The arbitration agreement, jurisdiction and seat

Transcription

1 The arbitration agreement, jurisdiction and seat 1. Jurisdiction / competence competence: Competence competence may now be well established, but can we really justify the current situation where arbitrators stand to gain financially from finding that they have jurisdiction? Is there an alternative? 2. Should parties which are in dispute whether an arbitration agreement is valid be entitled prior to the initiation of arbitration proceedings to apply to the competent state court at the place of arbitration and to have the state court decide on the arbitration agreement's validity, scope and enforceability? The French position is "No" due to the concept of negative competence competence and the main substantive argument is that such right might delay arbitration proceedings. The German position is "Yes" because such right reinforces legal certainty. My feeling is that the German position is correct as long as courts are willing to decide within an acceptable time frame and the parties are free to initiate arbitration proceedings in the meanwhile. My main argument is that at the end of the day the state court will have the final say anyway, unless one follows the view that awards which are set aside at the place of arbitration may be enforced elsewhere which is a new topic. But I am interested to hear what the English position is or could be? 3. The bad publicity made to arbitration in France with the "Tapie" case and reflexions on available avenues against the award should it be evidenced that the decision to have recourse to arbitration has been made fraudulently? 4. There are some national laws that for certain cases provide for arbitration as a compulsory and the only dispute resolution system between two parties. For instance, in Greece, Law 3389/2005 which concerns Public & Private Partnerships (PPP) in Article 31(1) provides that "Any dispute arising with regard to the application, interpretation or execution of the Partnership Agreements... shall be settled by arbitration." Moreover, Article 31(2) goes on to note that "The arbitral decision shall be final and irrevocable with no right of appeal and will be enforceable directly and the parties must comply immediately with its terms." In such cases, is it still the freedom of the parties the foundation stone for the arbitration agreement? 1

2 Is there a possibility for a such arbitral award to get annulled on the basis that a party did not opted for an arbitration clause? 5. The French and UK Dallah's decisions or French and UK courts' opposite interpretation of French case law on the extension of arbitration agreement to third parties. 6. Two companies entered into a commercial agreement with included a valid arbitration clause. However, one of these companies closed. What are the possibilities for the other party to commence arbitration proceedings against the stockholders of the closed company? Does the arbitration agreement remain valid? Would be the answer different if that company went insolvent? What if a party ceases for any legitimate reason to exist during the arbitration proceedings? 7. The defendant is convinced that there is no arbitration agreement, but the claimant has started arbitration and the tribunal is formed, but has not yet decided on its jurisdiction. The defendant clearly stated their objections to claimant and tribunal. However, the arbitration process proceeds without any indication to the defendant that the tribunal will decide on their jurisdiction at this stage. (i) Should the defendant reject to take part in any further process that the tribunal will conduct? (ii) If the defendant reluctantly decides to follow the proceedings, how can they protect their position? would it be enough to state that they object, but partake Without Prejudice would it then be enough that they mark any further correspondence and exchange during the arbitral proceedings Without Prejudice, if not what else would be recommended? 2

3 could such involvement be interpreted later as accepting the arbitral decisions without an original arbitration agreement, i.e as a form of ad hoc arbitration? 8. Simultaneous change of seat, applicable law and one of the parties during a long term business relationship implications on jurisdiction ratione temporae? 9. When, if at all, can or should the seat of an arbitration be changed after the arbitration has been commenced? What effect might this have on the enforceability of the award(s) at the end of the case? 10. Is it helpful or in keeping with today's priorities that the LCIA Rules specify London as the "default" seat? 11. After Dallah and now Jivraj, it has been a busy 12 months for the Supreme Court. What effect have these two cases had on the UK s reputation internationally as an arbitration centre? 12. Jivraj: In an attempt to adopt a "glass half full" approach, was this episode helpful in highlighting and confirming the importance of international arbitration in London? Or was the whole affair merely an unwelcome distraction from business as usual? 13. Is London's reputation as a global centre for international arbitration becoming tarnished? Do high profile cases (Jivraj, Dallah etc) help or hinder? Are we at risk of pricing ourselves out of the market? Should the YIAG generation take responsibility for the issue or should we focus on the global market irrespective of regional centres? 3

