August-2017.Pdf

ARBITRATION

The International Journal of Arbitration, Mediation and Dispute Management Volume 83 Issue 3 August 2017

ISSN: 0003–7877 Editorial Board Dr Michael O’Reilly Editor Professor Derek Roebuck Editor Emeritus Senior Research Fellow, Institute of Advanced Legal Studies, University of London Dr Gordon Blanke, Book Review Editor Partner, DWF (Middle East) LLP (International Commercial and Investment Arbitration), DIFC, Dubai, UAE Dominique Brown-Berset Attorney-at-Law, Partner, Brown and Page, Geneva Hew R. Dundas Chartered Arbitrator Arthur Harverd Chartered Accountant and Chartered Arbitrator, London Julio César Betancourt Academic Visitor, University of Oxford and University of Salamanca Dr Colin Y.C. Ong QC Barrister; Dr Colin Ong Legal Services, Brunei and Associate Member, Stone Chambers, London This volume should be cited as (2017) 83 Arbitration. The International Journal of Arbitration, Mediation and Dispute Management is published by Thomson Reuters, trading as Sweet & Maxwell. Registered in England & Wales, Company No.1679046. Registered Office and address for service: 5 Canada Square, Canary Wharf, London, E14 5AQ. For further information on our products and services, visit: http://www.sweetandmaxwell.co.uk. Computerset by Sweet & Maxwell. Printed and bound in Great Britain by Hobbs the Printers Ltd, Totton, Hampshire. No natural forests were destroyed to make this product; only farmed timber was used and replanted. Copies of articles from The International Journal of Arbitration, Mediation and Dispute Management, and other articles, cases and related materials, can be obtained from DocDel at Sweet & Maxwell’s Yorkshire office. Current rates are: £7.50 + copyright charge + VAT per item for orders by post, DX and email. Fax delivery is guaranteed within 15 minutes of request and is charged at an additional £1.25 per page (£2.35 per page outside the UK). For full details, and how to order, please contact DocDel on Tel: 01422 888 019. Fax: 01422 888 001. Email: [email protected]. Go to: http://www.sweetandmaxwell.co.uk/our-businesses/docdel.aspx. Please note that all other enquiries should be directed to Customer Support (Email: [email protected]; Tel: 0345 600 9355). Orders by email to: [email protected]. Thomson Reuters, the Thomson Reuters Logo and Sweet & Maxwell ® are trademarks of Thomson Reuters. European Union material in this publication is acknowledged as © European Union, 1998–2017. Only EU legislation published in the electronic version of the Official Journal of the European Union is deemed authentic. Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen’s Printer for Scotland. All rights reserved. No part of this publication may be reproduced, or transmitted in any form, or by any means, or stored in any retrieval system of any nature, without prior written permission, except for permitted fair dealing under the Copyright, Designs and Patents Act 1988, or in accordance with the terms of a licence issued by the Copyright Licensing Agency in respect of photocopying and/or reprographic reproduction. Application for permission for other use of copyright material, including permission to reproduce extracts in other published works, shall be made to the publishers. Full acknowledgement of the author, publisher and source must be given. Published in association with Sweet & Maxwell. © 2017 Chartered Institute of Arbitrators Table of Contents

Editorial Editorial Michael O’Reilly 253 Articles Does the Will of the Parties Supersede the Sovereignty of the State? Anti-suit Injunctions in the UK Post-Brexit David Ndolo and Margaret Liu 254 The European Commission in Arbitral Proceedings Dealing with EU Competition Law: A “Friend” or an “Unwelcome Guest”? Katarzyna Sadrak 267 Recent Developments of (International) Commercial Arbitration in the UAE (Part III) Gordon Blanke 271 Resolving Disputes and Improving Security in Post-Conflict Settings: An Example from Liberia Jessica Vapnek, Alfred Fofie, and Peter Boaz 288 Consistency and Predictability versus Finality under the Kenyan Arbitration Act Wilfred Mutubwa 302 CIArb Arbitration Practice Guidelines: An Overview Tim Hardy and Elina Zlatanska 308 Party-Appointed What? Derek Roebuck 313 Lectures and Presentation CIArb’s New Arbitration Guidelines: Safe Ports for Arbitral Storms II Tim Hardy, Simon Nesbitt and Paul Klaas 318 The Roebuck Lecture 2017 Improving Arbitration: Responsibilities and Rights Neil Andrews 330 Cases The Enforcement of Adjudicators’ Awards under the Housing Grants, Construction and Regeneration Act 1996: Pt 63 Kenneth T. Salmon 353 Challenge to Arbitral Award and Survey of Scottish Arbitral Jurisprudence Hew R. Dundas 368 Decision of the Paris Court of Appeal on the Set Aside Application in García v Venezuela Marine De Bailleul 383 Book Reviews Gordon Blanke 388 Gordon Blanke 389 Contributors

NEIL ANDREWS: University of Cambridge, Professor of Civil Justice and Private Law

MARINE DE BAILLEUL: Attorney at Quinn Emanuel Urquhart & Sullivan LLP, London

GORDON BLANKE: Partner, DWF (Middle East) LLP (International Commercial and Investment Arbitration), DIFC, Dubai, UAE

PETER BOAZ: B.A., George Washington University; J.D., U.C. Hastings College of the Law. Tetra Tech DPK Project Officer, former Tetra Tech DPK Global Law & Development Fellow (Liberia)

HEW R. DUNDAS: Chartered Arbitrator; DipICArb; CEDR-Accredited Mediator; International Arbitrator, Mediator and Expert Determiner

ALFRED FOFIE: L.L.B., L.L.M., University of Ghana; J.S.D., L.L.M., New York University School of Law. Chief of Team, Mitigating Local Disputes in Liberia Program Phase I

TIM HARDY: Partner at CMS Cameron McKenna Nabarro and Chair of the CIArb’s Practice and Standards Committee

PAUL KLAAS: English barrister and member of the Minnesota (USA) Bar, FCIArb, FCCA and Fellow of the American College of Trial Lawyers, member of Maitland Chambers

DR MARGARET LIU: Solicitor, Senior Law Lecturer, Coventry University

WILFRED A. MUTUBWA: MCIArb, Partner in Lubulellah and Associates, Nairobi, Kenya

DAVID NDOLO: PhD Student, Coventry University

SIMON NESBITT QC: Arbitrator and arbitration counsel, FCIArb, Barrister, Maitland Chambers, London

DEREK ROEBUCK: Senior Research Fellow, Institute of Advanced Legal Studies, University of London

KATARZYNA SADRAK: PhD candidate at the University of Heidelberg

KENNETH T. SALMON: MCIArb, Solicitor, CIArb Accredited Mediator

JESSICA VAPNEK: B.A.Yale University; J.D., Boalt Hall School of Law. Lecturer, UC Hastings College of the Law, San Francisco

ELINA ZLATANSKA: FCIArb, CIArb Visiting Research Fellow

Editorial

As indicated in the most recent issue, a new Editor of the Journal is to be appointed from 2018. I can confirm that this will be Professor Stavros Brekoulakis of Queen Mary University of London. Professor Brekoulakis invites submissions from Issue 1 of 2018 onwards. Please send them for his attention to the two Assistant Editors, Dr Mary Mitsior or Mr Ahmed El Far at [email protected]. In this issue, we are pleased to present the usual range of articles from a variety of jurisdictions around the world, dealing with a diverse range of topics. David Ndolo and Margaret Liu discuss the potential effects of Brexit on anti-suit injunctions. Katarzyna Sadrak addresses the possibility of the European Commission intervening in arbitral proceedings where questions of EU competition law arise. Gordon Blanke continues his review of recent developments in international commercial arbitration in the UAE. Jessica Vapnek, Alfred Fofie and Peter Boaz examine the resolution of disputes and security improvement in post-conflict settings, using Liberia as a case study. Wilfred Mutubwa considers the balance between consistency, predictability and finality in the context of the Kenyan Arbitration Act. Tim Hardy and Elina Zlatanska present an overview of the new suite of CIArb Arbitration Practice Guidelines. And Derek Roebuck takes a historical look at the question of party-appointed arbitrators. In the lectures and presentations section Tim Hardy, Simon Nesbitt and Paul Klaas preside over a debate on the CIArb’s New Arbitration Guidelines. We then include a paper based on the Roebuck Lecture 2017, delivered this year by Professor Neil Andrews and entitled Improving Arbitration: Responsibilities and Rights. In the cases section Kenneth Salmon presents his continuing review of enforcement of construction adjudication under the UK legislation, which, as always, raises themes of wider international interest. Hew Dundas discusses a Scottish case dealing with a challenge to an arbitral award as well as surveying Scottish arbitral jurisprudence more widely. And Marine de Bailleul considers the decision of the Paris Court of Appeal on the set aside application in Serafín García Armas and Karina García Gruber v Bolivarian Republic of Venezuela. Finally, we carry a number of book reviews. As always, we are grateful to all authors and reviewers and greatly appreciate the time they spend ensuring that the Journal continues to be a key reference in this field.

Michael O’Reilly Editor

Does the Will of the Parties Supersede the Sovereignty of the State? Anti-suit Injunctions in the UK Post-Brexit

David Ndolo

Margaret Liu

1. Anti-Suit Injunctions Anti-suit injunctions are often sought in national courts to restrain foreign proceedings in favour of arbitration. This article will critically analyse the justifications advanced by the UK courts for issuance of anti-suit injunctions and thereafter extensively critically examine the reasons for and the effect of the European Court of Justice (ECJ) decisions in Turner v Grovit1 and West Tankers.2 Subsequently the article examines developments since West Tankers and the possible options available to the UK regarding the scope of the ECJ decisions in the UK. As Lord Mance recently confirmed in Ust-Kamenogorsk Hydropower Plant, in England and Wales the Court of Appeal, the High Court of Justice and the Crown Court (the Senior Courts) have a “general power” to issue an anti-suit injunction under the Senior Courts Act 1981 s.37(1) in cases in which it appears to the court to be “convenient” to do so.3 However, they exercise this general power cautiously and “sensitively” in the arbitration context “with due regard for the scheme and terms” of the Arbitration Act 1996.4 In particular, the Arbitration Act 1996 s.44(2)(e) also gives these courts in their supervisory role power to grant interim injunctions in support of arbitration proceedings. There was earlier a presumption that anti-suit injunctions should be granted sparingly and with great caution, in particular because, “however disguised and indirect, [it has an effect of] interference with the process of justice in that foreign court”.5 However, the Court of Appeal held that English courts should not be diffident about granting injunctions provided they are “sought promptly and before the foreign proceedings are too far advanced”.6 Despite this, Millet LJ held that there must be “good reason” to issue anti-suit injunctions and also, as discussed below, previous judicial decisions limit the circumstances in which it may be considered convenient and just to grant an injunction.7 In recent years there has been an increase in issuance of anti-suit injunctions internationally. For instance, in 2015, the Hong Kong Court of First Instance (CFI) in Ever Judger Holding Co Ltd v Kroman Celik Sanayii Anonim Sirketi8 issued its first anti-suit

1 Turner v Grovit [2001] UKHL 65; [2002] 1 W.L.R. 107. 2 Allianz SpA (formerly Riunione Adriatica Di Sicurta SpA) v West Tankers Inc (C-185/07) EU:C:2009:69; [2009] 1 A.C. 1138 at [15]. 3 Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35; [2013] 1 W.L.R. 1889 at [48]. 4 Ust-Kamenogorsk Hydropower Plant [2013] UKSC 35; [2013] 1 W.L.R. 1889 at [60]. 5 Lord Scarman, British Airways Board v Laker Airways Ltd [1985] A.C. 58 at 95; [1984] 3 W.L.R. 413. 6 Millet LJ, Alfred C Toepfer International GmbH v Societe Cargill France [1998] 1 Lloyd’s Rep. 379; [1998] C.L.C. 198. 7 See Lord Hobhouse in Turner v [2001] UKHL 65; [2002] 1 W.L.R. 107 at [22]. 8 Ever Judger Holding Co Ltd v Kroman Celik Sanayii Anonim Sirketi [2015] 3 HKC 246.

254 (2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Does the Will of the Parties Supersede the Sovereignty of the State? 255 injunction in favour of arbitration proceedings by preventing a Turkish party from pursuing foreign court proceedings.9 Moreover, despite there being very few anti-suit injunction cases in New Zealand,10 Robertson J in Jonmer Inc v Maltexo Ltd11 held that that there was “no question that the [New Zealand] Court has the jurisdiction to make such an order”.12 In addition, the Canadian Supreme Court in Amchem13 has acknowledged that Canadian courts have power to issue anti-suit injunctions but this should only be entertained when there is another more convenient and appropriate forum (forum conveniens test.) By comparison, in the US courts have held that they have “competence beyond question”14 to issue anti-suit injunctions where necessary to prevent irreparable harm that is likely and imminent15 as a result of the simultaneous prosecution of an action that causes an inequitable hardship and that tends to frustrate and delay the speedy and efficient determination of the dispute.16 National courts also resort to anti-suit injunctions in order to promote legal certainty and to avoid simultaneous court and arbitration proceedings which may lead to conflicting outcomes.17 In doing this, as noted by the US courts above, the courts also prevent a party from bringing a tactical claim in a bid to delay or even avoid arbitration.18 Perhaps more importantly, anti-suit injunctions are usually issued by the courts in order to prevent other practical inconveniences such as additional costs because they bind the wrongful party to comply with his/her contractual obligation of submitting the dispute to arbitration.19 For this reason, Lord Hobhouse in Turner v Grovit20 was of the view that the term “anti-suit injunction” is misleading because the injunction is not directed against the foreign court but rather, the order is directed against and binds the party who launched a wrongful claim in the foreign court in personam and is effective only in so far as that party is amenable to the jurisdiction of the English courts so that the order can be enforced against the party: “an injunction will only be issued restraining a party who is amenable to the jurisdiction of the court, against whom an injunction will be an effective remedy”.21 In practice, this can be evidenced by the fact that where a party does not comply with an anti-suit injunction, it will usually be considered a contempt of court,22 for which fines may be imposed on the party or other punishments including, inter alia, seizure of assets or even imprisonment.23 In this way, therefore, anti-suit injunctions can be seen as a personal remedy granted in respect of the arbitration agreement which has the effect of “restraining a party to a contract from doing something that he has promised not to do”.24

9 See W. Mok, “Hong Kong Court Issues First Anti-suit Injunction in Restraint of Foreign Court Proceedings”, Kluwer Arbitration Blog, 15 July 2015, http://kluwerarbitrationblog.com/2015/07/15/hong-kong-court-issues-first -anti-suit-injunction-in-restraint-of-foreign-court-proceedings/ [Accessed 13 June 2017]. 10 For more on this see W. Hugh, “Anti-Suit Injunctions: Damp Squib or Another Shot in the Maritime Locker?” (2006) 20(3) New Zealand Maritime Law Journal 4. 11 Jonmer Inc v Maltexo Ltd [1996] 10 PRNZ 119. 12 Jonmer [1996] 10 PRNZ 119 at 120. 13 Amchem Products Incorporated v British Columbia (Workers’ Compensation Board) [1993] 1 S.C.R. 897. 14 Paramedics Electromedicina Comercial Ltda v GE Med Sys Info Tech Inc [2004] 369 F.3d 645 (2d Cir.) at 657. 15 Empresa Generadora de Electricidad ITABO v Corporacio Dominicana de Empresas Electricas Estatales (CDEEE) [2005] WL 1705080 (S.D.N.Y.). 16 BHP Petroleum (Americas) Inc et al v Walter F Baer Reinhold [1998] XXIII YBCA 945 (S.D.T). 17 T. Linna, “The Protection of Arbitration Agreements and the Brussels 1 Regulation” (2016) International Arbitration Law Review 70, 73. 18 Linna, “The Protection of Arbitration Agreements and the Brussels 1 Regulation” (2016) International Arbitration Law Review 70, 73. 19 D. Rainer, “The Impact of West Tankers on Parties’ Choice of Seat of Arbitration” (2010) Cornell Law Review 431, 434. 20 Turner [2001] UKHL 65; [2002] 1 W.L.R. 107. 21 Turner [2001] UKHL 65; [2002] 1 W.L.R. 107 at [23]–[25]. 22 See the Opinion of Advocate General Kokott delivered on 4 September 2008: Allianz SpA (formerly Riunione Adriatica Di Sicurta SpA) v West Tankers Inc (Case C-185/07) [2009] E.C.R. I-663; [2008] 2 Lloyd’s Rep. 661 at [15]. 23 Contempt of Court Act 1981 s.14. 24 Cooke J in Starlight Shipping Co v Tai Ping Insurance Co [2007] EWHC 1893 (Comm); [2008] 1 All E.R. (Comm) 593; [2007] 2 C.L.C. 440 at 454.

