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Marriage advice from divorce lawyers - The Standard

Google International ADR News - Sun, 2018-09-30 01:23

The Standard

Marriage advice from divorce lawyers
The Standard
He is the President of the Mediation Training Institute International in East Africa. Experience: 18 years ... All family law experts will tell you that before filing for divorce, couples should attempt alternative dispute resolution mechanisms. Such ...

China’s International Commercial Court: A Strong Competitor to Arbitration?

Kluwer Arbitration Blog - Sat, 2018-09-29 20:00

Li Huanzhi

In June 2018, China launched its first and second International Commercial Courts (the “CICC”). The advent of them represents a prolonged attempt of China to upgrade its judicial system by transplanting the advanced international practices to, according to the Supreme Court of China (the “SPC”), “provide services and protection for the “Belt-and-Road” construction (the “BAR”)”.

International commercial courts are certainly no novelty to the international dispute resolution (“DR”) community. Numerous ones have emerged during the past decade with the goal of enhancing the attractiveness of their host countries in the purview of the intense competition on international DR market as one of their main pursuits. However, such aim was rarely mentioned when establishing the CICC. The idea of building a mechanism and corresponding institution for solving disputes in servicing the BAR was first put forward in January 2018 by a CPC Central Committee Opinion. This Opinion set the tone for the CICC by emphasizing its ability to serve, instead of its attractiveness for international parties. The corresponding purpose is stipulated in the Recital of the Provisions of the Supreme People’s Court on Several Issues Regarding the Establishment of the International Commercial Court (the “Provisions”), which can be summarized as, firstly, to better manage international commercial cases, secondly, to create a better judicial environment for transnational players, and lastly, to facilitate the BAR construction. Although an avenue through which parties can voluntarily submit their disputes to the CICC is created, and some of the reforms made by the Provisions are indeed unprecedented, the CICC’s attraction for international cases may remain limited. I explain in this post why the CICC might only be a good “starting point” for China in the cause of being recognized as an attractive place for BAR disputes and could not, for the time being, replace international arbitration as the mainstream avenue.

1. Difficulties posed by the CICC’s jurisdictional approach

According to article 2(1) of the Provisions, parties can submit the first instance international commercial cases with actual connection with China and with an amount in dispute of at least 300 million RMB to the CICC by a jurisdiction agreement. Obviously, such approach leaves limited room for consensual jurisdiction and in practice, poses several difficulties for lawyers intending to select the CICC as the DR forum.

The first difficulty would be how to draft an effective DR clause to select the CICC. There is not always a positive correlation between the total value of a contract and the amount in dispute arising out of such contact. In other words, one cannot predict the “size” of the dispute when drafting a DR clause. Selecting the CICC in a jurisdiction agreement would produce too much uncertainty regardless of the “size” of the contract.

A “safe” way to select the CICC would be to adopt a “non-exclusive” choice of court clause stipulating that disputes over 300 million RMB will be submitted to the CICC and other disputes would be submitted to an arbitral tribunal or other Chinese courts. Nevertheless, the amount in dispute is not always fixed during a proceeding, as Mr. Wei Sun pointed out in his earlier post on this Blog. Cases where the amount in dispute exceed 300 million RMB after the acceptance of other courts either by the change of the claims by the claimant or filing counter-claims by the defendant, might have trouble reaching the CICC. Moreover, one cannot assume that cases with smaller amount in dispute are necessarily easier. Last, it is the truism that the Higher Court or the SPC could transfer tricky cases with the amount in dispute less than 300 million RMB to the CICC if they agree or decide to. Nevertheless, party autonomy would be completely deprived. Setting this quantifiable threshold might lessen the CICC’s workload at the first appearance, but the practical difficulties posed by this may result in parties not selecting the CICC at all.

It is also noted that only cases with actual connection with China can be submitted to the CICC. Here the stubborn Chinese judicial tradition, i.e., Article 34 of the Civil Procedure Law, comes into play. Article 34 enumerates several locations which parties can choose via a written jurisdictional agreement to enable the court of such locations exercising jurisdiction over their disputes. It specifically emphasizes that for a consensual venue to be valid, such venue must have actual connection with the dispute. Thus, the CICC would be difficult to satisfy the demands of parties seeking a neutral forum for BAR disputes.

Taking the other four types of jurisdiction of the CICC into consideration (i. cases transferred from the first instance Higher Court; ii. cases with significant nationwide impact; iii. cases involving application for preservation measure in arbitration and setting aside or enforcement of international commercial arbitration awards; and iv. cases designated by the SPC when it deems appropriate), essentially, they operate only as an internal allocation of jurisdiction inside of the Chinese court system. In other words, with the restriction on the consensual jurisdiction, the CICC might only facilitate the resolution of cases which are already under the Chinese jurisdiction. Moreover, in terms of the CICC’s judicial assistance for the enforcement of preservation measures and awards of international arbitration, parties would, in a way, be encouraged to use arbitration proceedings for BAR disputes.