4 14. The controversial recent decision on jurisdiction in Abaclat v. Argentina raises a range of issues. For starters, is the conclusion that bonds are investments for the purposes of the ICSID Convention tenable? 15. Should holders of sovereign debt be considered investors? 16. Class Arbitration In the last few months, both the Supreme Court of the United States and the Supreme Court of Canada have considered issues concerning class arbitration, albeit in the context of consumer claims: see AT&T Mobility LLC v. Concepcion, 131 S. Ct (27 April 2011) and Seidel v. TELUS Communications Inc, 2011 SCC 15 (18 March 2011) In each case, the majority and dissenting judges expressed competing views regarding the perceived advantages and disadvantages of arbitration generally. Is there reason to be concerned about any of their expressed views? 2. The Arbitral Tribunal 17. Is it time for the Courts/ arbitral institutions to be more proactive about removing/ rejecting appointed arbitrators whose connections with the lawyers appointing them appears too close. For example, is it acceptable for (a) recently retired partners to be appointed by their old firm; or (b) arbitrators to be receiving a very substantial proportion of their appointments from a single firm? 18. Arbitrators Duty of Disclosure: Instances of challenges on the basis of an arbitrator's interest or shareholding in a party to the dispute or its affiliate appear to be arising not infrequently. Does this indicate a lacuna in the IBA Guidelines? Should the principle of a duty to disclose be extended not just to shareholdings but to the disclosure of positions on boards of a company on which a member of one of the parties to a dispute is also a director? 4

5 19. Challenges to the appointment of an arbitrator on grounds of impartiality or lack of independence: Do the IBA Guideline on Conflicts of Interest, together with the growing body of decisions published by institutions such as the LCIA and ICSID, form a legal framework which is increasingly applicable to all arbitration institutions? Or does the approach of institutions like the ICC, with its refusal to publish reasons for its decisions, mean that the ideal of a reliably consistent approach remains some way off? 20. Appointment of arbitrators: should there be more transparency in the appointment of arbitrators by institutions? For example, should institutions report annually on the appointments by party nomination and otherwise? 21. The rise of the unmeritorious challenge do cost sanctions represent a means of readdressing the balance? Could they work in practice? Is there any reality about the concern that if you are going to shoot the king you better not miss? 22. The decision in Jivraj has removed the threat to nationality based limitations on arbitral appointments. But to what extent are such limitations fit for purpose in the modern globalised world? Are there not more specific and effective means of achieving the appearance of neutrality? 23. Jivraj much ado about nothing? 24. The parties agree that their nominated arbitrators will attempt to agree on a chairman. They confer, and a number of names are proposed by each party, but no agreement is reached. It is therefore left to the institution to choose the chairman. One party writes to the institution, giving the names of all the potential arbitrators canvassed but not agreed upon, and asks that the institution does not appoint any of them. Should the institution accede to this request? 5