This is a fundamental principle in English arbitration law and also accepted as well as relied upon internationally. For instance, it was relied upon by the Hong Kong CFI in issuing a first anti-suit injunction.25 Also Brennan CJ in the Australian High Court in CSR Ltd v Cigna Insurance Australia Ltd26 held: “There must be an equity which entitles one party as against the other to an injunction to restrain the other from proceeding in the foreign court. It is not possible to define in advance the circumstances that give rise to such an equity, except to say that it arises when it would be unconscionable for the party enjoined to proceed in the foreign tribunal. The jurisdiction to issue an anti-suit injunction is not directed against the foreign court but against the party who would invoke that Court’s jurisdiction.” Interestingly, a similar approach to that of Australia, of using anti-suit injunctions as a fault remedy, is adopted under English law in that the fault is the wrongful action of launching a claim in a foreign court and this is considered inter alia unconscionable,27 an abuse of justice, vexatious or oppressive.28 It must also be noted that, in addition to being used as a fault remedy, it is used to protect the claimant’s contractual rights because without it the claimant will be deprived of its contractual rights in a situation where damages are a manifestly inadequate remedy.29 However, anti-suit injunctions are far from perfect. The central concern is the jurisdictional practicalities of issuing anti-suit injunctions. For instance, Fisher argues that they can be regarded as an indirect interference with the process of a foreign court.30 This view is further supported by Rainer, who is of the view that in practice, anti-suit injunctions cause technical difficulties as they effectively restrict the jurisdiction of a foreign sovereign court.31 Moreover, Clare Ambrose submits that the purpose and effect of this remedy is to interfere with foreign sovereignty.32 She adds that it also represents a lack of trust in foreign courts and it is why its application under current English law is subject to strict principles.33

2. Before West Tankers Within the EU jurisdictional concerns are exacerbated by the existence of the Brussels regime of allocating jurisdiction, governed by Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Brussels Regulation). A fundamental principle of the Brussels Regulation is the concept of “mutual trust” between Member States.34 This principle ensures that courts of “one member state should respect the right of the court of another member state to determine its own jurisdiction and respect the result it reaches”.35 In addition to the “mutual trust” principle, the Brussels Regulation also sets out a set of rules on jurisdiction in the EU. It requires that each EU Member State court rule only in its own jurisdiction and must not assume exclusive jurisdiction of another EU Member State court.36 This was

25 Ever Judger Holding Co Ltd v Kroman Celik Sanayii Anonim Sirketi [2015] 3 HKC 246. 26 CSR Ltd v Cigna Insurance Australia Ltd [1997] 146 A.L.R. 402. 27 Lord Diplock in British Airways Board v Laker Airways Ltd [1985] A.C. 58 at 81; [1984] 3 W.L.R. 413. 28 Lord Woolf M.R. in Fort Dodge Animal Health Ltd v Akzo Nobel NV [1998] F.S.R. 222 at 246; [1998] I.L.Pr. 732. 29 Steyn LJ in Continental Bank NA v Aeakos Compania Naviera SA [1994] 1 W.L.R. 588 at 596–597; [1994] 2 All E.R. 540. 30 G. Fisher, “Anti-suit Injunctions to Restrain Foreign Proceedings In Breach of An Arbitration Agreement” [2010] 22(1) Bond Law Review 1, 1. 31 D. Rainer, “The Impact of West Tankers on Parties’ Choice of Seat of Arbitration” (2010) Cornell Law Review 431. 32 C. Ambrose, “Can Anti suit Injunctions Survive in European Community Law?” (2003) 52 I.C.L.Q. 401, 408–409. 33 Ambrose, “Can Anti suit Injunctions Survive in European Community Law?” (2003) 52 I.C.L.Q. 401, 414. 34 Brussels Regulation arts 16 and 17. 35 N. Dowers, “The Anti-suit Injunction and the EU: Legal Tradition and Europeanisation in International Private Law” (2013) 2(4) Cambridge Journal of International Comparative Law 960, 965. 36 Turner v Grovit (C-159/02) EU:C:2004:228; [2005] 1 A.C. 101 at [20].

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Does the Will of the Parties Supersede the Sovereignty of the State? 257 confirmed in Erich Gasser GmbH v MISAT Srl37 where the ECJ held that, under the Brussels Regulation “the court second seized is never in a better position than the court first seized to determine whether the latter has jurisdiction. That jurisdiction is determined directly by the rules of the Brussels [Regulation], which are common to both courts.”38 This case appears to have triggered the jurisdictional concerns, especially because it was followed by the controversial Turner v Grovit,39 in which the House of Lords ruled that anti-suit injunctions do not infringe the Brussels Regulation. In particular, Lord Hobhouse explained that the ratio decidendi of the judgment was that anti-suit injunctions “come into the picture at an earlier stage and involve not a decision upon the jurisdiction of the foreign court but an assessment of the conduct of the relevant party in invoking that jurisdiction. English law makes these distinctions. Indeed, the typical situation in which a restraining order is made is one where the foreign court has or is willing to assume jurisdiction; if this were not so, no restraining order would be necessary and none should be granted.”40 As this case required an interpretation of the Brussels Convention, the House of Lords also referred to the ECJ the matter of whether it is inconsistent with the Convention to grant anti-suit injunctions. The ECJ held that anti-suit injunctions undermined foreign courts jurisdictions and thus were incompatible with the scheme of allocating jurisdiction in the Brussels Convention. The ECJ emphasised that “in so far as the conduct for which the defendant is criticised consists of recourse to the jurisdiction of the court of another member state, the judgment made as to the abusive nature of the conduct implies an assessment of the appropriateness of bringing proceedings before a court of another member state court.”41 It is evident therefore that the ECJ was concerned that in practice anti-suit injunctions may have the effect of depriving the court of an EU member state of jurisdiction to decide the case and that this constitutes a direct interference with its unfettered jurisdictional authority.42 From this therefore it is clear that the ECJ in that case was not satisfied that the UK regulatory framework relating to anti-suit injunctions does not interfere or at least justify an interference with foreign courts’ jurisdiction. Nevertheless, these cases did not relate to arbitration and thus the ECJ did not give specific reference as to the scope of the judgment, in particular whether the Member State courts were prohibited from issuing anti-suit injunctions to stop foreign proceedings in favour of arbitration proceedings. This is important because the Brussels Regulation art.1(2)(d) expressly excludes arbitration from the scope of the Convention. In fact, in previous ECJ cases including Marc Rich & Co AG v Societa Italiana Impianti PA43 the ECJ extended the arbitration exception so that the Brussels Regulation does not apply to arbitration proceedings only, but excludes arbitration in its “entirety”—including in court cases where the subject matter is arbitration.44

37 Erich Gasser GmbH v MISAT Srl (C-116/02) EU:C:2003:657; [2004] I.L.Pr. 7 at 164. 38 Erich Gasser EU:C:2003:657; [2004] I.L.Pr. 7 at 164. 39 Turner [2001] UKHL 65; [2002] 1 W.L.R. 107 at [118]. 40 Turner [2001] UKHL 65; [2002] 1 W.L.R. 107 at [118]–[119]. 41 Gregory Paul Turner v Felix Fareed Ismail Grovit, Harada Ltd and Changepoint SA Case C-159/02 ECLI:EU:C:2003:632. 42 This is in line with the opinion of Advocate General Colomber delivered on 20 November 2003 in Turner EU:C:2004:228; [2005] 1 A.C. 101 at [34]. 43 Marc Rich & Co AG v Societa Italiana Impianti SpA (C-190/89) EU:C:1991:319; [1991] I.L.Pr. 524. 44 Marc Rich & Co AG v Societa Italiana Impianti SpA (C-190/89) EU:C:1991:319; [1991] I.L.Pr. 524.

In Toepfer International GmbH v Societe Cargill France45 Colman J interpreted the rather broad/liberal approach of the ECJ to mean that the underlying function of the arbitration exception is to prevent proceedings before domestic court cases from “falling within the ambit of application of international Conventions on arbitration such as the New York Convention”.46 Further support for this interpretation is in the comment by Millet LJ in Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace)47 that “the courts in countries like Italy [which is a party] to the Brussels and Lugano Conventions as well as the New York Convention, are accustomed to the concept that they may be under a duty to decline jurisdiction in a particular case because of the existence of an exclusive jurisdiction or arbitration clause. I cannot accept the proposition that any Court would be offended by the grant of an injunction to restrain a party from invoking a jurisdiction which he had promised not to invoke and which it was its own duty to decline.”48 With regard to the determination of what is the “subject matter” of a case referred to the ECJ, Rix J in Xing Su Hai49 concluded that such assessment involves categorising the nature of the dispute, and that the subject matter should not be “casually categorised” as relating to arbitration merely because what is really a question of construction relates to an arbitration clause.50 In that case, the mere fact that the claimants wanted to obtain a writ in aid of an arbitration claim against the defendants to enforce the defendants’ liabilities was not enough for arbitration to be considered as the essential subject matter of the case.51 However, in his judgment, Rix J implied that if a relief was sought which was “in any way related to arbitration” then the subject matter of the case would be arbitration.52 Relying on this, Aikens J in Ivan Zagubanski53 categorically held that anti-suit injunctions fall within the exception because the subject matter in anti-suit injunctions claims is arbitration as in essence the “claim is for relief to enforce the arbitration agreement”.54 This approach is consistent with the ECJ decision in Van Uden Maritime v Kommanditgetesellschaft55 that the subject matter is arbitration if the proceedings serve to protect the right to have the dispute settled by arbitration. It clear therefore, that the English courts operated on the assumption that the anti-suit injunctions cases in favour of arbitration proceedings were exempted from the Brussels Regulation and thus not bound by the ECJ’s decision in Turner v Grovit.56 This is evident in Clarke LJ’s comments in The Hari Bhum57 that: “As we [English judges] see it there is nothing in the convention to prevent the courts of a contracting state from granting an injunction to restrain a claimant from beginning proceedings in a contracting state which would be in breach of an arbitration clause.”58

45 Toepfer International GmbH v Societe Cargill France [1997] 2 Lloyd’s Rep. 98. 46 Toepfer International [1997] 2 Lloyd’s Rep. 98 at 106. 47 Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep. 87. 48 The Angelic Grace [1995] 1 Lloyd’s Rep. 87 at 96. 49 Qingdao Ocean Shipping Co v Grace Shipping Establishment (The Xing Su Hai) [1995] 2 Lloyd’s Rep 15. 50 The Xing Su Hai [1995] 2 Lloyd’s Rep 15 at 21. 51 The Xing Su Hai [1995] 2 Lloyd’s Rep 15 at 21. 52 Qingdao Ocean Shipping Co v Grace Shipping Establishment (The Xing Su Hai) [1995] 2 Lloyd’s Rep 15. 53 Navigation Maritime Bulgare v Rustal Trading Ltd (The Ivan Zagubanski) [2002] 1 Lloyd’s Rep 106. 54 The Ivan Zagubanski [2002] 1 Lloyd’s Rep 106 at [46]. 55 Van Uden Maritime BV (t/a Van Uden Africa Line) v Kommanditgesellschaft in Firma Deco-Line (C-391/95) EU:C:1998:543; [1999] I.L.Pr. 73. 56 Turner EU:C:2004:228; [2005] 1 A.C. 101. 57 Through Transport Mutual Insurance Association (Eurasia) Ltd v New India Assurance Association Co Ltd (The Hari Bhum) (No.1) [2004] EWCA Civ 1598; [2005] 1 Lloyd’s Rep. 67. 58 Through Transport Mutual Insurance [2004] EWCA Civ 1598; [2005] 1 Lloyd’s Rep. 67 at 400.

West Tankers In West Tankers59 the UK House of Lords and the ECJ both directly ruled on the arbitration exception in the Brussels Regulation. As this is a landmark case with significant impact on the fate of anti-suit injunctions within the EU, this article will discuss the facts of the case, then compare the judgments of the Queen’s Bench, the House of Lords and the ECJ and thereafter critically analyse the case.

Facts A vessel owned by an English company (West Tankers) collided with a jetty owned by an Italian company, Erg Petroli SpA. The Italian company claimed compensation from its insurers and this was paid. The insurance company then started proceedings against the English company in Italy to recover the amount it had paid to the Italian company. The English company started proceedings in London claiming as the charterparty that it was to be governed by English laws and that disputes would be settled by arbitration in London. So the legal issue before the English court was whether it would be consistent with the Brussels Regulation to grant an anti-suit injunction to restrain further prosecution of proceedings in Italy in favour of London arbitration.

Held In the Queen’s Bench Court,60 Colman J held that the Court was bound by the Court of Appeal decision in The Hari Bhum61 to hold that anti-suit injunctions are not in breach of the Brussels Regulation, and thus he granted the relief. Interestingly, he also held that it is unnecessary “to consider what weight should be attached to the reaction of the Italian court [to the anti-suit injunction] in this case”.62 In the House of Lords,63 Lord Hoffman upheld Colman J’s decision and added that there is no “doctrinal necessity or practical advantage for the European community to deny its courts” the right to grant anti-suit injunctions.64 Despite giving the impression that the House of Lords was convinced by this approach, His Lordship also held that the matter is “not obvious” as it is of very considerable importance and about which different views have been expressed. Therefore he referred the matter to the ECJ for a preliminary ruling on whether it was consistent with the Brussels Regulation for a Member State court to make an order to restrain a person from commencing or continuing proceedings in another Member State court on the grounds that it is in breach of an arbitration agreement.65

The ECJ The ECJ66 did not follow the House of Lords decision, instead preferring the approach of Advocate General Kokott in his Opinion.67 Accordingly, the ECJ held that the prohibition

59 West Tankers Inc v Ras Riunione Adriatica di Sicurta SpA (The Front Comor) (C-185/07) EU:C:2009:69; [2009] 1 A.C. 1138; [2007] UKHL 4; [2007] 1 Lloyd’s Rep. 391; [2005] EWHC 454 (Comm); [2005] 2 Lloyd’s Rep. 257. 60 West Tankers EU:C:2009:69; [2009] 1 A.C. 1138; [2007] UKHL 4; [2007] 1 Lloyd’s Rep. 391; [2005] EWHC 454 (Comm); [2005] 2 Lloyd’s Rep. 257. 61 Through Transport Mutual Insurance Association [2004] EWCA Civ 1598; [2005] 1 Lloyd’s Rep. 67. 62 West Tankers [2005] EWHC 454 (Comm); [2005] 2 Lloyd’s Rep. 257 at [367]. 63 West Tankers [2007] UKHL 4; [2007] 1 Lloyd’s Rep. 391. Note that as this was already decided in the Court of Appeal (in Through Transport Mutual Insurance Association [2004] EWCA Civ 1598; [2005] 1 Lloyd’s Rep. 67) it was appropriate for direct appeal to the House of Lords under the Administration of Justice Act 1969 s.12. 64 West Tankers [2007] UKHL 4; [2007] 1 Lloyd’s Rep. 391 at [311]. 65 West Tankers [2007] UKHL 4; [2007] 1 Lloyd’s Rep. 391 at [307] and [312]. 66 West Tankers EU:C:2009:69; [2009] 1 A.C. 1138. 67 Opinion of Advocate General Kokott delivered on 4 September 2008: West Tankers [2009] E.C.R. I-663; [2008] 2 Lloyd’s Rep. 661 at [15].

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 260 Arbitration on anti-suit injunctions set out by the ECJ in Turner v Grovit68 extends even where there is an arbitration agreement on the following grounds, inter alia: 1. Although the subject matter of court proceedings which led to the granting of an anti-suit injunction is not within the scope of the Brussels Regulation, it has consequences which may undermine its effectiveness by, inter alia, affecting the attainment of the objectives and unification of the rules on conflict of jurisdiction.69 The ECJ added that a preliminary issue concerning the applicability of an arbitration agreement is also within the scope of the Brussels Regulation.70 2. An anti-suit injunction of this nature “runs counter” to the principle of mutual trust between courts of Member States.71 This is because the use of anti-suit injunctions prevents a court in a Member State from ruling on the very applicability of the Brussels Regulation and strips that court’s power to rule in its own jurisdiction.72 3. There is no need to issue anti-suit injunctions, because the chances for a party to avoid arbitration are minimal since the New York Convention art.II(3) requires Member State courts to refer parties to arbitration where there is a valid arbitration agreement.73 4. The mere fact that there is an arbitration clause does not confer an exclusive right to the arbitral body to examine the clause. This is because such an approach would deny a claimant judicial protection because the party would not have an opportunity to make a claim to the court that the arbitration agreement was invalid.74

Case comment The ECJ decision has been hailed because it maintains the principle of mutual trust among EU Member State courts as it ensures that no Member State court can interfere with the judicial sovereignty of other Member State courts by determining jurisdiction or reviewing a decision of the other Member State court as this is not in line with the principles of the Brussels Regulation.75 In this way therefore it can be argued that the ECJ decision puts EU law and more importantly judicial sovereignty above commercial interest. However, the ECJ decision is problematic as it creates a situation in which an opportunistic potential defendant can commence tactical proceedings in a Member State court which have the effect of delaying the resolution of the substantive dispute.76 As a result of this and other theoretical and practical consequences associated with it, the decision has attracted much attention from academics and practitioners.

