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Post-Brexit deals 'top priority' to maintain legal London's lead - City group - Law Gazette

Google International ADR News - Wed, 2018-11-28 18:28

Law Gazette

Post-Brexit deals 'top priority' to maintain legal London's lead - City group
Law Gazette
The report also noted the growth of international litigants that continue to flock to England and Wales, while noting that other common law jurisdictions are keen to establish their own litigation centres. According to the report, out of 1,200 claims ...

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Post-Brexit deals 'top priority' to maintain legal London's lead - City lobby group - Law Gazette

Google International ADR News - Wed, 2018-11-28 18:28

Law Gazette

Post-Brexit deals 'top priority' to maintain legal London's lead - City lobby group
Law Gazette
The report also noted the growth of international litigants that continue to flock to England and Wales, while noting that other common law jurisdictions are keen to establish their own litigation centres. According to the report, out of 1,200 claims ...

Venezuela pays ICSID creditor to protect US refinery business

Venezuela has paid US$500 million to distressed Canadian mining company Crystallex to partially satisfy a US$1.4 billion ICSID award – as part of a renegotiated settlement deal that will allow the country’s...

Malintoppi challenged over husband’s counsel work

A Canadian gold-mining company bringing an ICSID claim against Colombia has applied to disqualify the tribunal’s president Loretta Malintoppi, alleging that she financially benefits from her husband Rodman...

Employment & labour law in Iraq - Lexology

Google International ADR News - Wed, 2018-11-28 09:02

Employment & labour law in Iraq
Lexology
The Iraqi Labour Law attempts to align Iraqi labour practices with international norms. While the revised law has ... No – arbitration and alternative dispute resolution agreements are not enforceable with regard to employment contracts. Both the Iraqi ...

and more »

Canada: Contracts With Arbitration And Jurisdictional Clauses: Are They In Conflict? - Mondaq News Alerts

Google International ADR News - Wed, 2018-11-28 06:04

Canada: Contracts With Arbitration And Jurisdictional Clauses: Are They In Conflict?
Mondaq News Alerts
The motion judge determined that reading the contract as a whole provided two alternative methods of dispute resolution: the international arbitration pursuant to the base policy and the domestic proceedings pursuant to the Action Against Insurer ...

Class and Collective Actions in Canada - Lexology

Google International ADR News - Wed, 2018-11-28 05:19

Class and Collective Actions in Canada
Lexology
The Ontario Court of Appeal has held that, at least in Ontario, a court may certify an international opt-out class, provided that the court has jurisdiction over the representative plaintiffs' claims and foreign class members share common issues with ...

Contracts with Arbitration and Jurisdictional Clauses: Are They in Conflict - Lexology

Google International ADR News - Wed, 2018-11-28 04:53

Contracts with Arbitration and Jurisdictional Clauses: Are They in Conflict
Lexology
The motion judge determined that reading the contract as a whole provided two alternative methods of dispute resolution: the international arbitration pursuant to the base policy and the domestic proceedings pursuant to the Action Against Insurer ...

A Data-Driven Exploration of Arbitration as a Settlement Tool: What Happens When Cases Do Not Settle Before a Hearing?

Kluwer Arbitration Blog - Wed, 2018-11-28 02:21

Brian Canada, Debi Slate and Bill Slate

In this continuing series of blog posts, we have been using Dispute Resolution Data (DRD)’s growing repository of international arbitration case data to analyze the extent to which such cases reach various outcomes, whether it be an award being rendered, administrative closure, dismissal, impasse, or settlement/withdrawal (which we treat as a single, distinct outcome). Our first blog post demonstrated that when looking at an aggregate of DRD’s international commercial arbitration case data (which, as of November 2018, includes approximately 4,000 arbitration and mediation cases, dating back to 2005), the most frequently observed outcome is settlement/withdrawal, which is often reached within a year of the claim date and also prior to any counter-claim, preliminary hearing, or hearing on the merits. Our follow-up blog posts demonstrated that the margin of error (MOE) associated with such results is largely dependent on the size of the sample used to estimate the proportion of the “population” of all such cases known to have occurred. We also introduced our proprietary “Signal Strength” metric, a quick visual indicator of the degree of confidence that the statistical estimate based on DRD’s data sample is closely representative of all cases meeting the same criteria; put simply, the greater of the number of cases used as a data sample, the smaller the MOE (and correspondingly, the higher the “Signal Strength”).