There are significant differences between the CICC and other international commercial courts. The Singapore International Commercial Court (the “SICC”) requires only a written jurisdiction agreement for an action to be heard by it even where the dispute has no actual connection with Singapore. Similar approach is adopted by the Dubai International Financial Centre Courts (the “DIFCC”). As for the CICC, one may argue that the arrangement with regard to consensual jurisdiction would only enable international parties willing to bring cases to Chinese courts to have their disputes resolved by a more professional bench, instead of vying for jurisdiction with international institutions.

2. Difficulties posed by the Chinese upper laws

Building an international commercial court is never an isolated event. In the absence of a full-scale revision of the current laws, setting some special procedures for the CICC would not be able to eliminate parties’ concerns towards the Chinese judicial system.

A fully-internationalized commercial court requires the participation of reputable foreign judges and highly-professional international lawyers. However, according to Article 9 of the Chinese Judges Law, foreign experts are prohibited from sitting as judges on the CICC, because a judge must possess Chinese nationality. And only Chinese-admitted lawyers can act as legal representatives according to the Chinese Civil Procedure Law, even when the applicable law is foreign law. With its limited room for institutional innovation, the CICC created an internal International Commercial Expert Committee. Parties can use this Committee as the mediator after a case is accepted by the CICC. This approach does, somehow, inexplicably remove the meditation function from the collegial panel, while improving the enforceability of the mediation agreement by allowing the CICC to issue a conciliation statement or a judgment based on the mediation agreement upon parties’ request. The practical value of this Committee remains to be seen. However, it is obvious that this limited approach can by no means possess the same attractiveness compares to other courts with benches comprising leading international experts and flexible rules of representation for foreign lawyers, such as the SICC and the DIFCC, not to mention, to the international arbitration.

Moreover, the Chinese Civil Procedure Law does not provide any compulsive requirement for evidence disclosure before the start of hearings. The possibility of facing surprising evidence might be one of the biggest obstacles preventing a lawyer with common law background from trusting the Chinese judicial proceedings. The Provisions could have learnt from the SICC practices and opened a small window by allowing parties to exclude the application of the Chinese evidential rules and thereby grant more autonomy for parties to manage the proceeding. Regrettably, this issue remains unsolved.

In light of the preceding discussions, foreign lawyers’ reluctance in selecting Chinese courts as DR forum and their “medieval” impression of the Chinese judicial system can hardly be converted by the establishment of the CICC. Despite that, the CICC did achieve what it set out to achieve by helping transfer international commercial cases to the hands of a more professional and internationalized bench and creating a much more flexible and efficient procedure for those cases. The CICC may not be able to compete with international arbitration at this moment, but who is to say it will not be a good starting point?


More from our authors: International Arbitration and the Rule of Law
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The post China’s International Commercial Court: A Strong Competitor to Arbitration? appeared first on Kluwer Arbitration Blog.

More Observations about the Kavanaugh Hearing

ADR Prof Blog - Sat, 2018-09-29 11:37
Yesterday, Jen wrote an insightful post analyzing Judge Kavanaugh’s problematic apology to Senator Klobuchar.  Interestingly, he committed the same offense with Senator Whitehouse – arrogantly responding to a question about his drinking by asking the senator about his drinking – but didn’t apologize to him. This post provides a few more observations about this remarkable … Continue reading More Observations about the Kavanaugh Hearing →

Turkey’s Court of Cassation Refuses to Enforce an Arbitration Clause in English Based on a Turkish Language Requirement

Kluwer Arbitration Blog - Sat, 2018-09-29 01:08

Courtney Kirkman Gucuk and Can Talaz

In a recent decision, Turkey’s Court of Cassation refused to enforce an arbitration clause in an English language contract between a Turkish party and a foreign party based on Turkey’s national language requirement for commercial enterprises, the Code on the Mandatory Usage of the Turkish Language in Commercial Enterprises No. 805 (“Law No. 805”).

The Contract

The contract at issue is a Licensing and Distribution Contract (“Contract”) between a Swiss company that produces and sells health products (“Swiss Co.”), as licensor, and a Turkish company that handles the import, export, marketing, and sales of health products (“Turkish Co.”), as licensee. The parties signed the Contract in English, without a Turkish counterpart. The Contract is governed by Swiss law and includes an arbitration clause.

The Turkish Court Proceedings

Swiss Co. filed for a declaratory judgment against Turkish Co. in the Turkish court of first instance, the 12thCivil Commercial Court of Ankara (“Commercial Court”). Swiss Co. asked the Commercial Court to declare that Swiss Co. had rightfully terminated the Contract based on Turkish Co.’s non-performance of its contractual obligations. Turkish Co. objected to the request of the Commercial Court to hear the merits of the case because of the existence of an arbitration clause. This argument was accepted by the Commercial Court.

Swiss Co. appealed the Commercial Court’s decision. The Court of Cassation overruled the Commercial Court’s decision on the grounds that the Commercial Court had failed to take into account in its decision Law No. 805 and the obligation of Turkish parties to draft contracts in the Turkish language, and it remanded the case to the Commercial Court.

On remand, the Commercial Court accepted the Court of Cassation’s reasoning and denied Turkish Co.’s objection to its jurisdiction to hear the substantive case based on the arbitration clause. The Commercial Court noted that while the contract is valid, the arbitration clause could not be invoked by Turkish Co. Accordingly, the Commercial Court made a substantive ruling on the merits and decided that Swiss Co. had rightfully terminated the Contract.