68 Turner EU:C:2004:228; [2005] 1 A.C. 101 at [20]. 69 West Tankers EU:C:2009:69; [2009] 1 A.C. 1138 at [24]–[27]; [2005] EWHC 454 (Comm); [2005] 2 Lloyd’s Rep. 257. 70 West Tankers EU:C:2009:69; [2009] 1 A.C. 1138 at [24]–[27]; [2005] EWHC 454 (Comm); [2005] 2 Lloyd’s Rep. 257. 71 West Tankers EU:C:2009:69; [2009] 1 A.C. 1138 at [30]; [2005] EWHC 454 (Comm); [2005] 2 Lloyd’s Rep. 257. 72 West Tankers EU:C:2009:69; [2009] 1 A.C. 1138 at [28]; [2005] EWHC 454 (Comm); [2005] 2 Lloyd’s Rep. 257. 73 West Tankers EU:C:2009:69; [2009] 1 A.C. 1138 at [33]; [2005] EWHC 454 (Comm); [2005] 2 Lloyd’s Rep. 257. 74 Opinion of Advocate General Kokott delivered on 4 September 2008: West Tankers [2009] E.C.R. I-663; [2008] 2 Lloyd’s Rep. 661 at [58]. 75 C.P. Ojiegbe, “From West Tankers to Gazprom: Anti-suit injunctions, Arbitral Anti-suit Orders and the Brussels I Recast” (2015) Journal of Private International Law 267, 277. 76 N. Archer, “The Practical Implications of the West Tankers Decision” (2009) Slaughter and May, https://www .slaughterandmay.com/media/822289/the_practical_implications_of_the_west_tankers_decision.pdf [Accessed 13 June 2017].

At the heart of the concerns is the effect of this decision on arbitration in London and this is a concern that Lord Hoffman advanced in the House of Lords. His Lordship considered that the ability to issue anti-suit injunctions is one of the advantages that London offers as it is an “important and valuable weapon” in the hands of the English courts to exercise their supervisory role over arbitration.77 He added that it should also be taken into account that the European Community in regulating commerce is also in competition with the rest of the world as there is no shortage of alternatives. In this regard Lord Mance added that in commercial practice it is of “no or little comfort or use” for the only remedy is to engage in foreign proceedings pursued in disregard of the arbitration clause as this is exactly what the party aimed and bargained to avoid.78 These comments show that the English courts have an underlying vested interest to use anti-suit injunctions to protect international commercial arbitration in London.79 However, the Advocate General dismissed these comments as being of a “purely economic nature” and therefore they could not justify infringements of Community law.80 The Advocate General also added that from the point of view of procedural economy, an anti-suit injunction may lead to unsatisfactory results. This is because there is also the risk that where an anti-suit injunction is granted to stop proceedings in another Member State court, those courts might later refuse to recognise and enforce the arbitral award in reliance on the New York Convention art.V.81Article V2(b) allows national courts to refuse an arbitral award where the “recognition or enforcement of the award would be contrary to the public policy of that country”. Therefore, in the Advocate General’s view, prohibiting anti-suit injunctions may attract parties to arbitration in Europe, London in particular, as there is less reason for the arbitration award being set aside. In support of this view, Cairns adds that the ECJ approach may encourage European parties in contracts with non-European parties to choose London as English courts cannot issue an anti-suit injunction against the European party but can issue an anti-suit injunction in their favour against the non-European party in their country.82 In the same light, it has been submitted that there is no evidence showing that the overriding reason for parties’ choice of London as the seat of arbitration is the English courts’ ability to issue anti-suit injunctions.83 Support for this argument can be found in a survey conducted by Queen Mary University of London and White & Case LLP in 2015 (QMU 2015 Survey) which shows that even after the ECJ decision in 2009 London maintained its position as the second most preferred arbitration seat from 2010 to 2015.84 According to the survey, this can be attributed to a combination of the reputation, recognition and neutrality of the seat85 as well as the high quality of administration at the seat.86 However, the QMU 2015 Survey also shows two other worrying factors. First, the greatest improvement from 2010 to 2015 is by non-EU arbitration seats, that is, Hong Kong and Singapore, which are currently the third and fourth most popular seats respectively.87 Secondly, it shows that the most important reasons for selecting certain seats are the neutrality and impartiality of the local legal system as well as the national arbitration law.88 So although in the short term London has not been affected, these findings identify a

77 West Tankers [2007] UKHL 4; [2007] 1 Lloyd’s Rep. 391 at [19]. 78 West Tankers [2007] UKHL 4; [2007] 1 Lloyd’s Rep. 391 at [30]. 79 C. Ambrose, “Can Anti suit Injunctions Survive in European Community Law?” (2003) 52 I.C.L.Q. 401, 413. 80 Opinion of Advocate General Kokott delivered on 4 September 2008: West Tankers [2009] E.C.R. I-663; [2008] 2 Lloyd’s Rep. 661 at [66]. 81 Opinion of Advocate General Kokott delivered on 4 September 2008: West Tankers [2009] E.C.R. I-663; [2008] 2 Lloyd’s Rep. 661 at [69]. 82 D.J. Cairns, “Introductory Note to the European Court of Justice Allianz SPA v West Tankers INC” (2009) 48 International Legal Materials 485, 487. 83 H. Seriki, “Anti-Suit Injunctions, Arbitration and the ECJ: An Approach too Far?” (2010) 1 J.B.L. 24, 34. 84 P. Friedland and L. Mistelis, International Arbitration Survey: Improvements and Innovations in International Arbitration (London: Queen Mary University of London and White & Case LLP, 2015). 85 QMU 2015 Survey, p.19. 86 QMU 2015 Survey, p.18 87 QMU 2015 Survey, p.12. 88 QMU 2015 Survey, p.14.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 262 Arbitration worrying trend and the loss of this “important and valuable weapon” that effectively encourages arbitration by binding the parties to the arbitration agreement might in the long term have a significant disadvantageous effect. In addition, to counter the view expressed by Cairns above, there is a concern that the ECJ approach has now put EU companies in dispute with non-EU companies at a disadvantage relative to parties from countries that are not bound by the Brussels Regulation. This position has been exacerbated by IPOC International Growth Fund Ltd v OAO CT-Mobile89 because in this case the legal issue was whether the Bermuda court was entitled to grant an injunction in favour of arbitration on the ground that it had in personam jurisdiction as a party involved was a Bermuda company or whether the Bermuda court must also have some “sufficient interest”, that is, it is the national court of the chosen seat of arbitration or the dispute occurred within its jurisdiction. In this case, the Bermuda court held that in personam jurisdiction is sufficient to issue anti-suit injunctions. In a different light, it can be argued that the ECJ approach adds an additional barrier to the arbitration process and ranks arbitration as a second-rate dispute resolution process rather than the preferred method of dispute as it is parties who expressly chose it.90 In this regard, any powers the courts have are supervisory and the proper jurisdiction should be with the arbitral tribunal and as a result it should not be seen as a matter of a contest between rival national jurisdictions. Lew suggests that arbitration should not be seen as part of the national judicial system.91

3. Recent developments after West Tankers Following the prohibition of anti-suit injunctions by the ECJ in Turner v Grovit and West Tankers, the question that arises is whether this prohibition extends to arbitral tribunals. This is because, as was confirmed in Nordsee,92 for the purposes of EU law arbitral tribunals do not fall within the meaning of “court or tribunal”, so that they cannot even make a direct reference to the ECJ under the Treaty of the Functioning of the European Union 2009 art.267 (TFEU). In Gazprom,93 the Lithuanian Supreme Court made a reference to the ECJ on this issue. The ECJ held that the Brussels Regulation only governs conflicts of jurisdiction between the courts and tribunals of Member States and, as arbitral tribunals are not included in either of these categories, the principle of mutual trust in the Brussels Regulation is not infringed by an arbitral tribunal anti-suit injunction.94 Importantly, Gazprom raised questions on the compatibility of the anti-suit injunctions in Regulation 1215/2012 on the Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Recast Brussels Regulation) which came into force in January 2015 with the aim of revising the Brussels Regulation. Of particular interest in the Recast Brussels Regulation is Recital 12 para.4 which clarifies the arbitration exception by stating that the Regulation should not apply to “any action or ancillary proceedings relating to, in particular, … the conduct of an arbitration procedure or any other aspects of such a procedure, nor to … the … recognition or enforcement of an arbitral award”.

89 IPOC International Growth Fund Limited v OAO CT-Mobile [2007] Bda L.R. 43. 90 QMU 2015 Survey, p.29. 91 J. Lew, “Does National Court Involvement Undermine the International Arbitration Process?” (2009) 24 Am. U. Int’l L. Rev. 489, 522. 92 Nordsee v Reederei Mond [1982] ECR 1095. 93 Gazprom OAO v Lietuvos Respublika (C-536/13) EU:C:2015:316; [2015] 1 W.L.R. 4937. 94 Gazprom OAO EU:C:2015:316; [2015] 1 W.L.R. 4937.

Interestingly, while delivering his opinion on Gazprom, Advocate General Wathelet relied95 heavily on the Recast Brussels Regulation.96 He explained that if West Tankers had been decided under the Recast Brussels Regulation it would not have been held to be incompatible with the Brussels I Regulation.97 He supported his argument using Recital 12 para.4 of the Recast Brussels Regulation (above), on the basis that “Not only does that paragraph exclude the recognition and enforcement of arbitral awards from the scope of that [Brussels Recast] regulation, … but it also excludes ancillary proceedings, which in my view covers anti-suit injunctions issued by national courts in their capacity as courts supporting the arbitration.”98 Clearly, the Advocate General’s Opinion triggers the debate on the compatibility of anti-suit injunctions in the arbitration context of the Brussels Recast Regulation and also raises the possibility that the CJEU may overturn the decision in West Tankers in the future.99 However, although the ECJ judgment did not address the impact of the recast Brussels Regulation on the anti-suit injunctions, the ECJ made references to the West Tankers decision and buttressed the importance of the fundamental principle of mutual trust among EU Member States courts. On this basis therefore, the prohibition on anti-suit injunctions still continues under the Brussels Recast. Nevertheless, it must be noted that this ECJ decision was made before the Brussels Recast came into force and thus it was made on the basis of Brussels Regulation. In this regard, therefore, if there is another set of circumstances that arises which compels the ECJ to apply the Brussels Recast, following the Advocate General’s Opinion there is a possibility that it may depart from the West Tankers decision.

4. The Brexit effect Having established the present EU position on anti-suit injunctions this article now focuses on the unique position of the UK. At present, the UK is a member of the EU and therefore its current position is consistent with that of the EU. However, as a result of the referendum in June 2016100 the UK will be leaving the EU (Brexit) two years after art.50 of the TFEU is invoked. Therefore, it is necessary to examine the potential impact of Brexit on arbitration, in particular the granting of anti-suit injunctions after the UK becomes an “independent” state. One of the main issues that led to the Brexit vote was the desire to take back of control from the EU. At present, EU laws including the Brussels Regulations and ECJ decisions bind the UK and so UK courts have to adopt the ECJ decisions in West Tankers and Turner v Grovit although the highest court in the UK, the House of Lords, as discussed above, did not share the views of the ECJ. However, if after Brexit, EU law and ECJ decisions no longer apply in the UK, the UK courts may regain the power to issue anti-suit injunctions. In fact, this was one of the main arguments used by the leave campaigners. For instance, just before the Brexit vote, in an interview with the Daily Telegraph, one of the leading leave campaigners, Boris Johnson, made a last minute plea to voters that:

95 Opinion of the Advocate General Wathelet in Gazprom OAO EU:C:2014:2414. 96 Regulation (EU) No.1215/2012 on the Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters. 97 Opinion of the Advocate General Wathelet in Gazprom OAO EU:C:2014:2414 at [133]. 98 Opinion of the Advocate General Wathelet in Gazprom OAO EU:C:2014:2414 at [138]. 99 See V. Clark, “Gazprom, anti-suit Injunctions and Arbitration: The Debate Goes on” (2015) BLP, http://www .blplaw.com/expert-legal-insights/articles/gazprom-anti-suit-injunctions-arbitration-debate-goes [Accessed 13 June 2017]. 100 For the official result see Electoral Commission, “The Referendum Results” (2016), http://www .electoralcommission.org.uk/find-information-by-subject/elections-and-referendums/past-elections-and-referendums /eu-referendum/electorate-and-count-information [Accessed 13 June 2017].

“If we [UK] get outside the EU, if we leave the EU system, we will be relieved of a huge amount of unnecessary regulation that is holding this country back. We will be able to set our own priorities, make our own laws and set our own tax policies to suit the needs of this country.”101 However, despite Boris Johnson’s plea it must be emphasised that the impact of Brexit on anti-suit injunction will depend almost entirely on the terms of the Brexit negotiations.102 If the UK negotiates to opt out of all EU laws including the Brussels Regulation, the restrictions on anti-suit injunctions will no longer apply. This approach is supported by Rogers et al. who consider that reverting to the full power of granting anti-suit injunctions might give London a competitive edge as it may spark a rise in London-seated arbitrations.103 English companies would also have a competitive advantage, as they could apply to the English courts which would not be bound by the Brussels Regulation, to seek anti-suit injunctions. Obviously also, all the disadvantages associated with the ECJ decision in West Tankers would be avoided and all the advantages of anti-suit injunctions including preventing parallel proceedings would apply mutatis mutandis. It must be noted that even if the UK were to adopt such an approach, the power to grant anti-suit injunctions would not be completely unfettered. For instance, as discussed above, anti-suit injunctions can only be issued by the senior courts and also under English law they are used as a fault remedy; therefore it must be proved that the actions of the defendant are inter alia unconscionable, an abuse of justice, vexatious or oppressive in the eyes of English law.104 Furthermore, English courts would not issue anti-suit injunctions where it was not appropriate to do so even if the seat of arbitration were London. For instance in U&M Mining Zambia Ltd (UCM) v Konkola Copper Mines Plc,105 there was no doubt that the seat of the arbitration was London and thus the claimant sought an anti-suit injunction in the English court to stop Zambian proceedings started against it by the defendant. However, upon careful consideration of the facts, Blair J refused to issue an anti-suit injunction and held that: “I am not persuaded that the English court could, or if it could, would, make such an order. This dispute arises between two Zambian companies. It concerns the operation of a copper mine in Zambia … The matter is of national as well as local importance since, as I have been told, the mine contributes a substantial proportion of Zambia’s total GDP. So far as judicial assistance by way of interim measures pending the appointment of the arbitrators is required, in my view the natural forum for such proceedings is in Zambia, not in England.”106 Although this approach may be seen as anti-arbitration and/or an interference with the parties’ choice to select the seat of arbitration, the reasoning adopted by this English court is clearly justifiable as it is commercially sound and pragmatic. This is because it takes into account the fact that although the seat of arbitration is the natural forum for seeking an

101 P. Dominiczak, “Exclusive Boris Johnson interview: A Brexit will be a ‘turning point in the story of our country’” (23 June 2016), http://www.telegraph.co.uk/news/2016/06/23/exclusive-boris-johnson-interview-a-brexit-will-be-a -turning-poi/ [Accessed 13 June 2017]. 102 See K. Davies and V. Kirsey, “Anti-Suit Injunctions in Support of London Seated Arbitrations Post-Brexit: Are All Things New Just Well-Forgotten Past?” (2016) 4(1) International Journal of Arbitration 501, 502. 103 J. Rogers, S. Goodall and C. Golsong, “How will Brexit impact arbitration in England and Wales?” (2016) 7 International Arbitration Report 15, 17–18. 104 Lord Woolf MR in Fort Dodge Animal Health Ltd v Akzo Nobel NV [1998] F.S.R. 222 at 246; [1998] I.L.Pr. 732. 105 U&M Mining Zambia Ltd (UCM) v Konkola Copper Mines Plc [2013] EWHC 260 (Comm); [2013] 2 Lloyd’s Rep. 218. 106 U&M Mining Zambia [2013] EWHC 260 (Comm); [2013] 2 Lloyd’s Rep. 218 at [72].

