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OHADA updates its law on arbitration and implements a new act on mediation - Lexology

Google International ADR News - Mon, 2017-12-18 07:16

OHADA updates its law on arbitration and implements a new act on mediation
Lexology
Favouring alternative dispute resolution mechanisms, the OHADA Council of Ministers adopted on 23 and 24 November 2017 three major texts: a Uniform Act on Mediation, a new Uniform Act on the Law of Arbitration and revised rules of arbitration of the ...

MedOptions Appoints New Roles Within Senior Leadership Ranks - Markets Insider

Google International ADR News - Mon, 2017-12-18 07:06

MedOptions Appoints New Roles Within Senior Leadership Ranks
Markets Insider
Mr. Mercadante obtained his J.D. from Tulane University Law School, and holds certifications in international and comparative law as well as alternative dispute resolution. He received his undergraduate degree from Fairfield University. "I look forward ...

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MedOptions Appoints New Roles Within Senior Leadership Ranks - PR Newswire (press release)

Google International ADR News - Mon, 2017-12-18 06:59

MedOptions Appoints New Roles Within Senior Leadership Ranks
PR Newswire (press release)
Mr. Mercadante obtained his J.D. from Tulane University Law School, and holds certifications in international and comparative law as well as alternative dispute resolution. He received his undergraduate degree from Fairfield University. "I look forward ...

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William Schroder Recognized by Marquis Who's Who for Excellence in Arbitration and Mediation - NB Herard

Google International ADR News - Mon, 2017-12-18 03:05

William Schroder Recognized by Marquis Who's Who for Excellence in Arbitration and Mediation
NB Herard
With more than 50 years of experience in litigation and dispute resolution law practice, Mr. Schroder is the member manager of Schroder Partners LLC, an award-winning law firm that specializes in the areas of arbitration, international arbitration ...

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William Schroder Recognized by Marquis Who's Who for Excellence in Arbitration and Mediation - NB Herard

Google International ADR News - Mon, 2017-12-18 03:05

William Schroder Recognized by Marquis Who's Who for Excellence in Arbitration and Mediation
NB Herard
With more than 50 years of experience in litigation and dispute resolution law practice, Mr. Schroder is the member manager of Schroder Partners LLC, an award-winning law firm that specializes in the areas of arbitration, international arbitration ...

and more »

William Schroder Recognized by Marquis Who's Who for Excellence in Arbitration and Mediation - Quebec Daily Examiner

Google International ADR News - Mon, 2017-12-18 03:05

William Schroder Recognized by Marquis Who's Who for Excellence in Arbitration and Mediation
Quebec Daily Examiner
With more than 50 years of experience in litigation and dispute resolution law practice, Mr. Schroder is the member manager of Schroder Partners LLC, an award-winning law firm that specializes in the areas of arbitration, international arbitration ...

The DIFC Courts as a Conduit: Saving Grace or Just a Lifeline?

Kluwer Arbitration Blog - Sun, 2017-12-17 16:02

Gordon Blanke

A recent decision of the Dubai-DIFC Judicial Tribunal (the “JT”) (see Cassation No. 6/2017 (JT) – Assas Investments Limited v. Fius Capital Limited) – even though not quite a saving grace – appears to throw a lifeline to the DIFC Courts in their role as a conduit jurisdiction. Regular readers of this Blog will recall that the JT was established by Decree (19) of 2016 by the Ruler of Dubai in an attempt to deal with conflicts of jurisdiction between the onshore Dubai and the offshore Dubai International Financial Centre (DIFC) Courts. Such conflicts are prone to arise where an award creditor seeks the enforcement of an award before the DIFC Courts whilst the award debtor challenges the same award before the onshore Dubai Courts pursuant to Art. 216 of the UAE Arbitration Chapter.

