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People on the Move: Giraffe Event Solutions; Forbes Solicitors; Cowgills; Far East Consortium; LateRooms.com - The Business Desk

Google International ADR News - Mon, 2018-10-29 00:13

The Business Desk

People on the Move: Giraffe Event Solutions; Forbes Solicitors; Cowgills; Far East Consortium; LateRooms.com
The Business Desk
Manchester-based Giraffe Event Solutions has appointed a new managing director as part of an aggressive growth strategy. Andrew Wright has taken the helm and wasted no time, having already relocated the business to a newly-refurbished 4,000 sq ft ...

Heartbroken in Pittsburgh

ADR Prof Blog - Sun, 2018-10-28 19:48
I thought that teaching the Kavanaugh hearings in a careful and respectful manner a few weeks ago would be the biggest teaching challenge of the semester.  I was wrong.  This weekend, as you have all no doubt heard, a gunman with a history of anti-Semitic rants and far too many legally acquired guns in his possession, … Continue reading Heartbroken in Pittsburgh →

Tailwind for Arbitration in Uruguay: the Model Law Finally Reaches Safe Harbor

Kluwer Arbitration Blog - Sat, 2018-10-27 16:16

Noiana Marigo, María Julia Milesi, Santiago Gatica and María Paz Lestido

Uruguay’s long journey to approve an international commercial arbitration law has finally come to an end. Act Nº 19.636 (the “Arbitration Act”) was passed at the beginning of July, almost fourteen years after the Executive first sent a draft bill to Congress to regulate arbitration. The Arbitration Act largely incorporates the 1985 UNCITRAL Model Law on International Commercial Arbitration and some of its 2006 amendments (the “Model Law”). The objective of the Arbitration Act is to align Uruguay with accepted international legislative standards, although certain provisions are tailored to adjust them to the country’s procedural regulations, long-standing judicial practices and private international law principles.

Arbitration in Uruguay before the Arbitration Act

Uruguay’s legislative recognition of the institution of arbitration dates back to the second half of the nineteenth century. The Commercial and Civil Codes of 1865 and 1868 respectively included provisions making arbitration mandatory for certain disputes (such as those arising out of commercial lease agreements or between partners in any business entity). Although these provisions requiring mandatory arbitration were repealed in 1975, the country kept its longstanding tradition of recognizing arbitration as a valid dispute resolution mechanism in its general procedural legislation. For example, Uruguay’s first procedural code of 1878 included several provisions on, inter alia, the enforceability of arbitration clauses, the appointment of arbitrators, and the conduct of proceedings, which provided the foundation for domestic arbitration in the country. Subsequently, the 1988 procedural code (the General Procedure Code or “GPC”) included a specific chapter on arbitration.

Uruguay has also adopted, since 1977, numerous bilateral and multilateral treaties, including the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958,  the Panama Inter-American Convention on International Commercial Arbitration of 1975 and the Montevideo Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards of 1979.

More recently, amendments to the GPC in 2013 brought a number of improvements to the field of commercial arbitration, including the express recognition, for the first time, of the kompetenz-kompetenz principle (art. 475.2), regulation on preliminary measures granted by a court before arbitration is commenced (art. 488) and the inclusion of some additional grounds for the annulment of an award (art. 499).

However, under the GPC, which is still applicable to domestic arbitration in Uruguay, an arbitration clause is not sufficient to submit a dispute to arbitration, and a submission agreement (or compromis) is required once a dispute has arisen. If one of the parties refuses to execute a submission agreement, the other party can request specific performance to a judicial court. This pitfall, coupled with the fact that it is relatively inexpensive to submit a dispute to Uruguayan courts, has traditionally undermined the appeal of arbitration as a dispute resolution mechanism for Uruguayan parties.

Other aspects of the GPC’s provisions on arbitration are also troublesome. For example, arbitrators must ensure that the parties had a chance to conciliate the dispute before commencing the arbitration proceeding (art. 490). Failure to do so could cause subsequent proceedings to be void. Moreover, by default arbitration proceedings will be decided ex aequo et bono unless the parties expressly state in the submission agreement that the dispute will be decided by the application of the law (art. 477).

International Commercial Arbitration under the new Arbitration Act

The recently enacted Arbitration Act has come to solve most of these difficulties for international commercial arbitration.

The Arbitration Act’s scope is limited to international arbitration. According to its provisions, an arbitration is international only if: (i) the parties to the arbitration agreement have their places of business in different countries when such agreement was executed (art. 1.3.a); and (ii) the place of the performance of a substantial part of the commercial obligations, or the place with the closest relation to the subject matter of the dispute, are located outside the country where the parties have their places of business (art. 1.3.b). Hence, the Arbitration Act deviates from the Model Law in the sense that “[t]he sole will of the parties cannot determine the internationality of the arbitration” (art. 1.4). This limitation is rooted in Uruguay’s restrictive approach to party autonomy under its private international law rules, embodied in art. 2403 of the Appendix to the Civil Code which states that the “[t]he rules of legislative and judicial competence […] cannot be modified by the parties’ will. They can only act within the margin conferred by the competent law”. The Arbitration Act continues to reflect the conservative predisposition of the Uruguayan legislator in relation to party autonomy.

A second aspect regulated by the Arbitration Act is what constitutes an “arbitration agreement”. The Act adopted the definition included in art. 7 of the 1985 version of the Model Law, with the purported intention of being consistent with the NY Convention.

Third, the Arbitration Act also recognizes that the tribunal shall decide the merits of the dispute in accordance with the rules of law chosen by the parties (art. 28.1). This provision ratifies the criteria already adopted by scholars and case law, rejecting the application of art. 2403 of the Appendix to the Civil Code to international arbitration (which prevents parties from choosing the applicable law to a contract when the conflict of law rules point to Uruguayan law). However, the Arbitration Act establishes that in the absence of such an agreement, the tribunal will choose the applicable law based on the criteria it deems more convenient (art. 28.2). In contrast, under the Model Law, the tribunal should apply the law determined by the applicable conflict of law rules.

Fourth, the Arbitration Act adopted art. 17 of the original 1985 Model Law on interim measures, incorporating some of the 2006 amendments and additional provisions to harmonize it with the GPC. The Arbitration Act recognizes the binding character of interim measures adopted by an arbitral tribunal (art. 17.2) and incorporates the definitions provided in art. 17.2 of the 2006 version of the UNCITRAL Model Law (art. 17.3). The Arbitration Act requires that notice to the non-requesting party be given before the measure is granted, unless the tribunal determines otherwise due to the harm that would be caused by the delay (art.17.5). Interim measures granted before an arbitration begins will expire in 30 days unless the proceedings are initiated (art. 17.8).

Finally, the Arbitration Act departs from the provisions of the Model Law in several other aspects:

  1. Where a State or a public entity appoints a public official as an arbitrator in a proceeding to which it is a party, this shall not necessarily provide grounds for challenge (12.3).
  2. A specific definition and chapter on costs is included, inspired by the UNCITRAL Arbitration Rules, which shall be applicable in the absence of the parties’ agreement (arts. d and 34-38).
  3. In order to guarantee the celerity and efficiency of the procedure, the Arbitration Act provides that certain arbitration-related issues submitted to judicial courts must be decided within a 60-day period: (i) judicial review of arbitrator challenges rejected by the arbitral tribunal, when requested by the challenging party within 30 days as from the rejection ( 13.3); (ii) judicial review of the de iure or de facto inability of an arbitrator to perform his or her functions (art. 14.1); and (iii) judicial review of the arbitral tribunal’s decision upholding its jurisdiction as a preliminary question, when requested by any of the parties within 30 days as from the decision (art. 16.3).

