Preparing for ASEAN Economic Integration

Transcription

1 Preparing for ASEAN Economic Integration Jointly prepared by Lawrence Boo and Christine Artero, The Arbitration Chambers, Singapore Introduction This presentation introduces four areas in which ALA could consider to promote better understanding of best practices: 1. Third-party funding of dispute settlement processes 2. Online dispute resolution 3. The role of courts in strengthening enforcement regimes for arbitral awards made within ASEAN 4. Enforcement of mediated settlement agreements 1

2 Access to dispute resolution process a role for Third Party Funding (TPF)? TPF, key elements: - an investment per se in arbitration - by a funder unconnected to a claim - who will finance all or part of the parties arbitration costs - for a remuneration The funding agreement Definition of TPF (definition by ICCA and Queen Mary University of London Task Force on TPF in the context of the study of conflicts of interest in International Arbitration)- The terms third-party funder and after-theevent-insurer refer to any person or entity that is contributing funds or other material support to the prosecution or defence of the dispute and that is entitled to receive a benefit (financial or otherwise) from or linked to an award rendered in the arbitration. The pro-tpf view TPF Provides access to justice Provides financial and operational support: the claimant will be able to share with the funder the financial risk and operational burden of pursuing its claim Will add value to the arbitration: the operational and risk management support (will assist during the due diligence and investigation stage of the arbitration) Can be seen as a guarantee that there is a solid basis for the claim: tend to filter frivolous and unmeritorious claims as the funders will not be willing to take any risk 2

3 The anti-tpf view Criticisms to TPF include: Overwhelming economic power of the commercial funder (possibility of unfair funding arrangements) Conflicts of interest of lawyers (unduly influenced by commercial funders who will pay the lawyers bill) Conflict of interest of arbitrators: o repeated appointments in cases involving the same third party funder o sole or presiding arbitrator in one case involving a party funded by a third party funder, would also serve as counsel to the claimant in another unrelated case which is funded by the same third party funder Specific Issues in relation to TPF Chances of settlement (opposing arguments) Confidentiality and legal privilege: issue of the due diligence conducted by the funder and its access to confidential or privileged documents Allocation of costs and security for costs: o if the funded party is unsuccessful, it would then be unlikely that the prevailing party could turn to the third party founder to recover its legal costs o the arbitral tribunal will also lack jurisdiction to order the third party funder to pay advances on costs 3

4 Specific Issues in relation to TPF (continued) Transparency and disclosure Should TPF be disclosed, and should it be a mandatory or a voluntary disclosure? If yes : -to what extent should it be disclosed? -to whom? -when? New IBA Guidelines: funders must disclose their identity, and share the identity of the party they are funding Standard 6(b) ( Relationships ) of the new IBA Guidelines has been amended so that a legal or physical person having a controlling influence on the legal entity or a direct economic interest in, or a duty to indemnify a party for, the award to be rendered in the arbitration may be considered to bear the identity of the legal identity. States stand on TPF Traditional approached to TPF: o Civil law jurisdiction o Common law jurisdiction (doctrine of champerty, barratry and maintenance) Relaxation of the practice in the context of arbitration (UK, Australia, US) Developments in Singapore o General prohibition o Indications that there is some re-thinking : Ministry of Law Consultation Paper of 20 October 2011 Chief Justice Menon in his speech on Some Cautionary Notes for an Age of Opportunity at the Chartered Institute of Arbitrators International Arbitration Conference in Penang, August

5 Forms of control Indirect control mechanisms by requiring funders to adopt some self-regulations: Ethical standards, guidelines, best practices Example of the Association of Litigation Funders of England and Wales and its 2014 Code of Conduct for Litigation Funders Issues Legislations Urge ASEAN States to consider: ALA S ROLE Whether there should be limitations or restrictions imposed on the use of TPF To certain categories of claims, certain values, certain sectors, certain funders Whether funders should be deemed a party to the arbitration for the purposes of meeting adverse costs/security for costs orders Code of ethics for funders Adoption of the new IBA Guidelines Whether securitization of TPF should be permitted (derivative instruments) 5