6 3. Practice and procedure the conduct of the proceedings 25. Are tribunals becoming more interventional in the way in which they deal with procedural orders, and in particular in commenting on provisions already agreed between the parties? 26. Should arbitrators be more robust in way they manage the arbitration process? Are they constrained by the consensual nature of arbitration and/or by concerns (however unfounded) over fairness and due process? 27. Confidentiality: In the preparation of the updated UNCITRAL rules, there was much debate about whether there should be separate guidelines for investment arbitration regarding confidentiality. Although this was ultimately rejected, it seemed to be generally acceptable that investment arbitration should be carried out in a public manner. Are there limits to the desirability of openness in investment arbitration? Does this general rule allow for a sophisticated investor (potentially experienced in media campaigns etc) to hold a state to ransom? Is there anything a state / tribunal can do in this situation? What practical measures have been used to control confidentiality and to what effect (whether in investment arbitration or otherwise)? Does anyone have practical experience of arbitrators exercising their power to enforce LCIA art regarding the confidentiality of awards? 28. Is it tactically astute or a tactical blunder for the Respondent to dispense with the Response (nomination issues aside)? 29. Pleading v proving foreign law is it time for the foreign law expert to quit the field? 30. The IBA Rules on the Taking of Evidence (Article 3(3)(a)(ii)) provide in relation to a Request to Produce Documents maintained in electronic form that the requesting Party may, or the Arbitral Tribunal may order that it shall be required to, identify specific files, search terms, individuals or other means of searching for such Documents in an efficient and economical manner. How should arbitral tribunals deal with requests to produce electronic documents? 6

7 For instance, should they allow a request to image a computer with a view to recovering deleted data such as s? 31. Requests to produce potentially forged documentary evidence and due process. 32. Document production: Is an arbitral tribunal entitled (under the IBA Rules or otherwise) to sua sponte narrow down (and thus admit) an overly broad request for the production of documents? Is there a general practice to do so? 33. When is the "best" time for filing witness statements/expert reports: together with the legal briefs or thereafter? 34. Expert evidence: What happened to the Sachs Protocol? Has it been applied in practice? What are the experiences? Does it/could it work and provide a solution to bridge the gap between a system of party appointed experts and a system of tribunal appointed experts? Can it really save time and/or costs? 35. When should the issue of expert witness conferencing be raised? Is it appropriate for it to be raised only after the experts have delivered their reports? Or is that too late? What are your practical experiences with expert witness conferencing? Are there particular circumstances in which it has worked well, and circumstances in which it has not worked? Why? Are expert witness panels organized by topic a useful middle ground between full scale witness conferencing and conventional expert witness cross examination? 7

8 36. With a "professional expert", do you lose, in a perceived deficit of impartiality, what you gain in polish? 37. Is it appropriate for a party appointed expert to help counsel with cross examination of the other side's expert? 38. The Debevoise Protocol (Proposal 18) proposes to "divide the presentation of exhibits between core exhibits and supplementary exhibits that provide necessary support for the claim or defence but are unlikely to be referenced at a hearing". Has anyone ever done that? Does/can it really work? 39. Do divergent ethical standards applicable to legal professionals in different countries (or even to different types of lawyers in the same country) lead to an inequality of arms? Would there be any merit in having a transnational set of rules which would apply to all party representatives in international arbitration proceedings and, if so, could such a set of rules ever be agreed? 40. Is the quality of advocacy in international arbitration proceedings as high as that found in national courts? Are counsel sometimes guilty of over estimating their own advocacy skills? 41. Post hearing briefs: a waste of time and money? 42. In some cases, rather than permitting post hearing submissions which may simply repeat the points already made in the memorials (supplemented this time by references to the transcript of the hearing), the Tribunal will ask the parties to respond to discrete questions in a series of post hearing notes. What are your views on this practice? 8

9 43. ODR (Online Dispute Resolution). What s going on? Has anyone got any experiences? Pros and cons? See for example Joseph W. Goodman, The pros and cons of online dispute resolution: An assessment of cyber mediation websites. 44. Fast track arbitrations can they work in practice and could they ever realistically be agreed to up front or must they be the rarest of beasts ad hoc post dispute agreements between the parties? 45. In brief, Article 4.4 of the 2010 IBA Rules on the Taking of Evidence provides that the Tribunal may order the parties to submit witness statements by each witness on whose testimony the parties intend to rely. What if the Tribunal ordered that witness statements be submitted and that they shall be considered direct evidence, however, a party fails to provide the same. May this witness then testify at the oral hearing although no witness statement has been submitted and opponent party was thus deprived of advance notice of the witness testimony? Under what circumstances may this witness testify or not? Consider Article 8.4 IBA Rules regulating the confirmation of the witness statement by the witness at the beginning of the oral hearing which reads: [ ] If the witness has submitted a Witness Statement [ ], the witness shall confirm it. Although not directly dealing with the above issue, the provision somewhat anticipates that a witness may testify although she/he did not submit a witness statement when ordered by the Tribunal 4. Orders, Awards and Enforcement 46. To what extent should a Tribunal look into the terms of a consent award before making it? 9