The Uruguayan judiciary’s approach to arbitration

Uruguayan courts have traditionally shown themselves to be favorable to arbitration. Case law had resolved certain issues that were not addressed in the previous legislative framework governing arbitration in the country. For example, case law had recognized the doctrine of separability, and that parties could choose the applicable law to a contract when international arbitration was agreed. This pro-arbitration stance was also reflected in annulment proceedings, and proceedings on the recognition and enforcement of foreign arbitral awards.

The pro-arbitration approach of the courts combined with the Arbitration Act will likely position Uruguay well to compete with other jurisdictions as a reliable seat of arbitration in the region.  As a first step to making this a reality, the Government has signed an agreement with the Permanent Court of Arbitration establishing Uruguay as a seat country. Furthermore, Uruguay’s leading arbitral institution, the Conciliation and Arbitration Centre of the Chamber of Commerce of Uruguay (International Court for MERCOSUR)—which has so far been used mainly for domestic disputes—may also capitalize on the opportunity to administer more international arbitration proceedings.

Conclusion

The Arbitration Act has at last filled a significant lacuna in the legal framework governing international arbitration in Uruguay and will hopefully position the country as a reliable seat, promoting arbitration as an effective mechanism to resolve international controversies. The application of the Arbitration Act will also hopefully pave the way for future changes to the current domestic arbitration framework.

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Arbitral Precedent: Still Exploring the Path

Kluwer Arbitration Blog - Sat, 2018-10-27 16:05

Paula Costa e Silva, Beatriz de Macedo Vitorino and Filipa Lira de Almeida

Is there such a thing as an arbitral precedent? Is it binding to judicial courts? The answer to these questions will depend on the clarification of another set of broader issues relating to the existence of precedents themselves and their inevitable role in shaping today’s possible conceptions of the law. We will analyse these matters and attempt an answer to the initially posed questions.

We have already spoken of this theme in our paper Arbitral Precedent: Once and Again. However, while we previously analysed this matter in an international point of view, now we wish to focus on the arbitral precedent in the context of a national legal framework. We will explain why we believe that arbitral awards may furnish innovative norms, susceptible of being applied by decision-makers in future cases, given that a rational decision-making process is what it takes to arrive to the best decision according to the legal order applied: we believe that formal or institutional criteria which limit and define the precedential value of arbitral and judicial decisions are fictitious, although presenting a practical utility related to judicial uniformization.

For starters, a precedent may be defined, as does Duxbury, “a past event – in law the event is nearly always a decision – which serves as a guide for present action”. Guilherme Rizzo Amaral starts off his study about the possibility of arbitrators being bound by judicial precedents with this quotation followed up by the phrase: “In that sense, one can even maintain the existence of non-judicial precedents”, going on further by stating that “the existence of arbitral precedents could be contended to be somewhere between judicial and non-judicial precedents”.1) Guilherme Rizzo Amaral, Judicial Precedent and Arbitration: Are Arbitrators Bound by Judicial Precedent? 2nd ed, Wildy, Simmonds and Hill Publishing. jQuery("#footnote_plugin_tooltip_9021_1").tooltip({ tip: "#footnote_plugin_tooltip_text_9021_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

The precedent differs from the decision from which it originates. It is the ratio decidendi that may provide elements prone to establish such relevant connections with posterior cases that they present themselves as precedent. There are binding and persuasive precedents and while the former are as such recognized by all courts pertaining to a national legal order – even if only few of them are actually bound by said precedents (might it be because the law says so or because courts themselves take the responsibility of following certain courts’ decisions’ ratio decidendi) – the latter are extracted from whichever decision a decision-maker finds adequate to solve (or help solve) the case in hands: we may, at this point, already conclude that every decision that applies the law of a certain country may be considered a precedent and that it is considered as such whenever another decision-maker applying said law finds so to be adequate. This means the ratio decidendi of a first instance judicial court decision, appellate court decision, as well as arbitral decision may be a precedent, taken into account by a decision-maker in the deciding process. It is, of course, natural for a judicial court judge to decide the same way an arbitrator previously did, whenever the relevant facts (as considered as so by the judge) are analog to those that the arbitrator considered in order to decide a certain way, so far as the judge thinks the conclusion to which the arbitrator arrived is the correct one – if they think so, the judge must be able to explain the thought process leading up to such conclusion, justifying the decision taken.

This said, we understand arbitral decisions may form precedent because arbitrators too apply the law of the country (except when equity is the criterium chosen by the parties for the formation of the decision, which is not a particularity of the arbitral process, since certain judicial court decisions, depending on each country’s rules, are also based on equity and these ones also do not form precedent). W. Mark C. Weidemeier explains it is clear arbitrators cite other arbitrators’ decisions. This is particularly true when it comes to institutionalized arbitration, such as sports arbitration, where the lack of a set of principles or rules applicable means one of the tasks of the arbitrator is to develop the substantive system, which implies that each arbitrator is aware of creating a new rule (which will guide future arbitrators).

Yet, we admit they might not only form precedents for other arbitrators but also for judicial court judges. Arbitration is often seen, as W. Mark C. Weidemeier states, “as an ad hoc forum in which arbitrators do justice (at best) within the confines of particular cases”, but we do not see in this a differentiated characteristic of arbitration, since the judicial court judge also decides the particular case he is faced with: that is what doing justice means. If the arbitrator is set on the goal of doing justice by applying the national Law, then he or she cannot be oblivious to previous decisions, whether rendered by arbitral or judicial courts.

In fact, this discussion only makes sense when dealing with Civil Law, since it is clear the arbitrator in Common Law orders could never only rely on written laws. And it is when considering Civil Law systems that it is most pertinent (yet paradoxical) to assert that arbitration does not mean a positivistic view of the Law: it is not a field in which decision-makers are only to consider written laws. This observation may seem bizarre, since it contradicts the most common and intuitive thoughts about arbitration, often pictured as a more open and resourceful environment to solve a conflict; yet, when seen as an instance where the arbitrator is to read a law and interpret it without resorting to other interpretations, the result is precisely a positivistic approach. We mean to distance ourselves from it.

Both arbitrators and judges pertain to the Law, since they are the highest expression of its interpretation and application, and, therefore, creation of such Law – as Jhering declares, what only exists in the parliamentary statutes and in paper is nothing but a phantom of Law.

All we have said can lead us to a disturbing conclusion: if arbitral decisions were not to be considered by judicial courts, the State would be failing at one of its most crucial duties – delivering justice through its courts, for they would be reporting to incomplete, stale laws (for their application is also their formation), thus creating a parallel legal context in which former solutions are to be ignored, while the reasoning of solutions found without using all possible tools would be legally binding.

In other words, and consequently, we do not think that the contractual nature of arbitral courts should imply that they be excluded from the idea of jurisdictional system, which consistency depends – even more so if we consider the Common Law family – on the concept of preceding rulings being, at some extent, taken into account by decision-makers.

The definition of precedent has already made us arrive to these conclusions, which will be the starting point to the second part of this paper where we will ponder the weight of the traditional distinction made between binding and persuasive precedents and its usefulness, in an attempt to understand which nature an arbitral precedent (which we have just now clarified as existent) may have. As for now, we will take a short look into how precedents are framed by the legal families of Civil and Common Law.