Turkish Co. appealed the Commercial Court’s decision, and argued that Law No. 805 did not apply to commercial contracts, but only to commercial books and records. The Court of Cassation rejected Turkish Co.’s argument and upheld the Commercial Court’s decision. It found that based on Article 4 of Law No. 805, Turkish Co. could not invoke the arbitration clause because it was in English. The Court of Cassation upheld the Commercial Court’s decision that Swiss Co. rightfully terminated the Contract.

Turkish Co. has appealed the Court of Cassation’s decision and asked for a correction of the judgment (karar düzeltme) and the case is currently pending before the 11thCivil Law Chamber of the Court of Cassation.

Law No. 805

Law No. 805 is relatively short, comprised of only nine articles. It was adopted in 1926, shortly after Turkey became a Republic in 1923, when Turkey was actively promoting the use of the Turkish language as state policy.

The most important provisions of Law No. 805 are as follows:

Article 1: “All types of Turkish companies and enterprises shall use the Turkish language in all kinds of transactions, contracts, communication and bookkeeping in Turkey.”

Article 2: “For foreign companies and enterprises, this obligation applies to all kinds of transactions and communications with Turkish companies and persons, and whenever foreign companies are obliged to disclose documents and company books to government bodies or officials.” Unlike Article 1, Article 2 does not include the word “contracts”.

Article 3: “Even though the companies referred in Article 2 can use a secondary foreign language in their transactions, the Turkish copy shall prevail, and the binding signatures shall be put on the Turkish copy of such documents. In case the signatures are on the foreign language copy of the contract despite this prohibition, the Turkish text shall be acknowledged.”

Article 4: “Documents and papers that are drafted after this Law becomes effective and are in violation of the above articles will not be taken into consideration for the benefit of the companies and enterprises.”

Article 7: “Any person that acts in contradiction with the provisions of this Law shall be imposed with a judicial fine that is not less than one hundred days.”


Although Turkish parties and foreign parties routinely enter into contracts only in English, to our knowledge this decision is one of less than a dozen cases in which the Turkish courts have applied Law No. 805. The Court of Cassation selectively applied Law No. 805 to deny enforcement of the arbitration clause by Turkish Co., but enforced the rest of the Contract (also in English) on behalf of Swiss Co. Unfortunately, the Court of Cassation did not give a detailed analysis in its decision.

A look back at the few decisions in which Law No. 805 has been applied by the Turkish courts does not provide much guidance.

  • 1977: The court enforced a clause which was written in the English language and contained in a Turkish contract, finding that the clause was customarily in English.
  • 1979: The court refused to enforce a due date clause which was in English and contained in a bank security letter in Turkish given to a government office.
  • 1986: The court dismissed the argument that a foreign company doing business in Turkey should execute a contract in Turkish.
  • 2006: In a dispute between a Turkish bank customer and a Turkish branch of a foreign bank, the court of appeals found that the lower court should have considered Law No. 805.
  • 2009: In the same dispute, on remand the lower court decided that the Turkish branch of a foreign bank could not rely on a contract that was not in Turkish.
  • 2012: The Court of Cassation directed the lower court to consider, because both parties to the contract were Turkish, whether Law No. 805 applied to the dispute, and if so, to decide whether the arbitration-related clauses of the contract would benefit the defendant.
  • 2014: In a dispute between a foreign pharmaceutical company and a Turkish distributor, the court dismissed the case because it found the arbitration clause was invalid in the contract as it was drafted in English.
  • 2015: In a dispute between two Turkish companies related to a sales agreement in English, the Court of Cassation remanded the case because the lower court did not consider Law No. 805. On a second appeal, the Court of Cassation remanded again, finding that the dispute should not be resolved based on the contract but on general Turkish laws.


While the Court of Cassation’s recent decision sheds some light on the interpretation of Law No. 805, it also leaves some questions. Significantly, the Court of Cassation’s application of Law No. 805 to the Contract resulted in the enforcement of the Contract except for the arbitration clause. Because the Court of Cassation (and the Commercial Court in the earlier decisions) did not explain its reasoning in detail, we cannot be sure of the entire legal basis for the denial of Turkish Co.’s invocation of the Contract’s arbitration clause.

The Court of Cassation may have differentiated between the parties, as Law No. 805 imposes slightly different obligations on Turkish and foreign parties. In fact, it reasoned, applying Article 4, that the arbitration clause could not be taken into account for the benefit of Turkish Co. That is, Turkish Co. failed to comply with Law No. 805 in making the arbitration agreement and cannot invoke arbitration as a defense in seeking termination of the Turkish court litigation against it. The Court of Cassation also may have reasoned that the arbitration clause was rendered inapplicable for both parties because an arbitration clause that could be invoked by only one party (here, Swiss Co., as a result of Article 4 operating to preclude Turkish Co. from invoking the arbitration clause) would be invalid under Turkish law. The Court of Cassation has a very high standard for assessing the validity of arbitration agreements, which must establish explicitly, exclusively, with certainty, and without any doubt the parties’ agreement to arbitration. Here the Court of Cassation may have decided that an arbitration clause in violation of Law No. 805 is not exclusive, if not valid.