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Does the Will of the Parties Supersede the Sovereignty of the State? 265 anti-suit injunction in ordinary circumstances, in certain circumstance practical factors may make it more convenient and effective to approach courts in another jurisdiction.107 However, the corollary to such an approach is that the other EU Member State courts would equally be free to grant anti-suit injunctions to restrain a party from pursuing a claim before the English courts. In addition, there is also the risk that where an anti-suit injunction is granted to stop proceedings in another Member State court, those courts might later refuse to recognise and enforce the arbitral award on the basis its being contrary to the country’s public policy in reliance on the New York Convention art.V(2)b and the ECJ decision in West Tankers.108 If this is not what is negotiated, on the one hand the UK could negotiate to sign up to the Lugano Convention 2007 on the jurisdiction and the recognition and enforcement of judgments, which extends the effect of the Brussels Regulation to Iceland, Switzerland and Norway. If such an approach is taken, although it is still unclear what the terms of the agreement would be it is unlikely that the UK would still be bound by the Brussels Regulation and not the ECJ decisions on the Regulation. Therefore, the advantage of such an approach is that the UK’s judicial sovereignty would be protected through West Tankers and the mutual trust principle from anti-suit injunctions from EU Member State courts. On the other hand, the UK could negotiate for a Denmark-like approach. Under the Brussels Regulation art.21, Denmark opted out of the Brussels Regulation, but the EU concluded an agreement on the jurisdiction and the recognition and enforcement of judgments in civil and commercial matters which ensures the application of the provisions of the Brussels Regulation in Denmark as of 1 July 2007.109 In this way therefore the UK and the rest of the EU Member States will negotiate an agreement either to duplicate or “keep but amend” or that will completely replace the Brussels Regulation. As the UK will be negotiating while leaving the EU and will thus be in a different position to that to Denmark, it is more likely that it would prefer the “keep but amend” agreement. This also is a possibility because clearly the ECJ decisions in Turner v Grovit and West Tankers expose the weaknesses of the current UK regulatory framework relating to anti-suit injunctions.

5. Conclusion Clearly, from the outset anti-suit injunctions have been controversial, in particular because, although they are effective in preventing parallel proceedings and avoiding unnecessary cost and delays, they also have the effect of interfering with the process of justice in a foreign court. UK courts justify this interference on the ground that anti-suit injunctions are a fault remedy, in that they are not directed to the foreign court but to the party that wrongfully started court proceedings in a foreign jurisdiction in breach of the arbitration agreement. However, the ECJ has rejected these justifications and instead, in its rulings in both Turner v Grovit and West Tankers, has strictly applied the mutual trust principle in the Brussels Regulation. As a result the ECJ rejected the issuing of anti-suit injunctions within Member State courts even in the context of arbitration as they affect the rules on the unification of the EU and also because the court second seized is never in a better position than the court first seized to determine whether the latter has jurisdiction. Although the ECJ later relied upon these decisions in Gazprom, it must also be noted that, following the Advocate General’s assessment of the Brussels Recast Regulation in Gazprom, it is possible that the ECJ may depart from the West Tankers decision in the future.

107 For more on this see A. Singh, “Supervisory Jurisdiction of the Courts of the Seat: Primary, not Exclusive—A Comment on U&M Mining Zambia Ltd v Konkola Copper Mines Plc” (2013) 16(3) International Arbitration Law Review N23, N24. 108 C. Ambrose, “Can Anti suit Injunctions Survive in European Community Law?” (2003) 52 I.C.L.Q. 401, 413. 109 Commission of the European Communities, Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the application of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters COM(2009) 174 final at s.1.1.

However, ceteris paribus the UK is currently in a unique position as it will be leaving the EU. As discussed above, the impact of Brexit on anti-suit injunctions will depend almost entirely on the terms of the Brexit negotiations. However there are several options available. First, the UK may negotiate to maintain the status quo on anti-suit injunctions. Obviously, although it will benefit from the mutual trust principle, it will miss the opportunity to give its courts a competitive advantage. If this is the case, it follows that if the ECJ overturns the West Tankers decision on the Brussels Recast Regulation, before or after Brexit, that would have an effect on the English courts’ power to issue anti-suit injunctions in the EU. Secondly, the UK may opt out of the Brussels Regulation and the Brussels Recast Regulation with the effect that the restrictions on anti-suit injunctions will no longer apply. It must be stressed that if this is what is negotiated, the power to issue will not be unfettered as previous judicial decisions limit the circumstances in which it may be considered appropriate and convenient and just to grant an injunction. The drawback of such an approach is that the UK courts would not be protected from anti-suit injunctions from EU Member State courts. Thirdly, in order to protect the UK courts through the principle of mutual trust the UK could opt to sign up to the Lugano Convention 2007 which currently extends the application of the Brussels Regulation to non-EU countries in Europe. If this is the preferred option, although it is dependent on the Brexit negotiations, it is likely that the ECJ decisions, particularly on the Brussels Regulation, will still apply. Notably, at present the Lugano Convention has not been revised so as to include the Brussels Recast Regulation and thus if it is included in the negotiations, it will not apply. Fourthly, the UK may opt for a Denmark-like agreement. As the UK is leaving the EU, it may have the option to keep but amend the Brussels Regulation. Although it must be stressed that it would depend on the negotiating terms, this is a possibility because Turner v Grovit and West Tankers have exposed the weakness of the UK regulatory framework on anti-suit injunctions. Regardless of the preferred option, it is interesting to speculate about the final terms of the agreement. This is because, on the one hand the UK would principally like to protect its courts by keeping the principle of mutual trust between it and the EU Member State courts while simultaneously giving its courts the competitive advantage of issuing anti-suit injunctions. On the other hand, the EU would not want to come to an agreement with the UK that would encourage other Member States to leave the EU, and the Member States themselves would also not want to negotiate an agreement that would give the UK the power to interfere with their own courts’ proceedings.

Katarzyna Sadrak

In recent years there has been increasing recognition of the need for transparency and openness in arbitral proceedings. In the last three years the ICSID rules on confidentiality and transparency,1 the UNCITRAL Rules on Transparency in investor-state arbitration2 and the Mauritius Convention on transparency3 were adopted. While the appetite for transparency is growing, the question of how far the openness of arbitration should go remains unresolved. One example of a controversial use of rules on transparency is the European Commission’s requests for involvement as amicus curiae4 in the course of arbitral proceedings dealing with the competition law of the EU.

1. The European Commission’s interventions in arbitral proceedings dealing with EU competition law The participation of the Commission as a non-disputant party in Micula5 attracted the attention of many arbitration and competition law practitioners, partly because of the clash between investment arbitration and EU state aid law in interpreting the concept of legitimate expectations. However, the Commission’s determination to make the arbitral tribunal adjudicate the case according to its rationale is even more astonishing. The European Commission acted in arbitral proceedings in Micula as amicus curiae and provided its views on the application of EU competition law. Having observed that its opinion was not shared by the arbitrators it applied pressure by stating that “implementation and/or execution of the Award would be illegal under EU law because it would amount to unlawful State aid under Article 107(1) of the TFEU”.6 It subsequently adopted its own decision, stating that the award is unlawful state aid and needs to be recovered.7 When the Micula brothers tried to enforce the award before the EU and US courts, the Commission also requested its intervention as amicus curiae in those proceedings.8 Proceedings within the EU are likely to be in favour of the Commission since

1 International Centre for Settlement of International Disputes (ICSID), Confidentiality and Transparency, https:/ /icsid.worldbank.org/en/Pages/process/Confidentiality-and-Transparency.aspx [Accessed 13 June 2017]. 2 United Nations Commission on International Trade Law (UNCITRAL) Rules on Transparency in investor-state arbitration, https://www.uncitral.org/pdf/english/texts/arbitration/rules-on-transparency/Rules-on-Transparency-E .pdf [Accessed 13 June 2017]. 3 See http://www.uncitral.org/pdf/english/texts/arbitration/transparency-convention/Transparency-Convention-e .pdf [Accessed 13 June 2017]. 4 This Latin term meaning “friend of the court” implies that the involvement of a third party may be helpful for the adjudicator as it could provide him/her with expertise and another perspective on the case. In this article amicus curiae is defined narrowly and means the Commission’s involvement in an arbitral proceeding that is based on filing written submissions. For other definitions of amicus curiae see Council Regulation (EC) No.1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2003] OJ L1/1–25; Commission Notice on the co-operation between the Commission and the courts of the EU Member States in the application of Articles 81 and 82 EC [2004] OJ C101/54–64. 5 Ioan Micula, Viorel Micula, SC European Food SA, SC Starmill SRL and SC Multipack SRL v Romania ICSID Case No.ARB/05/20. 6 Ioan Micula v Romania ICSID Case No.ARB/05/20, decision of the ad hoc annulment committee, para.325. 7 Commission Decision (EU) 2015/1470 of March 30, 2015 on State aid SA.38517 (2014/C) (ex 2014/NN) implemented by Romania—Arbitral award Micula v Romania [2013] OJ L232/43. 8 Brief for Amicus Curiae before US Court of Appeals (2nd Circuit), Ioan Micula Romania, 15-3109-cv, p.11.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 267 268 Arbitration national courts need to respect the primacy of EU law.9 Even if the efforts of the Commission to block the enforcement of an award fails, it can still commence infringement proceedings for the breach of EU law under TFEU art.258 with respect to any EU Member States recognising the award.10 Such measures clearly raise questions about the recognition of arbitration as a method of dispute resolution and may give rise to inconsistent outcomes before arbitrators and national judges. The involvement of the Commission in arbitral proceedings may not only bring negative consequences to the arbitration as a system, but also adversely affect the position of one of the disputing parties. The Commission’s amicus curiae submissions are likely to bring new arguments in a case that would favour one of the parties. They can also be decisive in a case as the Commission has both vast resources and significant authority in the field of EU competition law. The amicus curiae brief can therefore seriously impede the position of one of the parties. For instance, in Electrabel, the tribunal noted that, “far from exercising the traditional role of an ‘amicus curiae’, the Commission became a second respondent more hostile to Electrabel than Hungary itself”.11 The engagement of the Commission as a non-disputing party in the Micula and Electrabel arbitral proceedings is not an isolated event. More and more often the Commission applies to intervene as amicus curiae in arbitral proceedings relating to EU competition law.12 The Commission participates also in commercial disputes as it is frequently informed about the case by the party benefiting from the allegation that there has been a violation of EU competition law. The Commission’s intervention in arbitral proceedings is increasingly common and consequently the problems such engagement causes need to be addressed. The next section examines these problems.

2. Investment versus commercial arbitration It is important to distinguish the position of non-disputing parties in, on the one hand, the field of investment and, on the other, commercial arbitration. It has long been claimed that investment law disputes require increased transparency so that members of civil society can be aware of the disputes and make their interests heard.13 This view is justified by the fact that such disputes involve states acting in their sphere of influence. Thus, the enforcement of incentives given to investors needs to be done in a sound and transparent way. Furthermore, ICSID awards are self-enforcing and the public policy test that is typical of the New York Convention mostly does not apply.14 Taking into account the fact that investment law disputes often concern public interest matters (e.g. the environment, sustainable growth, taxation) the participation of non-disputing parties is likely to ensure a higher degree of compatibility of the award with public policy rules. By contrast, commercial arbitration stems from a private-law contract between disputing parties. As the aim of commercial arbitration is to adjudicate disputes between the parties to an arbitration agreement, the proceeding is usually closed to the public and the

9 The award was already held unenforceable in Belgium, see judgment of Tribunal de Première Instance Francophone de Bruxelles—Juge des Saisies, 26 January 2016, R.G. 15/7242/A. 10 According to the principle of the supremacy of EU law when there is a conflict between EU law (e.g. a decision of the Commission) and national law (e.g. a judgment recognising an arbitral award), national law has to be set aside. An EU Member State that failed to do so may be held responsible for the breach of EU law under the TFEU art.258. 11 Electrabel SA v Hungary ICSID case No.ARB/07/19, para.234. 12 See, e.g. Antin Infrastructure Services Luxembourg Sàrl and Antin Energia Termosolar BV v Kingdom of Spain ICSID Case No.ARB/13/31; Eiser Infrastructure Ltd and Energía Solar Luxembourg Sàrl v Spain ICSID Case No.ARB/13/36; AES Summit Generation Ltd and AES-Tisza Erömü Kft v Hungary ICSID Case No.ARB/07/22; UNCITRAL Case EDF International SA v Hungary, http://www.italaw.com/cases/3766#sthash. UNCITRAL, PCA Case No.2008-13, Achmea BV v Slovak Republic, http://www.italaw.com/cases/417 [Accessed 13 June 2017]. 13 See, for instance, Andrea K. Schneider, “Democracy and Dispute Resolution: Individual Rights in International Trade Organizations” (1998) 1(1) Marquette Law Scholarly Commons 587-, http://scholarship.law.marquette.edu /cgi/viewcontent.cgi?article=1482&context=facpub [Accessed 13 June 2017]. 14 Lucy Reed, Jan Paulsson and Nigel Blackaby, Guide to ICSID Arbitration, 2nd edn (New York: Kluwer Law International, 2010), p.186.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators The European Commission in Arbitral Proceedings Dealing with EU Competition Law 269 participation of any external entities is excluded unless the parties agree otherwise. Although many institutional rules do not guarantee confidentiality, it still remains of the utmost importance to the parties.15 It is worth emphasising, however, that confidentiality does not mean that the control measure of whether the arbitral award is consistent with public policy or not is excluded. In the course of annulment and enforcement proceedings national courts may perform a public policy test in order to determine whether the award is likely to violate the public order of a given state. The European Commission can intervene in such national proceedings.

3. Is the engagement of the European Commission acceptable? Arbitrators should take a critical approach in assessing requests from the Commission for the filing of amicus curiae briefs in commercial arbitration. First, in most institutional arbitration rules there is no legal basis that would oblige the arbitral tribunal to accept or even consider such a request. Moreover, arbitral proceedings having seats within the EU are not EU courts.16 Consequently, even though the Commission is a “guardian of the Treaties”17 and EU competition rules amount to the rules of public policy,18 the Commission cannot simply intervene in arbitral proceedings because it wishes to do so. Secondly, the European Commission has many tools for use in acting before the national courts of the EU: it can send amicus curiae briefs, obtain access to the documents in a dispute and keep informed about any competition law cases pending before national courts.19 Thus, as with other non-disputing parties, the right fora in which to present the Commission’s objectives are national courts enforcing or annulling the awards. Consequently, the participation of the Commission in the course of commercial arbitral proceedings should be limited, if not excluded. The amicus curiae submissions of the European Commission need to be assessed differently in the case of investment arbitrations. Since the annulment process takes place within the ICSID framework and in general national courts enforce the awards automatically,20 the European Commission and other non-disputing parties have no alternative forum in which to present their views. Therefore, the Commission’s amicus curiae briefs should in principle be accepted, especially in view of the fact that many BITs and ICSID Rules provide the legal basis for allowing participation by non-disputing parties in arbitral proceedings.21

4. Should we expect more amicus curiae applications in arbitral proceedings? It is interesting to observe that there is a growing tendency in investment arbitration to guarantee not only that every non-disputing party has the right to file an amicus curiae

15 See, for instance, Queen Mary University of London and School of International Arbitration and White & Case LLP, 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, http://www .arbitration.qmul.ac.uk/docs/164761.pdf [Accessed 13 June 2017]. 16 Judgment of the Court of Justice of the European Union, Nordsee Deutsche Hochseefischerei GmbH v Reederei Mond Hochseefischerei Nordstern AG & Co KG (102/81) EU:C:1982:107; [1982] E.C.R. 1095 at [10]. 17 Koen Lenaerts and Piet Van Nuffel, Constitutional Law of the European Union (London: Sweet & Maxwell, 1999), para.10-057. 18 Judgment of the Court of Justice of the European Union, Case C-126/97, Eco Swiss China Time Ltd v Benetton International NV (C126/97) EU:C:1999:269; [2000] 5 C.M.L.R. 816 at [37]. 19 See, e.g. Commission Notice on the co-operation between the Commission and the courts of the EU Member States in the application of Articles 81 and 82 EC [2004] OJ C101/54–64, Pt III(A). 20 ICSID Convention r.52, https://icsid.worldbank.org/en/Pages/icsiddocs/ICSID-Convention.aspx [Accessed 13 June 2017]. 21 See, e.g. ICSID Arbitration Rules art.37(2).

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 270 Arbitration request but also that such a request will be accepted by the arbitral tribunal.22 Furthermore, non-disputing parties may be given broad access to any relevant documentation.23 While such developments should in general be approved, they need to be treated with caution. Although the right to access the file of arbitral proceedings enables the Commission to prepare a submission that is comprehensive and helpful to arbitrators, the involvement of the Commission in the dispute might bring serious adverse consequences to the parties. As illustrated by Micula,24 the Commission has broad competences and may use the information acquired in the course of arbitral proceedings in its own investigations, which could impede the award rendered by arbitrators. As a result, investment treaties imposing a legal obligation on arbitrators to accept the involvement of any non-disputing parties in arbitral proceedings (“arbitrators shall accept”) are to be criticised. It is suggested that arbitrators should be permitted to decide on amicus curiae participation on a case-by-case basis (“arbitrators should or may accept”).

5. Conclusion In conclusion, the trend towards increasing transparency and the participation of non-disputing parties in arbitral proceedings is certainly a positive one. Nevertheless, transparency—and, equally, confidentiality—are not absolute principles. The example of the European Commission’s influence on arbitral proceedings while participating as amicus curiae demonstrates that these two principles need to be balanced.

