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Recent Issue b-Arbitra

Kluwer Arbitration Blog - Sun, 2018-06-17 17:51

Gloria Alvarez (Associate Editor)

We are pleased to present to you this second issue of b-Arbitra 2017, which is also the second issue of our new cooperation with Wolters Kluwer. As announced, our journal is now also accessible in digital form on Jura in Belgium and in the Kluwer Law Arbitration database.

In this issue you will find an in depth analysis by Olivier Caprasse and Maxime Malherbe of the Belgian Constitutional Court decision of 16 February 2017. This decision addresses the important issue of the effects of judicial and arbitral decisions and of their consequences on the recourse that is available to third parties against an award. A distinction is made between the current inability of a third party to resist enforcement of an award and the limited possibility recognized by the Cour de Cassation for a third party to request the annulment of an award, in case of fraud. The decision of the Constitutional Court is published in the Case law section of this issue.

We then publish two contributions dealing with third party funding mechanisms. These contributions complement, as announced in our previous issue, the articles and documents already published in that issue on this topic, following a CEPANI colloquium on Third Party Funding that took place on 9 March 2017. The first contribution is an article by Dirk Van Gerven and Arie Van Hoe published in the Doctrine section about the ethical and deontological issues related to third party funding. The authors first discuss the views as to the ethical or unethical character of third party funding as such. Then they comment on the various aspects and manifestations of the ethical issues, from the perspective of both the lawyer and the arbitrator. They end with a question : how will arbitration institutions deal in the future with third party funding in their rules? You will find a second contribution on third party funding in our Documents section, written by Christopher P. Bogart, co-founder and chief executive officer of Burford Capital LLC, a major actor in litigation and arbitration finance, publicly traded on the London Stock Exchange. His contribution offers the finance industry’s point of view, as a primer of sorts, on the advantages that arbitration finance in general and third party funding in particular bring to both corporate clients and their lawyers. It also addresses two areas of concern that are frequently raised in regard to financing international arbitration : disclosure and security for costs.

In our Case law section, we publish a decision of the Brussels Court of First Instance, with a note by Stephanie Davidson. That decision deals with particular procedural aspects of a third party’s objection to enforcement of an arbitral award. The first aspect is the time limit applicable to a third party for filing its objection to enforcement of an award, in combination with a simultaneous application to set aside the award. In a second aspect, the court confirms the position of the Cour de Cassation as to the right of the third party to seek the annulment of an award that was obtained by fraud.

We also publish two decisions of the Brussels Court of First Instance rendered in the Yukos saga. In a first decision of 9 December 2016, the court has declared inadmissible the third party application (“tierce opposition/derdenverzet”) filed by the Russian Federation seeking to withdraw its decision of 24 June 2015 that had granted the exequatur of two arbitral awards against the Russian Federation. By another decision of 8 June 2017, the judge of attachments (“juge des saisies/beslagrechter”) lifted the seizures that had been obtained by Yukos on a number of assets in Belgium of the Russian Federation and of related entities. Both decisions raise interesting issues of international private law and of procedural law regarding the interaction between the enforcement and the annulment of awards, as well as the related seizures. A doctrinal comment on those decisions will be published in a next issue of our journal.

In the Documents section, after the contribution of Christopher Bogart, you will find the first Dutch translation of the rules of CIETAC (the China International Economic and Trade Arbitration Commission), made and commented upon by Jacques Herbots. International arbitration is today a hot topic in China and a priority of Chinese diplomacy under the presidency of Xi Jinping. No fewer than 387 international cases were dealt with under the auspices of CIETAC in 2016. This journal has previously published in 2014 a contribution by the same author on the characteristics of arbitration in China.1)Herbots J.H., “Les caractéristiques propres au droit de l’arbitrage de la République populaire de Chine », b-Arbitra, 2014/2, pp. 379-420. jQuery("#footnote_plugin_tooltip_6630_1").tooltip({ tip: "#footnote_plugin_tooltip_text_6630_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Herman Verbist then delivers a comprehensive presentation of the new ADR Rules of CEPANI that have just been revised, 5 years after the 2013 revision of its Arbitration Rules.

Finally, this issue contains a book review of the interesting and challenging reflections of Rémy Gerbay in his book on the Functions of Arbitral Institutions, as well as a brief presentation of the remarkable 1958 New York Convention Guide and Website launched in 2017 as a collaboration between UNCITRAL, Shearman & Sterling and the Columbia Law School.

We wish you excellent and stimulating reading and we always welcome further views, exchanges and suggestions from our readers.

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References   [ + ]

1. ↑ Herbots J.H., “Les caractéristiques propres au droit de l’arbitrage de la République populaire de Chine », b-Arbitra, 2014/2, pp. 379-420. 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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A New Arbitral Institution for the Art World: The Court of Arbitration for Art

Kluwer Arbitration Blog - Sun, 2018-06-17 02:48

Jane Parsons and Claire Morel de Westgaver

Bryan Cave Leighton Paisner LLP

A new court dedicated to resolving art-related disputes was launched earlier this month in The Hague. The Court of Arbitration for Art (“CAA”) was founded by the Netherlands Arbitration Institute (“NAI”) in collaboration with Authentication in Art (“AiA”), a not-for-profit foundation that promotes best practice in art, particularly in art authentication.

The CAA will administer arbitrations conducted by arbitrators with significant disputes, art and art law expertise and under arbitration rules (“AiA/NAI Court of Arbitration for Art Adjunct Arbitration Rules” (the “Adjunct Arbitration Rules”)) that have been designed to accommodate common issues in art-related disputes, such as provenance issues.

 

Submission to CAA arbitration

Parties can agree to submit a dispute to arbitration administered by the CAA and/or under the Adjunct Arbitration Rules in a contractual arbitration clause or submission agreement. Where parties have incorporated these Rules, the NAI Arbitration Rules will apply as well, except where they are modified by the Adjunct Arbitration Rules (Point 2, Adjunct Arbitration Rules and Explanatory Note 3.2).