According to the traditional fons iuris theories, only judicial courts decisions could form binding precedents. In the Common Law tradition, the stare decisis principle implies that previous decisions, rendered by the same or by an hierarchically higher court – therefore, either operating horizontally or vertically – should define not only a pattern to subsequent ones, but peremptory criteria for case resolution. Civil Law orders face the same challenges regarding predictability, equality and, ultimately, the deliverance of Justice in the form of just decisions. However, and although past judgments (more precisely, their reasoning) are presented as relevant arguments both by the parties and the judge, they are challengeable and can almost always be diverted from, for they are not equivalent to parliamentary legal dispositions, save for rare exceptions. Nonetheless a remark is to be made: in both families, the formation of precedents – both binding and persuasive – is taken as a consequence of the hierarchic position of the court that renders the decisions, often sustained by assumptions. They regard the quality of the decision-maker (thus implying another set of assumptions), the jurisdiction of the court or even its composition; more profoundly, and considering that, if binding, court decisions are equivalent to written law – which making power belongs to the State – arbitral decisions are not usually accepted as able to form precedent.

We are left – and leave the reader – with this question: according to the aims of the judgment and its generally accepted conditions of validity, does it make sense to justify the binding force of only some precedents based on a classic fons iuris theory when it only concerns institutional legitimacy? This question is one we will attempt to answer from the premise we started this one off with: every decision that applies the Law of a certain country may be considered a precedent and it is considered as such whenever another decision-maker applying said Law finds so to be adequate (which is a decision he or she will have to justify, as well as the decision to dismiss a previous decision’s ratio decidendi when it concerns a similar case).

In the introductory part to this blog post, we took a stance on what a precedent is – a past decision which serves as a guide for present action – and considered that arbitral awards may create self-standing rules with precedential value for both arbitrators and judges deciding a case. We concluded this by considering that the contractual nature of the arbitration agreement does not exclude arbitral decisions from the jurisdictional system and the Law of the country, when the arbitrator is bound to decide by applying such Law: in such case, arbitrators both interpret, apply and create Law. What this means is that state court judges must also consider arbitral decisions when deciding a case. However, we do not think these conclusions can sustain themselves solely based on the definition of precedent and on the nature of arbitration. We must now better understand what deciding is, what a valid and legitimate decision is, what differs persuasive from binding precedents and why States only consider binding the preceding decisions coming from high courts.

If regarded as previously developed schemes for the resolution of an ensuing conflict, it is easily understandable that the binding content of precedents does not lie on the operative part of the judgment, for the final decision cannot be separated from the situation that requires it.

Those schemes – the ratio decidendi – result from the intellectual effort of selecting from the reality, as presented to Court, what might be relevant for the final goal of delivering a judgment. That process is not crucial only for the purpose of reasoning the final decision. It is also the exercise that enables the construction of a pattern: identifying the general contours and the specifying elements of any given situation.

The selection process itself involves a certain understanding of the facts and knowledge of the applicable legal dispositions. From the choosing of elements and their – at least simultaneous – logical concatenation, a chain of deductions can be made, ideally syllogistically culminating in one sole conclusion, but often leading to a plurality of potential valid options, from which one is to be chosen by the decision-maker.

“Valid” is not a naively chosen word. The processes we are discussing are eminently rational and it is in this rationality that the crucial condition of legitimacy for the rendition of a judgment is. It may be argued that a court’s legitimacy derives from its powers being assigned by the State (even if an arbitrator may be perceived as to having less of a public legitimacy) – this would be the positivistic approach to the much wider question of knowing what makes everything binding and an understanding of the word “jurisdiction” that we cannot follow.Even if we were to accept this statement, it would be now helpful to recall what we have previously written: it is not the operative part of the judgment that must be applicable to subsequent situations. It is not the previous court’s given order that must be followed, thus the cornerstone of the precedent doctrine cannot be the mere power to order.

Even though it may be true that only certain entities may, by law, validly pronounce judgments, it is not true that the conditions for that political kind of validity apply to the legal and philosophical validity of a judgment. Coherence between premises and conclusion does not depend on any kind of hierarchy or institutional criteria, but on the prevalence of reason over randomness and, consequently, unpredictability, which is the enemy to be fought against by any legal thinker.

Trying to explain the existence and functioning of precedents using the topoi from which we discuss institutional legitimacy is an incomplete manner of analysing such matter and tends to deny the possibility of formation of binding arbitral precedents. In one word: the only acceptable justification for the very existence of binding legal precedents also implies accepting arbitral precedents, if the process to achieve the final judgment is submitted to the same rationalizing elements. What we mean to say is that, while a decision is only legitimate when formed by a rational process which can be communicated, and rendered by a competent entity, there is no competent entity to say whether the ratio decidendi of a decision may form a binding precedent, since it is the necessity of a rational decision able to put to terms the conflict taking place that may oblige the decision-maker to follow a previous set of decisions.

The idea we want to make clear is that the source of validity of every precedent rests in its ratio decidendi, which can only be achieved by the rationalizing process of sorting and applicating facts and legal criteria, a process which must be linguistically expressed and comprehensible: as Castanheira Neves explains, the relevant rationality is not the one that simply aims to achieve a necessary inference or demonstration or a true and universal knowledge or explanation, but a finalistic, practical and relational rationality that aims to solve definitively the conflict in a way that is understandable by the parties and third persons.2) Castanheira Neves, “Entre o ‘legislador’, a ‘sociedade’ e o ‘juiz’ ou entre‘sistema’, ‘função e problema’ – os modelos atualmente alternativos de realização jurisdicional do direito”, Boletim da Faculdade de Direito de Coimbra, v. LXXXIV. jQuery("#footnote_plugin_tooltip_9021_2").tooltip({ tip: "#footnote_plugin_tooltip_text_9021_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

This is what we meant by writing that the goal of achieving one decision is merely ideal – it is not incompatible with the potential validity of several judgments. The correspondence between a logical conclusion and a court decision is its most fundamental condition of validity. However, it is not because the conclusion derives logically from the premises – as taken to court by the parties – that the judgment is binding, for that would imply an ontological leap: this is where institutional legitimacy plays its most relevant role. It transforms the judiciary syllogism into an order. Indeed, the correctness of an intellectual construction that supports a final illation does not instantly correspond to the reasons of judgment or to the judgment itself. These are different realities, interlocked by institutional powers, assigned to courts by Law. The gap between logic and a declaration that alters a parties’ juridical situation and consubstantiates an enforceable order is both linguistical and logic itself; yet, the chasm is filled by the implicit transformative power that comes along with the power to render a judgment. We are not contradicting our previous statements, for there are two different kinds of legitimacy at presence – the legitimacy derived from a justified and therefore comprehensible reasoning process of deciding (jurisdictional legitimacy, which allows the validity of the decision) and the institutional legitimacy.

There is, in the end, only one optimal decision: the one reasoned (which means it must be driven by practical motives: obtaining the definitive composition of the conflict and the harmonization of the system and all its rules) and institutionally legitimate.

This obliges us to conclude that, institutional legitimacy checked, binding judicial precedents cannot be accepted without also accepting the formation of arbitral precedents and their binding effects. Why? Because the condition of validity for both judgments lies on the same justification: both judge and arbitrator must reach a reasoned decision to stabilize the legal situation of the parties at conflict.

This is why we understand that, in a legal system in which the law aims to reach a definitive solution to a conflict that is not incompatible with any other decisions and legal rules, the difference between binding and merely persuasive precedents ought to not exist, even though it exists in the praxis of both Civil and Common Law. We sustain that, if the mainstay of the precedent doctrine is, as we argued, the validity of the judgment, all decision-makers must try to achieve that rational decision and therefore make use of every source of Law, both formal and informal. Only institutional and political-legislative structures may make use of hierarchic and judicial vs. arbitration differential criteria, for validity criteria are common and equivalent whether they concern arbitral or state court judgments.