22 Comprehensive Economic and Trade Agreement between Canada and the European Union (CETA) para.8.38: “(2) The Tribunal shall accept or, after consultation with the disputing parties, may invite, oral or written submissions from the non-disputing Party regarding the interpretation of the Agreement. The non-disputing Party may attend a hearing held under this” [emphasis added]; Free Trade Agreement between the European Union and the Republic of Singapore, para.9.23: “(1) The tribunal shall accept or, after consultation with the disputing parties, may invite oral or written submissions on issues of treaty interpretation from the non-disputing Party to the Agreement” [emphasis added]. 23 CETA, para.8.38(1). 24 Ioan Micula v Romania ICSID Case No.ARB/05/20.

Gordon Blanke

Introduction This is the last in a series of articles1 discussing some of the latest developments in international commercial arbitration in the UAE. Like Pts I and II, this Pt III discusses both developments of arbitration specific to arbitrations seated in the Dubai International Financial Centre (DIFC),2 Dubai’s free zone common law jurisdiction, and developments of onshore arbitration, i.e. arbitrations seated in mainland UAE (i.e. outside the offshore DIFC).3 By way of reminder, arbitrations seated in the DIFC are governed by the DIFC Arbitration Law,4 with the curial supervision of the DIFC courts; those seated in mainland UAE are governed by the UAE Arbitration Chapter,5 i.e. the arbitration-relevant provisions of the UAE Civil Procedures Code,6 with the curial supervision of the UAE courts. The coexistence of both civil and common law arbitration jurisdictions makes the UAE an especially dynamic environment for the development of arbitral practice and procedure in the Middle East and justifies Dubai’s claim to be a leading arbitration hub in the region.

1. The scope of the DIFC courts’ curial jurisdiction in support of arbitration7 In a ruling of April 2016 in Emirates NBD Bank PJSC v Infospan Gulf Inc,8 H.E. Justice Ali Al Madhani, sitting in the DIFC Court of First Instance, found in favour of an expansive curial jurisdiction of the DIFC courts on the basis of a dispute resolution clause that he said provided for the DIFC as the proper seat of the arbitration by implication. Despite the compelling nature of his reasoning, it is questionable whether his findings are compatible with prevailing case law precedent of the DIFC courts and give sufficient (if any) credit to the doctrine of separability, which is enshrined under both the UAE Arbitration Chapter9

1 The two first parts having been published in previous issues of Arbitration: see G. Blanke, “Recent Developments of (International) Commercial Arbitration in the UAE (Part I)” (2016) 82 Arbitration 427; and G. Blanke, “Recent Developments of (International) Commercial Arbitration in the UAE (Part II)” (2017) 83 Arbitration 164. 2 For further detail on arbitrations seated in the DIFC, see G. Blanke, “Arbitration in the DIFC” in B. Gessel (ed.), The Challenges and the Future of Commercial and Investment Arbitration—Liber Amicorum Prof. Jerzy Rajski (Warsaw: Court of Arbitration/Lewiatan, 2015), pp.587–605; and G. Blanke, “United Arab Emirates” in G. Blanke (ed.), Arbitration in the MENA (Huntington, NY: Juris, 2016), pp.UAE-1-UAE-117, and UAE-30-UAE-UAE-34. 3 For the avoidance of doubt, offshore arbitrations include, of course, arbitrations seated in the Abu Dhabi Global Market (ADGM), which—like the DIFC—is a common law jurisdiction that can serve as a seat of arbitration in its own right. For further detail, see G. Blanke, Commentary on the UAE Arbitration Chapter (London: Sweet & Maxwell, 2017), paras I-046—I-051. 4 DIFC Law No.1 of 2008. 5 For a full commentary, see G. Blanke, Commentary on the UAE Arbitration Chapter (2017). 6 Federal Law No.11 of 1992 concerning Civil Procedures arts 203–218 and 235–238. For the avoidance of doubt, given the volume of recently published arbitration-relevant case law precedent of the DIFC courts and prevailing constraints of space, this Pt III will be followed by a further, separate article dedicated to a discussion of recent DIFC case law developments of relevance to arbitration, to be published in a forthcoming issue of Arbitration. 7 Based on G. Blanke, “The scope of the DIFC Courts’ curial jurisdiction in support of arbitration: A step too far?”, Kluwer Arbitration Blog, 24 April 2016, http://kluwerarbitrationblog.com/2016/04/24/the-scope-of-the-difc-courts-curial-jurisdiction-in-support-of-arbitration-a-step-too-far/ [Accessed 13 June 2017]. 8 CFI 017/2015, ruling of the DIFC Court of First Instance of 3 April 2016. 9 UAE Federal Law No.11 of 1992 Concerning Civil Procedures.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 271 272 Arbitration and the DIFC Arbitration Law.10 In our view, a more cautious interpretation of the dispute resolution provisions underlying the disputed contractual framework would have been in order and would have concluded in favour of onshore Dubai, and not the DIFC, as the proper seat of the arbitration. This being said, the resoluteness of the judge’s approach is no doubt commendable albeit not entirely beyond reproach. Even though his approach demonstrates an inherently arbitration-friendly attitude on the part of the DIFC courts and will no doubt contribute to the ongoing consolidation of the UAE as an internationally recognised and respected seat of arbitration within the Middle East, it appears to call into question the DIFC courts’ previous agreement on the proper distinction between “Dubai” and the “DIFC” as a chosen seat of arbitration. By way of background, in 2007, Emirates NBD Bank PJSC (Emirates NBD) and Infospan Gulf Inc (Infospan) entered into an agreement whereby Infospan was to provide stored value card services to Emirates NBD for use by customers in the UAE (the SVC Agreement). The SVC Agreement contained a number of governing law and dispute resolution provisions that formed the focal point of the parties’ arguments before the DIFC Court of First Instance. More specifically, the SVC Agreement cl.13.2 stipulated that “[t]he validity, construction and interpretation of [the SVC Agreement] and the rights and duties of the [P]arties [there]to shall be governed by the internal laws of the UAE”. Pursuant to the SVC Agreement cl.13.3, the parties were to “submit to the jurisdiction of the courts in Dubai, the UAE”. Finally, in the terms of the SVC Agreement cl.13.5, “[a]ny controversy arising out of, or relating to this Agreement, or the breach thereof … shall be submitted to arbitration per the law of the United Arab Emirates”. On the basis of these provisions, Emirates NBD sought to convince the DIFC courts that they were the proper forum for hearing an application for the appointment of a DIFC-seated arbitration tribunal that would in turn hear the merits of the parties’ dispute, or in the alternative to refer the application for appointment to the onshore Dubai courts. Infospan questioned the DIFC courts’ proper competence in this matter on the basis that: (i) the underlying arbitration agreement was invalid; (ii) the DIFC courts did not have proper subject-matter jurisdiction; and/or (iii) abuse of process. It is worth mentioning in this context that an affiliated company of Infospan incorporated in the US, Infospan Inc, had, prior to the application, initiated various court proceedings against Emirates NBD in relation to its claims under the SVC Agreement in California, which in turn prompted an order from the Californian courts to refer the parties’ dispute to arbitration in the US subject to an appeal that is now pending. H.E. Justice Ali Al Madhani based his finding of the DIFC courts’ proper curial competence in the present circumstances on a reading of both arts 7 and 17(3)(b) of the DIFC Arbitration Law and the jurisdictional gateways of the DIFC courts under as amended.11 Pursuant to the DIFC Arbitration Law, arts 7 and 17(3)(b), the DIFC courts’ power to appoint a tribunal, was only to be engaged if the seat of the arbitration was the DIFC. In reliance on art.5(A)(1)(e) of the Judicial Authority Law as amended, pursuant to which the DIFC courts have jurisdiction “in accordance with the DIFC Laws and DIFC Regulations as prescribed by the DIFC Arbitration Law”, Justice Al Madhani found that “the Arbitration Clause (13.5) alone [did] not clearly nominate the DIFC to be the Seat of Arbitration and [that] nothing in the entire SVC Agreement refer[red] specifically to the DIFC” and that “[t]herefore the DIFC Arbitration Law [was] not sufficient to confer jurisdiction to the DIFC Courts in this case”.12 So far, so good. Clearly, to the extent that the underlying arbitration agreement fails to mention a seat of arbitration and that the SVC Agreement cl.13.3 makes reference only to the courts in “Dubai, United Arab Emirates” as the litigious forum of choice, the DIFC hardly appears to have been within the parties’ contemplation when drafting the mechanism for disputes under the SVC Agreement in 2007. Despite the

10 DIFC Law No.1 of 2008 art.23(1). 11 DIFC Law No.12 of 2004 as amended by DIFC Law No.16 of 2011. 12 CFI 017/2015 at [52].

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Recent Developments of (International) Commercial Arbitration in the UAE (Part III) 273 apparent clarity with which the parties stayed clear of the DIFC as a jurisdictional venue or indeed a seat of arbitration in drafting the terms of the SVC Agreement, Justice Al Madhani read a measure of ambiguity and uncertainty into the arbitration agreement. This, he thought, justified him to look for the DIFC courts’ jurisdiction to appoint a tribunal in the present circumstances into the remaining jurisdictional gateways under the Judicial Authority Law art.5(A)(1), as amended, which deal with the substantive or subject-matter—as opposed to the curial—jurisdiction of the DIFC courts. In doing so, he completely ignored the statutory limits of the DIFC courts’ curial jurisdiction that are clearly defined by the DIFC Arbitration Law art.7 and operate by reference to the choice of the DIFC as the seat of the arbitration: no DIFC seat, no curial jurisdiction for the DIFC courts! This is in compliance with both domestic and international arbitration practice in most modern leading arbitration jurisdictions and supported by the wording of the DIFC Arbitration Law and, equally importantly, by the doctrine of separability, pursuant to which: (i) the arbitration agreement is separate from the main contract, i.e. the SVC Agreement; and (ii) a court’s curial competence in relation to it is commonly determined by the relevant provisions of the prevailing arbitration law and not a court’s judicial competence over the contracting parties’ substantive rights and obligations under the main contract. In complete disregard of these considerations, Justice Al Madhani held as follows: “53. If the Claimant cannot rely on the DIFC Arbitration Law to confer jurisdiction to the DIFC Courts seeing as the Arbitration Clause in the SVC Agreement is ambiguous and uncertain, then reliance falls on the general rules of jurisdiction provided by Article 5(1) of the Judicial Authority Law. Importantly, it must be determined whether the parties intended to refer their disputes to the DIFC Courts or to the non-DIFC Dubai Courts. Thus, both Clauses (13.3) and (13.5) should be interpreted with this inquiry in mind. 54. That leaves the question of whether, under the provisions of Article 5(A)(1) of the Judicial Authority Law, as amended, this Court has jurisdiction over the substantive dispute in this case in the absence of an Arbitration Clause.” It is clear from the wording above that in his determination of the DIFC courts’ proper jurisdiction to appoint a tribunal in the present circumstances, the judge failed to distinguish between the curial and substantive jurisdictions of the DIFC courts. Taking account of the doctrine of separability and the clear wording of the DIFC Arbitration Law art.7, this goes a step too far and ultimately results in an inflation of the DIFC courts’ proper curial jurisdiction. In other words, it is the choice of the DIFC as the seat of the arbitration that triggers the curial competence of the DIFC courts to exert supervisory and supportive functions in the arbitration, including the power to appoint arbitrators by default, not the DIFC courts’ (potential) substantive jurisdiction over the merits of a dispute under the main contract (i.e. the SVC Agreement). Misguided on the proper application of the DIFC Arbitration Law art.7, Justice Al Madhani continued to test whether any of the remaining jurisdictional gateways conferred jurisdiction upon the DIFC courts and ultimately concluded as follows: “62. Next, I move to discuss the third jurisdiction gateway under the Judicial Authority Law, which requires an action arising out of or relating to any incident or transaction, wholly or partly performed within the DIFC and that the action is related to DIFC activities. 63. To support their argument, the Claimant provides the letter of 4 May 2009 with the subject line: ‘Emirates NBD — InfoSpan Gulf Inc. Stored Value Card Program.’ The letter discusses meeting arrangements in the DIFC to occur the next day. Additionally, in this letter, the Deputy CEO of InfoSpan Private Limited (Pakistan) was inquiring about the 2nd Addendum to the

Emirates Bank — InfoSpan Gulf Inc Agreement, which was signed by him on 21 January 2009. 64. This letter is quite clear evidence that the transaction between the parties took place, at least in part, within the DIFC, which means that the parties transacted business in the geographical territory of the DIFC and therefore must be governed by DIFC Laws including being subject to the jurisdiction of the DIFC Courts pursuant to Article 5 of the Judicial Authority Law. 65. The only criticism the Defendant can provide against this evidence is that the letter was sent by an independent company, InfoSpan Pakistan. In my view this criticism lacks rationale. Although the letter was sent by InfoSpan Pakistan, the subject matter and the content of the letter indicate that the referenced meeting is about executing the SVC Agreement in the DIFC or that a transaction related to the same contract came through the DIFC. In my view, this is sufficient to link the transaction to the jurisdiction of this Court as required by Article 5(1)(b) and (c) of the Judicial Authority Law. 66. Thus, having said that this Court’s interpretation of the wording ‘the courts in Dubai, the UAE’ of Article (13.3) of the SVC Agreement must mean the DIFC Courts and since the [P]arties executed their contract and transacted in this jurisdiction, the DIFC Courts are the Courts of natural jurisdiction in the absence of an Arbitration Clause. 67. Since this Court has found that the contract or the transaction has crossed the line and become subject to the jurisdiction of the DIFC Courts, any reference to UAE Law must be a reference to UAE Laws applicable within the DIFC. Accordingly the reference to UAE Laws in the Arbitration Clause (13.5) of the SVC Agreement must be the DIFC Arbitration Law and procedure and not the applicable law as to the merits or substance of the claim, considering that the applicable law was referred to in Clause (13.2) and would not likely be referred to twice.” The judge’s findings run counter to the DIFC courts’ previous distinction between the use of the terms “Dubai” and “DIFC” for the designation of the seat of an arbitration in dispute resolution provisions providing for UAE arbitration. In at least two cases to date,13 the DIFC courts found that a wish to resort to DIFC arbitration required express wording to that effect; a reference to “Dubai” only was to be understood as a reference to arbitration onshore, not arbitration seated in the DIFC. This distinction, no doubt, will be applied by analogy to other wording in relation to the designation of law or dispute resolution fora in either Dubai or the DIFC: a reference, as in the present contractual framework, to the Dubai courts in combination with UAE internal laws as the governing laws of the dispute is, no doubt, to be taken literally, i.e. the courts of Dubai (and not those of the DIFC) and the laws of the UAE (and not those of the DIFC). Had the parties wished to opt into the jurisdiction and into the substantive laws of the DIFC in one form or another, they should have stated so in as many words, i.e. expressly. The requirement of express reference is not in any way mitigated by DIFC law being a form of UAE law and the DIFC courts forming part of the judicial system of Dubai and the UAE more generally. As regards the validity of the arbitration agreement, there can be little doubt—as indeed confirmed by the judge14—that it is prima facie valid: the absence of an express choice of seat does not render an arbitration agreement invalid (whether under UAE or DIFC law). Last but not least, the judge confirmed that in the light of the potentially conflicting outcomes

13 See DIFC Court of First Instance, Claim No.CFI 011/2009, Amarjeet Singh Dhir v Waterfront Property Investment Limited and Linarus FZE, Grounds of Decision of 8 July 2009 at [80]–[107]; and DIFC Court of First Instance, Claim No.CFI 012/2009, Five River Properties LLC and Renaissance Holdings and Developers FZE v Waterfront Property Investment Ltd and Linarus FZE, Grounds of Decision of 8 July 2009. 14 CFI 017/2015 at [73].

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Recent Developments of (International) Commercial Arbitration in the UAE (Part III) 275 between the arbitration process in California (provided it were to go ahead) and the arbitration proceedings in the UAE, “it seem[ed] that the correct decision [was] to dismiss the Claimant’s [application] based on abuse of process”.15 However, in the light of a pending appeal before the Californian courts, the judge decided in favour of an order to stay. Should the Californian courts confirm the proper reference to arbitration in the US, the practical implications of the DIFC courts’ findings will remain limited for now. This being said, the DIFC courts set a dangerous precedent, which—if followed—blurs the clear-cut boundary between arbitration offshore (i.e. seated in the DIFC) and arbitration onshore (i.e. seated in Dubai and the wider UAE). In a sense, the DIFC courts’ ruling in Emirates NBD Bank PJSC v Infospan Gulf Inc is the step too far that takes us two steps back!