10 47. How much, if any, information should a tribunal share with the parties as to the progress of the drafting of an award? 48. Errors in awards: it is easy to blame tribunals for imperfections, but do the parties and/or institutions bring enough pressure to bear on busy arbitrators to produce error free awards? Does the scrutiny of awards in ICC arbitration help and should it be replicated elsewhere? Should awards be issued in draft and in confidence to the parties' representatives? 49. Have "arbitral awards" become too long? What is the right balance between providing an explanation for the benefit of the losing party and the duty to render an enforceable award for the winning party? Enforcement problems? 50. Going beyond the "ICC Award Checklist" and the "SCC Arbitrator Guidelines": Should arbitral institutions provide forms (i.e. sample, draft, templates) for: "standard" submissions of parties, request for arbitration, answer to the request, etc. "standard" orders of the arbitrators, i.e. procedural timetable, PO's, etc. awards (with appropriate titles, placeholders, formatting, etc...) Threat to flexibility or boon to efficiency of arbitration? 51. The one thing most people would change about arbitration is the length of time it takes for arbitrators to render awards. Should there be a time limit for rendering awards in the LCIA Rules. If so, what limit is appropriate? Is this the correct cure? 52. What to do with arbitrators which are late with issuing arbitral awards? What are the efficient tools available to the parties? To arbitral institutions? 10

11 53. The New York Convention and Language of the Award: Can the dispositive of the award be made in several languages? 54. What experience do delegates have of tribunals ordering injunctive relief to prevent ongoing breach of contract? Imagine a licensing scenario where Party A has licensed certain complicated, unique technology to Party B who has used the technology in breach of license. Damages are hard to quantify because the breach of license leads not only to unpaid royalties but also to loss of competitive advantage, market share and reputation and impacts upon the rights of other licensees. In delegates experience, are tribunals prepared to issue the type of injunction necessary to stop Party B from using the technology, particularly where there are difficulties in defining the technology and its use and where enforcement will inevitably lead to further costly and complicated court proceedings in the enforcement jurisdictions? 55. Is injunctive relief issued by a Tribunal, rather than a national court, worth the paper it is written on? 56. Are orders by an emergency arbitrator enforceable? If so, under what enforcement regime(s)? 57. Are there any recent initiatives in your jurisdictions to educate judges about arbitration? 58. Enforcement: Is it fair to say that recent English decisions (Dallah, Court of Appeal in Jivraj) show that the English courts continue to practice a relatively interventionist stance regarding enforcement of arbitration awards (particularly compared to the French position see Dallah for a striking example...)? Are the English behind the French or are the French simply unrealistic? 59. Should it be open to the parties to provide for an appeal to the Court concerning findings of 11 fact (the English Court having recently held in Guangzhou Dockyards v. ENE Aegiali [2010]