 

Here, we examine how the spectrum of case outcomes potentially shifts when the case does not settle quickly and instead proceeds to a hearing on the merits. Based on the current sample of 3,642 international commercial arbitration cases in DRD’s database, we estimate that approximately 13% of such cases proceed to a hearing. Because of the relatively large size of the data sample, this estimate has a low margin of error (±1%) and a high “Signal Strength” (5 out of 5), as depicted in Figure 1:

Figure 1. Percentage of international commercial arbitration cases (since 2005) that proceed to a hearing on the merits, based on all such case data currently stored in the DRD database (3,642 cases as of November 2018). In this and all applicable subsequent figures, the MOE (margin of error, indicated by error bars) has been computed at the 95% confidence level. The “Signal Strength,” whose computational details are proprietary to DRD, provides a quick visual indicator of the degree of confidence that the reported statistic lies within an acceptably narrow MOE (at most ±5%).

 

Figure 2 depicts the distribution of case outcomes from an aggregate view of all international arbitration cases, compared side-by-side with the corresponding distribution of only those cases that proceed to a hearing, which applies to a total of 480 cases. When taking all 3,642 international commercial arbitration cases into account, a clear majority (approximately 59%) of cases result in settlement/withdrawal, with comparatively fewer cases resulting in an award and other outcomes, which is consistent with our previously reported results. However, when we limit the analysis to include only those cases that have proceeded to a hearing, the distribution of outcomes clearly shifts towards a sizeable majority of cases (approximately 68%) that result in an award judgment, with a correspondingly small proportion of cases (approximately 20%) reaching settlement/withdrawal:

Figure 2. Outcomes of international commercial arbitration cases (since 2005) in the DRD database, with comparison between all such cases (left) and only those cases that proceed to a hearing on the merits (right).

 

Although the sample size is reduced when we focus only on those cases in which a hearing occurred, the sample of 480 applicable cases is nonetheless sufficiently large enough to produce a relatively narrow margin of error (±4%) and high “Signal Strength” (5 out of 5), as depicted in Figure 3:

Figure 3. Percentage of international commercial arbitration cases (since 2005) that result in an award judgment, based only on those cases that proceed to a hearing on the merits, and as estimated from a sample size of 480 such cases.

 

Based on this data sample, we can be reasonably confident that the chances of an award judgment being rendered are relatively high (and likely to be close to the reported proportion of 68%) across the “population” of all known international commercial arbitration cases that proceed to a hearing.

 

However, parties that are exploring international commercial arbitration as a dispute resolution mechanism are probably interested mainly in those cases of a particular case type. From Figure 4, we see that when we break down the cases for which a hearing has occurred by case type, the sample sizes are necessarily smaller, which results in a wider MOE and a reduced “Signal Strength.” Even so, the estimated proportion of cases that result in an award judgment (again, only for those cases that have proceeded to a hearing) is consistently very high—more than 60% for all case types shown. Further, even when accounting for the wider MOE, one can still be confident that even the minimum proportion of cases that result in an award (corresponding to the left endpoint of each error bar in Figure 4) will approach or exceed the 50% mark:

Figure 4. Estimated proportion of international commercial arbitration cases (since 2005) that proceed to a hearing and ultimately result in an award judgment, for six selected case types (with sample sizes indicated in parentheses for each case type). For comparison, the last subfigure (itself a repeat of Figure 3 above) shows the corresponding estimated proportion when all case types are considered.

 

For comparison, Figure 5 provides corresponding results (for the same set of six selected case types) that depict how the estimated proportion of cases that reach settlement/withdrawal (regardless of whether a hearing has occurred) varies by case type:

Figure 5. Estimated proportion of international commercial arbitration cases (since 2005) that result in settlement/withdrawal, for six selected case types (with sample size indicated in parentheses for each case type). The last subfigure indicates the corresponding estimated proportion when all case types are considered.

