion of arbitration in Latin America and South Asia, as well as the increasing use of arbitration to resolve financial, IT and telecoms disputes.
Arbitration is currently perceived by a large number of public media and scholars as biased favouring big investors and corporations (there have been scholarly works and media pieces to that effect in various publications). I personally believe that such characterisation is inaccurate and indeed unfair, but if this accusation is consolidated, international arbitration will be diminished.
Dr Stefan Kröll: The speed with which attitudes towards arbitration have changed in some jurisdictions with the adoption of new laws. The best example is Brazil where after the new law had been enacted its constitutionality was questioned and where within one decade arbitration is fully embraced not only by the business community but also the courts. At the Vis Moot we have seen an enormous increase in the participation of Brazilian teams over the last years with great success.
Which international arbitration development has concerned you most? Professor Phillip Capper: The global demand and necessity for international arbitration is so great that it has to depend on the involvement of many practitioners not experienced in it. They routinely make the mistake of believing that it is their own notions of state court civil procedure (often at the seat of arbitration, but not always) that will govern the arbitral procedure. This problem is particularly prevalent for procedural issues where legal traditions differ greatly, for example questions of evidence and document production. Further difficulties stem from different conceptions counsel may have regarding the procedural or substantive nature of certain matters, such as privilege for instance. The impulse to bring baggage from state court litigation practice into truly international arbitration, in disputes arising from cross-border transactions, and where the seat is likely to be in yet a third jurisdiction, is a threat to the development of a coherent international best practice.
What is, or will be, the most significant challenge to the integrity and development of international arbitration? For Professor Julian Lew QC, the practice and regulation of international arbitration must better reflect its broad international user base: Nationalism, specifically a failure to recognise the truly international nature of arbitration and to fully integrate different approaches and attitudes towards arbitral law and practice. Despite some developments, international arbitration remains developed world-focused. It is important that international arbitration adapts to reflect the cultures of a broader range of players from around the globe. Currently, international arbitration embodies, to a large extent, Western standards, but a key question is whether or not those standards are the correct standards. The IBA Guidelines on Party Representation were criticised by some for failing to take adequate account of nondeveloped world approaches to counsel ethics. The survival and success of international arbitration is dependent on its appeal to a growing base of users. Merging different arbitration cultures (eg East, West, developed and developing) will be a significant challenge, but not an insurmountable task provided this issue receives the attention it deserves. Professor Stavros Brekoulakis considers that international arbitration must respond to growing concerns over the identity and status of its arbitrators: Decision-making is at the heart of arbitration and public discourse, and I expect it to be the single most significant challenge to the integrity and development of international arbitration. As international arbitral tribunals become more popular in the resolution of a wide range of commercial and investment disputes which previously fell under the exclusive jurisdiction of national courts, many critical voices coming from the public raise legitimate questions: who are these people that have such a power to decide disputes that involve
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Alexis Mourre: The ability of international arbitration to maintain the trust and support on the part of states and their judiciary. Christopher Newmark, partner at Spenser Underhill Newmark, considers the risk that some developments in international arbitration will make the DR mechanism less attractive to its core user base: International arbitration practitioners and institutions are continually striving to adapt the product of international arbitration so as to make it the dispute resolution procedure of choice in as many different scenarios as possible. This has been successfully achieved in the investor-state sector and the growth of investor-state arbitration has been one of the main reasons why law firms the world over have been keen to develop an international arbitration specialism so that they can enjoy a slice of what is viewed as being a very tasty pie. But the growth of international arbitration generally, its development into new fields, and the increasing number of practitioners working in the area have all had other effects on the practice. International arbitration no longer enjoys some of the features which were once viewed as being unique selling points. It is a long time since it has been able to boast that it is faster or cheaper than litigation. As the move towards transparency gathers pace, in many scenarios, it will not be able to claim confidentiality as a key feature. And as the pool of arbitrators increases (which I generally view as a good thing) so does the mix in quality and the unpredictability of outcomes. As international arbitration adds ever more features in order to compete with court litigation in as many situations as possible (such as, by way of example, class actions, emergency relief, summary