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The Virginia Workers' Compensation Commission Releases 2017 Annual Report - WorkersCompensation.com (press release)

Google International ADR News - Thu, 2018-09-13 09:21

The Virginia Workers' Compensation Commission Releases 2017 Annual Report
WorkersCompensation.com (press release)
“The Alternative Dispute Resolution team experienced an 80% growth in ADR cases since 2016 resulting in the addition of five (5) new certified mediators. ... statewide;; Evaluation of office spaces across the Commonwealth;; Record attendance at the ...

Commencement and Conduct of Proceedings - Swiss Civil Procedure Law in a Nutshell (Volume 3 of 12) - Lexology

Google International ADR News - Thu, 2018-09-13 06:23

Commencement and Conduct of Proceedings - Swiss Civil Procedure Law in a Nutshell (Volume 3 of 12)
Lexology
Although the CPC is pro-mediation, parties to litigation rarely request this form of Alternative Dispute Resolution in business law matters. Party-driven Proceedings. As a general rule, the parties must present the facts of the case and deliver the ...

Cooperation and Facilitation Investment Agreements in Brazil: The Path for Host State Development

Kluwer Arbitration Blog - Thu, 2018-09-13 01:09

Natali Cinelli Moreira

Brazil has recently executed two new Cooperation and Facilitation Investment Agreements (“CFIAs”) with the Federal Democratic Republic of Ethiopia on April 11, 2018; and with the Republic of Suriname on May 2, 2018. These are, respectively, the 7th and the 8th CFIAs that Brazil has executed since 2015 (the former ones were executed with Chile, Colombia, Malawi, Mexico, Angola and Mozambique). Following this same protection model, Brazil has also entered into two treaties with investment provisions: the Economic and Trade Expansion Agreement with Peru and the Intra-Mercosur Investment Facilitation Protocol. So far, the CFIA executed with Angola is the only one in force.
 
CFIAs are the model investment agreement proposed by Brazil to regulate the relationship between foreign investors and host countries. Focusing on cooperation and facilitation of investment flows, the CFIAs do not resemble traditional bilateral investment treaties (“BITs”). CFIAs regulate direct investment flows from the investor of a party into the territory of the other party; however, differently from BITs, they seek a greater balance between investment protection and host state’s development agenda. To accomplish it, CFIAs bring new wording to old traditional clauses inserted into BITs (such as National Treatment, Most-favored-nation Treatment, and Expropriation), introduce new safeguard clauses to regulate investments and investors’ behavior (as corporate social responsibility clauses and provisions to protect the environment, labor affairs and public health), as well as rely on a dispute resolution mechanism far from investor-state arbitration model widely included in BITs. The CFIAs executed with Ethiopia and Suriname have followed this same path.
 
When addressing National Treatment and Most-favored-nation Treatment, the referred CFIAs expressly state that “treatment accorded in like circumstances” shall be interpreted according to the totality of circumstances, including – and, therefore, excepting – whether the relevant treatment distinguishes between investors or investments on the basis of legitimate public welfare objectives (articles 5.2 and 6.3 of the Ethiopian CFIA; articles 5.4 and 6.4 of the Surinamese CFIA). As to Expropriation, both CFIAs also explicitly acknowledge that only direct expropriation – where an investment is nationalized or otherwise directly expropriated through formal transfer of title or ownership rights – is under protection, excluding the well-known creeping expropriation so dreaded by host countries when adopting public policies to protect the environment, public health and other areas of public concern (article 7.5 of both Ethiopian CFIA and Surinamese CFIA).
 
Besides this new face to old clauses, CFIAs also contain dispositions which historically have been alien to investment treaties. Both Ethiopian and Surinamese CFIAs include articles on corporate social responsibility (article 14 and 15, respectively), stating that investors and their investment shall strive to achieve the highest possible level of contribution to the sustainable development of the host state and the local community, by means of a high degree of socially responsible practices on a voluntary basis. This approach is in line with modern investment agreements, which have included more socially responsible clauses – as can be noted, for example, from the investment chapter included in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership; although this trend is recent, it has gained considerable relevance in the last years. The CFIAs also include articles which overtly acknowledge that host county is free to adopt, maintain and enforce any measure deemed appropriate to ensure the foreign investment is carried out according to national labor, environmental and health legislation (article 16 of the Ethiopian CFIA; article 17 of the Surinamese CFIA).
 
The aforementioned clauses evidence that the CFIAs executed with Ethiopia and Suriname follow the previous ones negotiated by Brazil within the last three years, consolidating a new model to regulate foreign investment. Investor protection is still a major concern in this Brazilian model; creating and maintaining favorable conditions for investments is an express objective included in the preamble, and several clauses intended to protecting investments are also part of the agreements (such as Compensation for Losses, Transparency, Transfers, among others). However, it comes accompanied by provisions intended to protect and, indeed, to promote the host country’s development agenda.
 