By way of reminder, the DIFC Courts have extended their jurisdiction on the basis of Art. 42 of the DIFC Arbitration Law to the recognition and enforcement of both domestic and foreign arbitral awards – even absent any assets of the award debtor in the DIFC – for onward execution before the onshore Dubai Courts, thus operating as a conduit of enforcement between the offshore DIFC and onshore Dubai. The DIFC Courts’ role as a conduit is in particular facilitated by the operation of Art. 7 of the Judicial Authority Law as amended, which establishes a regime of mutual recognition between the offshore DIFC and the onshore Dubai Courts and which prohibits the review on the merits by either court of the respectively other court’s legal instruments. The Dubai Courts have not taken well to the DIFC’s Courts role as a conduit and have declared the DIFC’s conduit jurisdiction null and void at first instance, setting aside the DIFC Courts’ findings in the Banyan Tree line of cases, which are widely recognised as the locus classicus of the DIFC Courts’ role as a conduit for the enforcement of domestic arbitral awards (see Commercial Case No. 1619/2016, ruling of the Dubai Court of First Instance of 15 February 2017 and my previous reporting here, http://arbitrationblog.kluwerarbitration.com/2017/06/11/dubai-difc-judicial-committee-difc-conduit-jurisdiction-sequel-four-parts-dubai-court-first-instance-attack-part-3/). The JT, too, has pronounced itself against the proper jurisdiction of the DIFC Courts in matters of onshore enforcement on the mistaken basis of the onshore Dubai Courts’ “general jurisdiction” (see my previous reporting here, http://arbitrationblog.kluwerarbitration.com/2017/10/16/dubai-difc-judicial-committee-difc-conduit-jurisdiction-sequel-four-parts-game-part-4/). This approach ignores the proper scope of Art. 42 of the DIFC Arbitration Law and the fact that constitutionally speaking, both the onshore Dubai and the offshore DIFC Courts are UAE courts at the same level of hierarchy.

The JT’s most recent decision in Cassation No. 6/2017 brings some welcome clarification to the subject by emphasising that the question of the proper competence of the UAE courts – whether onshore or offshore – is one of the location of the award debtor’s assets: To the extent that an award debtor has assets in the DIFC, the award creditor may seek enforcement and execution of an award there. The JT equally clarifies that an award creditor may commence parallel enforcement and execution actions against assets of the same award debtor in relation to the same award in both the DIFC and in onshore Dubai provided the presence of assets both on- and offshore. More specifically, the JT rejected the proposition that there was a conflict of jurisdiction between the onshore Dubai and the offshore DIFC Courts in this respect.

By way of background, Assas Investment Limited (“Assas”), a Dubai-based investment company, applied to the JT for a decision as to which court – the onshore Dubai or the offshore DIFC Courts – was properly competent to hear an application for enforcement of a DIFC-LCIA award rendered in favour of Fius Capital Limited (“Fius”), a company incorporated in the DIFC and regulated by the DIFC Financial Services Authority (DFSA), for Assas’s failure to pay the balance of an outstanding debt advisory fee to Fius. This followed an unsuccessful challenge of the award before the Dubai Courts, where execution proceedings are presently pending. Assas then applied to the JT out of a concern of multiplicity of proceedings on the same subject matter between the same parties, two parallel execution proceedings having been initiated by Fius, one before the onshore Dubai Courts and the other one before the offshore DIFC Courts. Pursuant to Assas, this may result in double recovery and hence unjust enrichment on part of Fius or in inconsistent outcomes before the onshore and offshore courts.

The JT rejected Assas’s arguments as unmeritorious. Pursuant to the JT:

“9. […] Any award creditor is entitled to pursue the award debtor for execution on the award in whatever jurisdiction that the award is recognized for enforcement. Presumably Dubai Courts [sic] accepted the DIFC-LCIA Arbitration Centre Award for execution pursuant to Article 7(2) of the Judicial Authority Law (Dubai Law no. 12 of 2004 as amended by Law No., 16 of 2011). If so, that is simply the law taking its natural course.

10. Pursuing execution proceedings in respect of an arbitration award in a jurisdiction which recognizes that Award does not mean that the award creditor is not permitted also to commence execution proceedings in the jurisdiction in the seat of arbitration. This is the same process as for court judgments whereby award creditors are not restricted in their execution process to a single jurisdiction but can at any time take the award to any other jurisdiction that recognizes the award, and then proceed to execute on assets of the award debtor in that jurisdiction.

11. Of course, the award creditor cannot carry out execution proceedings which will result in the creditor being able to recover more than 100% of the sum due under the relevant award, but the execution proceedings in force in various jurisdictions will keep a careful account of:

(a) The amount due to the award creditor; and

(b) The amount realized on the execution.

The award debtor will also be made aware of these figures, and can inform each enforcing court of the amount paid under the Award at the time of the execution so that the enforcing court does not overpay the creditor.

12. This is not a question of conflict of jurisdiction because each set of execution proceedings is carried out in respect of different assets. The award (unless it is set aside […]) will have equal force in all other states where it is recognized as in the seat of the arbitration.