Historically, the art market was notorious for conducting business without any paperwork or with only an invoice or very informal agreement to document a transaction, without any dispute resolution provisions. Where that is still the case or where no contractual relationship exists at all, the CAA would only have jurisdiction if the parties agreed a submission agreement after a dispute has arisen. Increasingly, however, written contracts are put in place for art purchases, consignments, artist/gallery agreements, loan agreements and other art-related transactions. It might be that in the early years of the CAA the majority of disputes will be referred to the CAA by way of a submission agreement after a dispute has arisen, but as the CAA gains prominence it will be interesting to see if parties decide to incorporate the Adjunct Arbitration Rules into their contracts from the outset.

 

Key features of the Adjunct Arbitration Rules

Number of arbitrators

The default position is that there will be three arbitrators, unless the value of relief sought is less than €500,000 or the parties have agreed to a sole arbitrator (Point 5). This is the reverse of the position of most leading commercial arbitration rules, under which a sole arbitrator is appointed unless the circumstances of the case warrant the appointment of three arbitrators (see Article 9.1 of the SIAC Rules 2016, Article 5.8 of the LCIA Rules 2014 and Article 12.2 of the ICC Rules 2017).

 

AiA/NAI pool of arbitrators

The starting point is that arbitrators will be appointed from a “Pool” compiled by the AiA Board and the NAI composed of international lawyers with experience in litigating or advising clients in art law disputes and/or international arbitration (Point 4 and Explanatory Notes 2.1 and 5.1). If a party wants to deviate from that Pool and has compelling reasons to do so, the party must obtain the consent of the NAI administrator (in consultation with the AiA Board) after having disclosed the name of the arbitrator they want to appoint and the reasons for the deviation (Points 4 and 6 and Explanatory Note 5.1). The only example of a compelling reason the Rules provide is wanting an arbitrator with a very specific background and the absence of such an arbitrator in the Pool.

Given the default position under the Adjunct Arbitration Rules is that the parties’ choice of arbitrator is restricted to the Pool, the calibre of people in the Pool has to be good and they have to be available to progress the proceedings efficiently, in order that parties have confidence in the process. If the Pool compiled by the NAI and AiA contains high quality candidates, these provisions should add credibility to the decisions and provide comfort to parties that their dispute will be resolved by a panel with the specific legal and sectorial expertise required in art disputes, which a judge in court may not always have.


Experts in forensic science and provenance

The only admissible expert evidence on forensic science and provenance issues will be from an expert or experts appointed by the tribunal (and not by the parties), which overrides Article 28 of the NAI Arbitration Rules (Point 10 and Explanatory Notes 7.1 and 7.2). The tribunal must consult with the parties on the appointment of the expert and will establish the expert’s terms of reference after considering comments from the parties.

These experts may come from an “Expert Pool” of art historians, materials analysts, forensic scientists and provenance researchers compiled by the AiA Board, but relevant scholars of a particular artist may be approached on a case-by-case basis. The parties are able to appoint experts on other issues, but any such evidence must not compete with or supplement the tribunal-appointed expert’s evidence on forensic science or provenance (Point 10 and Explanatory Note 2.2).

This provision, inspired by inquisitorial systems of civil law jurisdictions under which the court is in charge of investigating the facts of the case, appears to stem from the concern that party-appointed experts may advocate for the party who appointed them, as opposed to being a neutral expert whose duty is to assist the tribunal. The Explanatory Notes to the Adjunct Arbitration Rules state that “As an alternative to having disputing parties retain their own respective experts in these particular fields [provenance and forensic science], with such experts then advocating for their side, the AiA/NAI Rules shall offer the Expert Pool to provide the exclusive analysis and testimony on these subjects”. Parties who are used to a more adversarial system may not like to seemingly cede control to the tribunal in this regard. What is clear is that this feature reinforces the significance of provenance and forensic science, given they can be prominent or decisive factors in disputes regarding ownership, authenticity and value. In practice it will be interesting to see what proportion of disputes fall into forensic science and provenance categories, thereby leaving the expert evidence solely in the hands of the tribunal in those cases. As with the Pool of arbitrators, the parties’ confidence in the process and whether decisions rendered under these Rules will command the respect of the art market will depend on the calibre and independence of the experts in the Pool.

 

Technical process advisor

If the case involves highly technical issues, for example in relation to an object’s authenticity, the tribunal may appoint a “technical process advisor” from the Expert Pool in relation to pre-hearing evidence gathering and evidence exchange processes (Point 12 and Explanatory Note 8). This advisor will only be appointed with the parties’ consent, the parties first having seen the tribunal’s proposal setting out the intended role, scope of authority and advisory mandate of the advisor. The technical process advisor will act under the tribunal’s direction but, if requested, may draft proposed procedural orders for adoption by the tribunal. The Rules underline that the tribunal retains ultimate decision-making responsibility on all matters.

These provisions appear to have taken on board the criticisms often levelled at the use of tribunal secretaries that the scope of their role can lack clarity and transparency.

 

Choice of law guidance

Another interesting feature of the Adjunct Arbitration Rules relates to the cross-border nature of art-related practices and the international bearing of certain works of art in terms of legal implications typically arising under more than one legal system. Point 13 of the Adjunct Arbitration Rules provides that “An appropriate choice of law for the arbitral tribunal may be the law of the principal location of the seller, if known at the time of the transaction, or, if no sale is involved, of the owner of the object in question at the time of the commencement of the arbitration.” Point 13 supplements Article 42.2 of the NAI Arbitration Rules which, like other commercial arbitration rules, provides that the tribunal shall apply the law it considers appropriate in the absence of party choice. Point 13 appears to be intended to enhance certainty with respect to factors relevant to the determination of the applicable law by a tribunal in the absence of a party choice. This is an issue of significance in art disputes where it is not uncommon for controversies to be resolved without the benefit of a choice of law provision. Given the lack of constraint on tribunals under Point 13, whether this provision will actually render the arbitration process more efficient remains to be seen.

