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Roundtable: Exit wounds - Law Gazette

Google International ADR News - Wed, 2018-03-21 07:37

Law Gazette

Roundtable: Exit wounds
Law Gazette
The discussion starts with the Law Society's head of international, Mickaël Laurens, reminding the group of the arrangements that underpin market access and professionals' rights. 'UK lawyers, or members, as individuals and law firms have benefited ...

Consolidation of Arbitral Proceedings and its Ramifications on a Party’s Right to Challenge the Jurisdiction of the Tribunal and the Arbitral Award

Kluwer Arbitration Blog - Tue, 2018-03-20 22:19

Eunice Chan Swee En

YSIAC

The potential ramifications on a party’s right to challenge an award made in a consolidated proceeding should inform a party’s decision to adopt institutional rules or national arbitration laws that allow for consolidation. Ensuring as a preliminary matter that the mechanism for consolidation and any waiver provisions in the institutional rules or national arbitration laws adopted accords with the parties’ intent would avoid any unintended waiver of any grounds to set aside and/or challenge the enforcement of an award made in the consolidated proceedings.

The nature of a consolidation decision and its ramifications on a party’s right to challenge the Tribunal’s jurisdiction

A consolidation decision may be characterised as purely administrative or jurisdictional in the sense that the consolidation decision creates the jurisdiction of the tribunal of the consolidated proceedings. The characterisation of the nature of a consolidation decision is important as it may have ramifications on a party’s right to challenge the jurisdiction of the tribunal of the consolidated proceedings.

It may be said that the consolidation decision by an arbitral institution under institutional rules (such as Article 10 of the 2017 ICC Rules, Article 28.1 2013 of the HKIAC Rules and Article 15 of the 2017 SCC Rules) which allow such consolidation may be regarded as administrative in nature. There are two common features of such a consolidation decision. First, there is no requirement for reasons to be given (for example, see Article 8 of the 2014 ICDR Rules and Rule 40.1 of the 2016 SIAC Rules). Secondly, there is no stipulated avenue for a party to challenge an institution’s decision to consolidate proceedings. The institution’s decision on consolidation is final.

An institution’s decision to consolidate proceedings may be distinguished from an award or a ruling on jurisdiction. Unlike the institution’s decision to consolidate proceedings, the latter typically contains reasons and may be set aside under the law of the seat of the arbitration and/or challenged at the enforcement stage. Thus, the institution’s decision to consolidate, being administrative in nature, does not preclude a tribunal of the consolidated proceeding from making a determination on the validity of the consolidation in a ruling on its own jurisdiction. The 2016 SIAC Rules appear to adopt this view.

SIAC Rule 8.4 and Rule 8.9 clarify that the consolidation provisions (as with the joinder provisions in Rule 7.4 and Rule 7.10) in the SIAC Rules set out the procedural mechanism for consolidation. The SIAC Rules do not create the jurisdiction of the tribunal in respect of the consolidated proceedings. The tribunal of the consolidated proceedings retains kompetenz-kompetenz to decide on its own jurisdiction, including any challenge to its jurisdiction on the basis of the institution’s decision to consolidate.

In contrast, there are institutions that appear to treat the consolidation decision as jurisdictional in nature. Article 28.8 of the 2013 HKIAC Rules states that “parties waive any objection, on the basis of HKIAC’s decision to consolidate, to the validity and/or enforcement of any award made by the arbitral tribunal in the consolidated proceedings, in so far as such waiver can validly be made”. The underlying premise of this waiver provision appears to be that the tribunal of the consolidated proceedings has valid jurisdiction to make an award pursuant to the institution’s decision to consolidate proceedings.

However, having regard to the fundamental principle in international arbitration that the tribunal has kompetenz-kompetenz to rule on its own jurisdiction, the better view is that the initial decision by the arbitral institution to consolidate should be regarded as administrative in nature, and should not purport to create the jurisdiction of the tribunal of the consolidated proceedings. After all, the initial decision to consolidate does not bear the hallmarks of a jurisdictional ruling or award (i.e. containing reasons and subject to challenge). The tribunal of the consolidated proceedings should retain the competence to rule on its own jurisdiction, including any challenge to its jurisdiction on the basis of the initial decision to consolidate.