13. It is indisputable that arbitration awards from the DIFC will be recognized in mainland Dubai. There is simply no reason in principle or in law why multiplicity of execution proceedings cannot proceed simultaneously and/or cumulatively.” (see Cassation No. 6/2017 (JT), paras 9-13)

The bottomline is that pursuant to the JT’s decision in Cassation No. 6/2017, enforcement and execution of an arbitral award go hand in hand and require the presence of an award debtor’s assets in the chosen enforcement jurisdiction. This questions the proper operation of Art. 7(2) of the Judicial Authority Law as amended to the extent that it allows an award creditor to apply directly to the onshore Dubai Court execution judge for execution of an award ratified by the DIFC Courts (in a situation where the award debtor does not have any assets offshore). The JT’s decision – albeit slightly confusing on the subject – appears to insist that execution of an award in onshore Dubai will ultimately depend upon the proper recognition of that same award by the onshore Dubai Courts and thus require a separate recognition and enforcement process in onshore Dubai. That said, the JT appears to recognise at the same time the “natural course” of Art. 7(2) of the Judicial Authority Law as amended, pursuant to which the onshore Dubai Courts may accept a DIFC-LCIA ratified award for execution (without a separate ratification process). It remains to be seen whether this requires the presence of any of the award debtor’s assets in offshore DIFC. If not, then the DIFC’s role as a conduit appears to stand unaffected and as such confirmed (at least in relation to the recognition and enforcement of domestic awards).

More from our authors: International Arbitration and the Rule of Law
by Andrea Menaker
€ 240


The post The DIFC Courts as a Conduit: Saving Grace or Just a Lifeline? appeared first on Kluwer Arbitration Blog.

DR Faculty Seminar in Israel – Revisiting the Eichmann Trial

ADR Prof Blog - Sun, 2017-12-17 14:06
This afternoon we had the pleasure of meeting with Amos Hausner, the son of Gideon Hausner, the prosecutor in the Adolf Eichmann trial – what many believe to be the trial of the 20th century.                      Gideon Hausner                                       Adolf Eichmann For readers wondering who Eichmann was, he was a Nazi officer who … Continue reading DR Faculty Seminar in Israel – Revisiting the Eichmann Trial →

DR Faculty Seminar in Israel – Kibbutz Life to Yad Vashem (or from the best of humanity to the worst of humanity)

ADR Prof Blog - Sun, 2017-12-17 09:38
From FOI Deb Eisenberg: We spent our third night of Hanukkah at the kibbutz Kfar Haruv (which means Carob Village) in the southern Golan Heights. Founded in 1974 by native Israelis and U.S. immigrants, Kfar Haruv was the sixteenth Israeli settlement established in the Golan Heights and now has approximately 400 residents. Kfar Haruv has … Continue reading DR Faculty Seminar in Israel – Kibbutz Life to Yad Vashem (or from the best of humanity to the worst of humanity) →

Union Cabinet clears bill to set up an international-level arbitration council in India - Firstpost

Google International ADR News - Sat, 2017-12-16 21:44

Firstpost

Union Cabinet clears bill to set up an international-level arbitration council in India
Firstpost
... to establish an Indian council of international arbitration centre as a centre of all Indian excellence... a separate bill has been brought for that," Law and Justice Minister Ravi Shankar Prasad said at a briefing on the Cabinet decisions ...

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Siohvaughn Funches, JD, PhD - Mediate.com

Google International ADR News - Sat, 2017-12-16 19:33

Siohvaughn Funches, JD, PhD
Mediate.com
Siohvaughn L. Funches has over ten years of experience in alternative dispute resolution. She has extensive experience in a wide array of complex business and real estate transactions including, but not limited to, multi-million dollar real estate ...

Korean Government’s Vigorous Move to Nurture Arbitration “Industry”

Kluwer Arbitration Blog - Sat, 2017-12-16 18:58

Hongjoong (Paul) Kim and Sejin Kim

Bae, Kim & Lee LLC

Arbitration Industry Promotion Act of Korea

In South Korea, the Arbitration Industry Promotion Act (“Promotion Act”), which was enacted on 27 December 2016, finally took effect on 28 August 2017. The purpose of this legislation is to promote arbitral procedures within Korea by expanding required infrastructures such as dispute resolution facilities, arbitration professionals, arbitration system, etc. and to ultimately develop Korea as the “hub” of international arbitration. (Promotion Act, Article 1) To this end, the Promotion Act focuses on “arbitration industry” rather than “arbitration” itself. The Promotion Act defines the arbitration industry as “various industries related to dispute resolution facilities, services, etc. required to attract arbitration cases and conduct arbitral proceedings.”(Promotion Act, Article 2(2)) A similar language is found in the International Conference Industry Promotion Act, which defines the international conference industry to mean “industry related to international conference facilities, services, etc. necessary to attract and hold international conferences.” Stated otherwise, the Promotion Act intends to maximize certain economic benefits to be collaterally derived from arbitral proceedings conducted within Korea.