This is even more evident when the dispute resolution mechanism is taken into account. The agreements executed with Ethiopia and Suriname address foreign investment-related claims as previous CFIAs: there is an initial dispute prevention phase, and, if no agreement is reached, the aggrieved party may initiate a state-to-state arbitration. Both choices may be seen as positive steps towards host state’s development.
 
A high emphasis is placed in the amicable settlement of disputes. Two institutional arrangements created in the context of CFIAs – the Joint Committee and the Focal Point (or, Ombudsman) – are intended to address any issues or differences concerning investments in order to avoid litigation (articles 17 and 18 of the Ethiopian CFIA; articles 18 and 19 of the Surinamese CFIA). In case the dispute is not avoided, a settlement phase is initiated. The parties shall engage into negotiation proceedings and, by the end of a 60-day deadline, the Joint Committee shall issue a report with its recommendation; the parties, then, may decide whether to adopt it or not (article 23 of the Ethiopian CFIA; article 24 of the Surinamese CFIA). If no agreement is reached and the parties decide not to follow the Joint Committee’s report, then arbitration state-to-state may be initiated (article 24 of the Ethiopian CFIA; article 25 of the Surinamese CFIA).
 
The settlement approach, followed by this type of arbitration, may be seen as favorable to host state protection. No litigation is initiated unless several steps are taken in order to avoid the dispute itself. Both parties are invited to discuss their arguments and reach a settlement, while a preliminary report on the case, with the conclusions of the Joint Committee on their claims, is issued and made available. The fact both parties may discuss their arguments and even be provided with a first analysis of the case may avoid a lengthy and costly litigation, leading to an amicable settlement.
 
Even if this is not the case, and parties decide to proceed with litigation, it will not constitute an investor-state arbitration; this system has long been criticized as biased towards the investor’s protection, with little regard to host states’ interests. State-to-state arbitration, as proposed in the CFIAs, may be an alternative to reach a greater balance between investor and host state. The aggrieved investor shall persuade its home state that a damage was caused to the investment, so it may initiate an arbitration against the host state. It would be expected that only robust claims would proceed under this situation, avoiding adventurous litigators.
 
Brazil seems to be promoting the model agreement it has launched a few years ago, which is focused in finding a greater balance between investment protection and the development agenda of the host state. From new wording to old clauses, to the inclusion of provisions which were alien to traditional investment agreements, including new dispute resolution mechanisms, the fact is that CFIAs have come to provide a new meaning to the relationship between foreign direct investment and host state development. Nonetheless, we still have to wait whether these agreements will result in concrete facts.

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


The post Cooperation and Facilitation Investment Agreements in Brazil: The Path for Host State Development appeared first on Kluwer Arbitration Blog.

Arbitration and Conciliation (Amendment) Bill 2018: coherence or chaos? - Lexology

Google International ADR News - Wed, 2018-09-12 11:01

Arbitration and Conciliation (Amendment) Bill 2018: coherence or chaos?
Lexology
The failure of the International Centre for Alternative Dispute Resolution to promote India as a preferred seat for dispute resolution is evident from the proposed Arbitration Council of India in the 2018 bill. Prompt adjudication, clear end procedures ...

and more »

What's Next: EU's Right to be Censored? | Legal's Latest Crypto Craze | Hack the Vote - Law.com

Google International ADR News - Wed, 2018-09-12 10:35

Law.com

What's Next: EU's Right to be Censored? | Legal's Latest Crypto Craze | Hack the Vote
Law.com
FWIW, Google's reasoning has some history—GC Kent Walker previously blogged about how an enforcement-without-borders approach to right to be forgotten “runs contrary to the basic principles of international law,” opening the doors for “less democratic ...

Arbitration and Conciliation (Amendment) Bill 2018: coherence or chaos? - International Law Office

Google International ADR News - Wed, 2018-09-12 10:09

Arbitration and Conciliation (Amendment) Bill 2018: coherence or chaos?
International Law Office
The failure of the International Centre for Alternative Dispute Resolution to promote India as a preferred seat for dispute resolution is evident from the proposed Arbitration Council of India in the 2018 bill. Prompt adjudication, clear end procedures ...

and more »

Turkey: The Results Of Applying Arbitration Without Exhausting Pre-Arbitration Dispute Resolutions - Mondaq News Alerts

Google International ADR News - Wed, 2018-09-12 06:25

Turkey: The Results Of Applying Arbitration Without Exhausting Pre-Arbitration Dispute Resolutions
Mondaq News Alerts
The parties aim to settle their disputes in more effective, quicker and less expensive way of proceeding. As a solution of this problem, Alternative Dispute Resolution (ADR) is formed. The parties are not obliged to choose only one method, but it is ...