 

Publication of awards

As is the case with the NAI Arbitration Rules, awards may be published by the NAI and AiA although the parties’ identities will not be revealed. One difference under the Adjunct Arbitration Rules is that they note that the name or identity of the art work in question may be revealed (Point 15). Publication of the name of the object may be desirable if a party wants vindication, for example in relation to provenance. In other cases, sometimes the fact that there has been a dispute at all about an art work may negatively affect its value in the future, so a party may want to consider objecting to publication.

 

Looking ahead

The CAA certainly offers many attractive features that have been carefully tailored for art-related disputes. If the arbitrators and experts selected are well regarded in the art market, the CAA could become a popular method for resolving disputes, particularly when coupled with the other advantages arbitration offers, such as confidentiality which remains attractive to many parties involved in art-related transactions as well as the ease of enforcement of awards in foreign jurisdictions, which is pertinent given the cross-border nature of many art disputes. As the prominence of the CAA grows, this could lead to more parties including dispute resolution clauses in their contracts to refer disputes to the CAA.

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

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Efficient Arbitration – Part 1: Metrics

Kluwer Arbitration Blog - Sat, 2018-06-16 03:04

Victoria Pernt and Marina Stanisavljevic

Schoenherr

This is the first in a series of articles by Schoenherr focusing on efficiency in arbitration. In our series, we will explore various tools which serve to improve the efficiency of any given arbitration and so achieve a favourable outcome without wasting resources.

But before exploring those tools we need to determine what efficient arbitration actually means.

Thanks to its well-known advantages, arbitration has grown exponentially over the past few decades. However, as more complex, high-value disputes emerge and become regular subjects of arbitral proceedings, the length and cost of these proceedings inevitably increase. In fact, cost is now regarded as one of, if not the, worst feature of international arbitration (IBA Compendium of Arbitration Practice 2017).

This has not only spawned a torrent of third-party funding (an initiative to de-risk dispute resolution through the involvement of a funder), but a general push for efficiency in arbitration. For the past few years, law firms have been flagging efficiency as the year’s hottest trend. Possible solutions and tools have been evaluated in surveys, protocols, institutional guides and panel discussions. The recent tightening of institutional procedures, including expedited and summary disposition, is yet another example of the impact of this quest.

But efficiency is not just about cutting costs. Some argue that efficiency can be measured against two standards: time and money. In his article Key to Efficiency in International Arbitration, Veijo Heiskanen explains that in terms of money, arbitration may be deemed efficient if its costs are significantly less than the value in dispute. Thus, the greater the difference between the amount awarded and the fees spent, the more efficient the arbitration. The same could apply in terms of time. But a shorter arbitration is not necessarily an efficient arbitration. While it may save the party money in the immediate term, it could result in a less persuasive case and an unfavourable award. In a slightly longer arbitration, on the other hand, the parties could present their case more compellingly and thoroughly, which may result in a more favourable (and economic) award.

But time and money aren’t everything. Efficiency is also about quality. In her article Efficiency in Arbitration: Whose Duty Is It?, Jennifer Kirby postulates the concept of the “Iron Triangle”, in which efficiency in arbitration is the relationship between time, money and quality. When less time and money are spent on arbitration, its quality suffers. It is only when time and money are spent (or rather, wasted) on things that do not contribute to improving the arbitration that time and money can be reduced without affecting the quality.

Therefore the key to efficiency is to identify when resources are being invested and when they are being wasted – a daunting task. A variety of tools can help to identify and avoid unnecessary expenditures throughout the proceedings. We will introduce and explore these tools in the course of our series.

After all, if the right tools are chosen, arbitration will be efficient. The parties will end up with a quality arbitration free of unnecessary costs, and still be in a position to achieve the best possible outcome.

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

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A Toddler's Wisdom on Conflict Resolution - Mediate.com

Google International ADR News - Fri, 2018-06-15 11:17

A Toddler's Wisdom on Conflict Resolution
Mediate.com
Edinburgh Declaration of International Mediators ... She also serves as a Trustee of the Board of Directors of the San Fernando Valley Bar Association, and has presided as Chair of it's Alternative Dispute Resolution Section and Litigation Section. She ...

Arbitration, Social Media and Networking Technologies: Latent Existing Conflicts

Kluwer Arbitration Blog - Fri, 2018-06-15 02:00

Alonso Bedoya

Introduction

Currently, social network trends are focused on consumer markets, such as the fashion or food industry. The uninterrupted use of smart phones, computers, tablets, Ipod´s, etc. with unlimited internet connection has resulted in us being mere dependent beings on these devices. Social networks are everyday forms of social interaction, defined as a dynamic exchange between people, groups and institutions of high complexity, involving groups that identify with the same needs and problems.

It is within this understanding that a novel additional variable has become relevant within the legal domain as technology pervades all ambits of our human endeavor. International arbitration has since several years ago been affected by social networks as the latter have become an important part of our day-to-day lives. Whether we access them in our workplaces or elsewhere, social networks no longer serve solely to keep us connected with friends and family but also establish very important networks of professionals in the global labour market. Social networks for this purpose must thus be understood enunciatively – and without simply being limited to: Facebook, Twitter, Tumblr, LinkedIn, YouTube, Google +, Instagram, etc.