Policy Consideration behind the Promotion Act

The industrial aspect of arbitration is well illustrated by Hong Kong’s experience. Recognizing international arbitration as a service sector generating national wealth, Hong Kong has actively provided legislative and financial supports to nurture arbitration “industry” in the past decade. As a result, for the first time in Asia, it succeeded in hosting the Regional Office of ICC Arbitration Court in September 2009. Such efforts did lead to the revitalization of other industry sectors such as aviation and tourism.

Indeed, if a certain city or country is designated as an arbitration seat or venue, many practitioners, law firms, and parties to international disputes (including various interested parties) from all around the world travel to that place and often stay for a long period of time for hearings. This in-bound flow of resources has also prompted an increasing number of law firms to newly open or expand their local branches in cities that are frequently designated as arbitration venues like Hong Kong and Singapore. Such large-scale residence of foreign talent has proven to greatly contribute to the growth of related service industry. The Promotion Act envisions similar collateral benefits experienced by these countries.


Activities Envisioned in the Promotion Act

In this connection, the Promotion Act gives the Korean Ministry of Justice (a competent authority that principally enforces the Act) the authority and responsibility to play an active role in promoting the arbitration industry. Specifically, the Promotion Act requires the Minister of Justice to establish and implement a basic plan for promoting the arbitration industry every five years.(Promotion Act, Article 3) Furthermore, the Minister should establish a plan for the overall development of the arbitration industry by nurturing arbitration practice and culture in Korea, and training professionals with relevant expertise, etc.(Promotion Act, Article 3) The Minister may also request cooperation from the head of a local government for the purpose of achieving the basic plan. However, arbitration institutions, including the Korean Commercial Arbitration Board (“KCAB”), would not be included in the plan, because the Ministry of Justice would serve only as a control tower in preparing the plan; these institutions, therefore, would independently operate outside the government’s influence. Notably, the Korean Arbitration Act (“Arbitration Act”) has already allowed the government to financially support all or part of the expenses required by arbitration institutions in Korea.1)Arbitration Act, Article 40: “In order to ensure impartial and rapid settlement of domestic or international commercial disputes and to establish the order in international transactions pursuant to this Act, the Government may fully or partially subsidize an incorporated association designated by the Minister of Trade, Industry and Energy as one that conducts commercial arbitration for necessary expenses”. jQuery("#footnote_plugin_tooltip_8519_1").tooltip({ tip: "#footnote_plugin_tooltip_text_8519_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); This, in fact, has enabled the KCAB, which is the only institution in Korea that autonomously publishes its own domestic/international arbitration rules, to receive government funding. However, such financial support for arbitration institutions is different from various supports for the overall arbitration industry as set out in the Promotion Act. Accordingly, the Promotion Act is a new step taken by the Korean government to nurture arbitration practice as a main driving force to collaterally vitalize the markets of various industry sectors in Korea.

Further, the Minister of Justice may establish and operate dispute resolution facilities, and conduct related research and international cooperation to create a basis for promoting the arbitration industry;(Promotion Act, Article 4) and financially support the establishment, operation and promotion of “dispute resolution facilities”. (Promotion Act, Article 5) In addition, the Minister should also prepare certain measures to effectively train manpower with relevant expertise and skills(Promotion Act, Article 6) and to promote Korea as arbitration seats of many international arbitration cases. (Promotion Act, Article 7) These requirements appear to be based on the understanding that Korea should expand arbitration-related infrastructures and cultivate professional manpower to gain high recognition as an attractive venue for international arbitration. Indeed, a large-scale investment is essential to create such an arbitration-friendly environment. For example, in Singapore, Maxwell Chambers, which the government provided to arbitration institutions free of charge, played a key role in a rapid increase of arbitration cases conducted in Singapore.