How to become a New York lawyer - Study International News

Google International ADR News - Wed, 2018-09-12 04:10

Study International News

How to become a New York lawyer
Study International News
To help LLM students develops skills needed by a successful practicing attorney, BU Law provides four skills-based courses for LLM students: Alternative Dispute Resolution, LLM Moot Court/Persuasive Advocacy, Professional Responsibility for ...

Shining a Light on Dispute Resolution: Transparency, Metrics and Empirical Research

ADR Prof Blog - Tue, 2018-09-11 23:26
From my dear colleague and FOI, Professor Nancy Welsh, Director of the Dispute Resolution Program at Texas A&M: Texas A&M Law’s Dispute Resolution Program is very pleased to invite you to our annual symposium: Shining a Light on Dispute Resolution: Transparency, Metrics and Empirical Research. It will be held on Friday, November 16, 2018, with … Continue reading Shining a Light on Dispute Resolution: Transparency, Metrics and Empirical Research →

Law without lawyers: does legal education have a future? - Scoop.co.nz

Google International ADR News - Tue, 2018-09-11 20:19

Law without lawyers: does legal education have a future?
Scoop.co.nz
“From Blockchain to 'Alternative' Dispute Resolution, the way appears open for a legal system without the need for the high priests of the legal profession to navigate it,” Professor Hopkins says. “If current trends continue, the much maligned ...

New Signs of Good Prospects for International Arbitration in Argentina?

Kluwer Arbitration Blog - Tue, 2018-09-11 17:30

Noiana Marigo, María Julia Milesi and Ezequiel Vetulli

On 4 July 2018, the Argentine National Congress passed a new arbitration act modernizing the framework for the conduct of international commercial arbitrations in Argentina (the Arbitration Act or the Act), based on the UNCITRAL Model Law and its 2006 amendments (the Model Law). The development comes in response to calls from the arbitral community in Argentina, which have been ongoing for some time, to rehaul the country’s arbitration legislation, particularly following problematic amendments introduced in 2015. The approval of the new Act mirroring the Model Law represents a solid step towards enhancing the status of international arbitration in Argentina.

The Model Law is considered to embody the most widely accepted and highly regarded rules of arbitration practice and principles; its adoption by 80 countries attests to its reputation. Even countries not officially listed as “Model Law” jurisdictions follow its main principles, thereby further ensuring the uniformity and predictability of arbitral practice worldwide.

In November 2016, the Argentine Ministry of Justice presented to Congress a draft bill on international arbitration (the Bill) prepared by a working group composed of lawyers, arbitrators, academics, and public authorities (including the Treasury Attorney General’s Office). The Bill had its genesis in a project to enhance the judicial system so as to achieve quicker, more independent, and more secure resolution of disputes. The Bill acknowledged the importance of arbitration as a flexible, fast and reliable dispute resolution method. In September 2017, the Senate approved the Bill, and on 4 July 2018 it was finally passed into law by the House of Representatives. Once promulgated by the executive power, the Act will enter into full force and effect. The legislative decision to foster international arbitration forms part of a broader policy to reform Argentina’s political and economic framework, aimed at improving legal certainty as to attract foreign investors, in line with the recent policies of President Macri. The promotion of international arbitration as a means of dispute resolution can also be seen in other recent legislation, including the Public-Private Partnership Act, which expressly refers to international arbitration as a means of resolving disputes involving state parties.

The previous arbitration framework in Argentina

Historically, arbitration in Argentina has been regulated by the procedural codes of each jurisdiction, i.e. each province or the federal territory. While each code dealt with the procedural aspects of arbitration in a different way, there were no substantial differences between them. The Argentine courts applied the provisions of these procedural codes to both domestic and international arbitrations, as the rules provided no distinction between the two.

In 2015 Argentina introduced a new Civil and Commercial Code, which included a specific chapter on domestic arbitration. This Code, which applied in all provinces and federal territories, recognized the Model Law as one of its main sources (along with the French arbitration law and the Quebec Civil Code). Its enactment meant great improvements in the arbitration framework in Argentina, as it incorporated the principles of separability and kompetenz-kompetenz (articles 1653 and 1654), which were not previously formally codified, and that of favor arbitrandum for the interpretation of arbitration agreements (article 1656).

The provisions on arbitration contained in the procedural codes of each province, however, also remained in force. The Civil and Commercial Code did not clarify the scope of its application either, so both instruments governed domestic and international arbitration in Argentina.