Arbitration and Social Networks: A reason for conflict

In addressing the matter, and as an anecdote, he who writes these lines was once appointed to act as party arbitrator in an ad hoc arbitration some time ago, and as it is expected, prior to accepting the charge, did research on both parties in the dispute and on those who were to be their counsels so that the proper disclosure and declaration of independence and impartiality could be provided. After concluding that there was no connection with any of the parties or with any of their lawyers involved in the case, the disclosure was made, indicating that there existed no conflict of interests by being part of the tribunal, in accordance with the minimum standards for impartiality and independence for arbitrators that is exemplified in the new Arbitration Regulation of the Lima Chamber of Commerce in its article 14, numeral 2, which is very similar to the provisions in the English Arbitration Act or the U.S.A. Federal Arbitration Act, as follows:

“(…) 2. The arbitrator, upon accepting the designation, subscribes to a statement of availability, independence and impartiality, in which he must make known in writing to the institution any fact or circumstance that could give rise to justified doubts about his impartiality or independence … ”

Nevertheless, on the first procedural hearing day, one of the parties objected to my appointment as arbitrator, requesting  me to desist from being part of the arbitral tribunal. The party alleged that I do so because I had the brother of the other party as a LinkedIn contact; this was a fact of which I was not aware and could have, therefore, never anticipated the objection.

Conclusion 

It is undeniable that under current social media trends, contact suggestions, automated publicity and repetitive confirmation notifications are the standard once a person is online; and few are those who do not manage their professional contact networks with LinkedIn and who have probably accepted contacts before really knowing them in person. A good reason may be that the present competitive work environment prompts international arbitrators as well as highly trained individuals to establish a solid professional network that may generate business opportunities and/or work positions in the future. Hence, many have come to add contacts without necessarily coming to meet or know all the members of this network personally, and thus I found the objection to my appointment quite absurd. Consequently, having a relative of one of the parties to the process as a LinkedIn contact did not compromise any impartiality or independence; even so, one of the parties wanted to challenge one of the arbitrators and his counsels devised a viciously pernicious campaign in order to achieve it.

In principle, the synergy between arbitration and social media has been fruitful and constructive. Since the publicity of arbitration as an alternative mechanism for dispute settlement, arbitral institutions and arbitrators in general have been positively received by the majority of the domestic and international community. Nonetheless, this still-not-well-documented combination of areas does present some incompatibility, since arbitration is based on the premise that the arbitrators who form the panel have the obligation to be an independent and impartial body and must not have any bond with the parties in dispute; and yet this premise, by reference to social networking, is not always true.

Thus, arbitrators are prompted to consider that, as a consequence of technology becoming an everyday-life instrument, some of the following questions need to be addressed: What happens if the Chairman of the arbitral tribunal has as a “friend” on Facebook who is the respondent or one of his counsels in the arbitration?  A worse scenario still, what if the respondent, being a national or international celebrity, has one of the members of the arbitral panel as a follower on Instagram? As we see, the various possibilities for arbitrators to be linked to their parties or their counsels may become endlessly numerous; and even the most diligent of arbitrators may likely never be able to foresee all these facts in this ever evolving digital era.

Moreover, even though the International Bar Association (IBA) Council has created Guidelines on Conflicts of Interest in International Arbitration (hence, the famous Non-Waivable Red List, Waivable Red List, Orange List and Green List, which in brief terms try to reflect situations that in practice are usually present in arbitration), These Guidelines fall short of covering the plurality of potential scenarios that may arise as a consequence of a conflict of interest. Even more, none of the lists remotely mentions all the probable relationships that the parties and arbitrators may have with one another through social networks. Therefore, although the Red List describes critical situations in which the arbitrator has a very close relation with one of the parties or with the result of the process, and the Orange List only mentions those situations in which the arbitrator and any of the disputing parties may have a degree of closeness, I still stand pondering as to where being part of the same social network should be included.

This latent but active social media phenomenon further presents a condition in which the parties involved in an arbitration process, whether acting as claimant or respondent, may stand vulnerable to the fact that one of them (or its lawyers) may maliciously use social networks to manipulate and to challenge arbitrators principally because of fear that such arbitrator may issue an award (if it is a sole arbitrator) or vote against one of the parties’ interests. It is clear then and without doubt that these sorts of inquiry should inspire us practitioners to continue studying and researching on the evolution of new technologies and social media and its effect on our legal profession because we are currently entering a transformational digital era that will bring rise to issues requiring continuous analysis during the coming years.

 

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 “Think Like A Lawyer” Approach to Law School is Outdated

ADR Prof Blog - Thu, 2018-06-14 10:49
Mary E. Jutten wrote a piece in the ABA Journal titled The “Think Like a Lawyer” Approach to Law School is Outdated, which makes some interesting points that will be familiar to readers of this blog.  Her most interesting point being that law schools need to teach students to think like professional service providers rather than gladiators … Continue reading The “Think Like A Lawyer” Approach to Law School is Outdated →

5 Tips on How to Avoid Hotel Management Disputes - Lexology

Google International ADR News - Thu, 2018-06-14 10:10

5 Tips on How to Avoid Hotel Management Disputes
Lexology
While an international hotel operating company will have, after years of experience, a sophisticated understanding of the provisions of its standard HMA and, more importantly, the likely consequences of these provisions at both commercial and ...

Arbitration Seated in India? It is Time to Enforce Your Award!

Kluwer Arbitration Blog - Thu, 2018-06-14 07:00

Tania Singla

The Indian Parliament passed the Indian Arbitration & Conciliation (Amendment) Act, 2015 (“Amendment Act”) in a bid to refresh and reform the existing arbitration regime under the existing Arbitration Act. Ironically, the Amendment Act spiralled new waves of persistent ambiguity and uncertainty regarding the applicability of these amendments to pending as well as fresh proceedings before the arbitral tribunals and the national courts.

 

The entire controversy regarding the amendments emanated from Article 26 of the Amendment Act, 2015, which reads:

 

Section 26. Act not to apply to pending arbitral proceedings.

Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act. (emphasis supplied)

 

A detailed discussion of the issues regarding Article 26 have been previously discussed on this Blog here. Given the length and drafting of the provision, it is not surprising that various High Courts in India have only contributed to the confusion by offering diverse interpretations of this provision.

 

The Supreme Court of India recently made a laudable attempt to set the record straight. The judgement of the Court in Board of Control for Cricket in India vs. Kochi Cricket Pvt. Ltd finally settled the confusion surrounding the date of application of the amendments and their operation vis-à-vis the previous Act. The major takeaways of the judgment are:

 

  1. The operation of the Amendment Act, 2015 is prospective in nature and the critical cut-off date is October 23, 2015. The amended version of the Arbitration & Conciliation Act will apply to those arbitrations that were/are initiated on or after this date and to all arbitration-related court proceedings commenced on or after this date.

 

  1. Prior to the Amendment to Section 36, if an application for setting aside was filed under Section 34, it led to an automatic stay on the enforcement of the award. The amended Article 36 requires a party to make a separate application requesting for a stay on enforcement of the award. By this judgment, the benefit of the amended Section 36 has been extended even to those applications that were filed prior to October 23, 2015.

 

Prospective Operation of the Amendments

The Supreme Court performed an extensive textual analysis and distinguished between the two ‘limbs’ of Section 26 separated by the ‘but’. It focused particularly on the use of “to the arbitration proceedings” in the first part versus “in relation to arbitral proceedings” in the second part. The Court concluded that the first part applies to proceedings that are conducted before the Arbitral Tribunal alone whereas the second part refers to courts proceedings that are commenced in aid and assistance of arbitral proceedings. Thus, the operation of the Amendment Act, 2015 has been held to be prospective and applied to arbitrations as well as related court proceedings under the Arbitration Act initiated on or after October 23, 2015. This means that for awards that have been rendered before this date, any setting aside proceedings initiated on or after this date would benefit from the application of the amended provisions of the Act.

 

Automatic Stay on Enforcement of Domestic Awards Lifted with Retrospective Effect

 Prior to the amendment, if and when a party filed an application for setting aside before a Court under Article 34, the other party could not seek enforcement of the award until the application was refused. Notably, the Supreme Court of India had previously criticized this provision in National Aluminium Co. Ltd. v. Pressteel & Fabrications (2004) because it did not grant discretion to the Court and instead, the mere filing of a Section 34 application led to an automatic stay on the enforcement of the award. Fortunately, the newly amended Article 36 has replaced this ‘automatic’ stay with the discretion to the Court to grant a stay where it receives a request from a party. In this judgment, the Court noted that the amended Section 36 would apply to all setting aside applications filed on or after October 23, 2015. However, the main issue before the Court was whether the newly amended Section 36 could also be applied retrospectively to applications filed before this date.

 

Under the Indian Arbitration Act, the award is deemed to be a decree by the Civil Court and deemed to be enforceable without any further action on the part of the Indian courts. Therefore, the issue was whether ‘execution’ proceedings relating to a decree gave rise to vested rights of a substantive nature which would not permit retrospective application of the amendment. Notably, the Court found that the execution of a decree (and therefore, an award) is a matter within the realm of procedure and does not give rise to any substantive right vested in a party to resist the enforcement of the award. Therefore, all domestic arbitration awards can now be enforced in India irrespective of any pending setting aside applications before national courts!

 

Interestingly, the Court also took into account ‘the practical aspect and the nature of rights presently involved, and the sheer unfairness of the unamended provision’, which reflects the Court’s evolving pragmatism and its acknowledgement that minimum judicial intervention is necessary to promote the efficacy of arbitration. It is evident the Supreme Court sought to cast its net far and wide and attempted to extend the progressive regime created under the Amendment Act to as many beneficiaries as possible within the textual contours of the legislation.

 

To conclude, the application of the amended Section 36 now mirrors the pro-arbitration approach codified Article 34 (4) of the UNCITRAL Model Law. The retrospective effect of Section 36 would undoubtedly benefit several arbitration awards, the enforcement of which was hitherto blocked by pending setting-aside applications. In addition, it would discourage parties from filing strategic Section 34 applications merely to block the enforcement of the award by the other parties and therefore, ease some of the burden on Indian courts. Important questions still remain regarding the application of other provisions of the Amendment but the Supreme Court has set the ball rolling and clarified critical issues, finally granting predictability and certainty to the High Courts as well as the arbitration community to a certain extent.

 

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 Arbitration Seated in India? It is Time to Enforce Your Award! appeared first on Kluwer Arbitration Blog.

Workshop on Alternative dispute resolution - The Hans India

Google International ADR News - Wed, 2018-06-13 19:01

The Hans India

Workshop on Alternative dispute resolution
The Hans India
Visakhapatnam: The International Centre for Alternative Dispute Resolution (ICADR) is conducting a two-day workshop on alternative dispute resolution (Arbitration) for the engineers of water resources department and roads and building department here ...

Write a suitable "I" Statement

Communication and Conflict Blog - Wed, 2018-06-13 13:08
You are in the middle of serving a customer in a book shop and another customer comes up and demands that you help her get a book down from a high shelf.

Former Big Five Legal Services Offshoot Andersen Global Enters Asia Via Indian Tie-Up - Yahoo Sports

Google International ADR News - Wed, 2018-06-13 11:17

Yahoo Sports

Former Big Five Legal Services Offshoot Andersen Global Enters Asia Via Indian Tie-Up
Yahoo Sports
Vaish Associates will become a collaborating firm of the Andersen Global network, which was formed in 2013 and now has more than 3,000 professionals worldwide providing international tax and legal services. The association will give the Indian firm ...

