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

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

Lucas Bento

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

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

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

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

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

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

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

 

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

References   [ + ]

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


South African oil company wins ICC award against Congo

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

Negotiation, Trump, and Lessons for the Future

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

The 2020 USNews Dispute Resolution Rankings

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

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

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

Ben Jolley and Oliver Cook

Herbert Smith Freehills

ICC’s updated guidance to parties

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

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

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

 

Revised approach to publication of awards

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

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

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

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

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

 

What does this mean for users of arbitration? 

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

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

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

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

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

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

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

References   [ + ]

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


Making Arbitration FAIR

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

GE wins award in Taiwan nuclear dispute

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

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

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

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

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

Italian court allows enforcement against Kazakhstan

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

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

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

Ioana Knoll-Tudor

Jeantet

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

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

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

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

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

  • Jurisdiction

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

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

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

  • Judges

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

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

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

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

  • English language

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

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

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

  • Procedure

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

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

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

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

  • Costs

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

  • Legal representation by a foreign counsel

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

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

References   [ + ]

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

In your Tribunals’ initial case management conferences last month, what discussion took place regarding to the use of Technology Assisted Review (“TAR”) for e-disclosure? Are many of you now scrambling to your web browsers to confirm exactly what is TAR? Is your approach to e-disclosure frozen in time circa 2010 (or perhaps 1995) — even as TAR’s acceptance among judges and magistrates is expanding?  Should questions about the use of TAR in arbitral e-disclosure be left entirely to party agreement? Or is such preliminary delegation  simply a convenient way for arbitrators to steer clear of unfamiliar and challenging terrain? This...
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The post TAR: How Shall We Treat This Sticky Subject? appeared first on Marc J. Goldstein - Arbitration & Mediation.

Need for Overhaul of the Costs Regime in Indian Arbitration Law

Kluwer Arbitration Blog - Tue, 2019-03-05 02:00

Badrinath Srinivasan

A legal regime which asks the victim of a frivolous legal proceeding to subsidise the costs of the perpetrator is unjust and is bound to provide incentives for more frivolous proceedings. For a long time, Indian arbitration law had been providing such incentives for a party to make frivolous objections to the arbitration agreement or the arbitral award. The Law Commission of India sought to change this state of affairs through its 246th report and recommended certain changes to the Arbitration and Conciliation Act, 1996 (“1996 Act”). Pursuant to the recommendations, the Indian legislature enacted the Arbitration and Conciliation (Amendment) Act, 2015 (“2015 Act”) attempting to update the law on costs in line with the best international practices.

This post argues that even after the 2015 amendments, there has not been a marked change in the way in which courts award costs following best international practices such as the principle that costs follow the event.

 

Statutory Provisions on Costs in Arbitration

Section 31(8) of the 1996 Act as originally enacted dealt with costs in arbitration proceedings. Precedents that evolved therefrom led to a dissatisfied state of affairs regarding the regime on costs allocation in arbitration and arbitration related court proceedings (See, Ernst & Young LLP, Emerging Trends in Arbitration in India, p. 20). The chief complaint was that the provision was too open textured and allowed unnecessarily enormous discretion in awarding of costs. In most cases, tribunals and courts failed to award costs and provide reasons for their decision. An empirical survey suggested that in about 90% of the arbitrations, the parties had to bear either their own costs or half of the total arbitration costs, irrespective of the outcome of the arbitration.

Consequently, the winning party lost substantial money towards costs incurred due to the arbitral proceedings and was not compensated for considerable expenses incurred in arbitration related court proceedings such as proceedings relating to appointment of arbitrators, application for interim measures, and so on. Frequent judicial interference in arbitration also provided incentives for a party to delay or frustrate efficient settlement of disputes. A party so delaying or frustrating the proceedings was not made to bear the costs expended by the winning party and the winning party was not fully compensated for the costs incurred owing to the censurable conduct of the losing party.

This state of affairs was incongruent with best international arbitration practices. After numerous calls for reforms, the Law Commission of India in its 246th Report sought an overhaul of the existing provision on costs.

 

Law Commission’s Recommendations on Costs

The Law Commission of India submitted its 246th report, where it specifically pointed out the need for amending the law on costs. The Commission noted the potential for significant increase in costs in arbitration proceedings, which, according to the Commission necessitated the law on allocation of costs to be clear and predictable. For these reasons, the Commission recommended that the loser-pays principle should be normally followed by tribunals and courts hearing arbitration related court proceedings while allocating costs.

Primarily, two justifications were offered for by the Commission for this recommendation: One, it is only just that the losing party which dragged the other party to court/ arbitration or which set up unjust defences compensates the winning party for the losses incurred in resolving the issue in courts or before the tribunal. The second justification offered by the Commission was that from an economic point of view, the loser-pays principle provided an “efficient deterrence against frivolous conduct and furthers compliance with contractual obligations.” (Para 23)

Further thereto, the Law Commission recommended insertion of Section 6A to the 1996 Act containing a detailed provision on costs. Thus, it would appear that the objective of the Law Commission’s recommendations on costs was to introduce a “costs follow the event” regime and that in all arbitration related proceedings, the tribunal or the court, as the case may be, should ordinarily adhere to this principle. However, the manner in which Section 6A is a cause for concern (as will be seen in the later part of this post).

