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Challenging Arbitral Awards before the Singapore Courts for a Tribunal’s Failure to Give Reasons (Part 2 of 2)

Kluwer Arbitration Blog - Wed, 2018-03-14 07:00

Jordan Tan and Andrew Foo

Professor Stacie Strong has noted on this blog that “[c]ritics of international arbitration often express concerns about the quality of legal reasoning in arbitration, even though conventional wisdom…suggests that international arbitral awards reflect relatively robust reasoning that is often on a par with that of decisions rendered by commercial courts” .

 

However, adopting a more close-up view, it is the users of arbitration themselves who are often most directly affected by the quality of an arbitral tribunal’s reasoning in its award.  Take the example where, at the end of a lengthy and complex arbitration, the tribunal issues an award that summarises the evidence and submissions of both parties, and concludes with a single paragraph that states, “For the reasons given by the Claimant, which are accepted by this Tribunal, the claim is allowed in full.” Can an award of this nature be set-aside for lack of reasons?

 

In the first of this two-part series, we examined the arbitrator’s duty to give reasons.  This second part of this series examines the remedies parties may seek in cases where this duty has been breached, in particular with respect to the following two issues.

 

  1. Is a party seeking to set-aside an award for lack of reasons obliged to first apply for an additional award?

 

  1. What is the appropriate remedy where an award lacks reasons?

 

It concludes with a number of key practical tips for arbitrators and users of international arbitration.

 

Obligation to First Apply for an Additional Award?

Under Singapore law, pursuant to Article 33 of the Model Law and section 43 of the Arbitration Act (for awards emanating from international arbitration and awards emanating from domestic arbitration, respectively), a party to an arbitration is entitled to request the arbitral tribunal to make an additional award.  This position is similar to that under the laws of other leading jurisdictions for arbitration, e.g. England and Wales (cf. s57 of the English Arbitration Act 1996) and Hong Kong (cf. s69 of the Hong Kong Arbitration Ordinance (Cap. 609).

 

One may therefore attempt to argue that a party should be obliged to first apply for an additional award, before applying to challenge an arbitral award for lack of reasons – and that if a party has not first applied for an additional award within the statutory timeframe, it should be barred from challenging an award for lack of reasons.

 

However, it is clear that a failure to first apply for an additional award is no bar to an application to set aside an award for an arbitral tribunal’s failure to give reasons.

 

  1. In BLB v BLC [2014] 4 SLR 79, the Singapore Court of Appeal in considering Articles 33 and Articles 34 of the Model Law, recognised that requesting an additional award was optional – something a party “may” seek.

 

  1. The Court also observed at [116] that the risks of failing to first apply for an additional award are as follows:

 

…whilst a party is not obliged to invoke Art 33(3) [i.e. to request an additional award], he takes the risk that the court would not, in a setting-aside application, exercise its discretion to set aside any part of the award or invoke the powers of remission under Art 34(4) of the Model Law… [emphasis added].

 

  1. Where the Arbitration Act is concerned, the legislative drafters have expressly made the exhaustion of recourse under section 43 (including requests for additional awards) a prerequisite to a section 49 appeal (see s50 titled “Supplementary provisions to appeal under s 49” at s50(1)(2)(b)). The legislative drafters did not make this a requirement for a section 48 setting aside application. The expressio unius est exclusio alterius maxim applies to prevent the Court from judicially ‘legislating’ the equivalent of section 50 for section 48.

 

***

 

Appropriate Remedy

If an applicant is able to establish that a breach of the duty to provide adequate reasons warrants setting aside the award or a part of it under section 48(1)(a)(v) of the Act, or if the inadequacy of reasons forms the applicant’s primary complaint about the award, what is the appropriate remedy?

 

The key question is whether the Court should set aside the award, or remit it back to the tribunal, as it is empowered to do under Article 34(4) of the Model Law and section 48(3) of the Arbitration Act.

 

There are a number of competing considerations.

 

In favour of setting aside the award is the overarching point that if the courts resort to remission too readily, this practice may undermine key principles of arbitration: party autonomy, minimal curial intervention, and arbitrator discipline.

 

  1. Party autonomy: When a party succeeds in establishing that an arbitrator has breached his duty to give adequate reasons, that party’s dispute-resolution bargain has been breached. Arguably, the party is therefore entitled to have the dispute resolved in accordance with its bargain, by having the award set aside.

 

  1. Minimal curial intervention: Remittance is a classic case of curial intervention with the arbitral process, in particular the tribunal’s decision-making process.

 

  1. Arbitrator discipline: Regular remittance may reduce the motivation for arbitrators to be thorough and diligent in setting out their reasons, since they know that the court will likely give them a second bite of the cherry should they fail to do so.

 

However, in favour of remission is the fundamental benefit of self-correction. Remission of an award enables the arbitral process to correct itself before the severe stage of setting aside is reached. Indeed, a case of inadequate reasons can be said to be the paradigm case for remission.

 

  1. Assistance to the Court. Remission may allow the supervisory court to better determine whether an award should ultimately be set aside. This is because inadequacy of reasons in an award directly affects the court’s ability to determine whether any other grounds for setting aside the award are well‑founded (e.g. whether there has been a breach of natural justice, failure to give a party the opportunity to be heard).

 

  1. Finality unaffected. Remission typically does not require the re-opening of proceedings which have closed, e.g. for additional disclosure, evidence or submissions. Remission also cannot result in any change of outcome on the merits, and there is therefore no direct impact on the finality of the award.

 

  1. Time and costs. Generally, the cost and delay of going back to the tribunal on a remission for it to provide additional reasons is likely to be less than the cost and delay of starting fresh proceedings in respect of the matters covered by the award if the award is set aside.

