International Arbitration: What it is and how it works. Outline of lecture

Transcription

1 International Arbitration: What it is and how it works 2 May 2012 Practitioners Training Day Labourdonnais Hotel, Mauritius Lise Bosman Outline of lecture A. Dispute resolution techniques B. Advantages and limitations of international arbitration C. Legal framework D. Arbitrators and arbitral procedure E. Arbitral institutions F. Arbitral awards G. Investment arbitration

2 A(1). So what is arbitration? Key elements: Private dispute resolution mechanism (state apparatus not necessarily involved) Consensual (agreed to) Final and binding resolution Existing or future disputes Legal character (cf. alternative methods) A(2). And what is international arbitration? Defined by national law Two main criteria: The nature of the dispute (e.g. business disputes of an international character ) The nationality of the parties (e.g., different nationality, place of business, place of residence) Or a combination of both elements (e.g., Uncitral Model Law Article 1(3))

3 A(3). Overview of dispute resolution techniques Negotiation Mediation/ Conciliation Adjudication/ Expert Determination Arbitration or Litigation Non-binding Binding (and more expensive) B(1). Advantages of international arbitration Cf. non-binding methods... Cf. litigation: Enforceability a key benefit: NYC awards easily enforceable in >140 States Neutrality a level playing field for parties of different nationalities

4 B(1). Advantages of international arbitration (cont). Confidentiality but don t assume More private than court proceedings But not all legislation provides Not all Arbitration Rules specify May be limited by issues of public policy And limited by setting aside proceedings Policy backlash (e.g., investment context) B(1). Advantages (cont.) Expert arbitrators chosen by the parties Procedure Known and familiar (cf. national courts) Flexible (principle of party autonomy) Bridges cultural divide (civil law v. common law) More informal Finality Gen. no appeal No interference in merits by (foreign) court Speed and cost (perhaps)

5 B(2). Limitations of arbitration Limited scope of arbitral jurisdiction Defined by contract Arbitrability Limited powers of arbitrators Effective injunctions? Bind third parties? Multi-party disputes & non-signatories to agreement B(2). Limitations (cont.) Lack of consolidation powers Awards are not precedents or binding on third parties (High) costs and (dubious) speed Average ICC arbitration 18m; ICSID 2-3y Still the best option in international contracting?

6 For example Commercial: Swedish aircraft exported to France Dutch dredger in Mozambique Control over JV Sales contract SA-Tanzanian co. Investor-State: Infrastructure, energy, mining Argentine financial crisis Mixed: Zelezny media arbitrations State v. State: Maritime delimitation (GU-SU) Border conflict (Abyei) Indus Waters Kishenganga (Pak. v Ind.) Vladimir Železný Ronald Lauder Growth in international arbitration ICC: 3000 requests by 1976; by 1998; 796 cases filed in 2011 alone PCA: = 33 cases; since 2000 =128; currently 59 pending ICSID: 66 cases ; now 147 pending (369 by end 2011) Conventions: NYC = 146 ratifications ICSID = 148 ratifications

7 C. Legal framework Multi-layered legal regime: (1) Contract and arbitration agreement Arbitration clause in contract/ submission agreement (2) Arbitration rules Rules of Arbitral Institution to be used (if any) (3) Applicable procedural law National law that governs arbitral process (4) Arbitration Conventions Relevant to enforcement C(1). Legal framework: the arbitration agreement No international arbitration without an arbitration agreement Clause in contract or submission agreement Law governing arbitration agreement Law governing contract, or Another law chosen by parties, or Law of place of arbitration

8 C(2). Legal framework: the arbitration rules Rules become part of contract Basic choice: ad hoc v. institutional Ad hoc arbitration Tailor-made clause and procedure Or: ad hoc under UNCITRAL Rules Institutional arbitration Administered by institution under its Rules C(3). Legal framework: applicable procedural law Determined by place of arbitration ( place of arbitration is Port Louis / arbitration will take place in Jhb. ) Lex arbitri governs: Validity of arbitration agreement (maybe) Appointment of arbitrators and challenges Court intervention in and assistance to arbitration Setting aside of award

9 C(4). Legal framework: arbitration conventions Top of legal hierarchy New York Convention = most important Other Conventions Geneva Conv. (1927); European Conv. (1961) NAFTA and Panama Conventions ICSID (more later) C(5). Legal framework: other Law of place of enforcement National legislation Likely incorporating NYC Local or international public policy? FINALLY: do not forget the substantive law Chosen by parties National law/ supranational law/ international law If no explicit choice, determined by arbitrator(s)

10 D. Arbitral Procedure National Arbitration Acts mostly silent Rules skeletal Parties can agree (party autonomy); or Tribunal decides Background of parties, lawyers & arbitrators Development of an internationalized procedure E: Arbitral institutions and bodies Administering institutions: Commercial Specialized Harmonizing and monitoring: UNCITRAL UNCTAD ICCA

11 E (cont): UNCITRAL Not an arbitration institute Does not administer arbitrations UN body: development of international trade law 2 key achievements: UNCITRAL Rules (2010 Rules amend 1976) Used in ad hoc arbitrations Or another institution may agree to administer UNCITRAL Model Law (1985, revised 2006) Current work on transparency in investor-state arbitration F. Recognition and enforcement of arbitral awards What do you do once you get an award? Enforce or try to set aside Setting aside/ annulment Governed by law of place of arbitration UNCITRAL Model Law Modern: limited grounds for setting aside

12 F. Recognition and enforcement of arbitral awards (cont.) Most awards voluntarily performed See ICCA Yearbook If not, basic steps for enforcement: Identify jurisdiction where assets are (and attach!) File proceeding to enforce award under law of that jurisdiction Usually easier than enforcing a foreign judgment (magic of NYC) F(1). Enforcement under the New York Convention United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards (1958) Two fields of application Enforcement of agreements to arbitrate Recognition and enforcement of foreign arbitral awards Setting aside of awards is national law

13 F(2). Enforcement outside the New York Convention Washington Convention of 1965 (ICSID Convention) Panama Convention of 1975 OR through UNCITRAL Model Law of 1985/2006 Model for national arbitration legislation Grounds for setting aside award (Article 34) Grounds for refusing enforcement (Article 36) echo NYC Art. V G. Investment arbitration Private investor v. Host State BITs and MITs Generally contain Obligations on State to protect investments by other State s nationals Option to arbitrate at choice of investor Direct remedy for investor against Host State if State interferes with investment?

14 Final word: research methodology Why is international arbitration different? Parties from different jurisdictions (therefore multiple possible international sources) Unique blend of civil and common law Few precedents Sources: Primary Secondary The last refuge of the generalist