relief, anti-trust follow on actions, inter-state tax disputes), there is an inevitable risk that international arbitration will end up becoming less distinctive and ultimately less attractive to what has historically been its core constituency: international business to business commercial disputes. Only time will tell whether or not the continued growth of international arbitration is best served by focusing on the quality of the plain vanilla product or by the continuing drive to diversify. Dr Debbie De Girolamo, senior lecturer at QMUL, shares concerns with Professor Lew and Christopher Newmark: In some respects, the proponents of international arbitration themselves could become a challenge to its development if they become complacent about the process. Work must continue to be done to: • recognise the changing demands of the users of the process • be flexible in response to those demands, and • ensure that the complexity of the process does not become a barrier to its use Professor Loukas Mistelis: The absence of an appeal mechanism in most investment treaty arbitration is a significant challenge. There is no possibility of appeal in ICSID arbitration, which means that the introduction of an appeal mechanism would require an amendment to the ICSID Convention and ICSID Arbitration rules or, alternatively, the introduction of separate protocol on appeal. Some States have called for the introduction of an appeal mechanism. In the summer of 2010, Argentina won a series of annulment proceedings and called for the introduction of an appeal mechanism to ensure consistency of tribunal decisions. Despite receiving some support for this approach, the initiative did not progress. It will be
interesting to observe whether or not a separate ICSID appeal protocol will be introduced. There are logistical difficulties with the introduction of an ICSID appeal board. It is perhaps unlikely that many arbitrators will wish to sit on any appeal board as that will impact on their ability to take other appointments. Overall, while some States seem to be quite critical of and reluctant to engage in investment arbitration as well as commercial arbitration, others slowly become supporters of these procecesses. This is, for example, the case with several States in the Middle East and Gulf region.
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Dr Stefan Kröll, like Christopher Newmark, is keen to preserve arbitration’s unique selling points: Maintaining arbitration as a flexible, speedy and cost-efficient dispute settlement mechanism where the arbitrators and the parties conduct the process according to the requirements of the particular case and not try to use a one size fits all approach. Arbitration should not turn into off-shore litigation, ie mirror court proceedings with the only difference being that the parties have to pay for the judges and the hearings are not held in a court house. ‘Best practice’ in arbitration should not, for example, be any particular practice of taking evidence, but that procedures are tailored for the particular case. Professor Phillip Capper, head of international arbitration at White & Case, considers the challenges surrounding confidentiality: There are challenges and issues around the proper limits of confidentiality. Privacy of arbitration does seem to be a strong factor of choice for commercial arbitration (according to the SIA’s empirical studies, it is even a ‘deal-breaker’ for several corporations when negotiating arbitration clauses). It is also the reason for relatively light reporting of commercial arbitrations. Investor-state arbitrations, on the other hand, deal with issues of public international law and, in many cases, involve issues of public interest, so that greater transparency may indeed be justified. But the more public nature of investor-state arbitrations should not, of itself, be a reason to challenge the fundamental principle of privacy in commercial arbitration. Nigel Rawding, like Professor Brekoulakis, identifies transparency as a challenge to the integrity and development of international arbitration: Improving the transparency of the arbitral process and arbitral decision-making is necessary to promote accountability and increase public trust in the process. This is a particularly cogent challenge in the context of investor-state arbitration, with critics expressing concern that decisions which may have implications for public policy as well as public finances are being made ‘in secret’ by a relatively small pool of (mainly) Westernised arbitrators. These concerns were aired during the public consultation organised by the European Commission on the inclusion of an investor-state dispute settlement mechanism in the Transatlantic Trade and Investment Partnership. The consultation revealed polarised views and powerful opposition to the perceived carte blanche power granted to companies to use trade agreements and private arbitration panels to challenge national laws and regulations which do not suit their corporate agenda. This perceived lack of transparency and the inherent suspicions it engenders risks undermining the legitimacy and credibility of the arbitral process itself. The limited public scrutiny of arbitrator appointment, conduct and decision-making raises concerns that tribunals may be biased in favour of wealthy private investors and parties may lose faith in the arbitral process altogether. There have been some efforts to improve transparency in investor-state proceedings, such as the new 2014 UNCITRAL Rules on Transparency in Treaty-Based Investor-State Arbitration. The rules reverse the presumptions of confidentiality and privacy in investment treaty arbitration in favour of a presumption of openness. These rules face a number of challenges which have not yet been tested in practice, and it remains to be seen how effective they will be.