2. DIFC courts versus Dubai courts in arbitration: interim measures, anti-suits and other matters16 On 28 July 2016, in a judgment of Sir Jeremy Cooke J,17 the DIFC Court of First Instance ruled, in principle, in favour of the availability of interim measures issued by the onshore Dubai courts in support of arbitrations seated in the offshore DIFC. Even though the DIFC court’s findings to this effect were not express but only implied (given that the court was not required conclusively to determine the ultimate seat of the arbitration—whether onshore Dubai or the offshore DIFC—in the prevailing circumstances) and in this sense obiter dictum, it is worth mentioning that the judge ruled in no uncertain terms that measures of interim relief available before the onshore Dubai courts in support of an arbitration with its seat in mainland Dubai could equally be harnessed in support of arbitral proceedings seated in the DIFC (despite the exclusive role of the DIFC courts as the curial courts of a DIFC-seated arbitration). The court also took the opportunity to state its views on other matters, including in particular the DIFC court’s powers to grant anti-suit injunctions over the onshore Dubai courts. The court finally concluded with some musings on the proper designation of the DIFC as a seat of arbitration. The judge’s conclusions on these various matters are not entirely beyond criticism and as such deserve closer scrutiny. By way of background, Brookfield Multiplex Constructions LLC (Brookfield), a Dubai-based construction company and the claimant in the present action, commenced Pt 8 proceedings before the DIFC courts against DIFC Investments LLC (DIFCI) and the Dubai International Financial Centre Authority (DIFCA), both DIFC authorities, in pursuit of two main declarations: (i) that there was a binding arbitration agreement between Brookfield on the one hand and the DIFCI and the on the other; and (ii) that, subject to the arbitration agreement, the DIFC courts—as opposed to the onshore Dubai courts—had exclusive jurisdiction to hear the underlying substantive dispute. The arbitration agreement featured in a building contract concluded between DIFCA and Brookfield for the construction of the Gate Building, the main landmark of the DIFC, also known as “The Gate”, in 2003. That contract was said to be “governed by and construed according to the laws of and applicable in the Emirate of Dubai [including] without limitation, any ordinance, rule, decree, regulation or order of any governmental authority or agency of the Government of Dubai or the United Arab Emirates”. The contract further provided for disputes or differences arising from it to be

15 CFI 017/2015 at [80]. 16 Based on G. Blanke, “Dubai Courts v. DIFC Courts: interim measures and anti-suits”, Kluwer Arbitration Blog, 7 October 2016, http://kluwerarbitrationblog.com/2016/10/07/difc-courts-v-dubai-courts-arbitration-interim-measures-anti-suits/ [Accessed 13 June 2017]. 17 See CFI 020/2016: Brookfield Multiplex Constructions LLC v (1) DIFC Investments LLC (2) Dubai International Financial Centre Authority, ruling of the DIFC Court of First Instance of 28 July 2016.

“submitted to arbitration in the Emirate of Dubai as set forth below, [to be] conducted in the English language and in accordance with such procedures as the arbitrator agrees provided that no such procedures shall be contrary to any laws […] for the time being in force or applicable in the Emirate of Dubai”, and with default appointments of arbitrators to be secured by reference to “the Committee for Conciliation and Arbitration of the Dubai Chamber of Commerce and Industry” (which it appears no longer exists). Purported instances of deficient workmanship on the part of Brookfield, including the collapse of some marble cladding on the facade of The Gate, gave rise to a dispute between the parties in late 2015. Pending settlement negotiations between the parties, DIFCI successfully applied to the onshore Dubai court for the appointment of an expert to investigate and report back on the condition of The Gate under the UAE Law of Evidence art.68 read with the UAE Civil Procedures Code art.28. In response to this interim application before the onshore Dubai court, Brookfield requested the DIFC courts to restrain any proceedings pending before the Dubai court in favour of the proper exclusive jurisdiction of the DIFC courts over the dispute, hence essentially asking for an anti-suit injunction from the offshore DIFC courts over the pending proceedings before the onshore Dubai court. In response, DIFCI gave undertakings before the DIFC courts that it would not pursue proceedings on the merits in relation to the building contract. This, judge Sir Jeremy Cooke stated, made it unnecessary to make a finding on the first declaration requested by the claimant and shifted the focus entirely on to the issue of which court was to have proper jurisdiction, the onshore Dubai or the offshore DIFC courts. In a further sequence of events, the onshore Dubai court granted the application and appointed an expert with a mandate to report on the status of the deficiencies of workmanship of The Gate and to assess the damages thereto. In a first instance judgment, Cooke J examined in some detail the true objective and scope of the UAE Law of Evidence art.68 and concluded that an expert appointed under that article did not usurp the competent court of the merits (whether an arbitral tribunal or a public court) and as such did not affect the substance of the dispute, i.e. the substantive rights and obligations of the parties. In the judge’s view, it was “a matter for [the arbitrators] as to whether or not all of the [resultant expert] report was properly admissible or whether it usurped their functions in some respects and required redaction”.18 In the light of the laws of the Emirate of Dubai applicable to the conduct of the arbitral procedure, the judge concluded that “it is thus plain that the arbitrators can control their own procedures but could not view the expert’s findings as being determinative of the issues which fell to them for decision, because the law of Dubai provides that such expert determination is not to affect the substantive rights of the parties”.19 This was essentially in line with the findings of the onshore Dubai courts in response to Brookfield’s allegation that the Dubai court did not have proper jurisdiction over the dispute, that matters of liability, causation and damages were referable to arbitration and that it was the DIFC courts that had proper jurisdiction in relation to attendant ancillary measures. Reflecting on the onshore Dubai court’s findings and paying deference to considerations of comity, Cooke J stated: “It is not for this Court to impugn the reasoning behind the decision of the non-DIFC Dubai Court nor the substance of the decision itself but if the Court had no jurisdiction to make the order or the pursuit of the proceedings and application for the order amounted to a breach of the arbitration agreement, this Court would be bound to consider whether or not the grant of an injunction was appropriate in accordance with

18 CFI 020/2016 at [23]. 19 CFI 020/2016 at [24].

settled authority constituted by the well-known line of cases commencing with the Angelic Grace [1995] 1 Lloyd’s Rep 87.”20 Even though this statement is only obiter dictum, we have concerns that it does not give sufficient credit (not to mention pay deference) to the regime of mutual recognition that has been put in place between the offshore DIFC and the onshore Dubai courts by virtue of the Judicial Authority Law as amended art.7.21 Pursuant to art.7, judgment, orders and ratified arbitral awards are to move freely between the DIFC and Dubai courts and vice versa without any review of the merits by the receiving court. Article 7 essentially presumes a relationship of trust between the DIFC and Dubai courts, both forming part of the same family of courts, namely that of the Emirate of Dubai. This, one should think, would naturally extend to respecting the other court’s decision on its proper competence to hear a dispute and to treating as conclusive its finding as to the potential violation vel non of an arbitration agreement. This being said, Cooke J rightfully took care to emphasise that even the DIFC Arbitration Law expressly admitted the possibility of a non-DIFC court, hence including the onshore Dubai courts, to issue interim measures, irrespective of the seat of the arbitration, whether DIFC or non-DIFC.22 Conversely, the DIFC courts’ powers to issue interim measures were confined to arbitrations seated in the DIFC.23 This, however, so held Cooke J, had to be distinguished from the power to grant an application for an injunction to protect a party’s negative right not to be sued in a court in violation of an agreement to arbitrate, i.e. the power to grant an anti-suit injunction, which, in reliance on relevant English case law precedent, Justice Cooke confirmed was available from the DIFC courts even where the arbitration was not seated in the DIFC. In his reflections: “38. I do not … accept that, even if the seat of the arbitration is non-DIFC Dubai, the Court has no jurisdiction to grant an anti-suit injunction but it would be an unusual and exceptional case where the Court did so, particularly bearing in mind the appropriate respect that the courts of the two different systems in the Emirate of Dubai must have for each other. … 39. It is clear to me that, if non-DIFC Dubai is the seat of the arbitration, this Court would not interfere with an order made by that court because of the existence of an arbitration agreement. … 40. Although [by virtue of the Judicial Authority Law Art.5(A)(1)] the DIFC Courts are given exclusive jurisdiction over DIFC Bodies and Entities both generally and in relation to transactions of the character of the construction contract between the parties so that it has jurisdiction, in its own eyes, to enforce the arbitration agreement in that contract, regardless of the seat of the arbitration and the implied choice of the parties of the courts of the seat as the supervisory courts, the DIFC Court would not in practice do so, save in exceptional circumstances. Its jurisdiction cannot be ousted by the parties’ choice of the seat and supervisory jurisdiction, but comity would militate against the exercise of that jurisdiction when the courts of the seat can not only supervise the arbitration but are in a position to grant any injunction necessary and to ensure that the arbitration agreement is not breached by pursuit of remedies in that court.”24

20 CFI 020/2016 at [18]: Aggeliki Charis Compania Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87. 21 See DIFC Law No.12 of 2004 as amended. 22 See DIFC Law No.1 of 2008 art.15, which provides that “it is not incompatible within the Arbitration Agreement for a party to request, before or during arbitral proceedings, from a Court an interim measure of protection and for a Court to grant such measures”, read together with art.7 of the same Law. 23 CFI 020/2016 at [35]. 24 CFI 020/2016 at [38]–[40].

Again, it would seem that the consideration of anti-suit relief between the onshore Dubai and the offshore DIFC courts does not sit well with the relationship of trust between the two courts by virtue of the Judicial Authority Law as amended art.7 (even if anti-suit injunctions are brought in personam and not against a court). Whichever of the two courts were to decide first on a party’s application for a particular form of relief (the “first-seized” rule)25 should be respected by the other court and its decision enforced by virtue of the Judicial Authority Law as amended art.7. In the light of the regime of mutual recognition and the relationship of mutual trust established by that article, there is neither need nor room for the comity considerations entertained by Cooke J. As regards the seat of the arbitration, Cooke J took the interesting view that the arbitration provision contained in the building contract was to be construed as providing for arbitration seated in the DIFC. His reasoning was thus: “45. … Whilst at the time of concluding the contract, there was only one system of law and courts in existence, namely non-DIFC Dubai, it was the law of the Emirate of Dubai which was chosen as the governing law. Under the terms of that law, jurisdiction was then parcelled out between the DIFC and the non-DIFC Courts in 2004. From that point on, particular types of case were allocated to the DIFC and fell within the jurisdiction of that system, as opposed to that of the non-DIFC Courts. From that point on therefore, where, subject to the arbitration agreement, the DIFC Court had jurisdiction over the parties and/or contract in question, by reason of the terms of Article 5(A) of the Judicial Authority Law of 2004, the logic of the position would dictate that DIFC became the seat of the arbitration.”26 Even though Cooke J’s reasoning is intuitive from a pure DIFC perspective, it is difficult to ignore the strong indicators in the wording of the original arbitration provision that all, without exception, point towards mainland Dubai as the proper seat of the arbitration. There is no mention of the DIFC and even the default appointment of the arbitral tribunal was entrusted to a mainland-Dubai seated (albeit now defunct) institution. How, one may ask, could the parties have chosen DIFC-seated arbitration at the time of signing the building contract and the arbitration provision contained therein when, at that time, they could not even have been aware of—nor to have fully understood—the concept of arbitration in the DIFC? Arbitration is ultimately about party autonomy. To read retrospectively into an arbitration agreement elements that the parties could not have designed of their own free will at the time of contracting is artificially contrived and is not easily reconcilable with the principle of party autonomy. In the round, the judge’s thinking on the availability of interim measures from the onshore Dubai courts in support of DIFC arbitration has to be endorsed without limitation, by reason of the relationship of trust established between the onshore Dubai and the offshore DIFC courts by virtue of the Judicial Authority Law as amended art.7 alone. His thinking on anti-suits and the proper determination of the arbitral seat requires some critical review. Over to the DIFC Court of Appeal!

3. DIFC court adopts new Practice Direction to counteract guerilla practices in the enforcement of domestic and foreign arbitral awards Frivolous or unmeritorious behaviour by an award debtor in defending or seeking to annul an arbitral award, whether foreign or domestic, can now be taken into account by the DIFC courts in considering the provision of security and the award of costs in hearing applications for ratification and enforcement or applications for setting aside, whether under the DIFC

25 Also see s.5 below. 26 CFI 020/2016 at [45].

Arbitration Law27 or under the New York Convention.28, 29 This power has expressly been conferred on the DIFC courts by virtue of Practice Direction No.1 of 2017,30 which was adopted on 27 February 2017 and entered into effect on the same date. Pursuant to PD 1/2017, in the exercise of their discretion to award costs, the DIFC courts may award indemnity costs for “unsuccessful applications to [the] [DIFC] Court[s] relating to arbitration” more generally, including e.g. “unmeritorious challenges to remove arbitrators”.31 This new Practice Direction goes some way towards addressing party or counsel bad faith behaviour in the enforcement of domestic and foreign arbitral awards that is designed to thwart the enforcement process and as such must be welcomed without reservation. For example, the Direction also lists a number of cases from other common law jurisdictions in which adverse costs have been awarded on an indemnity basis on previous occasions for unmeritorious challenges of arbitral awards or the arbitration process more generally.32 That said, given the guidance that DIFC court proceedings tend to take from English court procedure, it is important to note that the English courts have placed some restrictions on the availability of security for costs in support of actions for enforcement of arbitral awards more recently. In particular, according to the UK Supreme Court in its ruling of 1 March 2017 in IPCO v NNPC,33 security for costs are not awardable in support of challenges of enforcement of arbitral awards.

4. EMAC adopts its own set of rules Following its establishment in April 2016, the Emirates Maritime Arbitration Centre (EMAC)34 has now adopted its own rules, the 2016 EMAC Rules of Arbitration. The EMAC has been empowered to oversee disputes under both the EMAC Arbitration Rules and any other rules chosen by the parties, seeks co-operation with other regional and/or international arbitration centres and aims to establish a roster of maritime arbitrators for appointment in EMAC arbitration. The EMAC Arbitration Rules entered into effect on 23 June 2016. They constitute a modern set of arbitration rules that combine the best of other leading international arbitration rules and contain provisions, such as the appointment of an emergency arbitrator,35 an extensive arsenal of interim measures36 and a fast-track procedure,37 that may be of particular assistance in the resolution of maritime disputes. Most importantly for present purposes, arbitrations under the EMAC Rules are by default seated in the DIFC.38 This will naturally import the efficiencies of the DIFC courts in their role as curial courts into an EMAC

27 In particular DIFC Arbitration Law art.44(2). 28 On the recognition and enforcement of foreign arbitral awards, done at New York, 10 June 1958. In particular art.VI, New York Convention, which authorises the competent review court to award “suitable security”. 29 Practice Direction No.1 of 2017—Indemnity Costs for Failed Challenges to Arbitral Awards in the DIFC Courts (PD 1/2017) (in the terms defined below), paras 1 and 2. 30 PD 1/2017. 31 PD 1/2017, para.3. 32 Peter Cheung & Co v Perfect Direct Ltd & Yu Guolin, HCMP 2493/2012, and New Heaven Investments Ltd & Rondo Development Ltd v Yu Guolin HCA 115/2013, Hong Kong Court of First Instance, ruling of 25 April 2016 (award of indemnity costs against award debtor that sought to delay the enforcement process); Exfin Shipping (India) Ltd Mumbai v Tolani Shipping Co Ltd Mumbai [2006] EWHC 1090 (Comm); [2006] Arb L.R. 24, ruling of the English Commercial Court of 17 May 2006 (award of indemnity costs following an unmeritorious challenge of an arbitral award); and DigiTelCom Ltd v Tele2 Sverige AB (1:12-cv-03082), ruling of the District Court for the Southern District of New York of 16 November 2012 (award of indemnity costs for a frivolous challenge application to vacate an award). 33 IPCO (Nigeria) Ltd v Nigerian National Petroleum Corp [2017] UKSC 16, [2017] 1 W.L.R. 970. 34 For further background, see G. Blanke, “Recent Developments of (International) Commercial Arbitration in the UAE (Part I)” (2016) 82 Arbitration 427, 429–430. 35 EMAC Rules art.12. 36 EMAC Rules arts 28–29. 37 EMAC Rules art.50. 38 EMAC Rules art.20(1).