 

Section 31A of the 1996 Act (as amended in 2015)

Based on the recommendation of the Law Commission and an ordinance, the Indian Parliament enacted the Arbitration and Conciliation (Amendment) Act, 2015, and the same was brought into force with effect from 23 October 2015.

The amended Act contains detailed provisions on costs in Section 31A, which is similar to Section 6A suggested by the Law Commission. Section 31A(1) empowers the court or arbitral tribunal, as the case may be, to award costs in relation to any proceeding under the 1996 Act. It reads:

In relation to any arbitration proceeding or a proceeding under any of the provisions of this Act pertaining to the arbitration, the Court or arbitral tribunal, notwithstanding anything contained in the Code of Civil Procedure,1908, shall have the discretion to determine— (a) whether costs are payable by one party to another; (b) the amount of such costs; and (c) when such costs are to be paid…

The wordings of Section 31A(1) is a cause for concern. The use of the word “discretion” could be construed to mean that the Court or the tribunal has the option to choose not to pass any order on costs.

Similar is the case of Section 31A(2) as well. It reads:

If the Court or arbitral tribunal decides to make an order as to payment of costs,— (a) the general rule is that the unsuccessful party shall be ordered to pay the costs of the successful party; or (b) the Court or arbitral tribunal may make a different order for reasons to be recorded in writing.”

This sub-section begins with the term “if” as if to suggest that making an order as to payment of costs is a matter of choice of the Court or the arbitral tribunal, as the case may be. This construction is incongruent to the purpose for which the new regime on costs was introduced, as noted by the Law Commission.

A perusal of the decisions in the post-2015 suggest that there has not been a change, especially by the courts, in awarding of costs. This leads to the inference that the introduction of Section 31A was a pointless exercise.

The recent decision of Larsen and Toubro Limited Scomi Engineering BHD vs. Mumbai Metropolitan Region Development Authority (03.10.2018 – SC): MANU/SC/1151/2018 is a typical example where the court did not even deal with costs in a petition for constituting the tribunal. The petition was ultimately dismissed on the ground that the arbitration was not an international commercial arbitration warranting constitution of the arbitral tribunal by the apex court rather than by the relevant High Court.

 

Proposed Amendments

The Arbitration and Conciliation Bill, 2018, which is now under consideration in the Indian Parliament does not seek to address this issue.

Therefore, it is suggested that amendments to Section 31A should be made in the current round of reforms to provide the following:

  • The Court or the tribunal shall make an order as to payment of costs.
  • The general rule for the tribunal and the Court should be that the unsuccessful party should be ordered to pay costs of the successful party.
  • The Court or the tribunal may depart from the above general rule for reasons to be recorded in writing.

Towards this end, a new sub-section in the form of Section 31A(1A) has to be introduced along the following lines: “The Court or arbitral tribunal shall make an order as to payment of costs while making a determination under this Act: Provided that the Court or arbitral tribunal shall have the discretion to postpone the order as to payment of costs at the time end of the proceedings before it.

Consequently, the phrase “If the Court or arbitral tribunal decides” at the beginning of Section 31A(2) should be amended to read: “Where the Court or arbitral tribunal decides”.

 

Closing Remarks

International practice suggests that arbitral tribunals and courts hearing arbitration related matters award reasonable costs in favour of the winning party. In some countries, courts award costs on indemnity basis in respect of unsuccessful challenges to arbitration agreements and arbitral awards and also in unsuccessful petitions for refusal to recognise or enforce awards. Indemnifying the winning party for costs incurred in such cases makes sense.

Unfortunately, Indian courts and tribunals not only fail to award indemnity costs in deserved cases but do not even award reasonable costs in favour of the winning party as provided under the statute book. Hence, it is important that the 2018 Amendment Bill clarifies the intent behind the enactment of Section 31A by amending the law as suggested above. This will ensure that the legal costs of the party initiating frivolous legal proceedings stalling the arbitration process is not subsidised by the victim of such proceedings.

In order for India to achieve the objective of becoming a prominent global centre for dispute resolution, it is of fundamental importance that courts and the arbitral tribunals allocate costs in accordance with best international practices.

This post is based on the ideas that were mooted in a paper presented at a conference in 2017 and can be accessed from here.

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Be There or Be Square

ADR Prof Blog - Mon, 2019-03-04 22:27
Do you care about the future of ADR in legal education? If so, you will want to be at Peppedine on June 18-19 for Appreciating Our Legacy and Engaging the Future: An International Conference for Dispute ResolutionTeachers, Scholars, and Leaders. This landmark conference for full-time faculty and current adjunct instructors will bring together leading dispute … Continue reading Be There or Be Square →

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