 

Our analysis suggests that for parties considering international commercial arbitration as a dispute resolution mechanism, the chances of reaching settlement are markedly lower once the case proceeds to a hearing, since the likely outcome of the hearing will be the rendering of an award judgment. This has potential implications from a cost and speed standpoint; if settlement cannot be reached early in the arbitration timeline, the expenses associated with preparing for and conducting the eventual hearing will inevitably grow, since the protracted case duration will result in higher overall attorney fees and other costs. Fortunately (at least, for the parties seeking dispute resolution), and as we have shown previously, settlement usually is reached quickly—often within one calendar year of the initial claim date—and as we have demonstrated herein, the procession to a hearing only occurs in a small fraction (between 12% and 14%) of all international commercial cases.

 

These results continue to support the notion that arbitration is a potentially effective mechanism for reaching settlement. In our future blog posts, we will more deeply explore and extract insights from the more than 200,000 data points in DRD’s growing repository. For example, we plan to examine how international commercial arbitration case outcomes are possibly affected by such parameters as the region in which the case occurred, the magnitude of the claim amount, and other criteria that contribute to a finer-grained analysis.

 

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The post A Data-Driven Exploration of Arbitration as a Settlement Tool: What Happens When Cases Do Not Settle Before a Hearing? appeared first on Kluwer Arbitration Blog.

Russian Courts Hold an ICC Arbitration Clause to Be Unenforceable

Kluwer Arbitration Blog - Wed, 2018-11-28 01:00

Alexey Yadykin and Noah Rubins

In February 2018, the Arbitrazh (Commercial) Court of the City of Moscow issued a ruling1) Ruling of the Arbitrazh (Commercial) Court of the City of Moscow dated 8 February 2018, case No. A40-176466/17-83-1232. jQuery("#footnote_plugin_tooltip_2611_1").tooltip({ tip: "#footnote_plugin_tooltip_text_2611_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); denying the recognition and enforcement of an ICC award issued in favor of Dredging and Maritime Management SA (Luxembourg) against JSC Inzhtransstroy (Russia), on grounds that included an alleged unenforceability of the ICC arbitration clause in the contract.2) The court also found that the recognition and enforcement of the award would violate the public policy, because the award debtor had become insolvent and the insolvency proceedings had been concluded by a settlement with creditors; the court found that enforcement of the award, out of the framework of the insolvency case, might result in preferential treatment of the award creditor. For more details on the impact of a Russian insolvency and other issues related to “Russian” arbitrations, see our overviews here and here. jQuery("#footnote_plugin_tooltip_2611_2").tooltip({ tip: "#footnote_plugin_tooltip_text_2611_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The arbitration clause in question provided that the disputes shall be finally “resolved in international arbitration“ in accordance with the ICC Arbitration Rules. The Moscow court found such an arbitration agreement to be unenforceable, on the basis that the referral to “international arbitration” was too vague. The court also found that the arbitration clause defined the arbitration rules without determining a specific arbitral institution to administer the dispute.

The award creditor appealed the ruling to higher courts, but the ruling was upheld, first by the Arbitrazh (Commercial) Court of the Moscow District3) Ruling of the Arbitrazh (Commercial) Court of the Moscow District dated 25 April 2018, Case No. A40-176466/17. jQuery("#footnote_plugin_tooltip_2611_3").tooltip({ tip: "#footnote_plugin_tooltip_text_2611_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); and most recently by a single judge deciding for the Supreme Court, who agreed with the lower courts’ reasoning and refused to transfer the case for further review before the Economic Panel of the Supreme Court.4) Ruling of the Supreme Court of the Russian Federation dated 26 September 2018 No. 305-ЭС18-11934. jQuery("#footnote_plugin_tooltip_2611_4").tooltip({ tip: "#footnote_plugin_tooltip_text_2611_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The Supreme Court judge’s ruling may be overturned by the Chairman or Deputy Chairman of the Supreme Court, who may order a panel review.5) Article 291.6(8) of the Arbitrazh Procedural Code of the Russian Federation. jQuery("#footnote_plugin_tooltip_2611_5").tooltip({ tip: "#footnote_plugin_tooltip_text_2611_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); We understand that a complaint has been lodged with the Supreme Court, and further that the ICC wrote to the Supreme Court to review the situation. However it remains unclear at the time of writing whether a further panel review will be allowed.