This view might be regarded as procedurally inefficient because a party objecting to the consolidation is effectively given a second bite at the apple. However, it upholds the fundamental principle in international arbitration that the tribunal of the consolidated proceedings has competence to rule on its own jurisdiction. It further acknowledges the fact that the initial decision-maker (institution or tribunal) may not have been in the best position to make a decision on consolidation at an early stage of the proceedings because there might have been insufficient information available at that time.

The agreement to consolidate and its ramifications on a party’s right to challenge the award

Consolidation of proceedings contrary to parties’ consent negates party autonomy and would jeopardise the enforceability of an award made by the tribunal of the consolidated proceedings. However, even where parties have consented to apply institutional rules or national arbitration laws which allow for the consolidation of proceedings, such agreement may have ramifications on the grounds available to a party to challenge an award made by the tribunal of the consolidated proceedings. Three potential ramifications are discussed below.

First, by agreeing to adopt institutional rules that grant the institution the power to decide to consolidate proceedings, parties may be deemed to have waived their right to challenge an award made by the tribunal of the consolidated proceedings on the basis of the institution’s decision to consolidate. Article 28.8 of the HKIAC Rules which has been mentioned above provides such an example. Notably, parties can waive their right to set aside an arbitral award in some jurisdictions: see Article 1522 French Code of Civil Procedure and Noble China Inc v Lei (1998) 42 O.R. (3d) 69; 42 B.L.R. (2d) 262.

Even if the institutional rules do not contain such a waiver provision, it would be prudent for parties to expressly reserve their rights to challenge any award made by the tribunal of the consolidated proceedings on the basis of the initial decision to consolidate. In Karaha Bodas v Pertamina (No 2) [2003] 4 HKC 488, the Hong Kong Court observed (at [29] and [36]) that the fact that the defendant had made no challenge to the decision on consolidation (and appointment of arbitrators) to the supervisory court and had remained silent until the enforcement stage “may be construed as a waiver, if indeed there had been an irregularity”.

Secondly, by agreeing to adopt arbitral intuitional rules that grant the institution the power to decide to consolidate proceedings, parties may be deemed to have waived their right to designate an arbitrator.

There are several institutional rules which provide that parties waive their right to designate an arbitrator in the event of a consolidation of proceedings. Examples of these rules include Art 4 of the SRIA Rules and SIAC Rule 8.12. Parties’ agreement to adopt such rules endangers a party’s right to set aside and/or challenge the enforcement of an award made by the tribunal on the basis that the composition of the tribunal was not in accordance with the parties’ agreement under Article 34(2)(a)(iv) of the Model Law and Article V(1)(d) of the New York Convention.

Thirdly, parties may have agreed to apply the law of the seat of the arbitration which allows the national court to order consolidation of arbitrations (for example, the Hong Kong Arbitration Ordinance). Such agreement may affect a party’s right to challenge the award made by the tribunal of the consolidated proceedings. For instance, where the consolidation decision is made by the court of the seat of the arbitration in accordance with the law of the seat, it would be difficult for a party to challenge an award made by the tribunal of the consolidated proceedings on the basis that the arbitral procedure and/or constitution of the tribunal was “not in accordance with the law of the country where the arbitration took place” (i.e. the law of the seat) under Article 34(2)(a)(iv) of the Model Law and Article V(1)(d) of the New York Convention.

Concluding remarks

Fidelity to efficiency in international arbitration demands that multi-contract disputes should be consolidated before a single arbitral tribunal. Consolidation reduces time and costs of resolving the dispute and prevents inconsistent / duplicative decisions on related claims and factual issues. However, before agreeing to consolidation, parties should be forewarned of the potential ramifications on their rights to challenge the jurisdiction of the tribunal of the consolidated proceedings and/or an award made in the consolidated proceedings.

To make sure you do not miss out on regular updates on the Kluwer Arbitration Blog, please subscribe here.

More from our authors: International Arbitration and the Rule of Law
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The post Consolidation of Arbitral Proceedings and its Ramifications on a Party’s Right to Challenge the Jurisdiction of the Tribunal and the Arbitral Award appeared first on Kluwer Arbitration Blog.