Going Forward

We await the final decision of the Court of Cassation, which could clarify the scope of application of Law No. 805. Until then, foreign and Turkish parties doing business together in Turkey should be cautious and may wish to execute their arbitration agreements as separate contracts in English and Turkish versions. For existing contracts including arbitration clauses between foreign parties and Turkish parties that have been executed in only English, if the parties agree, a Turkish version of at least the arbitration clause can always be executed to avoid possible future complications.

The case reference is: X v. Y, Court of Cassation, 11th Civil Law Chamber, File No. 2016/5836, K. 2017/4720, dated 26/09/2017.

More from our authors: International Arbitration and the Rule of Law
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The post Turkey’s Court of Cassation Refuses to Enforce an Arbitration Clause in English Based on a Turkish Language Requirement appeared first on Kluwer Arbitration Blog.

Calif. Court To Review $414M Award Nixed Over Bad Service - Law360

Google International ADR News - Fri, 2018-09-28 17:01

Calif. Court To Review $414M Award Nixed Over Bad Service
Ltd. in a default judgment after the Chinese company failed to show up for an arbitration stemming from their soured business deal to market international fonts. The American company then had the award confirmed in California trial court in a ...

Calif. Court To Review $414M Award Nixed Over Bad Service - Law360

Google International ADR News - Fri, 2018-09-28 16:56

Calif. Court To Review $414M Award Nixed Over Bad Service
Ltd. in a default judgment after the Chinese company failed to show up for an arbitration stemming from their soured business deal to market international fonts. The American company then had the award confirmed in California trial court in a ...

Kavanaugh Apologizes to Klobuchar

ADR Prof Blog - Fri, 2018-09-28 16:42
In case you hadn’t heard, yesterday Judge Kavanaugh appeared before the Senate Judiciary Committee to respond to Dr. Christine Blasey Ford’s allegation that he sexually assaulted her when they were teenagers. His testimony, both what he said and how he said it, provides much for us to analyze. Consider this exchange with Senator Amy Klobuchar: … Continue reading Kavanaugh Apologizes to Klobuchar →

Challenging arbitral awards - Lexology

Google International ADR News - Fri, 2018-09-28 03:08

Challenging arbitral awards
In any case, the Greek courts are reluctant to set aside arbitral awards or refuse their enforcement, thus indicating that recourse to arbitration for local and international cases is a valuable instrument in alternative dispute resolution, especially ...

Ryanair strike: 250 flights cancelled in walkout - The Independent

Google International ADR News - Fri, 2018-09-28 02:39

The Independent

Ryanair strike: 250 flights cancelled in walkout
The Independent
Ryanair cancelled 250 flights, affecting around 40,000 passengers, ahead of a coordinated one-day strike on Friday 28 September by pilots and cabin crew in Spain, Portugal, Belgium, the Netherlands, Italy and Germany. Various unions called for their ...
25 de setembro de 2018 - TwitterTwitter
Ooops! Ryanair apologizes after compensation checks bounceUSA TODAY

all 340 news articles »

CIETAC’s Fresh Footprint in North America: Drawing on Experiences of its Hong Kong Counterpart

Kluwer Arbitration Blog - Thu, 2018-09-27 20:00

Brad Wang and Gloria Ho

The Inauguration
On 2 July 2018, CIETAC established its second arbitration centre outside mainland China – the North America Arbitration Center in Vancouver, Canada. Co-organised by CIETAC and the Vancouver Economic Commission, the inauguration ceremony was graced by the presence of the Honourable Bruce Ralston, Minister of Jobs, Trade and Technology of the Government of British Columbia; the Honourable George Chow, Minister of State for Trade of the Government of British Columbia; Mr. Kong Weiwei, Deputy Consul General of the Consulate-General of the PRC in Vancouver; and close to 200 dignitaries from government departments, trade and commerce federations and the legal profession.

Expectations from the Vice-Chairman
Speaking at the ceremony, Vice-Chairman and Secretary-General of CIETAC Mr. Wang Chengjie pointed out that launching the North America Arbitration Center would enable CIETAC to learn from practices of international arbitration so as to enhance the internationalisation of its arbitration services. At the same time, the North America Arbitration Center would serve as a platform for the legal profession in North America to get informed of Chinese arbitrations.

Further, Mr. Wang foresaw that in establishing an overseas branch in North America, CIETAC would bring fair, efficient and convenient arbitration services to Chinese and foreign parties in North America. He indicated that CIETAC would continue its efforts in promoting the use of international arbitration and in making positive contributions to the development of global trade.

The Hong Kong Experience
Handling foreign-related commercial disputes has been CIETAC’s founding mission since it was established in 1956. However, it was only six year ago and after it has already administered approximately 30,000 cases in total, upon the invitation of the Department of Justice of Hong Kong SAR, when CIETAC decided to step outside mainland China and authorise its Hong Kong Arbitration Center to administer cases when a neutral, common law, (and of course a popular) seat of Hong Kong is preferred by parties. CIETAC was both confident and comfortable with choosing Hong Kong as it saw Hong Kong as a frequently chosen seat of arbitration, and Hong Kong party-related cases ranked as 2nd in its case profile at that time.