 

It may therefore be preferable to remit an award as the first resort, in a case where the only or primary ground for setting aside which has been established is inadequate reasons, rather than require the parties to re-arbitrate their dispute.

 

This conclusion is supported by the judgment of Lord Phillips of Worth Matravers MR for the English Court of Appeal in English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409 at [24]-[25], albeit given in the context of litigation:

 

Where the judge who has heard the evidence has based a rational decision on it, the successful party will suffer an injustice if that decision is appealed, let alone set aside, simply because the judge has not included in his judgment adequate reasons for his decision. … If an application for permission to appeal on the ground of lack of reasons is made to the trial judge, the judge should consider whether his judgment is defective for lack of reasons, adjourning for that purpose should he find this necessary. If he concludes that it is, he should set out to remedy the defect by the provision of additional reasons refusing permission to appeal on the basis that he has adopted that course…

 

***

 

Conclusion

 

As stated in the first of this two-part series, arbitrators should be conscious of their duty to render adequately reasoned awards. They should not regard the appointment of experts as exculpatory of the arbitrator’s duty, and, in giving reasons, should go beyond mere regurgitation of evidence / submissions.

 

Ultimately, arbitrators can expect the analysis set out in their awards – and in particular, any lack thereof – to be closely scrutinised by the parties, and potentially, the courts. The courts can, and will in the appropriate circumstance, remit awards back to arbitrators, to provide supplemental reasons for their decisions within a stipulated timeframe.

 

On the other hand, parties should be made aware that if they are unsuccessful in an arbitration, they should carefully scrutinise not only the arbitral procedure, but also the tribunal’s reasoning in its award. They should also properly consider the remedies that may be available – and in particular, whether they can request the remittance of the award back to the arbitral tribunal.

 

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


The post Challenging Arbitral Awards before the Singapore Courts for a Tribunal’s Failure to Give Reasons (Part 2 of 2) appeared first on Kluwer Arbitration Blog.

Parks on Race, Bias, and Student Evaluations

ADR Prof Blog - Tue, 2018-03-13 08:16
Gregory Parks (Wake Forest) has published “Race, Cognitive Bias, and the Power of Law Student Teaching Evaluations,” available here. It is a fascinating article, and it made me wonder whether there has ever been an article on student evaluations of ADR professors/courses. I am under the impression that ADR professors/courses receive higher-than-average evaluations; is that … Continue reading Parks on Race, Bias, and Student Evaluations →

India: Analysis Of The Arbitration And Conciliation (Amendment) Bill, 2018 - Mondaq News Alerts

Google International ADR News - Tue, 2018-03-13 07:53

India: Analysis Of The Arbitration And Conciliation (Amendment) Bill, 2018
Mondaq News Alerts
The Bill implements the suggestions made by the High Level Committee (HLC) under the Chairmanship of Justice Srikrishna. The HLC had inter alia recommended that International Centre for Alternative Dispute Resolution should be taken over with complete ...

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City Law Firm, Al Bawardi Critchlow, Launches New Service to Help Protect Sub-Contractors from Unfair Construction ... - Digital Journal

Google International ADR News - Tue, 2018-03-13 05:05

City Law Firm, Al Bawardi Critchlow, Launches New Service to Help Protect Sub-Contractors from Unfair Construction ...
Digital Journal
... by an established network of experienced international partner firms and consultants, offers clients access to 'magic circle' calibre expertise, all with a level of personal service associated with smaller, specialist law firms. Its international ...

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City Law Firm, Al Bawardi Critchlow, Launches New Service to Help Protect Sub-Contractors from Unfair Construction ... - Business Wire (press release)

Google International ADR News - Tue, 2018-03-13 05:00

City Law Firm, Al Bawardi Critchlow, Launches New Service to Help Protect Sub-Contractors from Unfair Construction ...
Business Wire (press release)
... by an established network of experienced international partner firms and consultants, offers clients access to 'magic circle' calibre expertise, all with a level of personal service associated with smaller, specialist law firms. Its international ...

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Finally, Iraq Says Yes to the New York Convention.

Kluwer Arbitration Blog - Tue, 2018-03-13 02:58

Noor Kadhim (Assistant Editor for the Middle East)

 

It has been on the cards for many years. But on 6 February 2018, days before the Kuwait reconstruction conference, the Iraqi cabinet officially agreed to endorse the ratification of New York Convention of 1958 and table it with Parliament. The decision finally to accede to the treaty coincides with the eradication of Da-esh (ISIL) terrorist cells from the last of their strongholds in the north, and the perception that the country has consequently become ‘safer to invest in’. The World Bank has also significantly contributed to the efforts in this turnaround, in the last few months.

Although Iraq has in principle accepted for a long time, at least in theory, that the New York Convention is necessary (see my blog post) the timeline for its accession has only recently been given attention. As such, accession will be subject to the non-retroactivity exception: it will apply only to contracts arising post-ratification of the Convention.

As explained above, it is no coincidence that the decision to ratify the treaty precedes the International Conference for Reconstruction of Iraq which was organized by the World Bank and co-chaired by the European Union, and convened in Kuwait on 12 -14 February 2018. The objectives of the reconstruction programme are set out in a framework paper issued in the same month (Framework). The conference garnered commitments from international investors to provide Iraq with a sizeable (over £30 billion) reconstruction package. The commitments emanated from different regions globally, including the United States and Europe. They were also linked to and supported by the World Bank and IMF commitments to Iraq.