Graham Curtin Co-Founder, 19 Attys To Join McElroy Deutsch - Law360

Google International ADR News - Tue, 2018-03-20 20:11

Graham Curtin Co-Founder, 19 Attys To Join McElroy Deutsch
Law360
The new additions bring McElroy Deutsch's roster to nearly 300 attorneys in 14 offices, including four in New Jersey, specializing in business law practices ranging from alternative dispute resolution to white collar criminal defense, according to the ...

and more »

Justice is best served through a diversity of arbitrators - Albany Times Union

Google International ADR News - Tue, 2018-03-20 16:54

Justice is best served through a diversity of arbitrators
Albany Times Union
I do not think the gender disparity in alternative dispute resolution is a matter of abject, overt discrimination. Rather, I think it's a problem of inertia and (bad) habit. Mediators and arbitrators tend to be drawn from the same pool from which they ...

and more »

Emirates Maritime Arbitration Centre and the Chartered Institute of Arbitrators collaborate to promote arbitration ... - Hellenic Shipping News Worldwide

Google International ADR News - Tue, 2018-03-20 13:28

Emirates Maritime Arbitration Centre and the Chartered Institute of Arbitrators collaborate to promote arbitration ...
Hellenic Shipping News Worldwide
... EMAC will provide arbitration and alternative dispute resolution related courses to its members, and those who wish to enhance their alternative dispute resolution knowledge. Members will benefit from a preferential members rate. These courses will ...

and more »

Greenberg Traurig Elevates 5 Attorneys in Texas - PR Web (press release)

Google International ADR News - Tue, 2018-03-20 11:08

Greenberg Traurig Elevates 5 Attorneys in Texas
PR Web (press release)
Palnitkar is an accomplished trial lawyer whose practice focuses on resolving complex business and intellectual property disputes through litigation, arbitration, and alternative dispute resolution. She has a national and international practice that is ...

Franchising in Chile: a guide to enforcement and termination - World Trademark Review (blog)

Google International ADR News - Tue, 2018-03-20 10:55

World Trademark Review (blog)

Franchising in Chile: a guide to enforcement and termination
World Trademark Review (blog)
This part of the series provides practical insight on these issues, including an overview of the ground rules that a franchise agreement should cover in various markets around the world, as well as insight into court experience and the feasibility of ...

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Coyne College Honored by Better Business Bureau for 90 Year PartnershipCoyne College is one of four organizations ... - Markets Insider

Google International ADR News - Tue, 2018-03-20 09:45

Coyne College Honored by Better Business Bureau for 90 Year PartnershipCoyne College is one of four organizations ...
Markets Insider
CHICAGO, March 20, 2018 (GLOBE NEWSWIRE) -- Coyne College, a leader in career-focused education and training for HVAC and Refrigeration; Electrical Construction, Maintenance and Planning; Medical Assisting; Medical Billing and Coding; and Pharmacy ...

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Coyne College Honored by Better Business Bureau for 90 Year Partnership - GlobeNewswire (press release)

Google International ADR News - Tue, 2018-03-20 09:32

Coyne College Honored by Better Business Bureau for 90 Year Partnership
GlobeNewswire (press release)
CHICAGO, March 20, 2018 (GLOBE NEWSWIRE) -- Coyne College, a leader in career-focused education and training for HVAC and Refrigeration; Electrical Construction, Maintenance and Planning; Medical Assisting; Medical Billing and Coding; and Pharmacy ...

Coyne College Honored by Better Business Bureau for 90 Year Partnership - GlobeNewswire (press release)

Google International ADR News - Tue, 2018-03-20 09:32

Coyne College Honored by Better Business Bureau for 90 Year Partnership
GlobeNewswire (press release)
CHICAGO, March 20, 2018 (GLOBE NEWSWIRE) -- Coyne College, a leader in career-focused education and training for HVAC and Refrigeration; Electrical Construction, Maintenance and Planning; Medical Assisting; Medical Billing and Coding; and Pharmacy ...

and more »

Novenergia v. Kingdom of Spain, the ECT and the ECJ: Where to now for intra-EU ECT claims?

Kluwer Arbitration Blog - Tue, 2018-03-20 02:12

Richard Power

Clyde & Co.

There has been much comment about recent awards in Energy Charter Treaty (‘ECT’) arbitrations concerning investors’ claims against Spain and other EU states regarding renewable energy projects . The fortunes of investors and states have waxed and waned over the last few years, but overall it seemed that investors faced a considerable hurdle. In recent weeks, the rollercoaster ride has accelerated, with Novenergia v. Kingdom of Spain, SCC Case No. 063/2015, giving hope to investors, and EC Decision 2017/C 442 (‘the Decision’) and the European Court of Justice’s (‘ECJ’) decision in Case C-284/16 Slovak Republic v. Achmea BV apparently dashing those hopes.