Arbitration and the renewable energy sector - Financier Worldwide

Google International ADR News - Wed, 2018-06-13 06:15

Arbitration and the renewable energy sector
Financier Worldwide
Arbitration in this matter is still very uncommon, with the exception of disputes under international investment protection law. During the construction phase, ... Disputes in this phase are often settled through alternative dispute resolution (ADR ...

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How Soon is Too Soon to Activate ISDS? The Nigeria-Morocco BIT Solution to Hasty Arbitration

Kluwer Arbitration Blog - Wed, 2018-06-13 00:56

Adebayo Adenipekun

International arbitration claims are oftentimes bedevilled with the contention that the claimant invoked the option to arbitrate much too early. Sometimes, this contention is no more than a lawyers’ artifice utilised to delay advancing arbitral proceedings. Yet, quite commonly, this contention is true in some cases. In my experience, I have identified a number of reasons for this extreme eagerness to activate arbitration clauses in Investor-State Disputes Settlement (ISDS).

Firstly, there is a distrust of the alternative remedies to arbitration. In Nigeria, the Nigerian Investment Promotion Commission Act (NIPCA), which is the principal legislation that embodies the Nigerian executive policy towards the promotion of investment in Nigeria, requires that domestic remedies be explored and exhausted before arbitration is activated. However, many claimants have flatly refused this owing to a belief (rightly or wrongly) that domestic remedies are biased, cumbersome or just altogether ineffectual.

Secondly, it is quite common for foreign investors to retain foreign counsel in the lifetime of their investments, most of who are unqualified to practice law in the countries where the investments are situate. When disputes arise, it is equally common for foreign counsel to be involved in the settlement of the disputes. This they do by direct appeal to authority and by participation in negotiations. However, when negotiations breakdown and the need to commence some form of legal proceedings arises, it is perhaps to be expected that foreign counsel will activate the dispute-resolution option that they are familiar with and are qualified to advocate.

Thirdly, the imprecise nature of what amounts to the exhaustion of local remedies contributes to the confusion. There is the school that argues that internal remedies include the full utilisation of the Court structure in the host State. Of course, the criticism of that school is that ISDS regimes exist to avoid submission to hometown justice and submission to the local Court structure is exactly that- hometown justice. Indeed, the main purpose of Investor-State arbitration is to avoid resorting to local Courts in deserving instances demonstrated in the 3rd Preamble to the ICSID Convention which recognises that “international methods of settlement may be appropriate in certain cases”. There is also the contention that litigation and arbitration are parallels and the activation of one should foreclose the other. Consequently, there is another school that argues that internal remedies are limited to non-litigious remedies such as negotiations, mediations and the likes. This school is not without its own criticism as questions persist as to who the competent mediator is in such instances (whether it is the state agency involved in the dispute, the foreign affairs department or the department of justice), what manner negotiations should take (are in-person meetings compulsory or will correspondences suffice), what duration of time is too long to be spent in mediation, when exactly these internal remedies can be said to have failed and what precisely, is the measure of success of these internal remedies, knowing fully that the investor mustn’t always prevail. Notably, the NIPCA does not stipulate what internal remedies are.

The effect is that there is now an increasing clamour for states to pull out of ISDS agreements – or to review them. In October 2017, 230 professors of economics and law wrote a letter to President Trump, demanding that he renegotiate both the NAFTA and TPP because those agreements contained ISDS regimes. The arguments of the professors are varied but most relevant here is their contention that ISDS regimes allow investors to “take those claims to a panel of private international arbitrators, circumventing local, state, or federal domestic administrative bodies”. They also argue that by ISDS regimes, investors “are even able to re-litigate cases they have already lost in domestic courts.” With such views on the rise, the future of arbitration and ISDS regimes in investment protection is under renewed scrutiny as parties haste to the arbitration door without heeding the calls to exhaust local remedies.

In Nigeria, the experience is not different and while there has not yet been a call for the total withdrawal from ISDS regimes, there is certainly a rethink of the approach. This rethink is necessary, if not mandatory, as the non-fulfilment of statutory/contractual conditions precedent (such as exhausting internal remedies) is a jurisdictional flaw in any arbitration that purports to interpret Nigerian law. The Nigeria-Morocco BIT, executed on 3 December 2016, exemplifies this rethink. By the treaty, the Parties are obligated by Article 26 to pursue dispute prevention, in addition to dispute resolution. This dispute prevention envisages that parties should first submit their dispute to a Joint Committee (JC) which shall comprise of “representatives as designated by both parties”. The JC is to submit relevant information about the presented case within 90 days (extendable by another 60). The JC is required to hold in-person meetings and render a report while the entire dispute ought to conclude in 6 months. The treaty does not appear to provide for the proceedings of the JC or what format they should take.

It is noteworthy that under Article 26, a dispute prevention obligation is imposed on the parties to the treaty. The parties are the Kingdom of Morocco and the Federal Republic of Nigeria. Upon a plain reading of Article 26(1), it may appear that the investors of these countries are not obligated by the treaty to undertake dispute prevention as envisaged by Article 26 more so as Article 27 specifically provides for the dispute-resolution procedure where the dispute is between a party to the treaty and an investor of the other party and appears to preserve the right to proceed straight to arbitration without exploring any internal remedies However, that appearance is not the true state of the treaty. Article 26(2) clearly allows a Party to “submit a specific question of interest of an investor” to the JC in dispute prevention. Article 26(5) also specifically refers to the investor and restricts his/her direct access to ISDS without first exhausting local remedies towards dispute prevention. Indeed Article 27 begins by stating that its provisions may be invoked only if “disputes cannot be settled according to the provisions of article 26” thus erasing any doubt as to the applicability of Article 26 and its dispute prevention obligation to investors.