Significance

Russian court rulings concerning defective or “pathological” arbitration clauses are nothing new. There have been numerous cases in which courts refused to enforce vague or contradictory arbitration clauses. However, the arbitration clauses in those cases often appeared to be inadequately drafted, custom-made arbitration clauses that failed to convey the parties’ actual choice of the dispute resolution mechanism. In contrast, the DMM v Inzhtranstroy case appears to be the first in which a standard recommended ICC clause, or a very close derivative from it,6) The arbitration clause in the parties’ contract is very similar to a standard ICC clause recommended on the ICC’s web site , but not completely identical to it. jQuery("#footnote_plugin_tooltip_2611_6").tooltip({ tip: "#footnote_plugin_tooltip_text_2611_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); was declared unenforceable in Russia. The significance of this case is further amplified by the wide use in Russia of standard arbitration clauses that stipulate the applicable arbitration rules without stating explicitly which arbitral institution shall administer the dispute. For example, the model SCC and LCIA arbitration clauses refer to the resolution of disputes by arbitration under the respective arbitration rules without specifying the administering institution. In contrast, the model clauses of SIAC and HKIAC define both the rules and the administering institution.

It is noted that the rulings in DMM v Inzhtranstroy do not represent a binding precedent. At the same time, the fact that the rulings were supported by the entire hierarchy of courts up to the Supreme Court suggests that other courts dealing with similar arbitration clauses may follow the same rationale in future, refusing to uphold arbitration clauses that do not spell out the name of the administering arbitral institution. There are two principal ways in which courts may refuse to uphold arbitration clauses in Russia. The first is the refusal to recognize the arbitral award in Russia. The second is the court’s refusal to dismiss without prejudice (оставить без рассмотрения) a claim that a party may try to file before a Russian arbitrazh (commercial) court in breach of the arbitration agreement. The default rule under Article 148 of the Arbitrazh Procedural Code is that, where the dispute is covered by an arbitration agreement, the court shall dismiss the case upon a jurisdictional objection made by a party before its first submission on merits. However, the court shall not dismiss the case where it finds the arbitration agreement to be unenforceable.

Analysis

The courts’ reasoning in respect of the arbitration clause does not appear to be analytically correct. First, the ICC Rules clearly designate the ICC Court as the only body that is entitled to administer disputes under the ICC Rules. The reference to the ICC Rules is, therefore, sufficient to stipulate the dispute resolution procedure without any ambiguity. Furthermore, there is no explicit general requirement in Russian law to identify an arbitral institution in the arbitration clause.7) Ad hoc arbitrations are permitted, except in respect of corporate disputes as defined in Article 225.1 of the Arbitrazh Procedural Code. See a more detailed analysis by Freshfields here. jQuery("#footnote_plugin_tooltip_2611_7").tooltip({ tip: "#footnote_plugin_tooltip_text_2611_7", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); There is also a provision in the recently amended Law on International Commercial Arbitration8) Article 7(9) of the Law on International Commercial Arbitration. jQuery("#footnote_plugin_tooltip_2611_8").tooltip({ tip: "#footnote_plugin_tooltip_text_2611_8", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); to the effect that all doubts must be resolved in favor of the validity and enforceability of the arbitration clause. However, none of this prevented the courts from refusing to enforce the arbitration clause in DMM v Inzhtranstroy.

Recommendations

Given that the DMM v Inzhtranstroy rulings do not constitute a binding precedent (and may still be subject to further review), it is probably too early to change the approach to drafting arbitration clauses on this basis alone. However, it will be important to monitor the situation in this case and observe how Russian courts deal with similar arbitration clauses in other cases. In the meantime, to be on the safe side, parties negotiating new arbitration clauses for Russia-related contracts may wish to revisit their approach. For example, parties using the ICC, SCC and LCIA model clauses or their derivatives may consider supplementing them by specifying the body that will administer the arbitrations (i.e., the ICC Court in respect of the arbitration under the ICC Rules, the LCIA in respect of LCIA arbitration and the Arbitration Institute of the Stockholm Chamber of Commerce for SCC Arbitrations). This requires very accurate drafting to avoid creating arbitration clauses that might be deemed “pathological”.