Background

In the mid-2000s, many EU states encouraged foreign investors to undertake renewable power projects, particularly solar energy. Legislation offered incentives such as specified feed-in tariffs for lengthy periods and no limit on energy generation/distribution.

The global economic crash made such schemes became unbearably costly, and relevant legislation was repealed or amended. Those legislative changes undermined or even destroyed the profitability of investments predicated on the basis of the existing legislative frameworks. Consequently, many investors brought arbitration claims under the ECT, which protects foreign investments in the energy sector of signatory states from expropriation and unfair treatment.1)At the time of writing, for example, around 30 ECT claims against Spain are underway jQuery("#footnote_plugin_tooltip_9170_1").tooltip({ tip: "#footnote_plugin_tooltip_text_9170_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Charanne, Eiser, Isolux and Blusun

In 2016 and 2017, four awards were made in respect of claims by investors from one EU state against another EU state: Charanne v. Spain2)Charanne B.V. and Construction Investments S.á.r.l v. Kingdom of Spain (SCC Case No. V 062/2012) jQuery("#footnote_plugin_tooltip_9170_2").tooltip({ tip: "#footnote_plugin_tooltip_text_9170_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });; Eiser v. Spain3)Eiser Infrastructure Limited and Energia Solar Luxembourg Sarl v. Kingdom of Spain (ICSID Case No.ARB/13/36) jQuery("#footnote_plugin_tooltip_9170_3").tooltip({ tip: "#footnote_plugin_tooltip_text_9170_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });; Isolux Netherlands, BV v. Kingdom of Spain4)Isolux Netherlands, BV v. Kingdom of Spain (SCC Case No. V 2013/153) jQuery("#footnote_plugin_tooltip_9170_4").tooltip({ tip: "#footnote_plugin_tooltip_text_9170_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); and Blusun v. Italy5)Blusun S.A., Jean-Pierre Lecorcier and Michael Stein v. Italian Republic (ICSID Case No. ARB/14/3) jQuery("#footnote_plugin_tooltip_9170_5").tooltip({ tip: "#footnote_plugin_tooltip_text_9170_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });. The awards displayed some consistency in that:

1. They rejected submissions by the respondents, and the European Commission (‘EC’) via amicus curiae briefs, that the tribunals lacked jurisdiction to hear ECT claims between an EU member state and an investor from another EU state.6)Similar arguments have been heard, and dismissed, in other cases, e.g. RREEF Infrastructure v. Kingdom of Spain (ICSID Case No. ARB/13/30) jQuery("#footnote_plugin_tooltip_9170_6").tooltip({ tip: "#footnote_plugin_tooltip_text_9170_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); Broadly the arguments were that:

(a) As the EU itself is a signatory of the ECT and both parties are from the EU, Article 26(1) ECT was not fulfilled i.e. the claimant was not from an “Area” of “another Contracting Party”;
(b) The ECT impliedly included a disconnection clause, barring EU states from applying the ECT inter se; and
(c) EU law is an independent legal system taking precedence over other international law and domestic law, which provides an exclusive source of legal rights and remedies for intra-EU relations, including investor protection. The tribunal must apply EU law in reaching its decision. Therefore, the courts of the EU are the only appropriate jurisdiction to apply and enforce EU law.

The tribunals dismissed those arguments, holding that:
(i) individual EU states are also individual signatories to the ECT and the parties are of different nationalities;
(ii) the plain wording of the ECT did not allow for an implied disconnection clause; and
(iii) the claims are based on the provisions of the ECT, not EU law; the ECT expressly gives the tribunal exclusive jurisdiction; and there is no clash between ECT protections and EU law which would require a decision by the ECJ.

2. The tribunals accepted that fair and equitable treatment protections such as that in Article 10(1) ECT do not prevent a state from amending its regulatory regime, unless (i) it has given specific assurances to keep that regime in place for the lifetime of the investment (such as a contractual ‘stablisation clauses’); and/or (ii) such changes are disproportionate to the aim of the legislative changes, and fail to take due regard to investors’ legitimate expectations, formed before such reforms were mooted.