6 Catering to the consumers Online Dispute Resolution (ODR) What is ODR? The process of resolving the dispute is entirely or largely conducted through the Internet at a cost that is proportionate to the amount in dispute. It includes: o e-negotiation, e-mediation and e-arbitration o B2B, B2C and C2C disputes The Fourth Party ODR is traceable to the late 90 s How can ODR be administered? Private sector initiatives Example of successful initiatives: the ICDR Protocol; ebaypaypal Arbitration centres CIETAC, Online Arbitration Rules (2009) HKIAC, Electronic Transaction Arbitration Rules (2002) 6

7 Challenges of ODR The challenges surrounding ODR include finding tools that can deliver trust, convenience and expertise for many different kinds of conflicts Technical challenges Cultural and linguistic challenges Legal challenges Applicable law, forum, enforcement, judicial review Definition of consumer The UNCITRAL Initiative (Initiative by the UNCITRAL Working Group III (Online Dispute Resolution) which has been working on ODR in cross-border e- commerce transactions since 2010) The Working Group recommended work on: (1) the drafting of procedural rules for ODR, (2) the possibility or desirability to have a single database of certified ODR providers, and (3) the issue of enforcement of awards made through ODR process. Two sets of draft rules (Track I and Track II) are being drafted on the basis of some guiding principles: Rules of procedure Examples: buyers and sellers should be able to attempt to solve their dispute directly first; ODR systems should be easily accessible, user-friendly, efficient, timely, transparent and low-cost; ODR personnel and decision makers should be impartial, and should possess sufficient skills and training Information to be provided Examples: buyers should be fully informed about the conditions of access to the ODR system at the time the transaction is concluded ODR providers Examples: should be accredited; close cooperation between public and private sectors 7

8 The UNCITRAL Initiative (continued) The UNCITRAL Draft Rules Two Tracks: aimed to address B2B and B2C, cross-border, low-value, high-volume transactions Track I, for jurisdictions in which agreements to arbitrate concluded prior to a dispute are considered binding on consumers, which would end in a binding arbitration phase Track II, for jurisdictions where pre-dispute arbitration agreements are not considered binding on consumers, which would not end in a binding arbitration, but rather with a recommendation by the neutral (i.e. non-binding effect) Some points currently under considerations (examples): Technology neutrality, definitions, timelines, drafting of model dispute resolution clauses Regional Initiatives OECD initiative Recommendation on Consumer Dispute Resolution and Redress, : the OECD Committee on Consumer Policy launched a review of the 1999 E-commerce Guidelines EU initiative The European Commission central database of alternative dispute resolution bodies for consumer complaints the EU has been considering an optional instrument for resolution of B2C transactions referred to as the Blue Button Organization of American States (OAS) initiative the OAS considered a multi-state electronic system to provide negotiation, facilitated settlement, and arbitration for certain cross-border consumer e-contract claims on the basis of a cooperative framework agreement and model rules 8

9 National Initiatives Examples of national initiatives: China the Online Dispute Resolution Centre the Internal Complaint Mechanism the Online petitions France the forum des droits sur Internet What is needed: government-supported initiatives ALA S ROLE Need for a global ODR system based on general principles and generic rules of fairness and commercial practices, which may need to be adapted to specific local needs. Urge ASEAN States to consider: Adopting the UNCITRAL Model Laws on Electronic Commerce and Electronic Signatures as domestic legislation Adopting the UN Convention on the Use of Electronic Communications in International Contracts 2005 which came into force on 1 March 2013 ASEAN States to undertake: a study of the current ODR legal framework and consider the initiatives currently being implemented elsewhereurge 9

10 Role of courts in strengthening enforcement regimes for arbitral awards made within ASEAN ALA members and ASEAN state courts have always been keen supporters of the international arbitral process However, national courts have many opportunities to intervene at different stages during arbitration proceedings, and the degree of national court support could vary Enforcement of agreements to arbitrate and applications for stay of proceedings When does a party apply for stay? Example of reasons cited to seek a stay The positive imperative under both Article 8 of the UNCITRAL Model Law or Article II(3) of the NY Convention is for the court to refer parties to arbitration Unless it is proven that the arbitration agreement is null and void, inoperative or incapable of being performed The English Court of Appeal in Albon v Naza [2007] Issues of res judicata and estoppel Whether the court has the right a full-review of the validity of the arbitration agreement or if it should adopt a prima facie approach 10