Amongst the largest ‘donations’ agreed by international investors were loans. The biggest donors included the United Arab Emirates ($5.5 million in guarantees for investments), the Islamic Development Bank, the European Union,Britain (considerable export credits) and the Kingdom of Saudi Arabia. The United States agreed to provide over $3 billion in loans and financing to American firms wishing to invest in Iraq. The financing is complicated and the figures reported in the press do not give an accurate picture, but consensus is that the package represents a major commitment from those involved. The five recovery ‘pillars’ include strengthening economic development. As part of this pillar, at chapter 3 of the Framework, Iraq’s reform priorities include “improving the business and investment environment”. Pillar 1, governance, also places emphasis on the need to promote accountability, equity and fairness.

It is clear, therefore, that the Kuwait conference is a crucial backdrop to the New York Convention decision. In fact, it is understood from internal sources that one of the World Bank’s conditions was that Iraq approve ratification of the New York Convention, prior to agreement of the reconstruction package. This is because one of the first things that investors would have been asking is: what if everything goes pear-shaped in Iraq again? What if the billions of dollars invested in the country fall into the wrong hands, the business environment rapidly alters, or the Iraqi counterparties (whether they are State-affiliated, or private companies) breach their contracts?

Some of the deals being negotiated are complex and cross-jurisdictional, and include multi-faceted financing arrangements. For instance, Iraq aims to enter into significant export credit agency financing agreements whose counterparties will include the Ministry of Finance, major banks (JP Morgan and Deutsche Bank), and export credit agencies. The financing components will be governed by English law – but will also need reliable jurisdictional (forum selection) clauses. The funding arrangements should also not lose sight of another crucial feature of the reconstruction agenda: boosting the private sector. One of Iraq’s main goals is to increase its non-oil revenue (currently less than 10%). The issue is that capacity building will take time. As a result, many of the contracts to be negotiated off the back of these financing deals will be fraught with obstacles and with unknowns.

Therefore, given the value and significance of the Iraqi projects and their connected international financial commitments, donors and investors need assurance that if any disputes arise, they will be resolved in a neutral forum (arbitration) and that the resulting award will be enforceable in the local courts, and subject to avoidance only on limited and objective criteria. The New York Convention, if observed correctly, should guarantee the second and most vital step of this process: enforcement. Accordingly, a condition of the investments and loans was that Iraq provide legal comfort to businesses through its accession to the New York Convention.

One recalls that Iraq signed and acceded to the ICSID Convention of 1965 last year (see my second blog post). Currently, there are two ICSID cases proceeding against Iraq: Ittisaluna Iraq LLC and Others, and Agility Public Warehousing Company K.S.C. (both telecommunications cases). These cases are discussed by reference to the investment law context in Iraq, in this third blog post.

ICSID provides legal assurance to qualifying investors with qualifying investments in Iraq, where disputes arise over those investments. The restrictions, of course, are that not every investor will be a qualifying one (they need to be nationals of a state that has also signed up to ICSID). Also, not every investment will qualify (one-off sales contracts will not normally meet the requirements for an ‘investment’, for example). In addition, the investor needs to have contracted with Iraq directly or an entity whose actions are directly attributable to the State. If there is no direct contract that mentions ICSID, a treaty would need to be utilised. Currently, there are only three bilateral treaties in force between Iraq and third states: Japan, Kuwait and Jordan. As such, the investment would need to have been structured to take advantage of these treaties, but in sufficient time before the dispute arises, to avoid any allegations of last-minute ‘treaty-shopping’.

Given these limitations, and the increased costs of pursuing a claim using the ICSID forum, it makes abundant sense that investors should be cautious about the ICSID route being an accessible one for disputes that may arise under their investments or the new and substantial contracts with Iraq in its major country reconstruction. Notably, for commercial disputes, an international arbitration award backed by the existence of the New York Convention and its limited grounds for annulment and non-recognition is the standard option when dealing with a State whose national justice system will not afford an internationally recognised and neutral forum for dispute resolution.

To an extent, Iraq will seek to protect itself at the State level by requiring government entities to obtain collective approval from a special committee at the Secretariat of the Council of Ministers wishing to enter into an arbitration that could possibly bind the State. Otherwise, the validity of contracts between private parties will depend on the usual laws applying to capacity to enter into arbitration.  As a consequence of this important step, negotiations between foreign investors and State-owned, as well as between commercial parties transacting at arm’s length, will hopefully find greater comfort in the legal regime underpinning their transactions. These developments should, with a lot of effort and a bit of luck, help steer a crippled country onto the path to recovery.

(Image: courtesy: nuaire).

 

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


The post Finally, Iraq Says Yes to the New York Convention. appeared first on Kluwer Arbitration Blog.

Justice AK Sikri Releases Book on ADR 'Alternative Dispute Resolution – The Indian Perspective' - Live Law

Google International ADR News - Tue, 2018-03-13 02:24

Live Law

Justice AK Sikri Releases Book on ADR 'Alternative Dispute Resolution – The Indian Perspective'
Live Law
The book, featuring a perceptive introduction written by Supreme Court judge Justice DY Chandrachud and the foreword written by ICC International Court of Arbitration President Alexis Mourre, is a resourceful copy for legal practitioners and students ...

NBA-SBL inaugurates club - The Nation Newspaper

Google International ADR News - Mon, 2018-03-12 20:51

The Nation Newspaper

NBA-SBL inaugurates club
The Nation Newspaper
“When these disputes arise, it is only natural that the parties will want to resolve them peacefully and the common method of doing so without going to court is to go through the Alternative Dispute Resolution process. The one thing all disputes share ...