This said and if our premises stand, there is no alternative but to perceive both Civil and Common Law as a rational and, therefore, systematic core of legal rules. The word “systematic” might raise some eyebrows, considering that one of the main distinctions made between Civil and Common Law is the systematic nature of Civil Law – however, the path we rationally traced in this paper forces us to conclude that, in Common Law, it is precedents and not legal codes that reveal its systematic nature, preventing contradictory rulings and guaranteeing predictability and equality before the Law.

Traditional – but still taking effect nowadays – constructions only confer binding effects to precedents derived from decisions rendered by higher courts, basing such option on assumptions of various kinds. These constructions stem from the realization of the inexistence of Dworkin’s Judge Hercules and, therefore, the practical impossibility of having a system able of discovering the absolute best (past) decision. The deliverance of Justice is as limited as we are, for the systems chosen are designed by men who have limited amounts of knowledge, experience and time. Yet, we still need to decide; what is most, we need to decide in the best, longest-lasting way possible. Therefore, these constructions are based on assumptions, on the penalty of facing the impossibility to decide in reasonable time. Binding precedents coming only from higher courts are meant to save the judge from the burden of looking into every past decision and deciding which is best, and are meant also to help enforce judicial certainty and predictability. These assumptions aim to help more the system’s continuity than the specified decision taken, for they might not be verified in a certain case. As we understand it, there is no relation of causality between one instance (legal or jurisdictional) saying which precedents (judicial or arbitral) are or are not binding and their actually binding effects, for it is the process of decision making itself that forces a judge to investigate past decisions and juridical opinions to better interpret laws and apply rules and principles. It is the goal – rectius, the judge’s duty – of reaching the optimal decision for the case in hands that might lead him or her to decide according to a past decision.

References   [ + ]

1. ↑ Guilherme Rizzo Amaral, Judicial Precedent and Arbitration: Are Arbitrators Bound by Judicial Precedent? 2nd ed, Wildy, Simmonds and Hill Publishing. 2. ↑ Castanheira Neves, “Entre o ‘legislador’, a ‘sociedade’ e o ‘juiz’ ou entre‘sistema’, ‘função e problema’ – os modelos atualmente alternativos de realização jurisdicional do direito”, Boletim da Faculdade de Direito de Coimbra, v. LXXXIV. 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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Chartered Institute of Arbitrators charges new members on professional ethics - Vanguard

Google International ADR News - Sat, 2018-10-27 06:58

Chartered Institute of Arbitrators charges new members on professional ethics
Vanguard
She said that more awareness was still needed for the profession to attract more people, and called on Nigerians to encourage Alternative Dispute Resolution (ADR) for the promotion of arbitration profession. Mr James Bridgeman, CIArb President, UK ...

Deep Sea Mining, Arbitration and Environmental Rules: What Role for Standards?

Kluwer Arbitration Blog - Sat, 2018-10-27 03:18

Marc-Antoine Carreira da Cruz

Deep sea mining regulation is an extremely young field of international law. Recently, there have been some important evolutions in the debate around the contractual and environmental rules that will organize the exploitation of mineral resources in the areas of the seabed beyond the continental shelf – hereafter referred to as “the Area”. Nevertheless, few people know that arbitration can be the stage for the settlement of some specific disputes in this field, with important impacts on the interpretation of environmental duties for the contractors.

The International Seabed Authority (ISA) is in charge of regulating and administrating deep sea economic exploitation according to articles 151 and 153 of the United Nations Convention on the Law of the Sea (UNCLOS).

The dispute settlement around deep sea mining is organized under a complex scheme, with various options and exceptions. Basically, article 187 of the UNCLOS confers a wide jurisdiction upon the Seabed Disputes Chamber of the International Tribunal for the Law of the Sea over disputes arising from activities in the Area. But there are exceptions under articles 188 and 189 of the Convention. Amongst these exceptions, one opens the door to commercial arbitration. Indeed, article 188 (2) (a) of the Convention states that disputes between parties to a contract concerning the interpretation or application of a contract or work plan under article 187(c) (i) shall be submitted, at the request of any party to the dispute, to binding commercial arbitration unless the parties otherwise agree, and unless it concerns the interpretation of UNCLOS.

On the arbitration procedure – and by extension the applicable law and rules – the UNCLOS gives a short indication in its article 188 (2) (c): In the absence of a provision in the contract on the arbitration procedure to be applied in the dispute, the arbitration shall be conducted in accordance with the UNCITRAL Arbitration Rules or such other arbitration rules as may be prescribed in the rules, regulations and procedures of the ISA, unless the parties to the dispute otherwise agree.

For years, this provision has led to an unknown scenario mainly because the ISA is still working on the main legal framework for deep sea mining, the Exploitation Regulations, the standard contract clauses and its annexes. Therefore, there could have been some uncertainty around some important points, notably the way environmental duties would have been defined in ISA regulations, contracts, and work plans and how they can be interpreted in cases of commercial arbitration.

There have been debates on this issue with stakeholders since the decision and first regulation by the ISA in 2011 and 2012 on the Environmental Management Plan for the Clarion Clipperton Zone, notably with the workshop in collaboration with the ISA dedicated to Environmental Assessment and Management for Exploitation in the Minerals in the Area, in May 2016.

Eventually, in April 2018, the ISA Legal and Technical Commission issued the revised draft regulations on the exploitation of mineral resources in the Area for consideration and adoption. What does it tell us?

Firstly, draft regulation 104 reaffirms the regime of dispute settlement set by the UNCLOS and thereby reaffirms the regime of arbitration set by article 187(c) (i) of the Convention.

Secondly, when looking at the Annex X of the document, section 3.2 the standard clauses for exploitation contract specify that the contractor shall implement the work plan in particular which includes the environmental and monitoring plan. At the same time, the document includes schedules that are integrated to the contract and Schedule 1 is dedicated to the use of terms and scope of the contract. This schedule includes several key terms related to environmental duties such as “best environmental practices”, “environmental effect”, “serious harm”, “mitigation”. But, interestingly, it is mentioned that the content and the terms defined are indicative at this stage and that definitions will evolve as regulations content evolves and a common approach towards terms based on internationally accepted definitions is established.

This leads to a rather open situation in the case of arbitration. And in this context, what seems interesting is to think about the way some tools could be used to make the debate around the interpretation of terms regarding environmental duties easier. In this view, there is one interesting option in the toolbox of international law instruments: standards.

Standards – or more precisely ISO technical and management standards, are a key soft law instrument with powerful legal implications as deeply analyzed by various works, notably in various contributions by the Perelman Center for Legal Philosophy. They can have significant advantages as applicable rules or tools for interpretation in international commercial law and in arbitration especially when it comes to complex technical matters.

Has the ISA considered this option during the drafting process and consultation of stakeholders? There is no answer on the specific issue of arbitration and interpretation. Nevertheless, the ISA and its stakeholders are aware of the subtle but crucial importance of standards to consolidate and make the environmental rules of deep sea mining operational in the contract and work plan framework.

Indeed, standards were already scrutinized in the Discussion Paper of January 2017 published by the ISA on the development and drafting of Regulations on Exploitation for Mineral Resources in the Area (Environmental Matters). The way standards such as ISO: 14001 (environment management) and ISO 31000 (risk management) could be appropriate was mentioned, even if it was not in a discussion on rules of interpretation in the arbitration procedure. This tentative working draft contained a commentary inside section 3, stating that the regulation sets the benchmark for an Environmental Management System equivalent to the principles of ISO 14001:2015. In this proposed option, the provision 3 of the Draft regulation 28 stated that where an applicant possesses or proposes to implement an Environmental Management System which is not equivalent to the principles of ISO 14001:2015, the Authority would have the option – without obligation – to consider the alternative Environmental Management System. This would imply a de facto kind of conformity presumption.