The operative words used in Article 26 are quite instructive. The obligation to invoke Article 26 is an express condition precedent to ISDS as submission to the JC shall be complied with “before initiating an eventual arbitration procedure”. The obligation of an investor in a Party to submit to the JC is not quite as clear as Article 26(2) states that a Party may submit issues relating to the interest of an investor. Nonetheless, even when the JC does not entertain or resolve the dispute, by Article 26(5), the investor is only allowed to explore ISDS remedies after it has exhausted “local remedies or the domestic courts of host State”. The nebulous phrase “local remedies” appears in this provision again. It presents a problem when it is considered that it is disjunctively used along with approach of the Courts. Thus, one may argue that having regard to the use of the word “or” which has been interpreted in Nigerian jurisprudence to present an option, an investor is not obligated to approach the courts but may in the alternative simply exhaust “local remedies”, whatever they are conceived by the explorer to be. This is especially as the treaty expressly preserves the “diplomatic channels existing between the Parties”. It appears though that once a Party activates the judicial process, it must see it through, including, to my mind, by exhausting the entire appellate process allowed by law (hence the use of the plural word, “courts”).

In the final analysis, what is sure is that the Nigeria-Morocco BIT envisages a delayed activation of ISDS remedies. Despite the disjunctive use of the phrase “internal remedies” in relation to resorting to domestic courts, the treaty achieves the following:

  1. It places some specificity on what internal remedies are (consultations and negotiations before the JC)
  2. It specifies the duration of these internal remedies (6 months)
  3. It clarifies the modalities internal remedies should take (correspondences alone will not suffice and in-person meetings should be held, where possible)
  4. It expressly settles the question of whether internal remedies include a submission to local courts and appears to be a waiver to any re-litigation objection that either party may raise in an eventual reference

Since the treaty, Nigeria and Morocco have entered into two high-value agreements for the construction of the Nigeria-Morocco pipeline project and the supply of Fertilizer to Nigeria. In the 10-year lifespan of the treaty, more deals are sure to be executed with the attendant possibility of conflict. Of course, when specific disputes arise, lawyers and tribunals will give imaginative and interesting interpretations to the ISDS regime of the Nigeria-Morocco BIT. Suffice to say for now however, that the Nigeria-Morocco BIT provides a healthy template for avoiding hasty arbitration.

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The post How Soon is Too Soon to Activate ISDS? The Nigeria-Morocco BIT Solution to Hasty Arbitration appeared first on Kluwer Arbitration Blog.

Locke Lord Adds FINRA Arbitrator, Greenberg Traurig Alum - Law360

Google International ADR News - Tue, 2018-06-12 16:32

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Locke Lord Adds FINRA Arbitrator, Greenberg Traurig Alum
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Vallo's practice encompasses securities litigation, arbitration and mediation, and he also has extensive experience with retail brokerage compliance issues in domestic and international markets. He serves as an arbitrator and mediator for FINRA and is ...

Former Big Five Legal Services Offshoot Andersen Global Enters Asia Via Indian Tie-Up - Law.com

Google International ADR News - Tue, 2018-06-12 15:44

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Vaish Associates will become a collaborating firm of the Andersen Global network, which was formed in 2013 and now has more than 3,000 professionals worldwide providing international tax and legal services. The association will give the Indian firm ...

The North Korean Summit

ADR Prof Blog - Tue, 2018-06-12 11:11
I haven’t followed the summit closely (for example, I didn’t know that it would be completed today), but some recent chatter about it did catch my attention.  The first is that President Trump did not prepare much for this negotiation.  As negotiation professors, we preach the importance of preparation for a number of reasons, mostly … Continue reading The North Korean Summit →

Law Firm Arbitration Clauses for Summer Associates

ADR Prof Blog - Tue, 2018-06-12 06:52
From this morning’s Inside Higher Education: A group of top law schools on Monday released the results of a survey of workplace harassment policies at law firms recruiting on their campuses. Those law schools asked the firms last month to respond to questions about mandatory arbitration agreements and other policies dealing with workplace harassment. Student … Continue reading Law Firm Arbitration Clauses for Summer Associates →

Arbitral Decision-Making: An Issue of Consistency and a Response to Bias

Kluwer Arbitration Blog - Tue, 2018-06-12 04:00

Stavros Brekoulakis, Mary Mitsi (Assistant Editor) and Ahmed El Far

Chartered Institute of Arbitrators (CIArb)

Consistent decision-making has been an ongoing concern in the way arbitrators approach the issue of treaty shopping and indirect expropriation. The article of Ozlem Susler and Therese Wilson, “Restoring Balance in Investor State Dispute Settlement: Addressing Treaty Shopping and Indirect Expropriation Claims and Consistent Approaches to Decision-Making” ,1)Published in CIArb’s Academic Journal: International Journal of Arbitration, Mediation and Dispute Management. jQuery("#footnote_plugin_tooltip_9054_1").tooltip({ tip: "#footnote_plugin_tooltip_text_9054_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); explores two of the apparent concerns of western liberal democracies regarding investor state dispute settlement provisions in investment treaties and trade agreements. Both of these concerns were highlighted in the arbitration in Philip Morris Asia Ltd v Commonwealth of Australia wherein Philip Morris Asia challenged Australia’s Tobacco Plain Packaging Act 2011 as amounting to, amongst other things, indirect expropriation or a breach of the fair and equitable treatment (FET) standard. The case, therefore, highlighted the possibility of treaty shopping by an investor to secure the protection of an investment treaty, as well as the possibility of challenging State regulation on the basis of indirect expropriation or breach of the FET standard.