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Challenging Arbitral Awards before the Singapore Courts for a Tribunal’s Failure to Give Reasons (Part 1 of 2)

Kluwer Arbitration Blog - Mon, 2018-03-12 07:00

Jordan Tan and Andrew Foo

At the end of a lengthy and complex arbitration, the tribunal issues an award that summarises the evidence and submissions of both parties, and concludes with a single paragraph which states, “For the reasons given by the Claimant, which are accepted by this Tribunal, the claim is allowed in full.” Can an award of this nature be set-aside in Singapore for lack of reasons? In the first of a two-part series, we examine the arbitrator’s duty to give reasons.

 

Introduction

 

Under Singapore legislation, an arbitral award may be set aside if “the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place” (under Article 34(2)(a)(iv) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”) for awards emanating from international arbitration; section 48(1)(a)(v) of the Singapore Arbitration Act, concerning awards emanating from domestic arbitration, is similar).

 

The foregoing raises a number of issues:

 

  1. What is the content of an arbitrator’s duty to give reasons?

 

  1. In what circumstances is an arbitrator held to a “judicial standard” in discharging his or her duty to give reasons?

 

  1. Is there a difference in standard if an arbitrator is an expert in the subject-matter, as compared with the situation where the arbitrator is not an expert?

 

 

***

 

Content of an Arbitrator’s Duty to Give Reasons – a Judicial Standard?

 

One of the duties of an arbitral tribunal is to give reasons for its decision (Article 31(2) of the Model Law).

 

However, while curial intervention may be warranted if the tribunal’s reasons and explanations lack sufficient detail, the level of detail required is a question of degree (see TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972 (“TMM“) at [99]).

 

In TMM, Justice Chan Seng Onn considered this question and noted that in this regard, the standards applicable to judges are useful indicia for arbitrators, given that arbitral tribunals are subject to the same ideals of due process and justice as courts (see TMM at [102]–[103]).

 

The duty to give reasons entails the duty to give sufficient reasons that adequately engage with the circumstances of each case  (see Thong Ah Fat v Public Prosecutor [2012] 1 SLR 676 (“Thong Ah Fat”) at [30], [33]).

The seminal case of Thong Ah Fat, which sets out the scope and content of the court’s duty to give reasons, was recognised as an instructive parallel to arbitrators (see TMM at [102]).

 

Thong Ah Fat concerned a criminal appeal against the decision of the trial judge convicting the appellant and sentencing him to the mandatory death penalty for a drug offence.

 

In that case, the Singapore Court of Appeal noted that it was an elementary principle of fairness that parties are not only given a fair opportunity to be heard, but also apprised of how and why a judge has reached his decision (see Thong Ah Fat at [14]–[15]).

 

Indeed, the spirit behind the court’s duty to provide reasons is to enable the parties to be apprised of why and how a decision turned out the way it did (see Ten Leu Jiun Jeanne-Marie v National University of Singapore [2015] SGCA 41 at [53]).

 

The Court of Appeal in Thong Ah Fat articulated the following principles:

 

  1. There should be a summary of all key relevant evidence, although not all detailed evidence need be referred to (see Thong Ah Fat at [34]).

 

  1. The parties’ opposing stance and the judge’s findings of fact on the material issues should be set out; however, the judge does not have to explicitly rule on every factual issue (see Thong Ah Fat at [35]–[36]).

 

  1. The decision should demonstrate an examination of the relevant evidence and the facts found, with a view to explaining the final outcome on each material issue (see Thong Ah Fat at [36]).

 

  1. The judge has to explicate how he arrived at a particular conclusion, and impressionistic statements are generally not helpful (see Thong Ah Fat at [37]).

 

In TMM, the Judge considered, but ultimately rejected, the argument that the arbitrator had failed to give reasons:

 

  1. It would not have sufficed if the tribunal had merely stated that it had considered both parties’ submissions and evidence (see TMM at [106]).

 

2. However, the tribunal in TMM had done more – it had summarised the relevant facts and evidence, crystallised the parties’ cases, and set out its conclusions on the construction of the relevant documents and the merits of certain arguments (see TMM at [106]).

 

3. Accordingly, the plaintiff evidently knew how and on what basis the tribunal had arrived at its decision, and also knew that the tribunal had preferred a particular version of events (see TMM at [106], [120]).

 

This issue has also been given careful analysis by the Australian courts. On the question of whether arbitrators should in all cases be held to the same standards as judges, i.e. obliged to give reasons of a “judicial standard”, the Australian courts have opined as follows.

 

  1. In BHP Petroleum Pty Ltd v Oil Basins Ltd [2006] VSC 402, the Supreme Court of Victoria held that an arbitrator must give reasons commensurate to those provided by judges in their determinations.

 

  1. However, the High Court of Australia subsequently rejected the notion that a single judicial standard of reasoning should apply to all arbitrations (see Westport Insurance Corporation v Gordian Runoff Ltd [2011] HCA 37 at [168]-[169]).

 

It may therefore be appropriate to abandon a one-size-fits-all conception of the requisite standard of reasoning, and instead consider, in each case, what standard of reasoning is required to inform the parties of the bases on which the arbitral tribunal reached its decision on critical issues, taking into account:

 

  1. Complexity of the dispute, e.g. whether there are multiple complicated issues of fact and law;

 

  1. Legal qualification(s) (or lack thereof) of the arbitral tribunal;

 

  1. Whether the parties have agreed that the tribunal may state its reasons in summary form (see e.g. Arbitration Rules of the Singapore International Arbitration Centre, 6th Edition, Rule 5.2(e) – expedited procedure, Rule 29.4 – early dismissal of claims and defences, Schedule 1, Article 8 – emergency arbitrator); and

 

  1. Whether the arbitrator(s) are experts in the subject-matter of the dispute. We explain below the relevance of the tribunal’s subject-matter expertise.