CIETAC Hong Kong Arbitration Center was not built in a day. We summarised three key breakthroughs which will be of great assistance to the North America Arbitration Center, as explained below:

  • Chapter VI of CIETAC Arbitration Rules 2015 and Its “Bridging” Function

Headquartered and having most cases administered in Beijing, CIETAC adopts arbitration rules which from version to version consistently feature what CIETAC considers to be the best practices of international arbitration to the extent they are practical to be carried out under the procedural laws in mainland China. The establishment of CIETAC Hong Kong Arbitration Center accordingly called for special rules that are more compatible with procedural laws and arbitration practices in Hong Kong.

Chapter VI was introduced in the CIETAC Arbitration Rules 2015 (the “Rules”), which is exclusively applicable to arbitration cases accepted and administered by the CIETAC Hong Kong Arbitration Center. The Chapter provides that cases under CIETAC Hong Kong Arbitration Center (unless parties agree otherwise) shall adopt an open panel of arbitrators and comply with the doctrine of “Kompetenz-kompetenz”; and acknowledges the power of the arbitral tribunal to make interim measures. A transparently-structured fee schedule was also introduced for the cases CIETAC Hong Kong Arbitration Center administers.

  • The Enforcement of Award of CIETAC Hong Kong Arbitration Center

CIETAC Hong Kong Arbitration Center started to administer its cases under the Rules on 1 January 2015. The next milestone event, subsequently, was the enforcement of an Arbitral Award issued by CIETAC Hong Kong Arbitration Center in mainland China, which gave lawyers and parties a glimpse of a typical case under its auspices, from the beginning to the end.

In late 2016, the Nanjing Intermediate People’s Court of Jiangsu Province of China (“the Intermediate People’s Court”) handed down its ruling ((2016) Su Ren Gang 1) to enforce an Arbitral Award issued by CIETAC Hong Kong Arbitration Center. Relying on the Supreme People’s Court’s Arrangement Concerning Mutual Enforcement of Arbitral Awards between Mainland China and Hong Kong 1999, the Intermediate People’s Court found that the CIETAC award was in accordance with procedural laws of Hong Kong, and the enforcement would not contradict the public interest of mainland China.

  • Offshore Court’s Mareva Injunction in Aid of an Ongoing Case Administered by CIETAC Hong Kong Arbitration Center

While most practitioners were discussing Hong Kong court’s supportive stance in its case Chen Hongqing v Mi Jingtian & Others (HCMP 972/2017) when it comes to granting interim relief for international arbitrations (in this case, a CIETAC mainland Chinese arbitration), an unreported case ((2017) Yue 0113 Cai Bao 237) by a local court in Guangzhou, China (“the Court”) in support of an ongoing arbitration at CIETAC Hong Kong Arbitration Center was lesser-known.

In June 2017, the Court accepted a party’s asset preservation application forwarded by CIETAC Hong Kong Arbitration Center to prevent the respondents from disposing of their assets. Primarily relying on Article 28 of Chinese Arbitration Law and upon a financial undertaking provided by a third party, the Court held that the tests for approving of such application were satisfied.

This case illustrates the “brunch” feature of CIETAC Hong Kong Arbitration Center as it carries both the characteristics of a Hong Kong seat and a sub-commission of CIETAC, a Chinese arbitration commission, and may be argued to have provided a new option of seeking interim reliefs in similar arbitrations.

More from our authors: International Arbitration and the Rule of Law
by Andrea Menaker
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The post CIETAC’s Fresh Footprint in North America: Drawing on Experiences of its Hong Kong Counterpart appeared first on Kluwer Arbitration Blog.

Mediation and Arbitrage in IP: a response to the weaknesses of the African judicial system - Inventa International (press release)

Google International ADR News - Thu, 2018-09-27 05:42

Inventa International (press release)

Mediation and Arbitrage in IP: a response to the weaknesses of the African judicial system
Inventa International (press release)
Arbitration is a form of alternative dispute resolution in which the decision is entrusted, by agreement of the parties, not to a court, but to one or more arbitrators. It binds the parties and it is susceptible of forcible execution. The main features ...

Mediation and Arbitrage in IP: a response to the weaknesses of the African judicial system - Inventa International (press release)

Google International ADR News - Thu, 2018-09-27 05:42

Inventa International (press release)

Mediation and Arbitrage in IP: a response to the weaknesses of the African judicial system
Inventa International (press release)
Arbitration is a form of alternative dispute resolution in which the decision is entrusted, by agreement of the parties, not to a court, but to one or more arbitrators. It binds the parties and it is susceptible of forcible execution. The main features ...

Interview With The Korea IP Office's Acting Commissioner - Intellectual Property Watch

Google International ADR News - Thu, 2018-09-27 01:10

Intellectual Property Watch

Interview With The Korea IP Office's Acting Commissioner
Intellectual Property Watch
Korean Intellectual Property Office (KIPO) Acting Commissioner Kim Tae Man is attending the annual World Intellectual Property Organization General Assembly this week. In that context, he sat down with Intellectual Property Watch, and in a mutually ...