Anticipated Expansion and Direction of Arbitration Practice Market in Korea

The most important factors that arbitration practitioners often consider when choosing arbitration places are known to be a pro-arbitration legal regime and arbitration-friendly courts. In Korea, The Arbitration Act, which closely modeled the UNCITRAL Model Law, has already provided a stable legal framework for fair resolution of international disputes through arbitration. Also, given that Korea is a signatory to the New York Convention, Korean courts have been well known to recognize and enforce foreign arbitral awards without any difficulty. Furthermore, the Korean peninsula, located between the land power (China, Russia, other European countries, etc.) and the sea power (the U.S., Japan, etc.), is in the middle of the geopolitical equilibrium that can provide parties from both regions with equal access to independent legal services free of any legal/political/economic influences.

Given these unwavering merits as an arbitration seat, Korea is likely further improve legal infrastructure to attract arbitration cases to Seoul as required by the Promotion Act, particularly, in certain industry sectors that currently enjoy relative advantages. For example, there has been outstanding expansion of Korea’s entertainment industry as illustrated by the recent phenomenon of the “Korean Waves” in dramas, movies, music, concerts, and games with high recognition at a global level. Thus, it is very likely that various players in this business sector will be encouraged by the government to resolve their cross-border disputes through international arbitration in Korea. This will also lead to a demand on more arbitration practitioners with relevant expertise and experience in the Korean legal market. Similar promotional effects are anticipated in other sectors as well, including information technology and medical industry.

Based on the above, the Promotion Act would likely prompt the Korean government to fully gear up in preparation for promoting arbitration in various industry sectors, anticipating certain “spillover effect” for economic benefits. This would demand further and consistent attention of arbitration practitioners from all around the globe.

References   [ + ]

1. ↑ Arbitration Act, Article 40: “In order to ensure impartial and rapid settlement of domestic or international commercial disputes and to establish the order in international transactions pursuant to this Act, the Government may fully or partially subsidize an incorporated association designated by the Minister of Trade, Industry and Energy as one that conducts commercial arbitration for necessary expenses”. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: International Arbitration and the Rule of Law
by Andrea Menaker
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The post Korean Government’s Vigorous Move to Nurture Arbitration “Industry” appeared first on Kluwer Arbitration Blog.

DR Faculty Seminar in Israel—“Medicine has no borders” at Ziv Hospital, Zafet

ADR Prof Blog - Sat, 2017-12-16 01:17
This guest blog post comes courtesy of Lydia Nussbaum (UNLV). This afternoon we visited the Ziv Medical Center in Zafet (aka Safed, Tzfat), a small hilltop town located on the hills above the Sea of Galilee. Although Zafet has a long history and is well known for being the center of Jewish mysticism (Kabbalah), our … Continue reading DR Faculty Seminar in Israel—“Medicine has no borders” at Ziv Hospital, Zafet →

Four Key Takeaways of the Decision in Bear Creek Mining Corp v Republic of Peru

Kluwer Arbitration Blog - Fri, 2017-12-15 21:40

Daniela Páez-Salgado (Assistant Editor for South America)

The latest decision in Bear Creek Mining Corp v Republic of Peru (ICSID Case No. ARB/14/21) presents some interesting takeaways for international investment arbitration case law.  This note briefly introduces the case’s relevant facts before addressing the reasoning of the Tribunal in relation to (i) illegality as a bar to investment protection, (ii) indirect expropriation, (iii) the measure of damages awarded to the claimant, and (iv) the relationship between the action of foreign investors and local communities.

 

  • Introduction

This case concerned a Canadian mining company’s (the “Investor”) investment in Peru for the development of the Santa Ana mining project, located close to the border with Bolivia.  In November 2007, the Investor had obtained through Supreme Decree 083-2007 the authorization to acquire, own and operate the corresponding mining concessions (“Decree 083”).

The development of the Santa Ana mine was strongly opposed by local communities, which included violent protests against the mine operations and the Investor.  In an attempt to deal with social unrest in the area and improve the situation, the government issued Supreme Decree 032-2011 which prohibited mining in nearby areas (“Decree 032”).  Decree 032 had the effect of revoking the rights granted to the Investor under Decree 083, preventing the Investor from continuing its future operations of the mine.

The Investor thereafter filed an international claim against Peru arguing (among others) that Decree 032 constituted an indirect expropriation of its investment under the Peru-Canada Free Trade Agreement (the “FTA”).  The Investor claimed damages of US$ 522 million.