References   [ + ]

1. ↑ Ruling of the Arbitrazh (Commercial) Court of the City of Moscow dated 8 February 2018, case No. A40-176466/17-83-1232. 2. ↑ The court also found that the recognition and enforcement of the award would violate the public policy, because the award debtor had become insolvent and the insolvency proceedings had been concluded by a settlement with creditors; the court found that enforcement of the award, out of the framework of the insolvency case, might result in preferential treatment of the award creditor. For more details on the impact of a Russian insolvency and other issues related to “Russian” arbitrations, see our overviews here and here. 3. ↑ Ruling of the Arbitrazh (Commercial) Court of the Moscow District dated 25 April 2018, Case No. A40-176466/17. 4. ↑ Ruling of the Supreme Court of the Russian Federation dated 26 September 2018 No. 305-ЭС18-11934. 5. ↑ Article 291.6(8) of the Arbitrazh Procedural Code of the Russian Federation. 6. ↑ The arbitration clause in the parties’ contract is very similar to a standard ICC clause recommended on the ICC’s web site , but not completely identical to it. 7. ↑ Ad hoc arbitrations are permitted, except in respect of corporate disputes as defined in Article 225.1 of the Arbitrazh Procedural Code. See a more detailed analysis by Freshfields here. 8. ↑ Article 7(9) of the Law on International Commercial Arbitration. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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UK: Always Pushing The Boundaries Is What CEDR Does Best - Mondaq News Alerts

Google International ADR News - Wed, 2018-11-28 00:02

UK: Always Pushing The Boundaries Is What CEDR Does Best
Mondaq News Alerts
London-headquartered law firm RPC, which analysed the statistics, also noted that the number of successful HMRC tax dispute settlements through alternative dispute resolution (ADR) increased by 23% from 370 in 2016-17 to 455 in 2017-18. https ...

Musings of a Dead Lawyer Walking

ADR Prof Blog - Tue, 2018-11-27 12:30
Arizona Attorney magazine, the Arizona Bar’s monthly magazine, contains a running column on the last page entitled My Last Word written by a guest author. The November issue’s column was written by an anonymous author with a terminal diagnosis who has been reflecting on his life as the disease has progressed.  I thought the following … Continue reading Musings of a Dead Lawyer Walking →

Lesotho defeats mining investors in Singapore

The Singapore Court of Appeal has rejected a bid by a group of South African mining investors to reinstate an investment treaty award that held Lesotho liable for its role in the disbanding of an African...

India’s Tryst with the Group of Companies Doctrine: Harbinger or Aberration?

Kluwer Arbitration Blog - Tue, 2018-11-27 06:00

Juhi Gupta

This blog previously carried a post (“previous post”) on the Indian Supreme Court’s (“SC”) progressive approach to binding non-signatories to an arbitration agreement in Ameet Lalchand Shah and Others v Rishabh Enterprises and Another (“Ameet Lalchand”). The present post briefly discusses another aspect of this approach in context of Cheran Properties Limited v Kasturi and Sons Limited and Others (“Cheran Properties”), which was incidentally decided just nine days prior to Ameet Lalchand.

In Cheran Properties, the SC held that an arbitral award can be enforced against a non-signatory based on facts and circumstances. The case involved a domestic arbitration under a share purchase agreement (“SPA”). The award was sought to be enforced against the appellant, Cheran Properties, which was not a signatory to the arbitration agreement contained in the SPA and was a nominee of one of the signatories, an individual by the name of KC Palanisamy (“KCP”). The SPA expressly recorded the right of KCP and/or his nominees to transfer their shareholding to any other person of their choice. Pursuant to the SPA, 95% of the shares was transferred to Cheran Properties. Prior to the dispute arising, KCP sent a letter to the opposite signatory party (“KSL”) as the authorised signatory of Cheran Properties, stating that in pursuance of the SPA, “our Group Companies, by themselves and/or by their nominees have agreed to purchase shares…” and requesting KSL to execute share transfer deeds “in the following names…[including Cheran Properties]”.

As in Ameet Lalchand, the SC in Cheran Properties took recourse to Chloro Controls India Private Limited v Severn Trent Water Purification Inc. (“Chloro Controls”), this time relying upon the ‘group of companies’ doctrine, which was recognised for the first time by the SC in Chloro Controls. To the best of the author’s knowledge, there appears to be no other reported decision where Indian courts have considered enforcing an arbitral award against a non-signatory on basis of this doctrine.