What single, positive change to the law or practice of international arbitration would you like to see in the immediate future? Professor Phillip Capper, head of international arbitration at White & Case, desires appropriate recognition for international arbitration’s role in resolving disputes: A welcome change would be greater recognition that international arbitration is the final method of dispute resolution of choice for global business, not merely an alternative to state court litigation (as the concept of ‘ADR’ would suggest). International arbitration is a necessary substitute system. As such, arbitration must not be thought of as just doing things differently than courts. Rather, it should develop more systemic qualities to meet all of its users’ needs, and be universally understood to be a full and final dispute resolution method fully equivalent to, but substituting for, state courts. Dr Stefan Kröll: I would like to see an updated New York Convention taking into account some of the deficiencies of the present convention and being equally successful. Professor Stavros Brekoulakis identifies diversity as an area for improvement: I would like to see more diversity in international arbitration, and see more arbitrators coming from different legal traditions, nationalities, cultures and regions that are currently underrepresented. This will enrich the practice of international arbitration and address issues of integrity. Unfortunately, diversity is not achieved by a change in law (equality legislation has not yielded results in national judiciaries for example), but a change in the culture surrounding selection and appointment of arbitrators. Here the role of arbitration institutions is critical, and they are already doing an excellent job in appointing new arbitrators from a wide range of backgrounds. 21
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Dr Debbie De Girolamo: Creative use of other alternative dispute resolution processes within the arbitration process, such as mediation in investor-state disputes, has the potential to augment the benefits of international arbitration for its users. Further research in this area would be welcome. Chris Newmark, partner at Spenser Underhill Newmark, would like to see greater use of institutional tribunal appointments: The recent debate as to the pros and cons of party appointed arbitrators resulted, as far as I could tell, in a win on points (if not a knockout blow) in favour of continuing with the party appointed system. Proponents for that system argued with vigour that the users of international arbitration are in favour of being able to choose their own arbitrator. While there were no doubt many users and their counsel that expressed that view, I remain concerned that this preference is based on a misunderstanding of what the party appointed arbitrator can (or should) deliver. In my experience, tribunals where every member owes his or her appointment to an institution are more consistent in being able to work as an efficient and cohesive unit that produces a timely and good quality award. That is not to say that I have not had good experiences on party appointed tribunals—to the contrary, many of those have been excellent. But there remains the higher risk of rogue arbitrators that can be so damaging to the smooth running of the arbitral process. So while it may not be the majority view, I would be very pleased if the practice of international arbitration moved towards greater use of institutional appointment of all members of a tribunal. If the parties give the institution some criteria for selection and the institution gives the parties a list of names to choose from, the parties can retain the control they need without the problems that can come with party appointments. Professor Julian Lew QC, Head of the SIA, seeks reduced court interference in arbitration: In addition to embracing different arbitral cultures (as discussed in the previous part of this article), I’d like to see further recognition for the autonomy of arbitration from court proceedings. Whilst it is important that courts support the arbitral process, I believe that a reduction in court interference would be beneficial. The development of flexible standards of arbitral practice (not the equivalent of the Civil Procedure Rules SI 1998/3132 or Code Civil) may encourage greater autonomy. Alexis Mourre: The arbitral community should depart from established practices in the management of proceedings and invent new ways to avoid duplications and losses of time and resources. Nigel Rawding, head of international arbitration at Freshfields Bruckhaus Deringer, like Professor Brekoulakis, calls for: Greater diversity in arbitral tribunals. The number of female appointees continues to be dismally low, even lower than the number of women in leading positions within the legal profession. The conservatism displayed by clients and their advisors in the selection process too often results in the appointment of the more-or-less usual suspects. This call for greater diversity is not (just) altruistic; it is essential to address challenges of legitimacy and efficacy facing the system. More diverse arbitral tribunals will counter criticisms about lack of impartiality and the perception that decisions are being made by an ‘old boys’ club’. Studies by leading management consultancies have demonstrated a statistically significant relationship between genderbalanced leadership and improved decision-making by reducing the risk of ‘group-think’. And by broadening the population of properlyqualified arbitrators, we will hopefully be able to remedy the problems inherent in having a too-limited pool of arbitrators, most obviously the resulting delays in scheduling hearings and receiving awards. It is the responsibility of the entire arbitration community—institutions, clients, law firms, arbitrators—to address this key issue.