 

  • Illegality as a bar to investment protection

First, the Respondent objected to the Tribunal’s jurisdiction to adjudicate the Investor’s claims on the basis that the Investor had used a strawman to obtain Decree 083 in violation of Peruvian law.

Second, and in the alternative, the Respondent also challenged the admissibility of the Investor’s claims, alleging that the Investor had obtained its investment unlawfully.

In adjudicating the Respondent’s allegations relating to the alleged illegal conduct by the investor in the obtaining of Decree 083 and the operation of the investment, the Tribunal looked at the plain language of the FTA to assess whether it contained any pre-conditions for a finding of jurisdiction based on the legality of the investment.

Because the FTA did not contain a specific provision requiring that the “investment be made in accordance with the law” or a good faith requirement, the Tribunal dismissed the jurisdictional objection.  Likewise, the Tribunal found no basis in the FTA to deny admissibility, as there was no clear wording in the FTA providing for admissibility requirements.

The Tribunal held, though, that the allegations of illegality could be relevant to its analysis of the merits of the case.  Indeed, the Tribunal looked at those allegations when deciding whether the Investor should be found liable on the basis of contributory fault.  In the end, the Tribunal also dismissed Respondent’s claims for liability of the Investor because Peru did not meet its burden to prove contributory fault.

 

  • Indirect expropriation under the FTA

Consistent with the new generations of FTAs (such as DR-CAFTA), the FTA contains an annex that sets forth the test for determining whether an indirect expropriation has taken place.  The Tribunal therefore interpreted and applied each of the elements in Annex 812.1 of the FTA to determine whether Decree 032 had constituted an indirect expropriation.

The first factor provided by Annex 812.1 refers to the economic impact of the “expropriatory measure”.  The Tribunal found that “there was an obvious economic impact” which had deprived the Investor of all major rights it had obtained through Decree 083 (¶ 374).

Second, the Tribunal found that Decree 032 had also interfered with the reasonable expectations of the Investor, who expected to develop its project in the next years based on the express governmental authorization it had acquired, i.e. Decree 083.

Third, to determine the “character of the measure” pursuant to Annex 812.1, the Tribunal engaged in a fact finding exercise.  In particular, the Tribunal looked at the circumstances under which the governmental authorities issued Decree 032, noting that: (i) the authorities met on June 23, 2011 without inviting the Investor to participate, (ii) the evidence upon which Decree 032 was issued was not produced in the arbitration, so it was not able to assess the reasonableness of the revocation, (iii) the participation of a strawman in the authorization procedure was fully known and approved by the government so it could not have constituted a legal justification to revoke Decree 083, and (iv) the social unrest in the area was not caused by the Investor’s conduct because its conduct was repeatedly endorsed by governmental authorities.

Having found that Decree 032 had an economic impact on the investment, that it violated the Investor’s reasonable expectations and that the measure was not legally justifiable, the Tribunal found that Decree 032 constituted an indirect expropriation in the sense of Article 812 of the FTA.

 

  • “Cost approach” applied to the measure of damages

When assessing the damages owed to the Investor due to the indirect expropriation, the Tribunal noted that the FTA was silent on the rules applicable to the calculation of damages.  Both parties agreed on the use of the fair market value to quantify the damages, but disagreed as to  whether the calculation should rely on the amounts invested (cost approach) or the potential profitability of the investment (calculated through the Discounted Cash-Flow methodology).

According to the Investor (relying on the test for early-stage projects from Vivendi v Argentina [II]), a willing buyer would have paid a price for the project calculated by the DCF method.  The Tribunal concluded that the DCF method was not appropriate.  The Tribunal pointed to the problems a hypothetical purchaser would have faced if interested in purchasing the Santa Ana project, such as: the project was at an early stage and had not received many governmental and environmental permits; the project faced opposition from local communities which would have made it hard to obtain the necessary social license to operate; and no track record of successful operation in the same area existed.  Those facts for the Tribunal meant that a DCF approach would be too speculative for this case.

The Tribunal therefore adopted a cost approach methodology and awarded damages for the costs incurred in the development of the project prior to the issuance of Decree 032, totaling around US$ 18 million.

 

  • Investor’s relationship with local communities

One of Respondent’s illegality allegations was that the Santa Ana Project lacked a social license to build and operate in Peru and that the Investor had contributed to the social unrest and therefore to the issuance of Decree 032.  The majority of the Tribunal found that Peru had not met its burden to show a causal link between the social unrest and the Investor’s operations, and dismissed all illegality related allegations.