Actually, this has been already pushed for and brought up in contractual obligations by the ISA in its Environmental Management Plan for the Clarion Clipperton Zone of 2011 that stated in the management objectives (contract areas- B.41) that the management objectives for the contract include that the contractors will apply the principles of ISO 1400133 to the development of their site-specific environmental management plans.

But what about the revised draft regulations of April 2018? It does not actually contain the same explicit mention. Nevertheless, there are some important indications on the consideration of standards related to the environment, with interesting consequences on interpretation in arbitration cases. Regulation 1 – on the use of terms and scope, indicates that the regulations shall be supplemented by standards in particular on the protection and preservation of the Marine Environment. At the same time, Annex X related to Standard Clauses for exploitation contract specifies in provision 3.2 that the Contractor shall in particular implement the work plan which integrates the Environmental Management and Monitoring Plan, in accordance with Good Industry Practice. One can remark on several interesting points here.

Firstly, the definition of “good industry practice” in Schedule 1 notably says that the requirements under applicable standards adopted by the ISA are one implementation of the skills and diligence reasonably expected to be applied as good industry practice. As the ISA may adopt ISO standards in its guidelines, it will shape this definition in the light of standards on risk assessment, environmental management, environmental assessment and deep sea mining industrial processes.

Secondly, the Environmental Management and Monitoring Plan, ruled by Annex VII, also introduce standards in the process, as it must include a description of relevant environmental performance standards, indicators and details of the quality control and management standards.

Thirdly, the Environmental Management and Monitoring Plan must be read in parallel with Part IV of the Regulations related to the Protection and Preservation of the Marine Environment which have also opened the door to the standards – directly and indirectly. Directly, with some provisions such as Regulation 47 which states that the Contractor shall take necessary measures to prevent, reduce and control pollution and other hazards to the Marine Environment as far as reasonably practicable, and in accordance with the applicable standards. And indirectly, with Regulation 46 stating that contractors shall integrate Best Available Scientific Evidence in environmental decision-making, including all risk assessments and management undertaken in connection with the management measures taken under or in accordance with Good Industry Practice.

Thus, all in all, the situation is the following: one must be careful and wait for the results around the draft regulations of ISA, notably the draft of Schedule 1 on the terms of the standard clauses for exploitation contracts. But it can observed that the door is potentially open to the use of standards in helping to interpret environmental terms and obligations if an arbitration takes place under the specific case set by art. 188 (2) (a) of the UNCLOS.

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Golden Chance for Students 10000+to take CLAT Scholarship Test - The Siasat Daily

Google International ADR News - Sat, 2018-10-27 00:28

The Siasat Daily

Golden Chance for Students 10000+to take CLAT Scholarship Test
The Siasat Daily
Jobs & Entrepreneurship opportunities in marketplace – Activists in NGOs | Administration Law | Advocate | Advocate General | Alternative Dispute Resolution | Attorney General | Author | Civil Lawyer | Company Secretary | Constitutional Lawyer ...

and more »

Italian study-abroad program opens world of opportunities for ASU Law students - Arizona State University

Google International ADR News - Fri, 2018-10-26 14:40

Italian study-abroad program opens world of opportunities for ASU Law students
Arizona State University
Hawthorne is seeking a career in international alternative dispute resolution, so the global and European focus of the curriculum appealed to her. “That was exciting to me to get credits that are fully recognized here, but being able to see things from ...

EWC: The FW de Klerk Foundation's submission - Politicsweb

Google International ADR News - Fri, 2018-10-26 13:44

EWC: The FW de Klerk Foundation's submission
Politicsweb
The amendment to allow this should not cause national and international investors to decide not to invest further in the economy because the assets that they have invested in may be taken away from them without compensation. In its implementation, the ...

and more »

Adedoyin Rhodes-Vivour: Judiciary support is essential to efficacy of arbitration - TODAY.NG

Google International ADR News - Fri, 2018-10-26 07:56

TODAY.NG

Adedoyin Rhodes-Vivour: Judiciary support is essential to efficacy of arbitration
TODAY.NG
According to her, the international standard of arbitration also requires the support of the judiciary, and prohibits judicial interference, which is specifically provided for in the relevant statute. “Nigerian courts largely support arbitration by ...

CJEU Opinion re CETA – Opinion AG Bot

Kluwer Arbitration Blog - Fri, 2018-10-26 07:11

Guillaume Croisant

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Wake Up Call: Lowenstein Starts Trade Practice With Team Poached From Baker Donelson - Bloomberg Big Law Business

Google International ADR News - Fri, 2018-10-26 05:36

Bloomberg Big Law Business

Wake Up Call: Lowenstein Starts Trade Practice With Team Poached From Baker Donelson
Bloomberg Big Law Business
JAMS, the alternative dispute resolution services provider, said it created a Sino-American panel in conjunction with the Shenzhen Court of International Arbitration. The panel, which includes neutrals from the U.S., China, Europe, and Hong Kong ...

Candide-Johnson: Ineffective justice system hampering graft war - New Telegraph Newspaper

Google International ADR News - Fri, 2018-10-26 05:16

New Telegraph Newspaper

Candide-Johnson: Ineffective justice system hampering graft war
New Telegraph Newspaper
LCA is a private-sector-driven, alternative dispute resolution (ADR) institution which is poised to become the preferred natural, neutral arbitral and ADR institution on the African continent. It was established to institutionalize ADR in Lagos and ...

Law firm sees global opportunity for Ireland as EU litigation hub - Irish Examiner

Google International ADR News - Fri, 2018-10-26 02:20

Irish Examiner

Law firm sees global opportunity for Ireland as EU litigation hub
Irish Examiner
Also of big interest for those in the legal profession is the Dublin International Arbitration Day in the Aviva Stadium on Friday, November 16. The 20 or so speakers will include High Court judge David Barniville and Colm McInerney of US law firm ...

How Can Practitioners Help Clients Assess Their Interests and Risks in Litigation?

ADR Prof Blog - Thu, 2018-10-25 16:01
I recently visited our DR friends and colleagues at Quinnipiac, courtesy of an invitation from Charlie Pillsbury, the co-director of their Center on Dispute Resolution.  He invited me to give a talk as part of the Quinnipiac-Yale Dispute Resolution Workshop. Using the patented Stone Soup process of systematically eliciting input from audiences, I tested some … Continue reading How Can Practitioners Help Clients Assess Their Interests and Risks in Litigation? →

Gender and negotiation – more of the same

ADR Prof Blog - Thu, 2018-10-25 12:05
In a recent Harvard Business Review article, Leigh Thompson (Northwestern) reports on her research around getting women to negotiate “more like men” (that is, competitive and unethical) and men to negotiate “more like women” (that is, empathetic and honest). The article is here. Nothing new here in terms of substantive advice, as Professor Thompson concludes … Continue reading Gender and negotiation – more of the same →

Do Party Appointments Encourage Compliance With Awards?

Kluwer Arbitration Blog - Thu, 2018-10-25 02:58

Paul Baker

YIAG

Party-appointed arbitrators have recently been the subject of much debate in the arbitration community. There are those who see the ability to ‘choose’ an arbitrator as one of the fundamental pillars of arbitration. For others, it is a time- and cost-consuming exercise leading to potential conflicts and an increased likelihood of arbitrator challenges, both of which undermine the arbitral process and its reputation.