Advance Waivers of Conflicts of Interest – Changing the Dimensions of Arbitrator Challenges

Kluwer Arbitration Blog - Wed, 2018-09-26 23:11

Alefiyah M Shipchandler

Arbitrator neutrality remains an imperative prerequisite in international commercial arbitration. After all, the primary advantage of arbitration is that parties have the ability to choose their own decision-makers.  The issue of advance waivers typically arises at the time of appointment, when the arbitrator reserves the right to continue as an arbitrator despite the occurrence of certain potential conflicts, that would normally give rise to justifiable doubts about the arbitrator’s impartiality and independence. Thus, what the parties end up ‘waiving’ is their future right to challenge the arbitrator on the basis of the previously disclosed potential conflict.

However, can such advance waivers of conflicts of interest supersede the mandatory right of challenging an arbitrator? There exists limited guidance in terms of the validity and enforceability of such waivers and its ultimate impact on the right to have an impartial and independent tribunal. Given that there do not exist any formal Rules or Guidelines on the same, this article aims at pointing out certain practices that have begun to gradually emerge amongst arbitral institutions, in their treatment of advance waivers.

Advance Waivers of Potential Conflict of Interests

In recent times, two kinds of advance waivers are generally used by arbitrators in their declarations of independence and impartiality,

  1. Arbitrators may seek an advance waiver by which parties to the dispute ‘waive’ their right to challenge the said arbitrator at a future time, on the basis of certain potential conflicts. For example,

 “… I would however make a reservation that the other partners of my law firm may be free to continue with current or take up new instructions, involving the parties to this dispute or their affiliates.”

  1. Arbitrators may also seek a ‘waiver’ by the parties, by which the arbitrator is no longer bound by his duty to make continuous disclosure of conflicts. For example,

“The parties are requested to accept that current or future member firms of [the prospective arbitrator’s group of firms] are free … to accept instructions from or against any of the parties to this arbitration … without any duty on my part to make any disclosure in connection with any such instructions.”

Interestingly, the IBA Guidelines on Conflicts of Interest, 2014 (“IBA Guidelines“) only recognizes the use of advance waivers. It does not take any conclusive position on their validity, and leaves this question to be determined by “the specific text” of the waiver, the applicable rules and law. Similarly, even the Report of the International Commercial Disputes Committee of the New York City Bar Association simply states that, “the Committee neither endorses nor rejects the use of advance waivers, but rather seeks to encourage further dialogue and consideration of an existing trend”.

Due to a lack of uniformity on the issue, different arbitral institutions seem to follow different procedures when it comes to advance waivers. A question that needs to be answered is whether parties can in exercise of their autonomy, do away with the arbitrators’ continuous duty of disclosure, which under most procedural rules is mandatory. The UNCITRAL Model Law, for example, omits any grounds for parties to contract out of Article 12’s impartiality standards.

In fact, the IBA Guidelines specifically mandate in General Standard 3(b) that, “advance declaration or waiver in relation to possible conflicts of interest arising from facts and circumstances that may arise in the future does not discharge the arbitrator’s ongoing duty of disclosure”. Given the soft law status of the IBA Guidelines it only remains to be seen whether notwithstanding such advance waiver, an arbitrator shall nevertheless be required to disclose conflicts of interest that may arise in the future.

A practice in point, followed by the ICC is rooted in the supervisory role the Secretariat plays in arbitrations administered by it. According to the current practice, the Court is not bound by the arbitrator’s statement relating to future conflicts of interest. This essentially means that the parties are not precluded from challenging an arbitrator. The Court consequently allows challenges against arbitrators notwithstanding advance waivers. Further, the arbitrator’s duty of continuous disclosure is also not discharged.

There is also a growing tendency of arbitral institutions to refuse the appointment of an arbitrator who requires an advance waiver. For example, when an arbitrator is to be proposed by an ICC National Committee pursuant to Article 13(3) of the ICC Rules, the Court ordinarily does not appoint arbitrators who request advance waivers. A similar practice is also followed by the SCC, where the arbitrator requesting a waiver is required to revise his/her declaration before sending it to the parties.

Proposed Practice

In consonance with the IBA Guidelines and the practice of the ICC Secretariat, the validity of an advance waiver may be evaluated on the basis of the following:

  1. Limited scope of the waiver.

An overly broad waiver covering a variety of potential conflicts, is incompatible with the fundamental principle, that parties to an arbitration have a legitimate interest in being fully informed of all circumstances that ensure that an arbitrator is and remains independent and impartial. Therefore, arbitral institutions such as LCIA do not accept waivers that are overly broad.

  1. Informed consent of the parties and constructive knowledge.

For a waiver to be valid, it must be necessary that the parties are aware of the exact nature of the potential conflict and the implications that that waiver could have on proceedings. The validity of waivers must thus be evaluated on the touchstone of ‘you cannot waive what you do not know’.

  1. Continuing obligation of the arbitrator to disclose conflicts.

Waivers by which an arbitrator attempts to do away with his continuing duty of disclosure should not be accepted at all.

  1. Possibility of challenging the arbitrator despite the advance waiver.

In unison with the mandatory right to challenge an arbitrator, parties should be permitted to challenge an arbitrator despite an advance waiver, in exceptional circumstances. Such leave may be given by the supervisory institution or the arbitral tribunal as the case may be.