The new Arbitration Act has sought to clarify this issue, specifying that it, exclusively, will govern international commercial arbitration (along with the relevant international treaties). The Act thus consolidates all relevant domestic rules for international commercial arbitration into a single instrument. The Act further provides that an arbitration will be “international” if: (i) at the time of the conclusion of the arbitration agreement the parties had their places of business in different states, or (ii) their places of business are different from either the seat of the arbitration, any place where substantial obligations are to be performed, or the place of the closest connection to the dispute. The procedural codes and the Civil and Commercial Code will continue to apply, but only to domestic arbitrations. As a consequence, the realms of international and domestic arbitration will now have different regulatory instruments.

The new rules for international commercial arbitration pursuant to the Act

Unlike other countries that have adopted the Model Law whilst making significant alterations to its text, Argentina has decided to adopt the model text almost in its entirety with few modifications. As such, Argentina’s new Arbitration Act offers cutting edge solutions with regard to some issues, but takes a more conservative approach regarding other novel practices.

In the definition of “arbitration agreement,” for instance, the Arbitration Act adopts option I of article 7 of the Model Law, which contains the requirement that an arbitration agreement shall be in writing. Congress indicated in the Act that the circumstances mentioned in article II(2) of the New York Convention under which an arbitration agreement is deemed to be “in writing” (arbitration clause, or arbitration agreement signed by the parties or contained in an exchange of letters or telegrams), shall be interpreted as non-exhaustive, as recommended in 2006 by UNCITRAL. However, the Act takes a conservative approach by declining to adopt the possibility that an arbitration agreement may be considered to be in writing “whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means” (article 7.3 of the Model Law).

The Arbitration Act also excludes the qualification of arbitration as “international” when the parties expressly agree that the subject matter of the arbitration agreement relates to more than one country (article 1.3.c Model Law).

Another deviation from the text of the Model Law relates to the law applicable to the merits where the parties are silent on the issue. Instead of taking the Model Law approach, which provides that the arbitral tribunal shall apply the law determined by the conflict-of-laws rules, the Arbitration Act creates a shortcut by stating that the tribunal shall simply apply the “rules of law” that it considers appropriate.

In turn, a few elements have been added to the original text of the Model Law, as follows:

  1. In the definition of the term “commercial,” instead of including footnote 2 of the Model Law (which recommends a wide interpretation of such term), article 6 of the Arbitration Act states that the term “commercial” refers to any contractual or non-contractual relationship predominantly governed by Argentinian private law. Article 6 also explains that the interpretation should be wide and, in case of doubt as to the nature of a relationship, there should be a presumption in favour of its commercial nature. While this provision may have been intended to foster arbitration, it probably went too far, as it may now encompass situations that are governed by private law but can hardly be considered “commercial” in nature.
  2. In the constitution of the arbitral tribunal, the Act states that an arbitration agreement whereby either party is granted an advantage over the other in the appointment of arbitrators shall be null and void. This provision is unusual, and represents a departure from the Model Law, which provides that any advantage in the appointment of arbitrators is governed by a general rule on equal treatment of the parties (see, for example, article 18 of the Model Law).
  3. While the Model Law provides general rules for challenging arbitrators, article 28 of the Act includes additional (non-exhaustive) grounds for challenge. It refers, for example, to the participation of an arbitrator (or members of his/her law firm or equivalent organization) in another arbitration (or judicial procedure) as: (i) counsel of one of the parties, regardless of the subject matter of the dispute, or (ii) counsel of a third party in a case with the same subject matter, and provides that either situation will constitute grounds for challenge, irrespective of any evidence to the contrary about the arbitrator’s independence and impartiality. This provision might therefore pave the way for frivolous challenges and generate delays.

The rules governing domestic arbitration pursuant to the existing instruments

Although Argentina’s new Arbitration Act establishes a new framework for international commercial arbitration, it leaves the existing procedural codes and the Civil and Commercial Code to govern domestic arbitration. The procedural codes are quite outdated, and, as noted above, the chapter on arbitration contained in the Civil and Commercial Code contains several technical flaws. For instance, one of the most problematic provisions relates to the challenge of awards (the last paragraph of article 1656). This provision (i) establishes an annulment recourse without indicating the applicable grounds, and also (ii) refers to a non-waivable “judicial challenge” against any final award “contrary to the legal system”, virtually creating a system of appeal for arbitral awards.

In an effort to address these issues, Congress is in the process of analyzing a draft bill which proposes several amendments to the Civil and Commercial Code, including on the vital issues of arbitrability and challenges to arbitral awards.

On arbitrability, the bill proposes to eliminate the Code’s limitation on the arbitrability of disputes involving public policy (article 1649). It also proposes to replace the Code’s blacklist of non-arbitrable matters with a general rule confirming the arbitrability of all disputes involving freely transferable rights (article 1651).