5. The Judicial Tribunal adopts its first decision40 In late 2016, the Dubai-DIFC Judicial Committee established by the Ruler of Dubai by virtue of Decree No.(19) of 201641 (also known as the Judicial Tribunal or simply the JT)42 rendered its first decision.43Daman v Oger is the very first case that has come before the JT and as such has prompted the Committee to test its competences under Decree No.(19) of 2016. By way of background, on this occasion, the JT sat in a panel of six judges, three from the DIFC courts (Dr Michael Hwang, Chief Justice of the DIFC Courts; Omar Juma Al Muhairi, DIFC Court of Appeal; and Sir David Steel, DIFC Court of First Instance) and the remaining three from the onshore Dubai courts (Dr Ali Ibrahim Al Imam, Chief Justice of the Dubai Court of Cassation; Essa Mohammed Sharif, Dubai Court of Appeal; and Jassim Baqer, Chief Justice of the Dubai Court of First Instance), Dr Al Iman served as the Committee’s President and hence had the casting vote. The Tribunal was asked to decide which of the two courts, the DIFC courts or the onshore Dubai courts, had proper jurisdiction to hear the case. The case, in turn, concerned two parallel actions before the two courts, namely: (i) an application for annulment of an underlying Dubai International Arbitration Centre (DIAC) award rendered in mainland Dubai as the seat of the arbitration before the onshore Dubai courts in their capacity as the curial courts; and (ii) an application for the recognition and enforcement of that award before the DIFC courts for onward execution in the DIFC. Importantly, the action for annulment before the onshore Dubai courts was served first and therefore preceded the action for recognition and enforcement before the DIFC courts. This gave rise to a concern about conflicting outcomes from the process before the onshore Dubai courts and that before the DIFC courts, hence creating a potential conflict of jurisdiction between the onshore Dubai and the offshore DIFC courts. Importantly, this case does not appear to be one where the DIFC courts serve in their role as a host or conduit jurisdiction in the archetypal sense of that term—given that the award debtor and its assets are understood to have been present in the DIFC at all material times (in other words, the question of the DIFC courts’ competence to order enforcement for onward execution before onshore Dubai courts in mainland Dubai in an otherwise purely onshore context did not arise in the present circumstances). The natural consequence of this is, in the words of the JT, that (bar the reference of the merits of the original dispute to arbitration) the DIFC courts “would [have] be[en] alone the competent courts to entertain the case since the building concerning the dispute (Daman Tower) together with the appellant company [i.e. the award debtor] are located and licensed in the DIFC”.44 It is worth mentioning that the DIFC courts had progressed on a prolonged trajectory of procedural measures against the award debtor, including the imposition of a freezing order, a winding-up order and an order to cease trading in order to safeguard the execution of the

39 Although this is, of course, no more than a physical fact and does not impact on the arbitration process as such. 40 Based on G. Blanke, “Daman v. Oger: The First Decision of the Dubai-DIFC Judicial Committee (Part 1)”, Kluwer Arbitration Blog, 24 February 2017, http://kluwerarbitrationblog.com/2017/02/24/daman-v-oger-the-first-decision-of-the-dubai-difc-judicial-committee-part-1/ [Accessed 13 June 2017]. It is reported that the JT has rendered four additional rulings that may have an impact on the role of the DIFC courts as a conduit jurisdiction. At the time of writing, none of these is available to the general public and, given their importance to the subject, it would be generally imprudent to report on these on the basis of hearsay. Reporting will follow when the text of the remaining JT decisions is accessible to the public. 41 Decree No.(19) of 2016 forming the Judicial Committee of the Dubai Court and the DIFC Courts, dated 9 June 2016. 42 For further background on the establishment of the Dubai-DIFC Judicial Committee, see Blanke, “Recent Developments of (International) Commercial Arbitration in the UAE (Part II)” (2017) 83 Arbitration 164, 181–184. 43 Cassation No.1/2016 (JT): Daman Real Capital Partners Co LLC v Oger Dubai LLC hearing of 19 December 2016, published by the Judicial Tribunal in both English and Arabic. 44 Cassation No.1/2016 (JT) at 3, read together with the Judicial Authority Law as amended art.5.

DIFC courts’ order for enforcement against an award debtor that had by and large ceased to be a going concern. In addition, pending a decision on cassation from the Dubai Court of Cassation, the DIFC courts signalled their disposition to suspend the DIFC enforcement proceedings subject to the timely provision of security for costs by Daman, the award debtor. For the avoidance of doubt, the annulment proceedings before the onshore Dubai courts are at the time of writing still pending cassation. Following the findings of the Dubai Court of First Instance, the Dubai Court of Appeal dismissed Daman’s application for annulment, rejecting concerns that: (i) the DIAC Tribunal lacked jurisdiction; (ii) the underlying building contract had been signed without authority; (iii) a pre-arbitral condition precedent had not been satisfied; and (iv) expert witnesses had wrongly been excluded from the hearing of fact witnesses. Against this background, the JT held in pertinent part as follows: “Doubtless the case before the Dubai Courts is still pending awaiting decision of the Court of Cassation. Thus the conflict with regards to jurisdiction between the two courts still exists. This conflict should not be resolved by permitting both courts to entertain the case. Pursuant to Article 4 of the Decree No. 19/2016 and for the sake of justice and to avoid contradictory judgements [sic] only one of the two courts should determine to annul or recognize the aforementioned arbitral award. According to the general principles of law embodied in the procedural laws/Dubai Courts are the competent courts to entertain this case. There is no similarity between this case and the case when it’s [sic] sought to enforce or annul a foreign arbitral award in several jurisdictions pursuant to the New York [C]onvention 1958. Therefore, the cassation should be allowed and judgement [sic] entered accordingly.”45 The JT then decided that: “1. [t]he case is to be remitted for trial by Dubai Courts” and “2. DIFC courts should cease from entertaining the case”,46 the costs to be borne by Oger, the award creditor. It is apparent from the Committee’s findings that in order to prevent a potential conflict of jurisdiction that may arise from contradictory outcomes of the prospective decision of the Dubai Court of Cassation and the DIFC courts’ order to enforce, the JT relied on a first-seized rule, according preferential jurisdiction to the onshore Dubai courts, which were seized in an action for annulment of the subject award before the application for ratification and enforcement being filed with the DIFC courts. This is an easy way to manage two potentially competing courts of competent jurisdiction for related actions that may produce conflicting outcomes in the event of the courts being seized in parallel. The natural implication of this is that had the DIFC courts been seized first, the Dubai courts, as opposed to the offshore counterparts, would have had to desist from entertaining the action. There is an argument for saying that in this latter instance, the award debtor would have been deprived of its statutory right to challenge the award pursuant to the UAE Arbitration Chapter art.216,47 onshore Dubai being the seat of the arbitration and hence the natural place for challenging the award. The obvious counter-argument is that an award debtor will be able to mount a defence of nullification in response to an application for enforcement under the DIFC Arbitration Law art.44 (and hence be given a fair hearing on nullification). In this context, it is important to recall the controversy inherent in this counter-argument, which in part has been dismissed in previous constitutional and public policy challenges of the DIFC courts’ role as a conduit jurisdiction.48 Nevertheless, it would be prudent to introduce

45 Cassation No.1/2016 (JT) at 3–4. 46 Cassation No.1/2016 (JT) at 4. 47 For an article-by-article commentary of the UAE Arbitration Chapter, see Blanke, Commentary on the UAE Arbitration Chapter (2017). 48 See G. Blanke, “DIFC Court of First Instance dismisses application for referral to USC of purported constitutional conflict between UAE Civil Procedures Code and Dubai Judicial Authority Law and DIFC Arbitration Law”, Kluwer

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 282 Arbitration amendments to the UAE Arbitration Chapter prescribing a time limit of, e.g., three months for challenging an arbitral award after issuance, failing which the award will be considered good for enforcement by the competent courts, including the DIFC courts. This will allow an award debtor of a domestic award rendered in mainland Dubai sufficient time to apply for nullification before the onshore Dubai courts in satisfaction of its rights of defence under the UAE Arbitration Chapter art.216. Further, in order to deal with the wider problem of conflicts of jurisdiction between the Dubai and the DIFC courts, it may be advisable to amend the Judicial Authority Law as amended art.7, which establishes a regime of free movement of judgments, orders and ratified awards between the onshore Dubai and offshore DIFC courts, to include a first-seized rule in the terms contemplated above. In any event, the JT leaves no doubt that at a domestic level, there cannot be a solution under the New York Convention, which allows contradictory outcomes of nullification and enforcement of the same award in different jurisdictions. Further, the JT’s decision inviting the DIFC courts to “cease from entertaining the case” may not have as far-reaching implications as may appear at first sight. In the given context, the meaning of these words may not require more than a temporary suspension of the DIFC enforcement proceedings (including all ancillary actions) pending a final ruling on nullification by the Dubai Court of Cassation. This, in any event, would make perfect sense in that should the Dubai Court of Cassation affirm the Dubai Court of Appeal’s rejection of the award debtor’s challenge of the subject award, the DIFC courts will be the natural forum for the enforcement and execution of that award and will as such resume enforcement jurisdiction. This reading would also accommodate the three DIFC court judges’ dissent on the “second point of the judgment”49 requiring the DIFC courts to cease to entertain the case. This reading further finds support in the binary wording of the JT when concluding that only one of the two courts, i.e. the onshore Dubai and the offshore DIFC courts, should determine to annul “or” (as opposed to “and”) recognise the subject award, implying the involvement of two separate jurisdictions for annulment on the one hand and enforcement on the other. In this sense also, there is no reason to believe that the JT’s decision jeopardises the DIFC’s acquired status as a conduit jurisdiction. Finally, in his Order of 1 February 2017,50 Sir Richard Field of the DIFC Court of First Instance, having reviewed the decision of the JT, ordered further written submissions from the parties in order to determine whether in the light of that decision, the DIFC courts had any jurisdiction to “retain or modify the orders it has previously made supplemental to [Oger’s] enforcement application”,51 essentially sharing the above reading of the decision of the JT.52

Arbitration Blog, 22 July 2015, http://kluwerarbitrationblog.com/2015/07/22/difc-court-of-first-instance-dismisses -application-for-referral-to-usc-of-purported-constitutional-conflict-between-uae-civil-procedures-code-and-dubai -judicial-authority-law-and-difc-arbitration-law/ [Accessed 13 June 2017] and G. Blanke, “Host jurisdiction status of DIFC Courts not contrary to UAE public policy”, Kluwer Arbitration Blog, 5 September 2015, http:/ /kluwerarbitrationblog.com/2015/09/05/host-jurisdiction-status-of-difc-courts-not-contrary-to-uae-public-policy/ [Accessed 13 June 2017]. 49 Cassation No.1/2016 (JT) at 4. 50 See Claim No.CFI 013/2016: Oger Dubai LLC v Daman Real Estate Capital Partners. 51 Claim No.CFI 013/2016: Oger Dubai LLC v Daman Real Estate Capital Partners at [1]. 52 For the avoidance of doubt, at the time of writing, Sir Richard Field had not yet rendered a decision on the subject.

6. Dubai Court of First Instance annuls DIFC courts’ rulings in Banyan Tree In a recent ruling,53 the Dubai Court of First Instance annulled the DIFC courts’ rulings in the Banyan Tree line of cases54 that recognised and ordered the enforcement of a DIAC arbitration award for onward execution against Meydan Corp, the award debtor, in onshore Dubai. It was these cases that originally established the status of the DIFC courts as a conduit jurisdiction for onshore domestic (non-DIFC) awards for onward execution outside the DIFC.55 The nullification of these awards at first instance essentially calls into question the DIFC’s acquired host jurisdiction status, at least within the context of domestic non-DIFC awards. The basis of the Dubai Court of First Instance’s decision is a finding that the DIFC courts did not have proper jurisdiction over the recognition and enforcement of the subject DIAC award: “It is clear from the documents on record that the case brought in the DIFC Courts to recognize, confirm and enforce the arbitral award does not meet any of the DIFC Courts’ jurisdiction criteria set out in the law. There is nothing in the record to prove that any of the parties are licensed Centre establishments or are duly established or carrying on activity in the Centre or that the agreement in question was executed or performed in the Centre or that the case involves an incident that has occurred in the Centre. The parties have not agreed to give jurisdiction to the Centre nor has the Defendant claimed that any of the jurisdiction criteria are met. It certainly does not appear from reading the two decisions issued by the DIFC Courts in Claim No: ARB/003/2013, dated 2nd April 2015 and 8 April 2015, which are to be invalidated, that any of the DIFC Courts’ jurisdiction criteria set out in the law are met. The decision dated 2nd April 2015 held that the DIFC Courts have jurisdiction under Article 5(A)(d) of Law No. (12) of 2004 on the Judicial Authority at DIFC when there is no evidence in that decision or in the record to support the DIFC Courts’ jurisdiction. Nevertheless, the DIFC Courts confirmed their own jurisdiction to hear the claim then ruled, in their decision of 8 April 2015, that the arbitral award would be recognized and enforced. … Having established from the record that the DIFC Courts have no jurisdiction to confirm or set aside the arbitral award in question, it follows that the said two decisions are devoid of one of the basic elements of validity (being issued by a court that has no jurisdiction to issue such orders and decisions). The decisions are fatally flawed and void ab initio. The decision in Appeal No. 005/2014, dated 26 February 2015 (concerning the costs of the application contesting jurisdiction), which was issued consequent to the invalid decision of 2nd April 2015 issued in respect of that challenge, is also invalid.”56 The Dubai Court of First Instance’s conclusion in favour of the DIFC court’s lack of jurisdiction evidently ignores the proper scope of the jurisdictional gateway under the Judicial Authority Law as amended art.5(A), upon which H.E. Justice Al Muhairi himself, correctly, relied in Banyan Tree when confirming the power of the DIFC courts to serve as

53 Commercial Case No.1619/2016, ruling of the Dubai Court of First Instance of 15 February 2017. 54 Case No.ARB/003/2013, rulings of the DIFC Court of First Instance of 2 April 2015 and 8 April 2015 (recognising and enforcing a DIAC award and confirming the DIFC courts’ competence to serve as a conduit jurisdiction); and Appeal No.CA/005/2014, ruling of the DIFC Court of Appeal of 26 February 2015 (in relation to costs). 55 For further background, see G. Blanke, “DIFC Court of First Instance confirms its status as host jurisdiction for recognition of both domestic and foreign awards“, Kluwer Arbitration Blog, 7 June 2014, http://kluwerarbitrationblog .com/blog/2014/06/07/difc-court-of-first-instance-confirms-its-status-as-host-jurisdiction-for-recognition-of-both -domestic-and-foreign-awards/ [Accessed 13 June 2017]. 56 My translation.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 284 Arbitration a conduit jurisdiction for domestic non-DIFC awards.57 The Judicial Authority Law as amended art.5(A)(1) clearly confers upon the DIFC courts “exclusive jurisdiction over … (d) any application over which the [DIFC] Courts have jurisdiction in accordance with the Centre [i.e. the DIFC]’s Laws and Regulations”, including, no doubt, the DIFC Arbitration Law. The DIFC Arbitration Law art.42(1), in turn, empowers the DIFC courts to hear actions for enforcement of both domestic and foreign awards (“[a]n arbitral award, irrespective of the State or jurisdiction in which it was made, shall be recognised as binding within the DIFC and, upon application in writing to the DIFC Court”), including, no doubt, any non-DIFC awards (irrespective of whether these are of UAE or properly foreign origin). The Dubai Court of First Instance further claims to have general jurisdiction—inter alia by virtue of Decree No.(19) of 2016 (establishing the Dubai-DIFC Judicial Tribunal or JT) art.4—over the validity of the DIFC courts’ decisions and more specifically over whether the DIFC courts’ decisions have been issued within the limits and scope of their proper jurisdiction. For the avoidance of doubt, this proposition entirely disregards the role given to the Judicial Authority Law as amended art.7, which, as was seen above,58 establishes a regime of mutual recognition between the onshore Dubai and offshore DIFC courts and hence an area of free movement of all judgments, orders and ratified arbitral awards between onshore Dubai and offshore DIFC and vice versa. For the purposes of the operation of the Judicial Authority Law as amended art.7, the Dubai and the DIFC courts both qualify as UAE courts of equal status (there being no vertical hierarchy between them). This is a fundamental precondition for the regime of mutual recognition that exists between the two courts and which is based on a presumption of mutual trust. Neither court has the power to review the orders, judgments or ratified awards that the other court has found and declared fit for execution under art.7.59 In addition and in any event, to the extent that there might have been a conflict of jurisdiction or a risk of contradictory outcomes between the Dubai and DIFC courts in Banyan Tree, reference should have been made to the JT, which was created precisely to deal with such a situation.60 It is to be hoped that, on appeal, the Court of Appeal and the Dubai Court of Cassation will overturn the ruling of the Dubai Court of First Instance and put the relationship between the onshore Dubai and the offshore DIFC courts back into balance.