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The Director of the SIA, Professor Loukas Mistelis, identifies three areas that are ripe for change: Increased harmonisation internationally on the meaning and scope of key concepts such as public policy and arbitrability may introduce greater certainty and result in fewer satellite disputes. This could be achieved by the introduction of authoritative guidance or protocols, although the work involved would be significant. I’d also like see the wider introduction and use of streamlined, summary arbitration procedures for simple money claims. This will expand the use of arbitration to cover a greater number of disputes. In addition, smarter use of technology in arbitration should be employed. While it is useful to have a hard copy bundle of documents for the final hearing, all submissions and evidence (including disclosure and witness evidence) should be exchanged electronically. A cultural shift is required to make this happen, but there are positive signs in practice.
Which features of international arbitration do you envisage will have experienced fundamental change in ten years’ time? In addition to changes necessary to reflect international arbitration’s increasingly diverse user base, Professor Lew QC predicts changes to features of investment treaty arbitration: More parties from a greater diversity of legal traditions and a wider spectrum of industries will turn to international arbitration to resolve their disputes. It’s vital that their needs are taken into account and international arbitration must adapt accordingly. The current debate surrounding the legitimacy of certain features of investment treaty arbitration is likely to result in some change. The global legal and political landscape has altered dramatically since, for example, the Convention on the Settlement of Investment Disputes between States and Nationals of Other States was concluded. Increasingly, the legitimacy of a tribunal’s jurisdiction to determine the extent of a sovereign State’s liability to an investor in respect of an investment is coming under scrutiny. Is it right for an investment tribunal to determine the extent of State A’s liability under a bilateral investment treaty (BIT) in respect of an investment made pursuant to legislation concluded by a previous administration in light of various external factors, such as economic crisis? I expect that we will see States moving away from general consents to investment treaty arbitration in favour of more bespoke agreements so as to protect their sovereign interests. Nigel Rawding, head of international arbitration at Freshfields Bruckhaus Deringer, discusses potential changes in procedural transparency and mass claims: As I mentioned previously, international arbitration is facing challenges due to a perceived lack of transparency in the process. One way to address these challenges would be to make arbitral awards publicly available. Arbitrations would still be conducted privately; however the awards would be open to public scrutiny. They could, if necessary, be redacted/sanitised to conceal the identities of the parties and/or to protect any (genuine) trade secrets or other commercially sensitive information. Although there would still be no right of appeal, publication would instil its own discipline and would improve the quality of arbitral decision-making and reasoning. Publication may also aid diversity, as repeat appointments would be subject to greater scrutiny and hence may encourage experienced arbitrators to prioritise quality over quantity, allowing new players to gain experience and build public profiles. I think we may also see an increase in mass claims, particularly in investor-state arbitration, following the decision in Abaclat and others v Argentina (ICSID Case No ARB/07/5). In this case the International Centre for Settlement of Investment Disputes (ICSID) tribunal found that the jointly filed claims of 60,000 individual investors arising out of Argentina’s 2001 sovereign debt default and subsequent state actions were within the tribunal’s jurisdiction and admissible. By consenting to ICSID arbitration generally under the Argentina-Italy BIT, Argentina was
held to have consented to mass proceedings being brought against it before ICSID. It is not clear whether arbitration will ever be able to fully embrace mass actions, however, similar reasoning has been applied in Ambiente Ufficio SpA and others v Argentina (ICSID Case No ARB/08/9, 2013) and Giovanni Alemanni and Others v The Argentine Republic, (ICSID Case No ARB/07/8, 2014) to justify collective claims.