12 EWHC 2826 (Comm) that it probably has no jurisdiction to entertain such an appeal even if the parties so agree)? Is there not something to be said for having this option, for example for cases in which the parties reason for choosing arbitration has more to do with ease of enforcement than a desire for speedy resolution? 60. How will French judges interpret the new Article 1522 of the Code of Civil Procedure stating that the parties may, by way of a specific agreement "waive their right to bring an action to set aside" an arbitral award? What kind of agreement, if any, should we recommend to our client when the seat of arbitration is in Paris? 61. Enforcement / status of annulled awards: There has been much debate about French courts' enforcement of awards that have been annulled at their seat (Hilmarton, Putrabali etc.), and now that the new French law on arbitration has introduced (in line with Swiss, Belgian, Swedish...legislation) the possibility of waiving the right to set aside the award. Have these issues had any practical effect on parties' behaviour? Has anyone included a clause incorporating this waiver? Are there any examples of situations where two conflicting awards have been enforced in different jurisdictions? 62. Does the decision of the Cour D'Appel in Dallah call into the question the wisdom of the enforcing court having greater rights to challenge awards than the court of the country of the seat? 63. To what extent should courts looking at enforcement of an award be bound by decisions (either upholding or overturning the award) made by the court of the seat of arbitration? 64. Sovereign immunity: any thoughts and comments on the implications for Hong Kong as an arbitral venue as a result of the decision in Democratic Republic of the Congo v FG Hemisphere Associates LLC, and its subsequent affirmation by the Chinese National People s Congress, confirming that sovereigns enjoy absolute (as opposed restrictive) state immunity in Hong Kong? 12

13 65. Where a claimant has withdrawn a claim (but the terms of such withdrawal, in particular the issue of costs, cannot be agreed between the parties), is it open to the Tribunal to dismiss the claim "with prejudice", or is its only option to make an order on costs? 5. Costs 66. Are arbitration proceedings generally more expensive than litigation? If not, is there a perception to the contrary and should (or could) anything be done to alter this perception? 67. Can an arbitrator consider an application for security for costs under Art 26 (2) of the UNCITRAL Arbitration Rules? If so, would he turn to Art 26 3 (a) and (b) and ask the requesting party to satisfy him accordingly? If so, would that mean in practise, it is unlikely that such security is granted as the requirements under 3(a) are very high and the requesting party will have a lot of difficulty to bring adequate proof? 68. Is there a general consensus among arbitrators and/or practitioners as to the best time to make submissions on costs e.g. with closing submissions or after the award has been issued, and to what extent/level of detail should tribunals carry out an assessment of those costs? 69. Are you seeing any trends regarding the level of detail Tribunals expect to see in costs submissions? Do they really want to know how much a party spent on binding and couriers? Are staged costs submissions appropriate, in which details may be sought only if the parties' claimed costs are wildly divergent? 13

14 70. Awards / Costs and interest: Neither the award of costs nor that of interest appear to follow particular standardised guidelines. This can therefore be difficult for the parties to predict in advance, cause potentially unnecessary debate, and be a hindrance to settlement as parties may have widely varying expectations. Is the guidance of the LCIA Rules that "the general principle that costs should reflect the parties' relative success and failure" (art. 28.4) taken into account by arbitrators, and does it have an impact on decisions compared to other arbitrations? What considerations influence arbitrators in the award of interest statutory rates / market rates (at place of contract / home of company)? Does there exist a general principle of interest awards, and is there scope for this to be recorded somewhere as guidance? 71. We have seen a trend whereby arbitral tribunals seated in London order the winning party to pay the costs of the losing party but state that the parties should agree to the amount of the costs within a specified period of time, failing which the matter should be referred to a costs judge for assessment (rather than the arbitrators assess it themselves). Should arbitral tribunals be required to assess costs themselves? If so, how may this be achieved? 72. In an effort to keep the procedure efficient, arbitrators may wish to demonstrate to the parties that the parties procedural (mis)conduct may result in (dis)advantageous cost decisions (i.e. the Tribunal finds that some cost is reimbursable/non reimbursable) not merely at the end but also during the proceedings when procedural orders on defined topics are issued. To the extent this is allowed for under the applicable arbitration act and rules, would you find this a sensible way to proceed? On a more administrative level, different tools seem to be employed by arbitrators (ranging from schedules to mere post-it notes) in order to keep track of those multiple cost decisions then made during the proceedings for the overall award on costs in the final award. Any suggestions what other tools to use? 14