One arbitration textbook (which shall remain nameless) contains the comment that the parties’ ability to participate in the appointment of the tribunal makes the parties more likely to comply with the resulting award. At first glance this would appear to make some sense. Where the competence of the tribunal is known and respected then a ‘correct’ result is anticipated and there should be no reason to challenge or appeal the award or resist enforcement (save in exceptional circumstances). In this vein, even a losing result should be perceived as fairly reached and, as such, complied with.

In this paper we consider whether it is really the case that parties’ ability to nominate an arbitrator impacts their attitude to enforcement.

Appointing the tribunal

In the 2018 Queen Mary International Arbitration Survey: The Evolution of International Arbitration, 39% of survey participants placed the ability of parties to select their own arbitrator as one of the three most valuable characteristics of arbitration. This is consistent with anecdotal evidence both from parties and advisors that it is ideal, but not imperative, to have nominated or appointed a member of the tribunal. Such engagement with the make-up of the tribunal should naturally encourage confidence that the tribunal possesses the skills that party desires to determine the dispute in hand.

For this reason, many arbitration agreements set out the tribunal appointment mechanism. Commonly this will be the joint appointment of a sole arbitrator or a panel of three with each party nominating one arbitrator and the co-arbitrators nominating a Chair.

Other arbitration agreements make no provision for appointment and instead default to the relevant arbitral rules or legislation. Others will, perhaps deliberately, leave the appointment structure to those relevant rules and institutions or courts.

Under the LCIA Rules (whereby parties nominate rather than appoint arbitrators) if the parties have not agreed the mechanism by which the tribunal will be appointed, the default position, absent any agreement of the parties for the mechanism for appointment, is that the LCIA appoints all members of the tribunal. In practice, the LCIA leave it open to the parties to agree on party-nominations and a variety of methods can be used (names provided by LCIA, ranking/striking out from a list of names etc.) Often, though not always, the appointment of a three-member tribunal will be resolved by one party nomination per side and a joint Chair nomination by the two tribunal members or appointment of the Chair by the LCIA.

Under the ICC Rules, where the parties have provided for a sole arbitrator but no mechanism for appointment, they may agree a joint nomination or the sole arbitrator will be appointed by the ICC Court. Where the parties have provided for three arbitrators but no mechanism for appointment, each party shall nominate one arbitrator failing which the appointment will be made by the ICC Court.

It is therefore clear from these institutional rules that party autonomy in choosing the tribunal is encouraged by the institutions.

There is, however, usually a degree of compromise in any tribunal. In the case of a sole arbitrator, while a party may have the opportunity to agree a jointly appointed arbitrator, it is standard for that appointment to be one of compromise rather than either party’s first choice. Where a party appoints its arbitrator to a panel of three, the parties have participated in the appointment of one third of the tribunal but they could well be dissatisfied with two-thirds of the tribunal (particularly if it had no involvement in the appointment of the Chair). In these ways, party-appointment may not result in the appointment of a tribunal in which either party has its complete confidence.

Independence and impartiality

The important topics of independence and impartiality come into play too. While parties and their advisors will always try to appoint an arbitrator who they believe will correctly determine the dispute, the arbitrator remains independent and impartial. Yes, concerns such as bias, repeat appointments and ‘hidden’ conflicts related to the involvement of funders are topics that take up a lot of column inches in arbitration but, on the whole, international arbitrators are not appointed to be partisan, they are appointed to understand the case and reach the correct result on the law and facts.

Why comply?

There are of course a myriad of reasons why a party would comply with an award including acceptance of the result following a fair process, resignation to the finality of the result and reputational concerns.

A review of case law under Arbitration Act 1996, s.103 under which parties resist enforcement of awards yields no supporting evidence either way.

a. In 2015 there were three s103 decision:
one Court of Appeal decision which was considered by the Supreme Court in 20171) IPCO (Nigeria) Ltd v Nigeria National Petroleum Corporation [2017] UKSC 16 jQuery("#footnote_plugin_tooltip_4289_1").tooltip({ tip: "#footnote_plugin_tooltip_text_4289_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); (so won’t be double-counted here)
in the second2) H & C S Holdings Pte Ltd v Rbrg Trading (UK) Ltd [2015] EWHC 1665 (Comm) jQuery("#footnote_plugin_tooltip_4289_2").tooltip({ tip: "#footnote_plugin_tooltip_text_4289_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); a sole arbitrator was appointed but the judgment does not say how he was appointed
in the third3) Malicorp Ltd v Government of the Arab Rpublic of Egypt and others [2015] EWHC 361 (Comm) jQuery("#footnote_plugin_tooltip_4289_3").tooltip({ tip: "#footnote_plugin_tooltip_text_4289_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); the parties each appointed one arbitrator and the two co-arbitrators appointed the Chair

b. In 2016 there is only one reported decision4) Pencil Hill v US Citta Di Palermo S.p.A [2016] EWHC 71 (QB) jQuery("#footnote_plugin_tooltip_4289_4").tooltip({ tip: "#footnote_plugin_tooltip_text_4289_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); which involved a three-person tribunal. While the judgment does not say how the panel was appointed, it is not unreasonable to think that the parties would have appointed one arbitrator each.

c. In 2017 there were five reported decisions on AA 1996, s.103,5) Lexis Library search 2 July 2018. Zavod Ekran OAO v Magneco Metrel UK Ltd [2017] EWHC 2208 (Comm) – enforcement resisted on grounds that defendant was not given proper notice of the arbitration proceedings. Defendant did not participate in appointment of the tribunal; Viorel Micula and others v Romania and another [2017] EWHC 1440 (Comm) – each party appointed one arbitrator; Eastern European Engineering Ltd v Vijjay Construction (Proprietary) Ltd [2017] EWHC 797 (Comm) – it is unclear from the judgment how the tribunal was constituted or appointed though it is likely that the tribunal was a sole arbitrator (there is reference to arbitrator rather than arbitrators in the judgment); IPCO (Nigeria) Ltd v Nigeria National Petroleum Corporation [2017] UKSC 16 – it is unclear from the judgment how the tribunal was constituted; Sinocore International Co Ltd v RBRG Trading (UK) Ltd [2018] 1 All ER (Comm) – each party appointed an arbitrator, the Chair was appointed by CIETAC. jQuery("#footnote_plugin_tooltip_4289_5").tooltip({ tip: "#footnote_plugin_tooltip_text_4289_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); of these:
in two the parties appointed their own arbitrators;
in two it is unclear how the tribunal was constituted; and
in one the party was resisting enforcement on grounds that defendant was not given proper notice of the arbitration proceedings and as such the defendant did not participate in appointment of the tribunal.

With the benefit of educated guesses, in half of the cases the parties were involved in the appointment of the tribunal. This is of course insufficient and not sufficiently accurate data to draw any firm conclusion.6) Expanding the search to include another popular arbitral seat – Hong Kong – yields similarly inconclusive results. Utilising the same three year sample size (2015-2017) provides just one relevant case from each year. In none of the three cases does the judgment specify the means by which the tribunal was appointed. jQuery("#footnote_plugin_tooltip_4289_6").tooltip({ tip: "#footnote_plugin_tooltip_text_4289_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Perhaps what it does indicate is that the numbers of applications seeking to resist enforcement remain low. This in turn, indicates that a large number of awards are complied with without enforcement being challenged. With a degree of frustrating circularity this brings us to the question of why parties comply with awards and if the presence of a party-appointed arbitrator is a factor.