The SC noted that the doctrine facilitates fulfillment of a mutually held intention between parties, where circumstances indicate that the intention was to bind both signatories and non-signatories (affiliates) – “the effort is to find the true essence of the business arrangement and to unravel from a layered structure of commercial arrangements, an intent to bind someone who is not formally a signatory but has assumed the obligation to be bound by the actions of a signatory”.

The SC was cognisant of the exceptional nature of the doctrine and held that its application turns on construction of the arbitration agreement, and circumstances surrounding conclusion and performance of the parent contract. Applying the law to the facts, the SC found that Cheran Properties was conscious of and accepted the terms of the SPA, which specifically provided that KCP’s nominees would be bound by it. This would include the arbitration agreement contained in the very same agreement and therefore, Cheran Properties was bound by the arbitral award. It acted as KCP’s nominee at all material times and this was unequivocally confirmed by KCP’s letter to KSL in which KCP indicated, as its authorised signatory, that the group of companies agreed to purchase the shares.

While Ameet Lalchand focussed on identifying the principal/mother agreement in a network of agreements that contained an arbitration clause (which was similar to the facts in Chloro Controls), Cheran Properties focussed on identifying the mutual intention of parties to bind signatories and non-signatories that are related to each other in a corporate structure and where only one agreement is involved. The SC expressly clarified that interpretation of the Chloro Controls dictum could not be restricted to the parent-ancillary agreements situation.

The SC also clarified that the material legal provision in Cheran Properties was section 35 of the Arbitration Act, 1996, and not sections 8 or 45 as contended by Cheran Properties, since the case dealt with a post-award situation. Section 35 clearly stipulates that an arbitral award shall be final and binding on the parties and persons claiming under them. The expression “persons claiming under them” widens the net of those who are bound by an arbitral award – it is a “legislative recognition [that] an arbitral award binds every person whose capacity or position is derived from and is the same as a party to the proceedings”. Cheran Properties derived its capacity or position from KCP and was therefore bound by the arbitral award.

It is not often that the group of companies doctrine is applied in the arbitration context. The doctrine must be distinguished from ‘piercing the corporate veil’, which arbitral tribunals and courts have often done and approved to bind non-signatories, such as shareholders, to arbitration agreements and awards. The doctrine, on the other hand, involves binding a distinct legal entity on account of it being a part of an undivided economic reality or being inseparable from the signatory such that its participation and acquiescence is deemed.

Perhaps the leading arbitration decision on the doctrine is Dow Chemical – here, an ICC interim award that was upheld by the Paris Court of Appeals permitted non-signatories to contracts containing arbitration agreements to raise claims along with the signatories. It was held that Dow Chemicals, one of the non-signatories, was the parent company of the signatories and had participated in the conclusion, performance and termination of the contracts. The arbitral tribunal and court affirmed existence of the mutual intention to bind the non-signatories and implied consent of the non-signatories to the disputed contracts. While a detailed analysis of the doctrine in case law is beyond the scope of this post, what can be deduced from Dow Chemical and subsequent decisions is that (1) willingness to bind non-signatories varies greatly across civil and common law jurisdictions (see previous posts on this blog here and here); and (2) when the doctrine is applied, mutual intention and consent (express or implied) of the non-signatory are vital touchstones.

In the limited repository of decisions on the doctrine in the arbitration context, where does Cheran Properties stand? Admittedly, the SC did not undertake much of a nuanced or principled analysis of the doctrine. Given KCP’s express nomination of Cheran Properties and language of “our Group Companies” in his letter, as well as the wording of section 35, the SC did not have to assess the relationship between KCP and Cheran Properties from a group company perspective or Cheran Properties’ conduct in the conclusion and performance of the SPA in much detail. Arguably, given Cheran Properties’ nominee status combined with section 35, did the SC have to refer to the doctrine at all? Likewise, if either or both of these factors were absent, would the SC have paid more attention to the group company aspect and potentially delineated some test or principles?

While these are academic questions worth pondering, they should not dilute the significance of a decision on a doctrine of limited and fairly reluctant acceptance in the arbitration context. In its limited discussion, the SC struck the right notes by emphasising the touchstones of mutual intention and implied consent of Cheran Properties to the SPA. The decision gives effect to the express stipulation in section 35 and has positive implications for reducing roadblocks to the enforcement of arbitral awards and consequently, upholding commercial contracts and agreements in India.