 

In summary, while the rules of natural justice dictate that parties should be apprised of how and why an arbitrator has reached his decision, the ultimate question is whether the contents of the arbitral award, taken as a whole, inform the parties of the bases on which the arbitral tribunal reached its decision on the material or essential issues.

 

This is consistent with the views of the New Zealand Courts, which have been discussed in two prior posts on this blog here and here.

 

***

 

Expertise of the Tribunal

 

An arbitral tribunal’s duty to give reasons includes a duty to inform the parties of the bases on which it has decided key issues of expert evidence.

 

In particular, in arbitrations where the arbitral tribunal does not possess qualifications or experience in a particular area of expertise and the parties have adduced expert evidence on issues within that area of expertise, the arbitral tribunal is obliged to explain why it prefers the evidence of one expert over the other’s, or indeed why it does not accept either expert’s evidence.

 

The appointment of experts, even by the tribunal itself, does not negate this duty. This is because experts are appointed to report on specific issues, but not to determine them (s27 of the Arbitration Act, Article 26 of the Model Law, and the definitions of “Party-Appointed Expert” and “Tribunal-Appointed Expert” in the IBA Rules on the Taking of Evidence in International Arbitration (the “IBA Rules”).

 

It is instead the tribunal that is expressly empowered to determine the relevance, materiality, and weight of evidence, including evidence given by experts (s23(3) of the Arbitration Act, Article 19(2) of the Model Law, and Article 9(1) of the IBA Rules).

 

Therefore, the following practices cannot, without more, discharge an arbitral tribunal’s duty to give reasons where expert evidence is in issue:

 

  1. Summarising expert reports, or fixating on isolated aspects of expert reports, and not dealing with other relevant aspects;

 

  1. ‘Splitting the difference’ between experts (e.g. as to quantum to be awarded);

 

  1. Where an expert’s views are explicable, brushing aside those views on the basis that the expert’s explanations are ‘unclear’ or ‘difficult to follow’; and

 

  1. Asserting without explanation that the tribunal’s determination of a particular expert issue is ‘prudent’, ‘reasonable’, or ‘fair’.

 

In summary, even if an expert issue pertains solely to a relatively small claim among numerous large claims (e.g. a $1,000 claim for variations in a $100 million construction dispute), the tribunal’s decision must demonstrate that it has grappled with the expert evidence put forward, and explain why it has decided as it has, e.g. why it is more persuaded by one expert than the other.

 

***

 

Conclusion

 

Arbitrators should be conscious of, and conscientious to fulfil, their duty to render adequately reasoned awards: that is, awards that inform the parties of the bases on which the tribunal reached its decision on the material or essential issues.

 

Arbitrators should not regard the appointment of experts as exculpatory of the arbitrator’s duty, and should go beyond mere regurgitation of evidence / submissions and glib statements of agreement and disagreement.

 

In the second part of this series, we shall examine the remedies parties may seek in cases where this duty has been breached.

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


The post Challenging Arbitral Awards before the Singapore Courts for a Tribunal’s Failure to Give Reasons (Part 1 of 2) appeared first on Kluwer Arbitration Blog.

From schoolboys to ruthless killers: Rehabilitating the abducted lost ... - Irish Examiner

Google International ADR News - Mon, 2018-03-12 02:14

Irish Examiner

From schoolboys to ruthless killers: Rehabilitating the abducted lost ...
Irish Examiner
More than a decade after war ended in northern Uganda, the legacy of the conflict lingers on in poverty, suspicion, and land disputes. Caroline O'Doherty travelled with Trócaire to see how the charity is helping to rebuild trust and hope. Denis Ojara ...

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Conflict in Context

ADR Prof Blog - Sun, 2018-03-11 20:04
One of the reasons I feel so strongly about the value of the Stone Soup Project is that it inspires us to develop deeper understandings about how conflicts unfold.  I have encouraged colleagues to assign students to get detailed accounts of cases from the outset – not focus only on the tail end – because … Continue reading Conflict in Context →

Howard J. Aibel, 88, Arts Advocate | WestportNow.com, Westport, CT - Westport Now

Google International ADR News - Sun, 2018-03-11 15:04

Howard J. Aibel, 88, Arts Advocate | WestportNow.com, Westport, CT
Westport Now
Howard J. Aibel of Weston, lawyer, conservationist, philanthropist, and passionate arts advocate, died March 9 from complications from pneumonia. He was 88. WestportNow.com Image Howard Aibel: passionate arts advocate. Helen Klisser During for ...

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Howard J. Aibel, 88, Arts Advocate - Westport Now

Google International ADR News - Sun, 2018-03-11 15:03

Howard J. Aibel, 88, Arts Advocate
Westport Now
He attended Poly Prep Country Day School in Brooklyn, Harvard College (class of 1950), and Harvard Law School (Juris Doctor, cum laude, 1951). He worked for nearly 30 years as executive vice president and chief legal officer of International Telephone ...