As the decision in Phillip Morris v Australia2)Philip Morris Asia Ltd (Hong Kong) v Commonwealth of Australia (Award on Jurisdiction and Admissibility, Permanent Court of Arbitration, Case No.2012-12, 17 December 2015). jQuery("#footnote_plugin_tooltip_9054_2").tooltip({ tip: "#footnote_plugin_tooltip_text_9054_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); demonstrates, tribunals will not entertain jurisdiction to hear a claim where there has been an abuse of process in the form of treaty shopping which was undertaken at a time where the dispute was foreseeable. The clear message for investors following the decision in Philip Morris v Australia is that investors must structure their investment to make use of protections offered in a particular treaty at the time of entering the investment, rather than when a dispute is foreseeable.

The host state’s response to abusive treaty shopping might be to amend existing BITs or to terminate existing BITs. Some countries have moved towards terminating BITs with other countries—a radical move which can undermine the whole fabric of the foreign investment framework that has been developed to date. For example, Australia attempted to ban investor state arbitration, presenting a Bill in 2014 with a view to protecting Australian laws. An alternative approach is to improve the function of ISDS from the perspective of states, for example by addressing the issues discussed in this paper—including through a consistent investment court mechanism

Additionally, recently negotiated agreements such as the TPP reconceptualised as the CPTPP, and the proposed TTIP, have tended to include “carve-out” provisions, preserving state rights to regulate in the public interest, for example with regard to the environment and public health. Explicit preservation of the right to regulate, with regard to a range of public policy objectives, is a notable feature of the CETA. However, concerns might remain about how consistently such provisions might be interpreted or how consistently approaches to abuse of process might be applied by arbitral tribunals. A permanent and central investment court may allay those concerns.

A different factor influencing consistent decision-making is the issue of bias. Stepan Puchkov, in his article “Subconscious Bias as a Factor Influencing Arbitral Decision-Making” ,3)Published in CIArb’s Academic Journal: International Journal of Arbitration, Mediation and Dispute Management. jQuery("#footnote_plugin_tooltip_9054_3").tooltip({ tip: "#footnote_plugin_tooltip_text_9054_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); explores the “black box” of the human mind which has been explored less than many people would guess and much less than it deserves. Even scientists specialising in this sphere have very limited knowledge about how thoughts are processed and how decisions are made. One of the means to obtaining an insight into this deep and mysterious process is the observation of repeating patterns of irrational behaviour that many people often follow. The process is two-way: on the one hand, the fact of human irrationality makes it possible to construct thought “road-maps”, on the other hand, an understanding of thinking processes allows us to predict and to some extent to avoid irrationality.

Rational decision-making is crucial for the functioning of many aspects of human society including dispute resolution. The progress made from trial by battle to international arbitration cannot be overestimated, but even the latter is not completely free from non-legal influences. Subconscious biases are among them. The good news is that such biases are predictable and as such can in principle be avoided.

Puchkov explores the most influential theories dealing with the concealed thought processes and their implications for arbitral decision-making. One of the most important known features of the human mind for decision-making is the processing of information by two different systems rather than by one. Departing from the results of previous research, they distinguished between the “automatic and largely unconscious” System 1 and the deliberative and analytical System 2. Subconscious influences are not apparent to a person but can nevertheless result in irrational although predictable decisions

As an example, the CME v Czech Republic and Lauder v Czech Republic cases are based on essentially the same factual and legal background but, nevertheless, the tribunals’ decisions are vastly different. Subconscious biases might have to a certain extent conditioned the discrepancies in the outcomes. One can fairly easily imagine a situation where a judge or an arbitrator sympathises with one party’s case in general as a “big question” but cannot accept arguments underpinning “small issues” and thus has no option other than to dismiss the claim altogether (despite not feeling inclined to do so). In such cases, it must be helpful for a party to state its arguments broadly, in a way that would allow the decision-maker to exercise some degree of interpretation.

The issues of consistency and bias in arbitral decision-making cannot be underestimated. They have given rise to criticisms regarding the legitimacy and transparency of arbitration as a dispute resolution process for resolving disputes involving public and private interests. Elucidating the arbitral decision-making process can be the much needed reply to such criticisms proving the effectiveness of arbitration as an alternative to domestic courts.

Both articles are published in CIArb’s Academic Journal: International Journal of Arbitration, Mediation and Dispute Management. After 8 years under the Editorship of Mr Michael O’Reilly, Professor Stavros Brekoulakis has taken over as the Editor in Chief of the CIArb’s Academic Journal (the International Journal of Arbitration, Mediation and Dispute Management). He will be supported by associate editors Dr Mary Mitsi, Dr Ahmed El Far and Sabina Adascalitei, and an Editorial Board of distinguished international arbitration practitioners and academics from a wide range of jurisdictions and legal backgrounds. The Journal is the oldest academic journal dedicated to the field of arbitration and dispute resolution and boasts an unparalleled membership of around 16,000 individuals and online access through Westlaw and Lexis Nexis UK. The Journal welcomes the submission of articles for publication (see here the guidelines for submissions)

References   [ + ]

1, 3. ↑ Published in CIArb’s Academic Journal: International Journal of Arbitration, Mediation and Dispute Management. 2. ↑ Philip Morris Asia Ltd (Hong Kong) v Commonwealth of Australia (Award on Jurisdiction and Admissibility, Permanent Court of Arbitration, Case No.2012-12, 17 December 2015). 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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EMAC marks Year of Zayed at Posidonia 2018 - Seatrade Maritime News

Google International ADR News - Mon, 2018-06-11 20:12

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The Emirates Maritime Arbitration Centre (EMAC) attended Posidonia 2018 as part of a Dubai team that will be taking part in a number of important local and international events during the current 'year of Zayed' - marking the centenary of the birth of ...

Expert lists benefits of arbitration in Nigeria - Daily Trust

Google International ADR News - Mon, 2018-06-11 17:58

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Speaking on the forthcoming 50th anniversary of the United Nations Commission on Trade Law (UNCITRAL) to be hosted by Nigeria from June 13, he said the event will boost Nigeria's image in international trade and investment standards as it will be ...

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