However, the awards also differed on some key issues:

3. The only award in favour of an investor was Eiser. This distinguished the 2010 amendments to Spain’s solar incentives regime7)The focus of the claim in Charanne. jQuery("#footnote_plugin_tooltip_9170_7").tooltip({ tip: "#footnote_plugin_tooltip_text_9170_7", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); from the more extensive 2013/14 reforms. The tribunal held that Article 10(1) ECT entitled the claimants to expect that Spain would not revise the regime upon which their investments were based to such a degree that all value in them was lost. Those legitimate expectations were based on the 2007 legislation and Spain’s further conduct in 2010-2011. The 2013/14 reforms amounted to a “total and unreasonable change” in violation of those legitimate expectations. The tribunal awarded the claimants damages of €128m.

4. When considering the circumstances in which a state may have breached Article 10(1) by modifying its regulatory framework, the Blusun tribunal rejected the tripartite criteria in Charanne (public interest, unreasonableness and disproportionality). The tribunal concluded that “in the absence of a specific commitment”, a state has no obligation to grant or maintain subsidies, but any modification should be done “in a manner which is not disproportionate to the aim of the legislative amendment, and should have due regard to the reasonable reliance interests of recipients who may have committed substantial resources on the basis of the earlier regime.”

The awards indicated the difficulties of establishing actionable legitimate expectations of stability in the absence of a stabilisation clause. Even the one result in favour of an investor, Eiser, is being challenged via annulment proceedings.8)Spain has applied for annulment for a failure to state reasons and a manifest excess of power, based upon the finding of a breach of Article 10(1) in circumstances where the tribunal held that Spain had a sovereign right to amend its legislation and had made no commitments as to a stable regulatory environment. Spain’s application also alleges that the claimant’s nominated arbitrator breached his obligation of independence and impartiality by failing to disclose a longstanding relationship with the claimants’ valuation experts. jQuery("#footnote_plugin_tooltip_9170_8").tooltip({ tip: "#footnote_plugin_tooltip_text_9170_8", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Novenergia v. Kingdom of Spain

However, in February 2018, the tribunal in Novenergia v. Spain ordered Spain to pay €53 million to Novenergia, a Luxembourg fund which had invested in photovoltaic plants in Spain. The award was significant in that adopted a more expansive approach to investor claims than in the previous cases (including Eiser).

Novenergia’s claim related to the same 2013/14 reforms as in Eiser and Isolux. As in the previous awards, the tribunal confirmed that Article 10(1) ECT does not create an independent obligation to provide stable investment conditions. The key question is whether the investor has legitimate expectations of stability.

Contrary to Charanne, however, the tribunal held that such expectations “arise naturally from undertakings and assurances” given by the state. These do not need to be specific undertakings and/or contractual stabilisation clauses – state conduct or statements which objectively create such expectations (irrespective of whether the state intended to create them) are sufficient. Novenergia was entitled to form legitimate expectations as to the 2007 regime based on statements by officials to Spain’s Congress of Deputies, as well as Spain’s marketing documents which, the tribunal said, constituted “bait”.

As in Eiser, the tribunal held that Spain’s 2013/2014 reforms, which replaced the 2007 regime with a new regime guaranteeing only a ‘reasonable rate of return’, were a “radical and unexpected” departure from the 2007 regime. At the time of its investment decision, Novenergia had a legitimate expectation that the 2007 regime would remain relatively stable.

While Novenergia’s investments had not been destroyed by the 2013 reforms,9)In fact, they were still achieving a reasonable rate of return jQuery("#footnote_plugin_tooltip_9170_9").tooltip({ tip: "#footnote_plugin_tooltip_text_9170_9", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); going further than Esier, the tribunal held that it was sufficient that Novenergia could show “quantifiable prejudice” compared with its position when it initially made its investment. The tribunal found that the 2013/14 reforms had a “significant damaging economic effect” on Novenergia’s plants, decreasing revenues by 24% – 32%, and awarded damages accordingly.

Enter the EC

One might think that the tide has turned in favour of investors. However, two interventions from EU institutions seem to have swung the pendulum in the other direction:

(a) In Decision 2017/C 442, published on 10 November 2017, the EC attacked ECT claims brought by investors against Spain (and other EU states). Spain had established the 2007 regime, and reformed it, without obtaining prior approval from the EC. That constituted the granting of state aid without first notifying the EC, and under EU law investors cannot form legitimate expectations with regard to such schemes. The applicable law of the dispute must be EU law as each party was or was from an EU state; and since “the principle of fair and equitable treatment [in the ECT] cannot have a broader scope than the [EU] law notions of legal certainty and legitimate expectations in the context of a state aid scheme”, no investor could form legitimate expectations with regard to the Spanish 2007 regime and its reforms.