11 National courts and Interim measures UNCITRAL Model Law on International Commercial Arbitration Chapter IV, (2006 Rev), Article 17(J): concurrent power of the courts and arbitral tribunals. Examples of interim measures Article 17(H)(1) of the UNCITRAL Model Law provides for the enforcement of interim measures and Article 17(I) sets strictly limited grounds for refusing enforcement No mechanisms of enforcement within ASEAN (not awards so not capable of enforcement under NY Convention) National courts and arbitral awards Court s power under the NY Convention: Article V(1): refuse enforcement of foreign awards Power to set aside by the courts of the country where the award was made No burden of proof on the party seeking to enforce NY Convention Article V(1) and V(2): even if the grounds for refusal of recognition and enforcement are proved to exist, the court of the enforcement State is not obliged to refuse enforcement, and still has the discretion to enforce the award Underlying principles of the NY Convention: burden of proof on the party resisting enforcement no review of the award on the merits narrow construction of the grounds of refusal of enforcement 11

12 The ALA 2011 Guidelines on Best Practices on the Enforcement of Arbitral Awards in ASEAN Principles that ASEAN countries agreed to try to implement in their own domestic legislations: 1. the agreement in writing include electronic communications 2. the authentication or certification of the award appointment of one or more competent body for the purpose of such authentication, with a list of such bodies maintained by the ALA Secretariat and published on the ALA website 3. the certified translation of the award and accompanying documents recommendation that documents and materials be in English, or accompanied by an English translation by a competent translator normally accepted by the enforcement court or under the auspices of the ALA Secretariat ALA S ROLE Urge ASEAN States to consider drawing up a protocol to identify the areas in which ASEAN state courts could access best practices in exercising the power of enforcement of arbitral awards under the NY Convention: Enforcement of agreements to arbitrate: consider the desirability of a common understanding among state courts within ASEAN states: despite the different roots of legal system, we are united by the NY Convention Interim measures in favour of arbitration: ASEAN States to consider adopting the MAL 2006 ASEAN States to consider a mechanism for the enforcement of interim measures made by courts or by an arbitral tribunal (convention; protocol or agreement of cooperation; guidelines) Enforcement of awards Guidelines and best practices in exercising power to enforce or refuse enforcement under the NY Convention: each and every State must interpret properly the basic principles of the NY Convention, and implement them in its domestic legislation in order to establish a solid base for the enforcement of arbitral awards in its country and, thereby, throughout ASEAN 12

13 Enforcement of mediated settlement agreements within ASEAN Recent recognition of a need for a specific instrument dedicated to the enforcement of cross-border settlement agreements: Growing use of mediation Uncertainty in relation to the end result UNCITRAL Working Group II (Arbitration and Conciliation) proposal of a convention on the recognition and enforcement of international settlement agreements achieved through mediation Taiwan Supreme Court Justice (Prof) Lo Chang-fa s draft Convention on Cross-Border Enforcement of International Mediated Settlement Agreements, 2014 Existing mechanisms for enforcement of settlement agreements UNCITRAL MLICC principle of enforceability of mediated settlement agreements (Article 14) limited scope EU DIRECTIVE 2008/52/EC Scope and limits 13

14 Existing mechanisms for enforcement of settlement agreements (continued) National legislations 1. As court judgements Difficulty of enforcement of foreign judgements 2. As an arbitral award Med-Arb process In theory, it has the advantage of falling into the scope of the NY Convention Practical difficulties Is such award an award in the sense of the NY Convention? 3. Arb-Med-Arb and the Singapore Clause (Singapore International Mediation Centre) A solution to the above problem, though yet untested Possible new mechanisms for enforcement of settlement agreements International convention Principles to be considered for a successful convention (as inspired by the NY Convention): o Brevity o Simplicity o Focus on the result (and not on adopting harmonised rules on the mediation process) The UNCITRAL Working Group II proposal as to the scope of the convention: o international settlement agreements o commercial settlement agreements o certainty as to the form requirements o flexibility as to its application to settlement agreements involving governments Exceptions to the enforceability: o Exceptions similar to the NY Convention ones Limitations to enforcement: o Equivalent to the procedure for setting aside arbitral awards under the NY Convention, or provisions to avoid duplicitous litigation caused by simultaneous attempts to enforce a settlement under the convention as well as under contract law 14

15 ALA S ROLE Lead in engaging our state governments to actively walk with UNCITRAL to pursue the route that will lead to the eventual recognition and enforcement of mediated settlement agreements Urge ASEAN states to consider formulating policies that would encourage our state governments to implement a legal framework to recognize mediated settlement agreements 15