It appears that regardless of the parties’ participation in the appointment process, unsuccessful parties will regularly consider whether there is scope for challenge or appeal a final award and consequently whether there is any just cause for resisting enforcement. Presumably in the majority of the cases this is not intended to be disrespectful to the tribunal or the arbitral process, it is simply seeking to understand whether additional steps can be taken in the best interests of the unsuccessful party. While it may be the case that the users of arbitration like to think that parties comply with awards following the fair outcome of a legitimate process parties agreed to enter into, we have seen no definitive evidence to link this to the parties’ ability to participate in the appointment of the tribunal.

References   [ + ]

1. ↑ IPCO (Nigeria) Ltd v Nigeria National Petroleum Corporation [2017] UKSC 16 2. ↑ H & C S Holdings Pte Ltd v Rbrg Trading (UK) Ltd [2015] EWHC 1665 (Comm) 3. ↑ Malicorp Ltd v Government of the Arab Rpublic of Egypt and others [2015] EWHC 361 (Comm) 4. ↑ Pencil Hill v US Citta Di Palermo S.p.A [2016] EWHC 71 (QB) 5. ↑ Lexis Library search 2 July 2018. Zavod Ekran OAO v Magneco Metrel UK Ltd [2017] EWHC 2208 (Comm) – enforcement resisted on grounds that defendant was not given proper notice of the arbitration proceedings. Defendant did not participate in appointment of the tribunal; Viorel Micula and others v Romania and another [2017] EWHC 1440 (Comm) – each party appointed one arbitrator; Eastern European Engineering Ltd v Vijjay Construction (Proprietary) Ltd [2017] EWHC 797 (Comm) – it is unclear from the judgment how the tribunal was constituted or appointed though it is likely that the tribunal was a sole arbitrator (there is reference to arbitrator rather than arbitrators in the judgment); IPCO (Nigeria) Ltd v Nigeria National Petroleum Corporation [2017] UKSC 16 – it is unclear from the judgment how the tribunal was constituted; Sinocore International Co Ltd v RBRG Trading (UK) Ltd [2018] 1 All ER (Comm) – each party appointed an arbitrator, the Chair was appointed by CIETAC. 6. ↑ Expanding the search to include another popular arbitral seat – Hong Kong – yields similarly inconclusive results. Utilising the same three year sample size (2015-2017) provides just one relevant case from each year. In none of the three cases does the judgment specify the means by which the tribunal was appointed. 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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Solicitor / Associate – DWF LLP - Scottish Legal News

Google International ADR News - Thu, 2018-10-25 02:36

Scottish Legal News

Solicitor / Associate – DWF LLP
Scottish Legal News
The national team provides commercial advice to clients who need to resolve disputes arising out of companies or company law, either through litigation or Alternative Dispute Resolution. ... The work spans a wide ranging spectrum of general commercial ...

Proposed 2018 Amendments to Indian Arbitration Law: A Historic Moment or Policy Blunder?

Kluwer Arbitration Blog - Thu, 2018-10-25 01:11

Pranav Rai

YIAG

The lower house of the Indian Parliament recently passed the Arbitration and Conciliation (Amendment) Bill 2018 (“Bill”) to amend the arbitration law. If also passed by the upper house of Parliament, and upon receiving the President’s assent, this will become a law. It will then come into force when the Government so notifies.

The Law Minister termed this Bill as a historic moment. It is largely based on the report (“Report”) of a High Level Committee (“Committee”), which was given a mandate to identify the roadblocks to institutional arbitration (“IA”), examine issues which affect the arbitration landscape, and prepare a roadmap for making India a robust center for international and domestic arbitration.

This post argues that the Report has taken a myopic view of the problems and has made some suggestions which do not have a sound basis in policy. To be fair to the Committee, it was given a flawed mandate by the government – to implement rhetoric, disguised as an objective. The Report, however, instead of correcting this flawed objective, had a one-dimensional focus of improving IA. In this process it ignored the more importunate issues which plague Indian arbitration landscape. Below is an analysis of some important policy flaws in the Report which have crept into the Bill.

Making India a global arbitration hub – a wrong premise to start with

For some time now, statements made by the government on the issue of arbitration have contained more rhetoric than substance. One such rhetoric has been to make India a global arbitration hub (“Hub”). It is important to point out that, due to similarity of terms there is a scope of confusion over the meaning of the term Hub, especially at the government level. However, a reading of government statements, here and here, and an earlier Law Commission report suggests that the intent has indeed been to make India a Hub i.e. making India a globally preferred seat when both parties are foreign.

Consequent to such an objective, one of the aims of the Committee was to formulate a roadmap to achieve this. This, in my view, was an opportunity for the Committee to set the record straight by pointing out the impossibility of this objective (at least in the near future) and instead suggest a more modest objective with a clear roadmap and timelines. It however ended up presenting an ambiguous picture of this objective coupled with an equally ambiguous roadmap.

These are some fundamental flaws with the objectives which the Report fails to properly address.

a) All of the existing Hubs are cities or city states. It would be nothing short of a miracle if a country of India’s size becomes a Hub. As a proposition, this is a non-starter and the Committee should have advised the government accordingly. If the other flaws with such objective (explained below) could be resolved, the Report should have first suggested that some cities should be identified for this purpose. Priority should have been given to new smart cities such as GIFT City which would have complemented the larger plans of the government in the financial space. A model suitable in the Indian context should have then been applied to such cities, differently if necessary. But since neither of this was done, it is still not clear what will be the government’s objective going forward.

b) This idea of a Hub seems to have been developed by the government without a clear understanding of its rationale. The Report suggests that improving the arbitration landscape in India and making India a Hub will help in improving the ease of doing business and will also promote India as an investor-friendly country. While an improved arbitration landscape should help in the ease of doing business and should also promote India as an investor-friendly country, these are not plausible reasons to endeavor to become a Hub. Generally, it is the other way around – ease of doing business and being investor friendly are more like a pre-requisite to be a Hub. The case of Singapore and Hong Kong are good examples here. There are on the other hand several reasons for not aiming so high. Substantial costs for considerable period of time is one such reason. It would have been helpful if the Report could have included a cost-benefit analysis and financial feasibility study of this objective before even attempting to provide a solution.

c) None of the existing Hubs have directly become a Hub. A possible process which could have been followed here is – first improve upon the international arbitration landscape and identify the cities and arbitral institutions which need to be developed. Care should be taken so that the arbitral institutions are evenly spread across the cities and do not exceed beyond a point. An opportunity to be a regional or global player can only arise later once the arbitration system is well developed. The Report however did not provide any roadmap or timelines here, except for suggesting that an Arbitration Promotion Council should be set up to grade arbitral institutes and that as of now one arbitral institution has been identified for this purpose. With the aims so high the Report’s roadmap should have been more robust than this.

More immediate problems overlooked

The ambiguity surrounding the objectives of the Committee has also resulted in the more immediate problems being overlooked. For example, the Law Commission’s earlier report (see above) noted that the shortcomings in the arbitration law resulted in even the Indian parties preferring arbitration seat abroad. The judiciary has also been unable to resolve this issue and has instead given contradictory signals. This should have set the alarm bells ringing and, in my view, calls for a legislative fix. This was an achievable goal and should have been the first priority for the Report. But instead, the Report seems to suggest that IA is a general medicine which will cure all problems. These could have been resolved if the Committee would not have mixed all problems together and could have clearly prioritized its objectives.

One-dimensional focus on institutional arbitration

The Report and the Bill clearly favour IA at the cost of ad hoc arbitration (“ad hoc”). This is an important arbitration policy deviation because until now the arbitration law has been IA agnostic. Being an important deviation, the Report should have at least provided plausible reasons for favoring IA over ad hoc. But all it seems to suggest is that ad hoc should be discarded gradually as they are costly and cause delay. There was, however, one favourable change suggested in the Report – to provide model arbitration rules. Although this was not intended to directly benefit ad hoc, this could have been beneficial for ad hoc. These model rules, however, do not form part of the Bill.