Professor Capper: Because international arbitration is the only workable solution for cross-border disputes, for which state court litigation is not suitable, it should develop as a system. For that to happen, the fundamental concept of consent is bound to evolve. Two example areas are interim measures, and consolidation and joinder. In the future, the parties should only need to give their consent at the outset, to agree to recourse to arbitration as their final dispute resolution method. After such consent is provided, the system should be able to provide all the necessary procedural tools—and the arbitral tribunal should have the corresponding powers—without there being any risk to the enforceability of the award. Like Mr Rawding, Professor Brekoulakis predicts increased transparency in commercial arbitration and greater use of third party funding: I envisage changes in two areas. First, there is a trend towards restricting confidentiality which has been one of the fundamental features of international arbitration all these years. In investment arbitration there are now the UNCITRAL Rules on Transparency in Treatybased Investor-State Arbitration and the ensuing Mauritius Convention on Transparency in Investment Arbitration. I expect that transparency will creep into commercial arbitration too in the following years. Second, funding of arbitration claims will be increasingly shifted to third parties. Third party funding is now a reality and I expect it to be the widely prevailing form of funding in ten years’ time. This is either because claimants are lacking the necessary funds to bring a claim (especially since costs in arbitration are becoming larger), or because claimants, who do have the sources to fund a claim, elect to keep their cash flow or diversify risks. Professor Mistelis: I expect that we will see greater publication of awards by institutions in an effort to promote their services, whether by way of extract or anonymisation. Such a development would increase collective knowledge of the arbitral process and will aid the development of arbitration law and practice. In respect of investment treaty arbitration, the production of a model BIT is anticipated with more emphasis on the use of negotiations and mediation to resolve disputes, perhaps as conditions precedent, before the parties resort to arbitration. State parties are increasingly concerned by the costs involved with investment treaty arbitration and the greater use of ADR may help ameliorate this concern. Dr Stefan Kröll: I assume that in ten years’ time the discussion about arbitration being an old boys club will be history. The pool of arbitrators is increasing and my experience is that, particularly in smaller cases, parties are willing more and more to appoint new faces to ensure speedy proceedings. Alexis Mourre: Transparency will have established itself as an accepted feature of arbitration, not only in the field of investment protection, but also in commercial arbitration. That means that more awards will be published, institutions will be more transparent, and more information will be provided on who sits with whom. In parallel, the culture of conflicts disclosures will have considerably evolved, with more readiness on the part of arbitrators to make full declarations.