However, Prof. Philippe Sands QC (arbitrator appointed by the Respondent) disagreed.  In his Dissenting Opinion, Prof. Sands appealed to the ILO Convention 169 to assess whether all the rights of the local communities located in the nearby areas of the Santa Ana project were given sufficient effect.  In his analysis of the evidence presented by the parties, Prof. Sands concluded that a possible explanation for the adverse responses of certain communities to the Investor’s project could be that the Investor did not engage the trust of all potentially affected communities and that even if the Investor was on notice of those numerous communities, it failed to take the appropriate steps to address the concerns of those communities (¶ 19).  On this point, Prof. Sands would have reduced the amount of damages awarded to the Investor by one half for its contribution to the events that led to the issuance of Decree 032.

The approach taken by Prof. Sands is interesting in light of the increasing number of cases dealing with the interaction of investment protection and rights of indigenous communities. Other recent examples include, Álvarez y Marín Corporación S.A. and others v Panama (involving claims of invasion of the investors’ properties by indigenous groups) and South American Silver Limited v Bolivia (involving claims of investor misconduct in its relationship with neighboring local communities to a mining project).

Finally, on a curious note, notwithstanding this dispute, Bear Creek Mining will keep doing business in Peru developing other project.  The company’s official press release after the award states that Bear Creek “look[s] forward to accelerating the advancement of our Corani project in conjunction with the Government of Peru and the Corani communities.”

More from our authors: International Arbitration and the Rule of Law
by Andrea Menaker
€ 240


The post Four Key Takeaways of the Decision in Bear Creek Mining Corp v Republic of Peru appeared first on Kluwer Arbitration Blog.

Jackie Font-Guzmán on Self-Determination for Puerto Ricans

ADR Prof Blog - Fri, 2017-12-15 16:36
Jacqueline N. Font-Guzmán, director of Creighton’s Negotiation and Conflict Resolution Program, wrote an op-ed in the Washington Post entitled,  Puerto Ricans are Hardly U.S. Citizens.  They are Colonial Subjects.   It reviews the history of how Puerto Ricans gained US citizenship without self-determination.  Click the title of this post to see the link and take a look.

Family Business Succession: The Joys and Challenges - Mediate.com

Google International ADR News - Fri, 2017-12-15 13:03

Family Business Succession: The Joys and Challenges
Mediate.com
He is a Past President (2006-2007) and member of the Massachusetts Collaborative Law Council, the International Academy of Collaborative Professionals and the New England Association for Conflict Resolution. He writes frequently on collaborative law ...

Cabinet clears bill to set up arbitration council - Economic Times

Google International ADR News - Fri, 2017-12-15 09:50

Firstpost

Cabinet clears bill to set up arbitration council
Economic Times
... an Indian council of international arbitration centre as a centre of all Indian excellence... a separate bill has been brought for that," Law and Justice Minister Ravi Shankar Prasad said at a briefing on the Cabinet decisions. Last week, Chief ...
Union Cabinet clears bill to set up an international-level arbitration council in IndiaFirstpost

all 7 news articles »

China: Is Arbitration A Viable Option For Resolving Disputes With A Chinese Party? - Mondaq News Alerts

Google International ADR News - Fri, 2017-12-15 06:52

China: Is Arbitration A Viable Option For Resolving Disputes With A Chinese Party?
Mondaq News Alerts
... a treaty some see as the pillar of the international arbitration system. In essence, it allows parties to apply to enforce an award rendered in one signatory state in another, and it limits the grounds to challenge the enforcement of such foreign ...

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Alternative Dispute Resolution: Sometimes It's Better To Stay Out of Court - Lexology

Google International ADR News - Fri, 2017-12-15 06:47

Alternative Dispute Resolution: Sometimes It's Better To Stay Out of Court
Lexology
Alternative Dispute Resolution or ADR is any procedure for settling a dispute by means other than litigation in state or federal court. The long-term and multi-party nature of construction work has made the various methods of ADR particularly popular ...

Is arbitration a viable option for resolving disputes with a Chinese party? - Lexology

Google International ADR News - Fri, 2017-12-15 04:21

Is arbitration a viable option for resolving disputes with a Chinese party?
Lexology
Continuing our current series on doing business in China, this edition discusses the viability of arbitration as a method of resolving disputes. This article highlights international arbitrations with a Chinese party that is decided outside China ...

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