With regard to challenges of arbitral awards, the bill proposes to remove the last paragraph of article 1656 providing for the judicial challenge of awards “contrary to the legal system” mentioned above and an existing ground to challenge interim measures on the basis that they violate constitutional rights or are “unreasonable” (article 1655).

Such changes will hopefully provide the much-needed certainty required to achieve consistency of the arbitration framework at the domestic level as well.

Conclusions

In sum, Argentina’s decision to pass the new Arbitration Act is a positive step towards the promotion of the country as an arbitration-friendly jurisdiction. The Act now establishes a clear distinction between the rules applicable to domestic versus international arbitration, and a modern body of rules for the latter. There remain some aspects that could be improved in the legal framework applicable to domestic arbitration, but the reforms proposed in the current bill being considered by Congress appear promising in this regard.

The ultimate success of the Arbitration Act will be measured by its application in the domestic courts. It remains to be seen whether the Argentine courts will respect the new dividing line between the instruments governing international and domestic arbitration and apply the provisions of the Act to the exclusion of the old procedural codes. While many courts have been contributing to the creation of a solid body of pro-arbitration case law even prior to the introduction of the new Act, a limited few still show some reservations towards its use.

By passing its new Act, Argentina follows in the legislative footsteps of several of its Latin American neighbours. In the last decades, almost all countries in the region have modernized their arbitration legislation. Like Argentina, most of them have followed the Model Law, with some also incorporating the 2006 amendments. Most of them, like Argentina, have also consolidated their international arbitration laws into  a single standalone act, with the exception of Mexico, where arbitration is still governed by the commercial code. Uruguay, for instance, passed its new and long awaited arbitration legislation on 3 July 2018 (almost simultaneously with Argentina), replacing its old procedural code-based rules with a new framework based on the 1985 Model Law with some 2006 amendments. In view of these developments, the future of arbitration in Argentina and in Latin America seems bright.

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


The post New Signs of Good Prospects for International Arbitration in Argentina? appeared first on Kluwer Arbitration Blog.

Serving Justice Online: Online Dispute Resolution as an Alternative to Traditional Litigation - lawless.tech

Google International ADR News - Tue, 2018-09-11 15:16

lawless.tech

Serving Justice Online: Online Dispute Resolution as an Alternative to Traditional Litigation
lawless.tech
Similarly, UNCITRAL (UN Commission on International Trade Law) also got interested in regulating the field. In 2010, a dedicated working group was established in order to develop a sufficient system for cross-border e-commerce disputes to make ...

New US Law Uncertainty About Nonsignatories

The New York Convention mandates that an “agreement in writing,” as defined in Article II (2), shall be recognized by Contracting States, and that the court of a Contracting State shall refer the parties to arbitration when there is an action before the Court as to which such an agreement has been made. (Article II, subsections (1) and (3)). But if a US District Court has subject matter jurisdiction based on FAA Chapter Two (implementing the Convention), is an “agreement in writing” as defined in Article II the only form of arbitration agreement the Court may enforce?  A decision at...
Read More »

The post New US Law Uncertainty About Nonsignatories appeared first on Marc J. Goldstein - Arbitration & Mediation.

Terms of Service - WESTERNMASSNEWS.com

Google International ADR News - Tue, 2018-09-11 09:26

WESTERNMASSNEWS.com

Terms of Service
WESTERNMASSNEWS.com
International Users. The Services are controlled and offered by Meredith from its facilities in the United States of America. Meredith makes no representations that the Services are appropriate or available for use in other locations. Those who access ...

DLA Piper Adds Insurance Disputes Partner In London - Law360

Google International ADR News - Tue, 2018-09-11 09:04

Law360

DLA Piper Adds Insurance Disputes Partner In London
Law360
"Clients value the service we are able to provide in London on complex international insurance and reinsurance disputes, across a wide spectrum of both traditional and emerging classes of business,” Leon Taylor, head of DLA Piper's U.K. insurance and ...

Creighton Program on Disrupting Law and Reclaiming Justice on October 8

ADR Prof Blog - Tue, 2018-09-11 08:23
The Negotiation and Conflict Resolution (NCR) Program in the Creighton University Graduate School is excited to invite you to Disrupting Law, Reclaiming Justice – an upcoming event at Creighton that brings to the Heartland a national conversation about the need to remake the legal system – for it to be more responsive to more people, … Continue reading Creighton Program on Disrupting Law and Reclaiming Justice on October 8 →

Mediator Don Philbin Again Recognized by Best Lawyers in America, Super Lawyers, and Who's Who Legal - Markets Insider

Google International ADR News - Tue, 2018-09-11 07:45

Mediator Don Philbin Again Recognized by Best Lawyers in America, Super Lawyers, and Who's Who Legal
Markets Insider
... more than five percent of the lawyers in the state are selected by the research team at Super Lawyers. Philbin has been listed for Alternative Dispute Resolution (Mediation and Arbitration) since 2010. ... by the San Antonio Business Journal, and ...