This form of international arbitration will be based largely on documents, with less reliance on witnesses, it will be confidential, hearings will be short and, while the proceedings will not be ‘fast-track’, the time and cost of the entire proceeding will be contained. I am not suggesting that such a return to a bygone era will replace the all singing, all dancing arbitration proceedings that have become commonplace. But as large scale international arbitration proceedings continue to become ever more like court litigation, certain business users will be interested in having recourse to a more traditional arbitration procedure that retains the distinctive features that have in the past made it an attractive alternative to court litigation. One response to this suggestion might be that the existing rules of the major arbitral institutions are already sufficiently flexible to enable parties to choose what sort of procedure they want. While this is correct in theory, it does not work in practice. Arbitration agreements rarely describe in detail how the arbitration procedure will be conducted (for good reason), and once a dispute has arisen, parties often find it hard to agree on such matters. As I see it, the way in which this more basic form of international commercial arbitration is likely to gain some traction, is through one of the leading arbitral institutions offering it via an alternative set of arbitration rules. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
Links to biographies: Professor Phillip Capper www.whitecase.com/pcapper/#.VQll946sXTo Dr Stefan Kröll www.rechtsanwalt-kroell.de/en/ Professor Stavros Brekoulakis www.law.qmul.ac.uk/staff/brekoulakis.html Dr Debbie De Girolamo www.law.qmul.ac.uk/staff/degirolamo.html Christopher Newmark www.sunlaw.co.uk/about-us/christopher-newmark/ Professor Julian Lew QC www.20essexst.com/member/julian-dm-lew Alexis Mourre www.castaldimourre.com/en/alexis-mourre/ Nigel Rawding www.freshfields.com/profiles/Nigel_Rawding/ Professor Loukas Mistelis www.law.qmul.ac.uk/staff/mistelis.html
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Christopher Newmark: I have a bad track record in predicting which future developments will stick and which will not (my comments on 23
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Dr Debbie De Girolamo: Given the preponderance of use of the process, the development of a system of precedence could very well take hold within the field. There are challenges to such a development, not the least being the confidential nature of the process, however, movement is occurring in this area, and the trend may well take hold.
emergency arbitrators prove that point). But my best guess—and this follows on from my observations about possible challenges to international arbitration—is that a form of international commercial arbitration will develop which is more akin to the type of procedure that was commonplace (particularly in civil law jurisdictions) twenty years ago.
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Recasting the arbitration exception? Barry Fletcher, LexisPSL Arbitration and Dispute Resolution
What is the impact of the Brussels I (recast) on arbitration? A new era for the European jurisdiction regime began this month. The Brussels I (recast), also known by its less pithy, formal title, Regulation (EU) No 1215/2012 “on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast)”, partially entered into force on 10 January 2013 and became fully applicable on 10 January 2015. The aims of the Brussels I (recast) are to provide unified rules on conflicts of jurisdiction in civil and commercial matters and to ensure the rapid recognition and enforcement of judgments given in member states (recital 4). While the Brussels I (recast) makes significant and welcome changes across the existing regime (which it replaces in full), this article focuses on particular aspects of the Regulation’s impact on arbitration.
lacking substantive effect, provides an aid to the interpretation of the arbitration exception. The inclusion of an arbitration-focused recital follows loud calls from the arbitration community for more detailed guidance on how the arbitration exception should be applied in practice, given confusion among member state courts and arbitration practitioners about what exactly was excluded by the arbitration exception under Brussels I, particularly following the infamous decision of the European Court of Justice (ECJ) in West Tankers (Case C-185-07). As discussed further below, while the clarification provided by recital 12 is largely helpful, there remain areas of confusion that will, no doubt, trouble practitioners and the judiciary of member states before too long.
The established exception The Brussels I (recast) preserves the well-established arbitration “exception” to the otherwise wide-ranging effects of the Regulation (Art 1(2)(d)). The exception exists principally because the cross-border recognition and enforcement of arbitral awards is governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention), the priority of which is confirmed in a new Art 73(2) to the Brussels I (recast). So far, so clear. However, for arbitration practitioners the most significant, and in some respects the most frustrating, aspect of the Brussels I (recast) is the addition of recital 12 to the Regulation’s preamble, which, although 24
Recital 12—what does it say? Recital 12 sets out that nothing in the Brussels I (recast) should prevent a member state court seised of an action in a matter in respect of which the parties have entered into an arbitration agreement from: • referring the parties to arbitration; • staying the proceedings; • dismissing the proceedings; or • examining whether the arbitration agreement is null and void, inoperative or incapable of being performed in accordance with national law (recital 12, para 1).