The Decision went on to criticise the concept of the ECT claims, stating that the EC considers that “any provision that provides for investor-State arbitration between two Member States is contrary to [European] Union law…Union law provides for a complete set of rules on investment protection…Member States are hence not competent to conclude bilateral or multilateral agreements between themselves”. The Decision concluded that “[f]or those reasons, ECT does not apply to investors from other Member States initiating disputes against another Member States”.

Finally, the Decision stated that if an arbitral tribunal awarded an investor compensation in respect of losses caused by Spain’s reform of the Special Regime, that would constitute state aid; and if Spain paid such an award, it would require EC approval. For good measure, the Decision stated that “this Decision is part of Union law, and as such also binding on Arbitration Tribunals, where they apply Union law. The exclusive forum for challenging its validity are [sic] the European Courts”.10)The Decision was considered in the Novenergia award and dismissed as irrelevant, since the tribunal held that they were not applying EU law, but rights arising under the ECT. jQuery("#footnote_plugin_tooltip_9170_10").tooltip({ tip: "#footnote_plugin_tooltip_text_9170_10", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

(b) In March 2018, the ECJ handed down its judgment in the Achmea case, holding that investor-state arbitration clauses in intra-EU BITs are not compatible with EU law. However, it is not clear whether this affects intra-EU ECT claims. The ratio decidendi appears to be that EU member states cannot derogate from the provisions of EU instruments, especially the Treaty on the Functioning of the EU, which provide for the primacy of EU law and the necessity for it to be tested in the courts of member states, by reference to the ECJ if necessary. However, in contrast to the Netherlands and Slovakia BIT which is the subject-matter of Achmea, the EU itself is a signatory to the ECT, and hence it can be argued that it has agreed to claims under the ECT being determined by the arbitration mechanism specified in the ECT. The EU clearly has the power to enter into arbitration agreements – c.f. the EU’s free trade agreements with third parties.

Nevertheless, the Decision and the Achmea judgment make it likely that any attempt to enforce an ECT award in an EU state will be resisted, e.g. under Article V(2) of the New York Convention (dispute not capable of settlement by arbitration/contrary to public policy). Investors may of course try to enforce outside the EU.

Where to now?

It remains to be seen if claimants will press ahead with their outstanding ECT claims against Spain and other EU states; or whether fresh claims will be commenced in another forum (and if so, what and where?). However, the Decision and Achmea may not necessarily be the death-knell for intra-EU ECT arbitrations that they might seem at first glance.

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References   [ + ]

1. ↑ At the time of writing, for example, around 30 ECT claims against Spain are underway 2. ↑ Charanne B.V. and Construction Investments S.á.r.l v. Kingdom of Spain (SCC Case No. V 062/2012) 3. ↑ Eiser Infrastructure Limited and Energia Solar Luxembourg Sarl v. Kingdom of Spain (ICSID Case No.ARB/13/36) 4. ↑ Isolux Netherlands, BV v. Kingdom of Spain (SCC Case No. V 2013/153) 5. ↑ Blusun S.A., Jean-Pierre Lecorcier and Michael Stein v. Italian Republic (ICSID Case No. ARB/14/3) 6. ↑ Similar arguments have been heard, and dismissed, in other cases, e.g. RREEF Infrastructure v. Kingdom of Spain (ICSID Case No. ARB/13/30) 7. ↑ The focus of the claim in Charanne. 8. ↑ Spain has applied for annulment for a failure to state reasons and a manifest excess of power, based upon the finding of a breach of Article 10(1) in circumstances where the tribunal held that Spain had a sovereign right to amend its legislation and had made no commitments as to a stable regulatory environment. Spain’s application also alleges that the claimant’s nominated arbitrator breached his obligation of independence and impartiality by failing to disclose a longstanding relationship with the claimants’ valuation experts. 9. ↑ In fact, they were still achieving a reasonable rate of return 10. ↑ The Decision was considered in the Novenergia award and dismissed as irrelevant, since the tribunal held that they were not applying EU law, but rights arising under the ECT. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: International Arbitration and the Rule of Law
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2018 US News Rankings

ADR Prof Blog - Tue, 2018-03-20 00:08
Here they are, this year’s US News Rankings for dispute resolution programs.  Unlike the rankings for law schools, these are voted on by law school faculty – consider them reputational rankings.  Congratulations to all ! Rank School Name 1 Pepperdine University 2 Ohio State University (Moritz) 3 Harvard University 4 Mitchell Hamline School of Law 5 … Continue reading 2018 US News Rankings →

The Stone Soup Project Needs YOU!