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Mediator Don Philbin Again Recognized by Best Lawyers in America, Super Lawyers, and Who's Who Legal - PR Newswire (press release)

Google International ADR News - Tue, 2018-09-11 07:42

Mediator Don Philbin Again Recognized by Best Lawyers in America, Super Lawyers, and Who's Who Legal
PR Newswire (press release)
... more than five percent of the lawyers in the state are selected by the research team at Super Lawyers. Philbin has been listed for Alternative Dispute Resolution (Mediation and Arbitration) since 2010. ... by the San Antonio Business Journal, and ...

and more »

FULL LIST: UNRA, UTB, NAADS Lose Autonomy in Major Govt Restructuring - softpower.ug

Google International ADR News - Tue, 2018-09-11 06:52

softpower.ug

FULL LIST: UNRA, UTB, NAADS Lose Autonomy in Major Govt Restructuring
softpower.ug
Uganda National Roads Authority (UNRA), Uganda Tourism Board (UTB), Uganda Investment Authority (UIA) and National Agricultural Advisory Services (NAADS) have been disbanded and their operations reverted to their line Ministries in a major ...

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Madrid High Court of Justice and the Setting Aside of Arbitral Awards

Kluwer Arbitration Blog - Tue, 2018-09-11 02:00

Alessandro Spinillo

Part I

In a judgment dated 5 April 2018 (Case nº 6/2017), the Madrid High Court of Justice (“TSJM”), the competent court to hear applications to set aside an award when the seat of the arbitration is Madrid, set aside an arbitration award on public policy grounds after finding that the tribunal “[…] unjustifiably omitted to assess evidence that was relevant for the resolution of the case”.

In recent years, Spain has experienced an impressive increase of arbitration cases. The TSJM has handled an unusual number of applications to set aside arbitration awards based on a wide array of grounds and has granted a significant part of these applications. Many in the Spanish and international arbitration community have raised concerns that the TSJM is too easily prone to review the merits of awards. Statistics show a rather high rate of successful applications for setting aside (26.6 %) (here). The matter, however, seems too nuanced and complex to sum up, and definitive conclusions cannot be hastily made on the sole basis of statistics.

This post is divided into two parts. The first part will discuss the facts of the above case, the arbitration proceedings and the TSJM’s judgment dated 5 April 2018. Thereafter, the second part will illustrate some thoughts and views about the particular stage of development of arbitration in Spain and the TSJM’s trend to review the merits of awards.

 

The facts of the case and the arbitration

The case involved a turnkey contract for a wind farm project between owner, Engasa Eólica (“Engasa”), and contractor, Vestas Eólica (“Vestas”). The core issue in dispute was whether or not the parties agreed upon a valid and enforceable limitation of liability provision with respect to the civil construction works required for the project.

Some years after the wind farm had become operational, Engasa claimed that Vestas was responsible for certain defective construction works under the turnkey contract. Engasa took the matter to arbitration and sought that Vestas be ordered to repair the defective construction works (specific performance) or, alternatively, to pay damages. Vestas denied the claim by invoking the limitation of liability provision. Vestas maintained that the parties concluded a valid limitation of liability provision by way of an exchange of emails between them during the negotiations leading to the signature of the turnkey contract. Engasa disagreed and argued that it never consented to any such limitation of liability.

The tribunal concurred with Vestas. In taking the decision, the tribunal relied on the contents of that set of emails as well as corroborating witness testimony. It was satisfied that the parties only signed the turnkey contract to meet a requirement of the financing banks. The tribunal assumed that the banks were not prepared to finance the project unless Vestas (given its good track record in the energy renewable sector) accepted to act as contractor under a standard turnkey contract −also referred to as an Engineering, Procurement and Construction (EPC) contract.

Regardless of the turnkey contract the parties had signed, the tribunal found that their mutual intention was, in fact, that Engasa would select and pay another engineering company, Isolux, for the whole of the project’s civil construction works whilst Vestas would supply, start up, and maintain the turbines and related equipment. In other words, from a common law contract terminology perspective, it could be said that the tribunal found that the consideration stated in the turnkey contract did not reflect the true intention of the parties and therefore did not bind them.