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This paragraph reflects the pro-arbitration stance adopted by member state courts, including in England & Wales, when proceedings are brought in contravention of the parties’ agreement to submit their disputes to arbitration. For example, if a party commences court proceedings in England & Wales in breach of an arbitration agreement with the defendant, the defendant may apply to the court for a mandatory stay of those proceedings in favour of arbitration pursuant to s 9 of the Arbitration Act 1996. The new recital 12 simply spells out that nothing in the Regulation is intended to interfere with member states courts’ jurisdiction to act as described above, which, although not revelatory, was welcome nonetheless. Para 2 of recital 12 is where things start to get interesting as the Regulation provides that a ruling by a member state court on point (4) above will be exempt from the rules of recognition and enforcement contained in the Brussels I (recast) irrespective of whether the court decided the point as a principal issue or as an incidental question. Accordingly, a member state court won’t be bound by a ruling by another member state court on the validity of arbitration agreement and can decide the point for itself anew. Although this will, in all likelihood, result in the existence of inconsistent declarations on the status of a particular arbitration agreement, this is preferable to the alternative position of a declaration by a member state court on the status of an arbitration agreement being automatically binding within the EU.
‘While the clarification provided by recital 12 is largely helpful, there remain areas of confusion that will, no doubt, trouble practitioners and the judiciary of member states before too long.’
However, the third paragraph of recital 12 complicates matters as it provides that where a member state court exercising jurisdiction under the Brussels I (recast) or national law has determined that an arbitration agreement is null and void, inoperative or incapable of being performed, the court’s judgment on the substance of the matter can be recognised or enforced in accordance with Brussels I (recast) (although this is expressed as without prejudice to the competence of member state courts to decide on recognition and enforcement of arbitral awards in accorded with the New York Convention which “takes precedence over” Brussels I (recast)). This third paragraph suggests that where, say, the Spanish court has handed down judgment in civil litigation proceedings in Spain following or including a declaration that an arbitration agreement between the parties was null and void (and in which one party has refused to participate or has done so under protest), the English & Welsh court may be bound to recognise that judgment pursuant to the Brussels I (recast) even though the English & Welsh court may have made a separate declaration that the arbitration agreement between the parties was valid in accordance with para 1 of recital 12. Although it may not arise too often in practice, in such circumstances the English & Welsh court may, it is suggested, be unsure of its obligations under the Regulation. The court would not be bound to recognise the judgment in the presence of an enforceable New York Convention arbitral award, but if such an award does not exist (which is likely in such circumstances) it is, on the wording of the Regulation, arguably bound by the recognition and enforcement articles of the Brussels I (recast), even though this may offend the court’s pro-arbitration stance. Nevertheless, there is an argument that the English & Welsh court would not be bound to recognise such a judgment due to its previous declaration on the validity of the arbitration agreement. Art 45.1(c) of the Brussels I (recast) provides that the recognition of a judgment shall be refused if it is irreconcilable with a previous judgment given in a dispute between the parties the enforcing court. Although the English & Welsh court may resist enforcement on that basis, it is perhaps unlikely that the drafters of the 25
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Brussels I (recast) intended the regime to operate in that way. It is clear that the scope for uncertainty remains significant. Finally, para 4 of recital 12 states that the Regulation should not apply to any action or ancillary proceedings relating to (in particular) the establishment of an arbitral tribunal, the powers of arbitrators, the conduct of an arbitration procedure or any other aspects of such a procedure, nor to any action or judgment concerning the annulment, review, appeal, recognition or enforcement of an arbitral award. This clarity is to be welcomed (and confirms the position established by the ECJ in Marc Rich, Case C190/89 [1991] ECR I-3855), although, as discussed further below, its breadth may also be the cause of uncertainty.