ADR Prof Blog - Mon, 2018-03-19 20:44
      This post summarizes a status report on the Stone Soup Dispute Resolution Knowledge Project, describes possible next steps, and invites your input and participation.  I encourage you to consider how you might incorporate Stone Soup in your plans for next year.  In particular, this post describes choices you might make in using … Continue reading The Stone Soup Project Needs YOU! →

Tasks before new Industrial Court chief registrar - The Nation Newspaper

Google International ADR News - Mon, 2018-03-19 18:28

The Nation Newspaper

Tasks before new Industrial Court chief registrar
The Nation Newspaper
Daudu, a certified Mediator by the Henning Mediation Centre, Atlanta, Georgia, U.S.A, is a Fellow of the Weinstein International Fellowship in Alternative Dispute Resolution (ADR). He is a member of the Nigerian Bar Association (NBA), International Bar ...

Alternative Dispute Resolution - Law.com

Google International ADR News - Mon, 2018-03-19 12:44

Law.com

Alternative Dispute Resolution
Law.com
Alternative Dispute Resolution. In this week's Special Report: "Five Reasons to Include Arbitration Clauses in Business Contracts … and Five Reasons to Reconsider," "Mediating Highly Emotional Workplace Disputes," "'Nondomestic' Arbitrations: An ...

Farkas on Legal Education

ADR Prof Blog - Mon, 2018-03-19 10:56
Check out the contribution of Brian Farkas (Cardozo) over at Prawfsblawg, as part of their online symposium on the future of legal education. Brian calls for greater adoption of mediation and arbitration in doctrinal courses, to better prepare students for the realities of legal practice. It’s a terrific post.

Round table: Exit wounds - Law Gazette

Google International ADR News - Mon, 2018-03-19 07:45

Law Gazette

Round table: Exit wounds
Law Gazette
The discussion starts with the Law Society's head of international, Mickaël Laurens, reminding the group of the arrangements that underpin market access and professionals' rights. 'UK lawyers, or members, as individuals and law firms have benefited ...

and more »

The Structural Implications of Belt-and-Road Arbitration: China’s Legal Gamble across Eurasia

Kluwer Arbitration Blog - Sun, 2018-03-18 21:00

Horia Ciurtin

The Belt-and-Road Initiative (“BRI“) is a grand vision about connectivity, infrastructure, trade and unimpeded foreign direct investment (“FDI“) flows. It is a path to China’s largest export market  – the European Union – which does not only propose to ‘transit’ Eurasia (and coastal East Africa), but to radically transform it. And, thus, mere construction and outpours of capital do not suffice for such an ambitious project. The scale and depth of the BRI require a substantial ‘investment’ in establishing a common normative nexus. For connectivity to actually exist as a functional feature of the project, it must also – on the long-term – take the shape of legal harmonization.

However, in this initial phase of the BRI, more modest objectives need to be achieved. And China has taken small – but firm steps – in this direction. Thus, while previously considered a problematic jurisdiction for arbitrating commercial disputes (and a difficult Respondent in investment litigation), China’s status has significantly improved in the last few years. As it envisions itself to rather be the source of investors and contractors along the Belt-and-Road (and not a destination for FDI), Beijing is seeking legal mechanisms to ensure the protection of Chinese companies’ interests abroad.

For this reason, China is well set on the course of strengthening CIETAC and also offering it – for the first time – a clear set of rules that will deal with investor-state disputes. However, if ADR as a whole is considered, it must be noted that China still favors mediation (usually state-to-state driven) as a manner of solving disputes, seeing arbitration as a measure of last resort. Nonetheless, it got involved in ensuring that this legal ultima ratio is circumscribed within a discernable pattern which is not so different from similar measures proposed by Western states. It might be a form of globalization with Chinese characteristics – as Beijing likes to portray it – but it does not diverge too much from the beaten track regarding international arbitration.