The tribunal was satisfied that Engasa, in that set of emails, agreed to waive any claim against Vestas that would be outside the said scope of supplies, start up and maintenance undertakings. It would have made little commercial sense for Vestas to accept to remain liable for Isolux’s potential non-performance or negligence under the circumstances. The tribunal also considered that Engasa decided to pay Isolux directly for the advance of the construction works.

The tribunal concluded that Vestas and Engasa had agreed upon a valid and enforceable limitation of liability provision that excluded Vestas’ liability for the defective construction works carried out by Isolux.

 

Dissenting arbitrator

The tribunal was composed of three arbitrators, and one of them issued a dissenting opinion holding that Vestas and Engasa entered into nothing but a true standard turnkey contract, and therefore Vestas, as contractor, was globally liable for all the construction works and supplies related to the project. According to the dissenting arbitrator, Vestas could have claimed recovery from subcontractors for the faulty performance of the latter, including, of course, from Isolux.

The dissenting arbitrator relied on an additional set of emails submitted to the tribunal that the majority did not consider at all. It appears, however, that the dissenting arbitrator did not give any weight to the circumstance that Engasa selected and paid Isolux directly for the whole of the project’s civil construction works, a circumstance which would be incompatible with the predicate that Vestas and Engasa had entered into a standard turnkey contract.

 

Engasa approached the TSJM to set aside the award

Engasa moved to the TSMJ seeking that the award be set aside on public policy grounds under Article 41 (1) (f) of the Spanish Arbitration Law (SAL). The grounds for setting aside in the SAL are exhaustive, reflecting the UNCITRAL Model Law standards. Engasa put forward, inter alia, the argument that the majority voting “[…] irrationally assessed the evidence and the applicable law […]”. It contended that the flawed assessment of the evidence by the tribunal led to an “irrational outcome in the award”.

The TSJM used the public policy argument as a door to open a review of the merits of the award and finally set it aside. The TSJM effectively undertook a de novo review of the issues in dispute and held that the arbitral tribunal “unjustifiably omitted to assess evidence that was relevant for the resolution of the case”.

The TSJM underscored that the dissenting arbitrator relied upon another set of emails and documents submitted to the tribunal that the majority vote did not consider at all in the award and held “[…] those means of evidence […] relied upon by the dissident opinion required a proper analysis, even if it were to explain why they did not undermine the arguments put forward by the two arbitrators of the majority. The absolute silence about those means of evidence, without any explanation or justification, causes an appearance of arbitrariness in the arbitral tribunal […]”. The TSJM cited one of its own precedents in support of its conclusions: “[…] under certain circumstances, the assessment of the evidence −as put forward in the reasonings− may infringe due process and therefore infringe public policy” [ROJ:STSJ M 11066/2017-ECLI:ES:TSJM:2017:11066].

 

Assessment

The TSJM’s reasoning and conclusions are unfortunate and depart from mainstream arbitration rules and practice.

Article 25 SAL (based on Article 19 Model Law) provides that evidential questions of admissibility, relevance and materiality are clearly within the sole sphere of the arbitral tribunal. The assessment of evidence is a matter for the tribunal, not for the court.

The arbitral tribunal’s duty is to decide the issues put before it, and to provide reasons in the award. This duty does not require the tribunal to refer to all the evidence submitted. The TSJM cannot determine −as it did in this case− what evidence is relevant for the case, unduly interfering with the tribunal’s decision on the merits.

It appears that the members of the arbitral tribunal simply disagreed on the merits of the dispute and the set of documents they relied upon to support their respective findings. The dissenting opinion, as one may observe from the TSJM’s ruling, does not at all suggest any appearance of arbitrariness or procedural unfairness or unequal treatment to the parties throughout the proceedings, let alone any impropriety during the tribunal’s deliberations leading to the final award. The dissenting opinion, therefore, cannot form the basis for challenging the award.

One cannot appreciate any infringement to public policy as provided for in Article 41 (1) (f) SAL as to justify the TSJM’s decision for vacating the award. The TSJM’s decision is final and subject to no appeal or recourse in accordance with Article 42 (2) SAL.

By accepting arbitration, the parties undertake to carry out the award without delay and waive the right to an appeal on the merits, meaning the award was only subject to a very narrow scope of judicial review. If anything, the TSJM’s ruling is likely to encourage attempts to mount appeals on the merits disguised under Article 41 (1) (f) challenges.

Having discussed the TSJM’s reasonings in setting aside the award made in the Engasa vs. Vestas arbitration, Part II, as noted earlier, will raise some thoughts and views on the particular stage of development of arbitration in Spain and the TSJM’s trend to review the merits of awards.

 

Part II

In Part I, the TSJM’s reasoning in setting aside the award made in the Engasa vs. Vestas arbitration was discussed in detail.Now the discussions will focus on the particular stage of development of arbitration in Spain and the TSJM’s trend to review the merits of awards.