  1. Effect on the enforcement of the award vis-à-vis the advance waiver.

Since an arbitral award can be set aside by national courts on the grounds of partiality of an arbitrator, the validity of advance waivers may also be determined on the basis of its general treatment in the jurisdictions from which the parties to the dispute belong. For example, according to the dictum of Justice White in Commonwealth Coatings Corp. v. Continental Cas. Co, arbitrators are not automatically disqualified by a business relationship with the parties before them if both parties are informed of the relationship in advance. Thus, the United States appears amenable to enforce advance waivers.

Path Ahead

Another question that must also be answered is as to what impact the advance waiver might have on a challenge to the arbitrator. Could an arbitrator rely on the advance waiver as a defence in such case? And to that extent, can the advance waiver be used to draw conclusions on some form of acquiescence or can it be used to increase the objective standard necessary to uphold a challenge against an arbitrator?

Advance waivers thus affect various elements which are at play in commercial arbitration, including party autonomy, standards of impartiality and independence, duty of disclosure and even enforceability.  In light of the uncertainty surrounding them, it is necessary to formulate a set of rules, even if in the form of soft law, to regulate the use and ensure uniformity in the enforcement of advance waivers and address the effect they have on arbitral proceedings.


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

The post Advance Waivers of Conflicts of Interest – Changing the Dimensions of Arbitrator Challenges appeared first on Kluwer Arbitration Blog.

Serial Podcast Shows How Much You Can Learn From a Single Case

ADR Prof Blog - Wed, 2018-09-26 19:15
The first episode of the Serial podcast’s new season is a dramatic illustration of how much you can learn from a single case.  The case involves a young white woman who was prosecuted for her participation in a bar fight.  The Serial team are incredible storytellers, so this podcast is not “just” educational, but it … Continue reading Serial Podcast Shows How Much You Can Learn From a Single Case →

Challenging arbitral awards - International Law Office

Google International ADR News - Wed, 2018-09-26 09:17

Challenging arbitral awards
International Law Office
In any case, the Greek courts are reluctant to set aside arbitral awards or refuse their enforcement, thus indicating that recourse to arbitration for local and international cases is a valuable instrument in alternative dispute resolution, especially ...

Mediation Summit in Changsha, China

Business Conflict Blog - Mon, 2018-09-17 04:46

The China Council for Promotion of International Trade (CPPIT) in conjunction with its Hunan Province Sub-Council convened a dynamic Mediation Summit in Changcha, China, on 12-13 September 2018.

The first panel discussed implications of the Belt/Road Initiative, announced five years ago.

GAO Xiaoli, Deputy Chief Judge of the Civil Tribunal of the Supreme People’s Court, addressed how Chinese courts can provide assistance in international disputes, particularly international commercial mediation.  She noted that increased engagement in international trade has challenged China’s capacity to resolve commercial trading disputes efficiently and in line with disputants’ interests.  She rejected the model of mediation as a substitute for litigation, and suggested that there is no need to approach the challenge with an “either/or” attitude.  It does require that mediated agreements be enforceable (either judicially or through the notary process), strengthening the effectiveness of the international mediation process.  Enforcement proceedings should also be quick and not protracted, and sensitive to commercial demands.  She proposed certain procedural administrative improvements to support the growth of mediated resolutions.  Some of these – such as court-appointed mediation — were promulgated already by decree dated 27 June 2018.    (A later panel, which I moderated, addressed enforcement of mediated settlement agreements through the newly promulgated Singapore Convention.)

Pasit ASAWAWATTANAPORN, Managing Director of the Thailand Arbitration Center, noted that his country is an important trade and investment partner with China.  It has benefited from China’s aggressive investment activities in connection with Belt/Road, resulting in a 10% growth in Chinese trade.  Thailand’s own infrastructure plans are heavily influenced by Belt/Road, for example the high-speed train from China through Laos to Thailand.  These public and private investments amount to at least 1.5 trillion baht (USD 45 billion) in the past five years, including roads, airports, hospitals, ports and tourism.  In acknowledgement of the critical nature of the success of these projects, the Thai government has eased restrictions on foreign workers, loosened regulations of procurement laws, and – in the case of the high-speed train project – taken actions to anticipate and forestall disputes.  He noted that arbitration is not the ideal approach inasmuch as disputes in this area are best addressed early, inexpensively, and with the goal of a consensual outcome.

CHEN Fuyong, Deputy Secretary General of the Beijing Arbitration Commission, offered several case studies of disputes that have arisen from activities associated with Belt/Road.  One was a construction dispute between a Hong Kong and Beijing corporations to complete a construction located in Russia, featuring an arbitration clause before the Beijing Arbitration Center.  Claimant initiated such an action, but Respondent sought to enforce the requirement of mediation prior to arbitration.  The arbitral tribunal interpreted the Russian “Development Project General Contract” to be too general to enforce, and permitted the arbitration to go ahead.  In another case involved a purchase agreement providing for payment by the acquired company of contingent debt or outcomes of lending legal proceedings.  Dispute resolution proceedings were sufficiently vague as to be commercially ineffective.  The lesson is a general one – clarity matters when drafting dispute resolution agreements and when transferring risk through contracts of insurance.