Returning to the BRI’s intrinsic (and necessary) relationship with arbitration, it must be ascertained that it is the only viable way to ensure a stable and predictable framework for solving disputes over such a large area, with dozens of different jurisdictions, legal cultures and diverging geoeconomic interests. Most of the states that will become part of the BRI are not consolidated democracies, lacking independent judiciaries and national courts that uphold the rule of law. And that might be a problem for Chinese investors which will – inevitably – face the risk of (creeping) expropriation or breaches of the FPS and FET standards. And thus, although arbitration might not be the preferred solution for China, it is the best answer to such systemic risks.

On the other hand, for companies along the Belt-and-Road that trade, construct and invest in the opposite direction, targeting the Chinese mainland as a destination for their goods and FDI, arbitration against China (and within China) still remains problematic. Especially on the enforcement side. The judiciary is sometimes less than collaborative and – although it might permit enforcement on a regular basis – it strongly takes into consideration matters of public policy and personal ties to the Party members involved. Most large Chinese private entities are linked with the Party nomenklatura one way or another, representing a matter that BRI investors need to carefully take into account.

In this sense, China might seek to improve some procedural aspects of arbitration within its territory, but it will stick to its ‘systemic’ approach of favoring state-owned entities and Party-linked companies, even by making enforcement against them extremely difficult. On the short term, it is unlikely that significant improvements will take place where there are high stakes involved. Especially if they are in any way linked to the political scene. However, what can be expected is a more predictable framework and improved procedures in the statutes. How they will work in practice, it is difficult to tell.

Thus, even the recent enactment of the CIETAC ‘investment arbitration rules’ seems to be – at this stage – more an exercise in wishful thinking and PR for the BRI. Its practical effects upon existing BITs from the third generation that offer ICSID rules or UNCITRAL rules as possibilities. But such new rules might – nonetheless – impact the manner in which the Belt-and-Road contracts and treaties will be further modelled. If ‘legal traditions’ and ‘customs’ are taken into consideration when developing the arbitration framework, that will give a high margin of appreciation to the arbitrators that will be called to rule upon those disputes. Of course, if China has sufficient leverage on one country, it can renegotiate the existing BIT and introduce a mandatory reference to its new rules, but it is unlikely that many states will switch ICSID or UNCITRAL rules for CIETAC. Or choose an arbitral seat anywhere in Chinese mainland territory.

And that is why the Belt-and-Road is dependent upon a ‘string’ of regional arbitral venues that fulfil all the impartiality and quality requirements for every party involved. More precisely, in East and Southeast Asia, Hong Kong proves to be an excellent choice for the seat’s jurisdiction when arbitrating with Chinese entities. Its legal system comes from a long Anglo-Saxon tradition of upholding the rule of law and an independent judiciary. The quality of the arbitral institutions is extremely high (see the HKIAC, ICC-HK), as well as of local arbitrators. The enforcement is quite swift (compared to mainland China) and it is within the bounds of what a Western-based investor would expect. In addition, for this region, the Singapore International Arbitration Centre is also a good choice, benefitting from the same qualities as Hong Kong and – even more – a total disconnection with Chinese authorities.

On the other hand, in Central Asia, the Middle East, the Balkans or Eastern Europe, the offer is quite scarce. The projected arbitral venue in Astana is still just in blueprint phase, while Moscow and Teheran do not have a consistent track record in large commercial arbitration (and no experience in investment disputes). That could, perhaps, leave Istanbul on-route and – for the BRI end-point – one could consider the Vienna International Arbitral Centre. Otherwise, almost all other parties will consider using Hong Kong, Singapore or a traditional Western-based institution.

For these reasons, China must seriously invest in developing a network of sister-institutions along the entire BRI, each having a regional focus. Unitary rules could be adopted, drafted along the UNCITRAL ones, but with additional provisions that allow the BRI specifics to emerge. CIETAC ones might work just fine for Chinese companies that wish to settle a dispute against foreign entities or sovereigns, but they could prove insufficient and inadequate for a litigation going the other way round. And that is where such regional centers – ‘decoupled’ from China’s state apparatus – need to emerge. As a measure to build confidence and to symbolically reveal all other parties that Beijing is accepting to be bound by clear and transparent rules, well beyond its jurisdiction.

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The post The Structural Implications of Belt-and-Road Arbitration: China’s Legal Gamble across Eurasia appeared first on Kluwer Arbitration Blog.

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