 

An unprecedented growth of arbitration in Spain  

The SAL, modelled on the UNICTRAL Model Law, was passed in 2003 and amended in 2011. The new law triggered an unprecedented growth in the number of arbitrations with a seat in Spain (here). Madrid and Barcelona (and likely in that order) are by far the most frequently chosen venues for arbitration in Spain. There has been a significant volume of new entrants at all levels of an emerging (and profitable) niche of the legal market (here). The new entrants naturally have different levels of arbitration expertise. In addition, only in 2011 was the TSJM vested with the authority to hear applications to set aside awards after a major reassignment of judicial functions related to arbitration brought about by said amendment to the SAL. Previously that authority resided in the first instance civil courts of Madrid. According to the preamble of the 2011 amendment, the legislator conferred jurisdiction on the TSJM (and the respective High Court in each Autonomous Community of Spain), to hear applications to set aside, for the sake of “uniformity”.

As discussed, the TSJM granted a rather high number of applications to set aside awards, but actually many of them resulted from lethally-flawed arbitration proceedings with manifest breaches of due process (here here here), lack of transparency (actual or perceived) and conflict of interests of local arbitral institutions (Case nº 120/2013 and here here), as well as dubious arbitrability of the subject matter of the dispute (here).

In other cases, the TSJM vacated pro-bank awards, resulting from disputes related to the sale of complex financial products to consumers, for infringements of Spanish and EU economic public policy (Cases nº 20/2014 and 59/2014). Although these decisions raised controversy, the TSJM ultimately followed the principle laid down by the ECJ in the well-known Ecco Swiss case. Arbitration cannot be used to circumvent mandatory rules of public policy.

The TSJM, however, sometimes confuses its role by handling applications to set aside arbitration awards as if they were appeals on the merits. In those cases, in effect, the TSJM appears to function as an appeal court reviewing a first-instance court judgment. The TSJM is a collegiate court composed of three judges, one of whom issued a dissident vote with a strong warning in this respect (Case nº 59/2014):

“[…] it is necessary to define the powers of this Chamber when entertaining an action for annulment of an arbitral award so as not to confuse them with those of a Court of Appeal”.

For example, as discussed in Part I, the TSJM vacated the arbitral award made in Engesa vs. Vestas after reviewing de novo the issues discussed in the arbitration and concluding that the tribunal’s assessment of evidence involved an “appearance of arbitrariness in the arbitral tribunal”. After a thorough analysis of the TSJM’s judgment, one can only observe that the tribunal rendered a perfectly reasoned award based on documentary evidence (primarily a set of emails exchanged between the parties) which appeared to be corroborated by witness testimony. The TSJM had been unfair to hold that the tribunal acted with arbitrariness.

In another recent case, the TSJM was called upon to set aside an arbitration award made by an ICC tribunal on grounds of an alleged breach of due process (here). In this case, the tribunal refused to grant a party’s request for disclosure of documents that were in the possession of the other party. The tribunal had skillfully narrowed the issues in dispute and decided that the requested documents were not material to the resolution of the case. The tribunal’s decision disallowing disclosure was reasonable and predictable under ICC Rules and practice. The TSJM, however, gave no deference to it and reviewed de novo the issues discussed in the arbitration to finally conclude that the requested documents would not have changed the outcome of the arbitration. Although the award was not set aside, the standard of review used by the TSJM was again intrusive. There had been no violation of due process, let alone a manifest or egregious one.

In some advanced jurisdictions, for example, Hong Kong, the threshold to be met to set aside an award for want of due process is very high, requiring that “[…] the conduct of the Tribunal must be sufficiently serious to offend our most basic notions of morality and justice” (here).

One cannot definitively say that the TSJM has adopted an anti-arbitration stance although its tendency to use public policy arguments as a door to review the merits of awards may cause disruption to the development of Madrid as an emerging arbitration center.

A considerable number of Spanish multinational corporations −in sectors such as infrastructure, construction, telecommunications, finance, oil and energy− have become world leading players and gained leverage to include ICC (and others) arbitration clauses, providing for arbitration with seat in Madrid, into their international business transactions. There has been a proliferation of arbitration clauses of this sort. Parties from Latin America, Eastern Europe and North America are known to come to Spain to arbitrate their disputes with Spanish counterparts.

Madrid has a unique opportunity to start to build its own tradition of arbitration. To this end, however, it is crucial that the TSJM’s standard for reviewing awards be brought in line with international best practice. Arbitration users are understandably risk-averse and may not take too long to choose other safer seats for their arbitrations, within or outside of Spain.

 

 

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