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Art Hinshaw Wins CPR Award for Article on Regulating Mediators

ADR Prof Blog - Sun, 2018-03-11 06:56
The International Institute for Conflict Prevention and Resolution (CPR) gave its award for outstanding professional article to our own Art Hinshaw as well as Stephanie Cohen and Mark Morril, and to Lynn Cohn for a short article. As a matter of parochial pride, I also want to note that the editor-in-chief of Missouri’s Journal of … Continue reading Art Hinshaw Wins CPR Award for Article on Regulating Mediators →

The President of Abuja Chamber Of Commerce & Industry (ACCI) felicitates with Daudu on appointment as NICN Chief ... - The Nigerian Voice (press release) (blog)

Google International ADR News - Sun, 2018-03-11 05:25

The Nigerian Voice (press release) (blog)

The President of Abuja Chamber Of Commerce & Industry (ACCI) felicitates with Daudu on appointment as NICN Chief ...
The Nigerian Voice (press release) (blog)
Mr. Daudu has attended sundry professional courses in Alternative Dispute Resolution (ADR) and was inducted as a Fellow of the JAMS Foundation sponsored Weinstein International Fellowship; having completed several ADR trainings in different ...

The CJEU in Slovakia v Achmea or Is Justice Best Served Cold?

Kluwer Arbitration Blog - Sun, 2018-03-11 03:47

Lucia Bizikova

On 6 March 2018, the Court of Justice of the European Union issued a long-awaited decision on a preliminary ruling from Germany’s Federal Court of Justice in the Slovak Republic v Achmea case (available here and already addressed in a different KluwerBlog entry here) [Case C-284/16]. By concluding that the arbitration clause in the Slovakia-Netherlands bilateral investment treaty (BIT) applicable in arbitration between Achmea and Slovakia had an adverse effect on the autonomy of EU law and declaring that it was incompatible with EU law, the CJEU has put an end to the controversy regarding the legality of intra-EU BITs. This question has been haunting legal professionals and academics at least since 2007, when the Tribunal in Eastern Sugar v Czech Republic handed down its decision refusing to accept the Respondent’s argument that the application of the BIT was limited because it had been superseded by EU law since the Czech Republic’s accession to the European Union [Eastern Sugar v Czech Republic, SCC. Case No. 088/2004]. It has gained even more prominence in recent years in the context of the CETA and the debate on the establishment of a (European) multilateral investment Court. Consequently, the CJEU issued a clear signal as to where the intra-EU investment arbitration might be heading.

Liberalising and De-Liberalising of the Health Insurance Market

The dispute between Achmea and Slovakia arose out of the measures adopted by the Slovak Government in 2006 that reversed the previous liberalisation of the Slovak health insurance market. Slovakia underwent reforms of its health system in 2004 opening the market to private sickness insurance providers. Following this, Achmea set up a wholly owned subsidiary in Slovakia offering private sickness insurance services. In 2006, Slovakia stepped back from its policy and prevented private health insurers from distributing profits to shareholders. Achmea challenged this change and commenced arbitration proceeding against Slovakia before the PCA in October 2008, according to the UNCITRAL Rules [Achmea v Slovakia (I), PCA Case No. 2008-13]. By the arbitral award of 7 December 2012, the Tribunal composed of Professors Vaughan Lowe, Albert Jan van den Berg and V. V. Veeder found for Achmea and ordered Slovakia to pay EUR 22.1 million worth of damages. Interestingly, this is the only case in which the investor was successful in challenging Slovakia’s changes to its health system reforms. Coupled with the subsequent plans to establish a single health insurance company, the deliberalisation of the health insurance market gave rise to three other investment arbitrations, all of which failed on jurisdictional grounds (see ad hoc arbitrations initiated by HICEE, EURAM Bank and Achmea II, all heard by the PCA).

Slovakia’s Legal Battle Against the Award

Slovakia challenged the Tribunal’s decision and submitted an application to set aside the award to the Higher Regional Court in Frankfurt am Main on 31 January 2013. After the Court rejected its application, Slovakia appealed on a point of law to the Federal Court of Justice in Germany. Slovakia took the view that the tribunal lacked jurisdiction because the Slovakia-Netherlands BIT was contrary to several provisions of the Treaty on the Functioning of the European Union (TFEU), which in the event of conflict should take precedence over the BIT. The Federal Court of Justice accepted the appeal and referred the question of compatibility of the contested BIT with the TFEU to the CJEU.

First, the CJEU noted that the disputes leading to the constitution of arbitral tribunal in accordance with Article 8 of the BIT may relate to the interpretation or application of EU law by that tribunal. Still, an arbitral tribunal could not be classified as “a court” or “tribunal” of a Member State within the meaning of Article 267 TFEU (in this case, the Tribunal was neither a court of Slovakia nor one of Netherlands), which meant that it had no power to make a reference to the Court of Justice for a preliminary ruling. This has important consequences as under the BIT, the tribunal’s decision is final. While it is possible to conduct a judicial review of the validity of the award, this has to be carried out in accordance with the law of the seat of arbitration, which is subject to the tribunal’s choice. More importantly, such judicial review can be exercised by the national court only to the extent that the respective national law permits. In this sense, the limited ground for review of awards issued in commercial arbitration is not suitable for arbitration proceedings like the present case, that derived from a treaty by which the Member States effectively displaced the jurisdiction of their own courts, which (by implication) could lead to limiting the application or interpretation of the EU law.

The CJEU concluded that the mechanism for settling disputes established by the BIT failed to ensure that those disputes would be decided by a court within the judicial system of the EU. The arbitration clause in the BIT had an adverse effect on the autonomy of EU law and was, therefore, incompatible with EU law.

CJEU’s Decision in Slovakia v Achmea Finally Bringing Justice to the Most Recent Members of the EU

We will have to wait and see what the German Federal Court makes from the CJEU’s decision, but it is likely that it will end up setting aside the Award. This puts an end to a long-going saga of arbitrations Slovakia was facing following its deliberalisation of health insurance market. And while arbitrations in HICEE v Slovakia and Achmea v Slovakia II were dismissed on different procedural grounds, the Tribunal in the 2012 decision EURAM Bank v Slovakia have already had an opportunity to deal with the issue of the conflicting application of the BIT (in this case, Austria-Slovakia BIT) and one of the European Treaties, specifically the Treaty Establishing the European Economic Community (ECT) and the subsequent treaties [EURAM Bank v Slovakia, PCA Case No. 2010-17].