Prachant KUMAR, of the Bar Association of India, noted you can choose friends and enemies but not neighbors, and the close regional reliance with China has dictated consensual, non-confrontational dispute resolution processes between Chinese and Indian businesses.  Cultural traditions such as frugality, efficiency, and attention to elders inform the use of consensual resolution processes in the region; it is simpler and more cost-effective than alternatives.  He warned of the risk that, as happened with international arbitration, the simple features of mediation may be made obscure, legalistic and expensive if appropriated by the legal community.  He used an iPhone as an example of something that contains much expertise, but is designed to be very simple for the user of the device.  He urged that companies engaging in cross-border deals opt for simple agreement language, close monitoring of local advisors, and early attention to operational issues that, if left unattended, could develop into formal, disruptive disputes.  He reported on a 2018 initiative in Indian courts that commercial disputes be mandatorily referred to mediation – an effort that, if successful, could have a substantial and welcome impact on the state of civil justice in India.


Supreme Court Grants Cert Addressing Delegation of Arbitrability

Business Conflict Blog - Thu, 2018-07-05 13:46

Upon reconvening in October 2018, the Supreme Court will take up  an interesting question involving the familiar rules of First Options v. Kaplan:  Who is to decide whether a claim is subject to arbitration — a court or the arbitrator?  The peculiar facts giving rise to that concern in Archer and White Sales Inc. v. Henry Schein Inc. broaden, rather than limit, the case’s interest.

Archer, a distributor and seller of dental equipment, brought a suit against Schein, a manufacturer, alleging violations of the Sherman Antitrust Act through a pattern of conduct including price-fixing and anti-competitive agreements that were continuing.  The suit sought both money damages and an injunction prohibiting the continuing conduct.

Schein moved to compel arbitration pursuant to an arbitration agreement that required the application of AAA Rules and that carved out of its scope “actions seeking injunctive relief.”  The Magistrate Judge granted the defendants’ motion to compel arbitration on the grounds that (a) the choice of AAA Rules evince an intention to delegate arbitrability to the arbitrator, and that (b) the arbitration agreement can be reasonably construed as contemplating the inclusion of this dispute.

(AAA Rule 7(a) provides that an “arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”)

The district court vacated the Magistrate Judge’s order and held that the dispute was not arbitrable  pursuant to the arbitration agreement, because it expressly carved out any claim for the injunctive relief sought by the plaintiff in the action.

Upon appeal to the Fifth Circuit, the parties agreed to the existence of an arbitration agreement, but not to whether its scope included the filed action.  Following its precedent in Douglas v. Regions Bank, the court entered into a two-step analysis, asking first whether the parties “clearly and unmistakably” intended to delegate the question of arbitrability to an arbitrator, and second whether there is a plausible argument for the claim’s being arbitrable.  This is so because, according to the Douglas analysis, if the argument of arbitrability is “wholly groundless,” it made no sense to send to an arbitrator a dispute as to which there are no grounds whatsoever for arbitration.

As to the first step — whether the parties unmistakably agreed to delegate arbitrability — the court skirted the question of whether AAA Rule 7(a) delegated the question of arbitrability to claims that are subject to the carve-out in the arbitration agreement.  Instead, it held that the second Douglas step was dispositive irrespective of the resolution of that first inquiry.  That second-step analysis was straightforward, according to the Fifth Circuit.  The arbitration agreement “expressly excludes certain types of disputes,” and among them are claims for injunctive relief.  Here we have a dispute where the claimant seeks injunctive relief.  Any conclusion  that the claim is subject to arbitration is therefore “wholly groundless,” and the court could see “no plausible argument that the arbitration clause applies” to it.  The district court therefore properly determined that the action was not subject to arbitration, and its order denying defendants’ motion to compel was affirmed.  “The mere fact that the arbitration clause allows [plaintiff] to avoid arbitration by adding a claim for injunctive relief does not change the clause’s plain meaning.”

[Note to Self:  Revise slide 19 of the “Drafting Arbitration Clauses” Power Point!]

So we have several interesting questions.  Does a clause carving out “actions seeking injunctive relief” carve out that portion of an action that seeks an injunction, but preserve that portion that seeks monetary damages?  Is the idea of booting “wholly groundless” claims of arbitrability properly applicable only to claims having nothing whatsoever to do with the contract at issue (say, a claim for an unrelated, non-contractual injury)? In determining the “wholly groundless” nature of the assertion of arbitrability, is the court improperly construing the arbitration agreement, in derogation of the parties’ determination that the arbitrator should do so pursuant to AAA Rule 7(a)?  Is there an at-least-colorable construction of the carve-out language that would hold that the parties may come to court to seek injunctive relief, but must arbitrate claims for money damages?

At least we will have no doubt about “who decides” these questions — the Supreme Court will.

Music for Mediators

The Mediation Times - Sun, 2013-05-26 16:07
For years I have talked about the similarity of mediation with both photography and music, particularly jazz. I have been clearing out my inbox and came across an hilarious email trail between some of the UK’s top mediators. The topic – songs for mediators, parties and mediation! I thought I would share … Thank to [...]
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