Interestingly, the Madras High Court subsequently applied the doctrine to refer non-signatories [SEI Adhavan (“Adhavan”) and SunEdison India] to a SIAC arbitration; however, no reference was made to Cheran Properties. The Court’s key observations were: (1) it was undisputed that the non-signatories and one of the signatories [SunEdison Holding (“SunEdison”)] constituted a single economic reality and all transactions pertained to a project undertaken by Adhavan; (2) “for the convenience sake, the group of companies divided the work between themselves to carry out different activities among which the project is one”; (3) the undertaking executed by SunEdison, which contained the arbitration clause, expressly reflected that Adhavan was its alter ego, evidenced by its appointment as SunEdison’s agent and other provisions; (4) the undertaking was prepared by SunEdison’s President who controlled all operations of Adhavan; and (5) the arbitration clause clearly envisaged the non-signatories and SunEdison in one basket. The Court referred to Chloro Controls, holding that it read the doctrine into section 45 of the Arbitration Act (referring parties to international arbitration). However, while the Court cited Ameet Lalchand on the point that Chloro Controls applies to section 8, (referring parties to domestic arbitration), in my opinion, Cheran Properties ought to have been cited given it is on the doctrine and would have aided the building of jurisprudence on the doctrine in India.

Nevertheless, the decision is a positive development and combined with Cheran Properties, bodes well for the application and acceptance of the doctrine in India. The decisions reinforce India’s progressive approach to binding non-signatories to arbitration agreements and awards, and to arbitration in general, and also reflect the commercially pragmatic and pro-arbitration attitude of Indian courts.

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The post India’s Tryst with the Group of Companies Doctrine: Harbinger or Aberration? appeared first on Kluwer Arbitration Blog.

Digital Business in Luxembourg - Lexology

Google International ADR News - Tue, 2018-11-27 05:24

Digital Business in Luxembourg
Lexology
International data transfers. What rules and restrictions apply to the cross-border transfer of personal data collected in the course of digital business? Cross-border transfers of personal data – that is, any transfers to countries outside the ...

Swiss make slow progress returning Nazi-looted art - swissinfo.ch

Google International ADR News - Tue, 2018-11-27 01:22

swissinfo.ch

Swiss make slow progress returning Nazi-looted art
swissinfo.ch
For instance the last of the principles, number 11, calls for “national processes to implement these principles, particularly as they relate to alternative dispute resolution mechanisms for resolving ownership issues.” France, Germany, Austria, the ...

Swiss make slow progress returning Nazi-looted art - SWI swissinfo.ch - swissinfo.ch

Google International ADR News - Tue, 2018-11-27 01:22

swissinfo.ch

Swiss make slow progress returning Nazi-looted art - SWI swissinfo.ch
swissinfo.ch
Progress in Switzerland has been patchy since it agreed to encourage museums to identify Nazi-looted art.

and more »

Legal Stress

ADR Prof Blog - Mon, 2018-11-26 20:45
In a recent post, I described the intense stress that individual and organizational litigants often undergo as a result of litigation.  The legal system attracts and magnifies stressful conflicts, which affects everyone in its ambit.  In addition to litigants, this includes law students, lawyers, and legal academics. This post provides excerpts from my research summarizing … Continue reading Legal Stress →

Disney Loses 'Pink Slime' Arbitration Appeal - Law360

Google International ADR News - Mon, 2018-11-26 17:09

Disney Loses 'Pink Slime' Arbitration Appeal
Law360
The Court of Appeal for Ontario ruled that Disney's bid for an order to force insurer American International Reinsurance Co. Ltd. to arbitrate on Disney's preferred terms — with the JAMS alternative dispute resolution organization in Toronto — was ...

Disney Loses 'Pink Slime' Arbitration Appeal - Law360

Google International ADR News - Mon, 2018-11-26 17:05

Disney Loses 'Pink Slime' Arbitration Appeal
Law360
The Court of Appeal for Ontario ruled that Disney's bid for an order to force insurer American International Reinsurance Co. Ltd. to arbitrate on Disney's preferred terms — with the JAMS alternative dispute resolution organization in Toronto — was ...

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