The Tribunal adopted a different approach to the CJEU and analysed the conflict between the different instruments in light of Article 59 Vienna Convention on the Law of Treaties (VCLT). By considering the two-step inquiry under Article 59 of the VCLT, the Tribunal rejected Slovakia’s arguments because the BIT in question and the ECT did not have the same subject-matter. The Tribunal even relied on the reasoning in Achmea (I) that had come to a similar conclusion (and was the subject of the CJEU’s decision)! The EURAM Bank Tribunal then added that even if it had reached a different conclusion on the subject-matter point, it would nevertheless have found that the other requirements of Article 59 were not met.

Significantly, the question regarding the conflicting application of the intra-EU BITs and the European Treaties is not exclusive to Slovakia’s health insurance controversy. As mentioned above, it has been raised (and dismissed) in Eastern Sugar but also in a more recent ICSID arbitration Micula v Romania [Micula v Romania (I), ICSID Case No. ARB/05/20]. This case is an extreme illustration of the clash between the “traditional” investment regime and the obligations imposed under the European law. Indeed, it led to an extreme result, whereby the Tribunal held that Romania’s revocation of tax incentives and benefits targeting foreign investment in disfavoured regions breached the BIT, while at the same time, those very incentives were held contrary to the EU State Aid Rules. Furthermore, once the Award has been issued, the European Commission prohibited Romania from complying with it. In fact, Romania sought to have this award annulled and the European Commission appeared as an amicus curiae. Despite this, the Final Award was upheld by the ad hoc Committee [See Decision on Annulment dated 26 February 2016]. But, significantly for our purpose, the European Commission invoked Article 59 of the VCLT and argued that the Award should be annulled because the Tribunal had lacked jurisdiction as the EU Treaties superseded the Sweden-Romania BIT as a result of Romania’s accession to the EU. The Committee rejected this argument albeit it failed to give any reasons for this conclusion.

It is no accident that all arbitrations that dealt with the validity of intra-EU BITs were brought against the new Members of the EU. After the fall of the communism, these countries were a target of the 1990s “BITs Baby Boom”. More often than not, BITs concluded during this period imposed extensive obligations on the Parties, which remain burdensome despite the fact that many of these countries are full Members of the EU. Read in this context, the CJEU’s decision represents a welcome development of the (European) investment regime. By protecting the autonomy of the EU law, it will provide more legal certainty in future disputes in which conflicting grounds for jurisdiction exist under both the intra-EU BITs and the EU laws.

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Africa, stand up for Africa

Kluwer Arbitration Blog - Sat, 2018-03-10 02:30

Rubin Mukkam-Owuor

It is trite that economic growth in Africa and the scale of investment into the region has thrust international arbitration to the forefront of dispute resolution on the continent. Indeed, the proliferation of African international arbitration centres (there are more than 40 currently in existence) is testament to the fact that African governments are alive not only to an international preference for arbitration as a mechanism for the resolution of disputes, but also to the potential of arbitration as an economic activity, with local lawyers, hotels, conference centres, and transcribers set to benefit.

It is also well-known that while Africa-related arbitration is on the rise, this is not reflected in an increase in the appointment of African arbitrators, or in the popularity of African seats. This is borne out in the oft-quoted statistics published by the ICSID, ICC and LCIA.    

Misunderstood

There is a false perception that arbitration as a practice is under-developed in Africa, and that there is a lack of expertise in arbitration on the ground. There is also a perception that African governments may not be pro-arbitration, and that enforcing international arbitral awards in African countries is difficult.

Evidence shows that the reality is quite different. In fact, there are very many well-qualified and experienced African arbitration counsel and arbitrators, and some of the arbitration centres on the continent are well-established and have a reasonably large international arbitration case load. The Cairo Centre for International Commercial Arbitration (CRCICA) is a notable example in this regard. Many African countries’ arbitration laws are based on the UNCITRAL model law, and have been through reform in the last 10 years. 36 of the 54 African countries are party to the New York Convention, while 47 are signatories to the ICSID Convention.

As for enforcement, though there is insufficient data from which to establish a trend, African courts generally do not take an adverse approach to enforcement. Au contraire, we have seen the upholding of arbitral awards by local courts, even when it is against a state-owned company, the most high profile example of which is probably the Tanzanian courts’ enforcement of a $65 million award against the Tanzania Electric Supply Company (TANESCO) in the Dowans case. Between 2011 and 2014, the Kigali International Arbitration Centre (KIAC) issued three arbitral awards against government parties, and not a single one of these were challenged in the Rwandan courts. The exclusion of the public policy argument as a ground on which to refuse enforcement of a foreign arbitral award in the laws of Nigeria and Tanzania show a strong commitment to honouring international arbitral awards. Even where grounds exist in local legislation to avoid enforcement (such as in South Africa – there is a specific provision requiring approval of the Minister of Economic Development for the exequatur of certain foreign arbitral awards), we have seen that these provisions are interpreted narrowly in practice so as to permit enforcement.

Notwithstanding the above, the exclusion of African counsel, arbitrators, seats and centres from amongst internationally preferred choices has led to a lack of African experience in these spheres, for which there is no substitute. This must be urgently resolved, so that African experience can catch up to African demand for arbitration services, and start shaping the very dispute resolution mechanism that will increasingly impact the continent.