What about anti-suit injunctions? The Brussels I (recast) does not address explicitly the issue of anti-suit injunctions. For many practitioners, this was an unfortunate omission. In 2009, the ECJ delivered its infamous judgment in West Tankers (C185/07), holding that Brussels I precluded the courts of a member state making an order restraining a person from commencing or continuing proceedings in another member state on the grounds that such proceedings would be in breach of an arbitration agreement. The ECJ’s decision followed the opinion of an advocate-general that the right of access to a national court was a fundamental right under EU law and denial of such right would be contrary to the right to effective judicial protection. The ECJ’s judgment continued that anti-suit injunctions ran counter to the trust which member states accorded to each other’s legal systems and judicial institutions on which the system of jurisdiction under Brussels I was based. Since that decision, it has been accepted that, under EU law, anti-suit injunctions are available only to restrain proceedings brought in breach of an arbitration agreement outside of the EU. Following the publication of the Brussels I (recast), some commentators interpreted the Regulation’s silence on anti-suit injunctions as a final nail in the coffin so far as the availability of that remedy within the EU is concerned. However, a recent opinion by Advocate-General Wathelet in the Lithuanian Supreme Court’s request to the Court of Justice of the European Union (CJEU) for a preliminary ruling on arbitral anti-suit injunctions (ie anti-suit injunctions ordered by a tribunal as part of an award rather than ordered by a court) suggests that there may yet be life for anti-suit injunctions within the EU (‘Gazprom’ OAO , Case C-536/13). In an opinion delivered on 4 December 2014, the advocate-general argued that para 2 of recital 12 (discussed above) represents a different approach from that taken by the ECJ in West Tankers and suggested that the anti-suit injunction which formed the subject matter of the decision in West Tankers would not have been incompatible with the terms of the Brussels I (recast).
The advocate-general proceeded to state that his conclusion that anti-suit injunctions in support of arbitration are permitted by the Brussels I (recast) is supported by the fourth paragraph of recital 12, which states that the Regulation should not apply to an action or ancillary proceedings relating to, in particular, the conduct of an arbitration procedure or any other aspects of such a procedures not to the recognition or enforcement of awards. He argued that: “Not only does that paragraph exclude the recognition and enforcement of arbitral awards from the scope of that regulation, which indisputably excludes the present case from its scope, but it also excludes ancillary proceedings, which in my view covers anti-suit injunctions issued by national courts in their capacity as court supporting the arbitration.” Although the advocate-general’s opinion is not binding, his conclusion that anti-suit injunctions issued by (a) member state courts in support of arbitration or (b) by arbitral tribunals are not prohibited by the Brussels I (recast) will be welcomed by those who consider that the arbitration exception was unreasonably eroded by the ECJ in West Tankers . It will be very interesting to see whether the CJEU agrees with this interpretation of recital 12 when it delivers its decision (anticipated to be April/May 2015), although I doubt that the court will do so because, aside from some of the conceptual difficulties with opinion, it is clear that those negotiating the Brussels I (recast) did not intend to reverse West Tankers.
Some concluding remarks Leading figures in international arbitration have been highly critical of the treatment of arbitration within the Brussels I (recast) and it will be clear from the discussion above that there remains significant uncertainty regarding how the revised Regulation will operate in practice. Time and experience will, hopefully, resolve the outstanding ambiguities. New Law Journal, the leading weekly legal magazine, keeps you up-todate with news and change across case law, legislation and changes in procedure across core civil practice areas. Key developments are presented in an easily digestible format, together with analysis of their implications and practical advice for busy practitioners. Subscribers receive 48 issues per year, plus unlimited access to exclusive online and archived content at www. newlawjournal.co.uk. 23 January 2015. New Law Journal, Volume 165 76 37
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