The problem of ad hoc was not only with respect to cost and delay, as has been pointed out by the Report, but also of independence and impartiality along with the unique problem of unilateral clauses. However, all of these have to a large extent been resolved by the 2015 amendment, but the Report discounts this fact. This amendment inter alia made provisions for: a) reduction in arbitrators’ fee on account of delay; b) model fee; and c) adoption of a modified version of IBA Guidelines on Conflicts of Interest in International Arbitration. These problems are thus not inherent in the system and a cure is possible. Also, most of the problems are common to both IA and ad hoc, so if the Report suggests a resolution of the problems for IA then it is difficult to comprehend why cannot the same be done for ad hoc.

While the Committee was constantly looking at other models for inspiration, it could have also studied India’s history and culture of alternative dispute resolution. This culture continues even today and is also one possible reason why majority of Indian parties prefer ad hoc over IA. Some versions of Ramayana, for example, cite attempts by deities to settle the dispute between Rama and his twin sons, which is akin to modern day alternative dispute resolution. Informal arbitration proceedings have been conducted by the panchayats (village councils) since ancient times and there is some evidence to suggest that it is still preferred over litigation. This not only shows that ad hoc has been functioning reasonably well since ages, but this could have also been used as a model even today, with some modifications to suit the current day requirements. The Report completely ignored these indigenous sociocultural aspects of ad hoc.

In view of the above, rather than out rightly rejecting ad hoc, there was at least a case to improve the existing ad hoc systems and provide it an equal playing field in the domestic arbitration sphere.

Conclusion

The above analyses show that there are some vital flaws in the Report and consequently in the Bill. The legislature should thus reconsider this Bill. In its eagerness to make India a robust center for arbitration, the government is perhaps missing the point that all successful models of arbitration have their own uniqueness. Hence, instead of blindly following a foreign model, India should first weigh in all options to see which model suits best from an Indian context and how best to utilize India’s rich history and experience in this sphere.

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The Contents of the ASA Bulletin, Volume 36, Issue 3, 2018

Kluwer Arbitration Blog - Thu, 2018-10-25 00:31

Matthias Scherer

We are happy to inform you that the latest issue of the ASA Bulletin (3.2018) is now available and includes the following articles and cases:

 

ARTICLES

Luka GROSELJ, Stay of arbitration proceedings – Some examples from arbitral practice

This article outlines a number of situations, illustrated by practical and (thus far) unpublished cases, in which parties requested arbitral tribunals to decide on a stay of the arbitration proceedings. The most frequently invoked reason that would justify a stay is the existence of on-going parallel proceedings. A number of other circumstances may also lead to a stay application, e.g., pending payment of security for costs or clarification of the opposing party’s representation.

As the reviewed cases demonstrate, arbitral tribunals have no legal obligation to grant a stay and exercise discretion to decide whether a stay request is well-founded. In principle, a stay will only be granted if exceptional reasons or circumstances exist. There are three guiding criteria that appear to be applied by most arbitral tribunals. First, the circumstances purportedly warranting a stay must have a clear impact on the arbitration. Second, the interests and intentions of the parties to the arbitration must be assessed with due regard to the principles of fairness and due process. Third, a stay should not adversely affect procedural efficiency or cause undue delay.

 

Michael W. BÜHLER, Anne-Sophie GIDOIN, L’« étape préalable » dans le nouveau droit de l’arbitrage et de la médiation OHADA

The new Uniform Arbitration Act, the new Rules of Arbitration of the Common Court of Justice and Arbitration (Abidjan) and the new Uniform Mediation Act, adopted by the Council of Ministers of 17 OHADA Member States of Western and Central Africa, entered into force on 15 March 2018. All three texts expressly grant arbitral tribunals the power to suspend the arbitral proceedings if a party rightfully claims non-compliance with a mandatory pre-arbitral procedure which may be imposed by a multi-tier dispute resolution clause. In such case, the non-compliance may be cured without the arbitral tribunal having to dismiss the claims for not (yet) being admissible.

Article 8-1 of the revised Uniform Arbitration Act, Article 21-1 of the revised Arbitration Rules of the Common Court of Justice and Arbitration, and Article 15 of the Uniform Mediation Act allow arbitral tribunals to fix a time limit for the parties to comply with the pre-arbitral procedure, after which the arbitral proceedings will resume unless the parties were able to settle their dispute. These truly innovative provisions are a first of their kind in modern arbitration law worldwide as they address, in a pragmatic and cost-effective manner, the growing number of objections (whether they be as to the tribunal’s jurisdiction and/or to the admissibility of the claims) related to the issue of compliance with mandatory pre-arbitral steps in multi-tier dispute resolution clauses.

This article compares the OHADA’s new provisions on mandatory pre-arbitral procedure with diverging positions taken by the French and Swiss courts in two decisions issued in 2016. Treating compliance with a pre-arbitral conciliation step as an issue of admissibility (the French solution) or as a jurisdictional matter (the Swiss solution) may have dire consequences for parties to an arbitration, not just in terms of the award’s ultimate judicial control.

 

Harshad PATHAK, India’s Tryst with Non-Signatories to an Arbitration Agreement in Composite Economic Transactions

Indian courts have dealt with issues relating to the effect of an arbitration agreement on related non-signatory entities in a plethora of circumstances. And, like a pendulum, their response has swung from one end of the jurisprudential paradigm to the other. While initially reluctant to bind non-signatory entities to an arbitration agreement as a matter of principle, the courts of India now adopt a pragmatic approach. Today, they are inclined to venture beyond the formal constraints of an arbitration agreement in writing to identify entities that may have tacitly consented to arbitrate, despite not signing the agreement. Against the backdrop of a conceptual discussion surrounding the issue, this article maps this particular journey undertaken by Indian courts over the past decade. It keeps a close eye on the inconsistent application of the principles expounded by the Supreme Court of India in its seminal judgment in Chloro Controls v Severn Trent Water Purification Inc., resulting in some confusion. In this light, the article examines why the Supreme Court of India’s latest exposition on this issue in its judgment in Rishabh Enterprises attains significance. Accordingly, while it is inevitable that Indian courts will continue to struggle to distinguish the circumstances in which they may bind non-signatories to an arbitration agreement from those where they may not, for now, there are more signs of clarity than concern.

 

Hui WANG, Multidimensional Thinking about the ‘Soft Laws’ Phenomena in International Commercial Arbitration: A Chinese Perspective

The arbitration regime is a multidimensional system. Together with ‘hard laws’, ‘soft laws’ are also inalienable components of the arbitration regime. ‘Soft laws’ are non-state enacted texts which aim at regulating procedural issues in international commercial arbitration. Although ‘soft laws’ are not legally binding, they are of some normativity. ‘Soft laws’ cover various arbitration topics, ranging from arbitration law harmonisation, arbitration evidence, arbitration ethics and arbitration management skills to the latest arbitration developments. The history of arbitration, global governance, and social interrelation all help to explain why ‘soft laws’ are developed. The author explains the reluctance of Chinese practitioners and tribunals to apply ‘soft laws’ and militates for more acceptance of ‘soft laws’ in China.

 

ARBITRAL DECISIONS

In this issue of the Bulletin, we have compiled extracts of a number of rulings by arbitral tribunals upon applications for a stay of arbitral proceedings. They are summarised by Luka GROSELJ in his paper, Stay of arbitration proceedings – Some examples from arbitral practice, see above.

 

DECISIONS OF THE SWISS FEDERAL SUPREME COURT

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