One solution is to build a track record by actively promoting the use of African counsel, arbitrators, seats and centres in arbitrations originating within Africa (“intra-African arbitration”). This is a good starting point, and would demonstrate to the outside world that African parties have faith in African arbitration, and therefore they should too.

Gaining Experience: (i) counsel; (ii) arbitrators; (iii) seats; and (iv) centres.

Counsel

An analysis of the ICSID cases involving East African state parties shows that all of them, save for one involving Burundi, involved the state being represented by an international law firm (ILF). In many cases, these ILFs partnered with co-counsel who were based locally. This should be formalized in the legal policy of African states, such that partnership between ILFs and locally-based firms is mandatory in any arbitration involving the government. This will enable the transfer of knowledge and skills, and the opportunity to gain from the wealth of experience which ILFs have to offer, in order to build local capacity. The ICSID cases involving Kenya seem to evidence that this policy has been adopted in Kenya. This has been taken to an extreme in Nigeria, where the Legal Practitioners Act has once before been interpreted as precluding parties from being represented by international counsel, and requiring that all oral advocacy be conducted by Nigerian counsel in order to avoid potential challenges to the resulting arbitral award.

Arbitrators

There is a strong case for appointing an African arbitrator in any arbitration which involves African parties and/or a contract which is substantially performed in Africa. Arbitrators from the same cultural background as the parties, who understand the local conditions, are in the best position to resolve these disputes. There is no dearth of training afforded to African arbitrators, with the African Legal Support Facility and Africa International Legal Awareness carrying out various trainings, and many conferences having taken place in African cities, particularly over the last four years. That said, training is no substitute for experience in a live arbitration. African arbitrators should be allowed to observe ongoing arbitration proceedings (with the necessary restrictions in place of course), to gain experience.

Seats

Although generally, the suitability of African countries as arbitral seats has not yet been tested, there are specific improvements which can be made to ensure that they are viable seats. Concerns surrounding bureaucracy and delay can be dispelled by allowing arbitration-related matters to be fast-tracked to experienced specialist judges. This has worked particularly well in Mauritius. It is also important that English is universally accepted for use in court – for example, the mandatory use of Arabic in court submissions in Morocco has limited its attractiveness as an arbitral seat in non-Arabic language arbitrations. It is also critical that local arbitration laws are modern and keep up with developments in international arbitration law – for obvious reasons, this is often cited as one of the most important factors in choosing a seat.

Mauritius and Egypt have shown themselves to be sound choices for African arbitral seats, and their use in intra-African arbitrations should be promoted.

Centres

Part of the reason that no one African arbitration centre has gained traction, is that there are simply too many of them. Limited resources should be channeled efficiently for the development of three or four regional centres, which are fully equipped with state-of-the-art facilities and information technology. If establishing a regional centre faces too much red-tape, then governments should consider simply promoting those African institutions which have successfully established themselves (such as the CRCICA, Mauritius International Arbitration Centre and the KIAC which have all struck the right balance between being supported by their respective governments, without control or interference from them), and making them the default choice in their contracts. This removes an item from public expenditure, and may have benefits in terms of the political leverage to be gained from encouraging the use of one or more of these centres.

The Arbitration Foundation of South Africa (AFSA) has potential to become a powerhouse in international arbitration in southern Africa. Its strong domestic arbitration caseload demonstrates that it has gained the trust and acceptance of the local community, and this should be a good springboard from which to build an international arbitration centre.

If these centres were promoted in intra-African arbitrations, then they would build a track record of international arbitrations (albeit from other African countries), and gain enough credence to administer non-African arbitrations.

Telling the World

Africa must be cognizant of its bargaining power. In the scramble for resources, investors will be forced to accept local or regional arbitral systems and/or African seats, or risk losing deals. Indeed, in a survey conducted by Simmons & Simmons in 2015, 72% of respondents said that they would consider using local or regional arbitral systems, and 58% said they would use an African seat.

In order to correct the misconception that Africa is not arbitration-friendly, it is incumbent on us to take active steps to increase awareness. We must build up the capacity of our arbitration centres, then market them aggressively. We must make legislative reforms an agenda priority, then publicise them widely. In all these efforts, it is important to act quickly and capitalize on the current interest in the continent, as this will eventually wane.

If we are successful, perhaps what might emerge is a more mature African arbitration jurisprudence, and evolution of an African-centric style of arbitration, or at the very least, one in which Africa has had an influence.

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Conflicts and disputes - Fiji Times

Google International ADR News - Fri, 2018-03-09 16:54

Conflicts and disputes
Fiji Times
Mediation is a method of alternative dispute resolution (ADR) available to aggrieved parties in any dispute. Mediation is essentially a negotiation facilitated by a neutral third party called the mediator. Unlike arbitration, which is a process of ADR ...

Investment protection in Latin America: Mexico takes one step forward, Venezuela takes two steps back - Lexology

Google International ADR News - Fri, 2018-03-09 12:10

Investment protection in Latin America: Mexico takes one step forward, Venezuela takes two steps back
Lexology
In recent years, Mexico has taken a series of measures aimed at fostering greater openness in trade and investment – both foreign and domestic – including promoting alternative dispute resolution. According to the United Nations Conference on Trade and ...

Joy on the History of Experiential Education

ADR Prof Blog - Fri, 2018-03-09 09:44
Peter Joy (Washington University School of Law) has published “The Uneasy History of Experiential Education in U.S. Law Schools,” forthcoming in the Dickinson Law Review and available here. The abstract: This article explores the history of legal education, particularly the rise of experiential learning and its importance. In the early years of legal education in … Continue reading Joy on the History of Experiential Education →
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