7. Enforcement of foreign awards under the New York Convention61 As anticipated, in a recent ruling in Case No.384/2016,62 the Dubai Court of Cassation reversed the lower court’s refusal to enforce an award rendered under the Rules of Arbitration of the International Chamber of Commerce (ICC) in London, on the basis that the UK had not been proven to be a member of the New York Convention.63 In doing so, the Dubai Court of Cassation gave short shrift to the dicta of the Dubai Court of Appeal and recorded for posterity the UK’s membership of the NYC. In essence, the Dubai Court of Cassation found that the Dubai Court of Appeal’s ruling was in violation of the prevailing legal position in the UAE. More specifically, the court confirmed as established that by virtue of the UAE Civil Procedures Code art.238, in the

57 See Case No.ARB/003/2013 at [29]. 58 See s.2 above. 59 By affixing an execution formula. 60 Decree No.(19) of 2016 art.2(2). 61 Based on G. Blanke, “Back on track: Dubai Court of Cassation affirms enforceability of UK award under NYC”, Kluwer Arbitration Blog, 1 August 2016, http://kluwerarbitrationblog.com/2016/08/01/back-track-dubai-court-cassation-affirms-enforceability-uk-award-nyc/ [Accessed 13 June 2017]. 62 Ruling of the Dubai Court of Cassation of 19 June 2016. 63 See Case No.52/2016, ruling of the Dubai Court of Appeal of 30 March 2016 and my previous reporting in G. Blanke, “Dubai Court of Appeal questions UK NYC membership: Investors keep calm … and carry on!”, Kluwer Arbitration Blog, 6 May 2016, http://kluwerarbitrationblog.com/2016/05/06/dubai-court-of-appeal-questions-uk-nyc -membership-investors-keep-calm-and-carry-on/ [Accessed 13 June 2017].

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Recent Developments of (International) Commercial Arbitration in the UAE (Part III) 285 enforcement of foreign arbitral awards, the UAE courts were bound by international enforcement instruments to which the UAE were a party, including the New York Convention, which the UAE had adopted by Federal Decree No.43 of 2006. Following express reference to a Convention country’s obligations to recognise and enforce under the New York Convention arts I and III and quoting the UAE Civil Procedures Code art.238 in full, the Dubai Court of Cassation stated verbatim as follows: “Whereas it is evident from a review of the New York Convention on the recognition and enforcement of foreign arbitral awards that the UK joined the Convention on 24 September 1974, which in turn means that the country where the arbitration award is issued and the country where the enforcement of the award is being sought are both members to the New York Convention, the Convention applies for the present purposes. Whereas the challenged ruling [i.e. the ruling of the Dubai Court of Appeal] deviated from this rule and ordered that the Appellant’s request be dismissed, stating that: ‘To enforce the arbitration award rendered in a foreign country without filing an ordinary case in the country where the award is requested to be enforced—in case either country has not signed an arbitration treaty or convention—it is required that both countries are members of New York Convention on the recognition and enforcement of foreign arbitral awards of 1958 …, and that the UAE have signed the New York Convention by virtue of Federal Decree No.43 of 2006; however, the documents submitted in evidence do not refer to Britain as “the country where the arbitration award is issued”.’ Considering that the UAE is a Convention country and that the UK signed the New York Convention in 1975, the challenged ruling misapplies and hence violates the law, inviting its reversal.”64 If a criticism can be made of the Dubai Court of Cassation’s ruling, it is that it does not give full force to the wide enforcement obligations imposed on the UAE and its courts by the fact that the UAE did not enter into a reservation of reciprocity under the New York Convention and are therefore obliged to recognise and enforce within the terms of the New York Convention any foreign award irrespective of its country of origin, whether Convention or non-Convention. The wording of the Dubai Court of Cassation appears to make recognition and enforcement under the Convention conditional upon Convention membership of the country of origin of the award whose enforcement is being sought. Strictly speaking, this is incorrect for the reasons stated above. This being said, to date, this particular issue has not arisen before the UAE courts for determination and will have to wait for a future opportunity to be resolved. All criticism aside, thanks are due to the Dubai Court of Cassation for having placed the UAE court’s pro-New York Convention enforcement practice back on track.65 That the Dubai Court of Cassation stays firmly on course in its enforcement of foreign arbitration awards under the New York Convention and hence keeps consolidating its pro-New York Convention enforcement practice was also recently demonstrated by the court’s pro-Convention approach in Case No.434/2014,66 in which the court embraced the terms of the New York Convention literally and confirmed in the wording the previous enforcement rulings of the Dubai Court of Appeal67 and the Dubai Court of First Instance68 in the same matter.

64 My translation. 65 For further detail on the UAE’s pro-enforcement history under the New York Convention, see in particular G. Blanke, “Recognition and Enforcement of Domestic and International Arbitral Awards in the UAE: Practice and Procedure” in C. Klausegger et al. (eds), Austrian International Arbitration Yearbook 2015 (Vienna: Manz’sche Verlags- und Universitätsbuchhandlung GmbH, 2015), pp.395–436. 66 Al Reyami Group LLC v BTI Befestigungstechnik GmbH & Co KG, ruling of the Dubai Court of Cassation of 23 November 2014. 67 Case No.1/2013, ruling of the Dubai Court of Appeal of 9 July 2013. 68 See Case No.681/2012.

By way of reminder, this case deals with the ratification and enforcement of an ICC award rendered by a sole arbitrator in ICC Case No.15977/JHN in Stuttgart, Germany, and awarding the award creditor, BTI Befestigungstechnik, a German company that specialises in the production and distribution of roofing systems and power tools, an amount of €300,000 in compensation for violation by Al Reyami Group, a UAE incorporated company, of an agency agreement concluded between the parties for the exclusive distribution in the UAE of BTI’s products. The Dubai Court of Cassation was emphatic in its endorsement of the pro-Convention approach previously taken by the Court of First Instance and the Court of Appeal. The Court of Cassation was satisfied that the terms of the New York Convention applied to the enforcement of the underlying award without reservation. In doing so, the Court emphasised, in reliance on the UAE Civil Procedures Code art.238, which gives precedence to the application of international enforcement instruments over the principles of reciprocity otherwise applicable to the enforcement of foreign judgments, and the UAE Constitution art.125, which gives domestic force of law to international conventions binding on the UAE, that the Convention formed part of domestic UAE law by virtue of Federal Decree No.43 of 2006, which implemented the provisions of the Convention at the municipal level. Having satisfied itself that Germany, the jurisdictional origin of the award subject to enforcement, qualified as another Convention country, the Court of Cassation confirmed the overall restrictive grounds of challenge admissible under the Convention art.V and the corresponding provisions of Federal Decree No.43 of 2006 art.5. The Dubai Court of Cassation rejected all the award debtor’s attempts at challenging the award on procedural grounds. More specifically, the court did not entertain any public order challenges on the ground of the purported non-arbitrability of exclusive distribution agreements, challenges on the basis of the chosen venue of the arbitration being France (despite the arbitral seat being Stuttgart, Germany) or challenges of improper administrative processing of the arbitration by the ICC International Court of Arbitration in Paris. The court fully endorsed the findings of the Dubai Court of First Instance, quoting from that court’s ruling in relevant part: “[The arbitration] has fulfilled all legal requirements in general and formal terms; it observed the principle of adversarial proceedings between litigants; it did not violate the rights of defence; it did not defeat any previously given award between the same parties; and it did not infringe public order or public morals. Hence, it fulfilled all requirements and must be ratified.”69 The court further confirmed the submission of a duly authenticated copy of the foreign arbitral award and the exclusive distribution agreement, including the arbitration agreement, and emphasised a supervisory court’s obligations of review in the following terms: “Whereas the judicial supervision of such a court over the foreign arbitral award, when considering the request for recognition of a foreign award, is limited to ensuring that the award does not violate the provisions of Federal Decree No.43 of 2006 and fulfills the formal and substantive elements of an arbitral award prescribed in Articles 4 and 5 of that Decree [corresponding to Articles IV and V of the NYC], as the arbitral award, subject matter of the action, is duly authenticated.”70 By way of conclusion, the straightforward approach taken by the Dubai Court of Cassation to the application of the terms of the New York Convention to the enforcement of foreign awards, even against a UAE national award debtor, is an encouraging development, which deserves unreserved support from local arbitration practitioners and the international arbitration community more generally. Slowly but surely, the Dubai courts are building a credible track record of New York Convention enforcement, which no doubt will continue

69 My translation. 70 My translation.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Recent Developments of (International) Commercial Arbitration in the UAE (Part III) 287 to encourage the inflow of foreign investment into the UAE economy and the Emirate of Dubai more specifically in years to come.

Conclusion The above recent developments in domestic and international commercial arbitration in the UAE demonstrate the UAE’s drive to develop into an arbitration jurisdiction of its own kind. Initiatives like free zone arbitration seated in the DIFC or the ADGM as common law jurisdictions (embedded within the wider civil law environment of the UAE) and practice directions promoting the conversion of judgments into arbitration awards to benefit from the global scope of enforcement under the New York Convention and to counteract guerilla practices in arbitration are truly revolutionary in the world of international arbitration. It is encouraging to witness the scope of change in UAE arbitration over the past decade and a half, which is a harbinger of times to come. In addition, the UAE’s commitment to bolstering its sector-specific capabilities, such as maritime arbitration, will no doubt consolidate the UAE’s status as a leading arbitration hub in the region. Taken in the round, the UAE are set to lead the way in the further modernisation of the practice and procedure of arbitration in the Middle East and beyond. This will be further supported by the adoption of a stand-alone Federal UAE Arbitration Law. The latest confidential insights appear to confirm that a Federal UAE Arbitration Law, modelled on the UNCITRAL Model Law,71 will be adopted later this year.

71 On International Commercial Arbitration.

Jessica Vapnek

Alfred Fofie

Peter Boaz*

1. Introduction Countries emerging from civil conflict in the developing world face numerous challenges that hinder reconstruction and peace building. These hurdles, many of which existed before the war and may have contributed to the civil strife, include poverty, unequal distribution of political and economic power, land disputes and exploitation or exclusion of groups on social, cultural, tribal or religious bases. Liberia emerged from 14 years of conflict in 2003 urgently needing to address many of these concerns, in particular the burgeoning number of land disputes and the looming threat they posed to peace, security and national reconstruction. A joint effort by the Government of Liberia and the US Government led to the formulation of the Mitigating Land Disputes in Liberia Project (MLDL)1 funded by the US State Department.2 The project was launched in late 2011 with the goal of developing innovative solutions to reduce conflict, address security concerns and improve crime prevention in two rural counties3 (Nimba and Lofa) in northern and northwestern Liberia, respectively. Largely because of crucial participation by local communities and because the programme was designed with a keen awareness of customary norms and practices, the project has had measurable impacts and offers a model for effective dispute and conflict resolution in a rural post-war setting. This article first examines the role of land underpinning disputes in post-conflict settings and then outlines the origins of the MLDL project. Next, the article provides a snapshot of the system and examines the methodology and factors that led to the success of the dispute resolution and conflict early warning/early response system established and supported by MLDL. After reviewing selected disputes resolved and security issues addressed during the life of the project, the article concludes by suggesting the features of MLDL’s dispute resolution and early warning model that could be replicated in other post-conflict regions.

2. The role of land in conflict and peace Land is a valuable resource that can simultaneously have economic, social, cultural and political significance.4 It holds symbolic and practical importance as an economic resource

* The opinions expressed here are the authors’ alone and do not imply the approval of the US Government or Tetra Tech DPK. The authors would like to thank Amy Bruins, Geralyn Busnardo, Jeffrey Collins, Amanda Dahan, Marinetta Cannito Hjort, Johnathan McCaskill, Robert W. Page, Jr., Rachel Sampson, Marti Troy and Helga Turku for comments and suggestions on this article. Thanks are also due to technical staff at the US State Department, in particular Andrea Lauritzen and Huber Parsons, who conceived the project and shepherded it through its early days. 1 After one year of operation, the US State Department requested that the project’s name change to Mitigating Local Disputes in Liberia (still MLDL), to reflect the fact that although land disputes are a critical risk to stability, other types of disputes also raise security concerns and contribute to destabilisation. 2 Specifically, the Bureau of International Narcotics and Law Enforcement Affairs, known as INL. 3 Liberia’s 15 regions are known as counties, each led by a superintendent (governor). 4 Sara Pantuliano and Samir Elhawary, “Uncharted Territory: Land, Conflict, and Humanitarian Action”, Humanitarian Policy Group Policy Brief 39 (London: Overseas Development Institute, November 2009), pp.1 and 3.

288 (2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Resolving Disputes and Improving Security in Post-Conflict Liberia 289 central to livelihoods; it is also a source of social legitimacy, a reflection of power in society, a basis of cultural identity and a symbol of belonging to a community.5 Land disputes are prevalent in post-war settings because the end of conflict usually leads to the return of displaced populations on a large scale. After years or decades living abroad, individuals return to their ancestral homes or legitimately purchased parcels of land to find that individuals or groups have claimed and occupied the land, at times for years. The resulting disputes threaten the fragile peace and stability of the recovering state if left unaddressed.6 Thirteen years after the end of the war, land disputes remain a volatile issue and a threat to peace in Liberia.7 The Liberia Truth and Reconciliation Commission, established in 2005 to investigate civil conflict in the country and to report on past human rights violations, warned of a “strong likelihood of Liberia’s return to violence if the land issue was not adequately addressed”.8 In 2008, 62% of Liberians surveyed stated that land was the most important cause of violence and conflict in the country.9 Ethnic or tribal conflict, often closely associated with land disputes in this context, was the next most-cited risk (19%).10 Nearly six in 10 respondents (59%) stated that violent conflict over land ownership and distribution arises “often” or “always” in Liberia.11 Land disputes in Liberia originate from many sources. They are particularly common in areas where opposing tribes fought heavily against one another during the civil war. Nimba County is home to the mutually distrusting Gio and Mano people, as well as to the Mandingo people who have historically feuded with both. In Lofa County, the Lorma (or Loma) and Kisi people have traditionally fought with the Mandingos. Tribal or religious groups can also create conflict by destroying the traditional land symbols of others; the desecration of Lorma sacred groves (a site for traditional ceremonies) by the Mandingo-Muslims in Lofa County is one such example.12 Nimba and Lofa also boast substantial natural resources—including minerals, lumber and wildlife—which can be another cause of conflict. Because of the movement of people and goods, border regions can be particularly volatile: Nimba and Lofa Counties share porous borders with Guinea and Sierra Leone, two nations that have also fought bitter civil wars. Liberia’s civil war forced many residents to seek refuge in other countries, and after the end of the conflict there was a high demand, and consequent rush, for land. In many cases vacant lands had been taken over by squatters unwilling to relinquish their claims. These illegal occupants usually demanded that the returning claimants provide valid documentation to support their claims of ownership—documentation that no longer existed (if it ever had), due to the conflict. Disputes over ownership were exacerbated by the breakdown of the formal legal system, which was not robust even before the conflict. As a result, struggles for land and other resources after the war’s end generated tensions and violent conflicts

5 John W. Bruce and Sally Holt, “Quick Guide to Land and Conflict Prevention, Initiative on Quiet Diplomacy, Handbook on Land and Conflict Prevention” No.6 (2003), p.11. 6 Pantuliano and Elhawary, “Uncharted Territory: Land, Conflict, and Humanitarian Action” (2009) 39 Humanitarian Policy Group Policy Brief 1, 1, 3. 7 Liberia International Conflict Vulnerability Assessment—Final Report, May 2016, p.13, http:/ /democracyinternational.com/media/Liberia%20Conflict%20Assessment%20Final%20Report%20(External).pdf [Accessed 4 June 2017]. 8 The Afrobarometer, “Land Disputes in Liberia: Views From Below, 2008”, Briefing Paper No.72 (October 2009), p.1. The Afrobarometer is a series of public attitude surveys on democracy, governance, markets and economic conditions in Africa. It is produced collaboratively by social scientists from 20 African countries, with coordination provided by the Institute for Empirical Research in Political Economy in Benin, the Center for Democratic Development in Ghana and the Institute for Democracy in South Africa. 9 The Afrobarometer, “Land Disputes in Liberia: Views From Below, 2008”, Briefing Paper No.72 (October 2009), p.1. 10 The Afrobarometer, “Land Disputes in Liberia: Views From Below, 2008”, Briefing Paper No.72 (October 2009), p.1. 11 The Afrobarometer, “Land Disputes in Liberia: Views From Below, 2008”, Briefing Paper No.72 (October 2009), p.1. 12 cf. Sarah Brownell, “Rival ethnic groups smoke peace pipe in Liberia’s Lofa county”, 20 July 2005, www.unhcr .org/en-us/news/latest/2005/7/42de6c764/rival-ethnic-groups [Accessed 13 June 2017].

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 290 Arbitration throughout the country, often with an ethnic dimension. This resulted in the destruction of lives and property and forced some residents to flee once again. Another source of conflict arose from the Government’s turning over significant tracts of land to large companies, usually foreign, for mining operations. Under- or unregulated mining and logging, combined with rural population growth, puts intense pressure on land and water as local communities struggle to meet their needs for food and income. Seventy-one per cent of Liberians live in rural areas where over 85% of the population rely on forest land for livelihoods and survival.13 For all of these reasons, finding a lasting solution to persistent conflicts around land and other resources was a high priority of the Government of Liberia after the war and was the genesis of the MLDL project.

3. Origins of the mitigating local disputes in Liberia project Liberia was relatively stable and peaceful in 2005 following democratic elections in 2004. Nonetheless, the country still faced a number of socio-economic, political and security challenges, including constant threats by former militia leaders to return to war, an alarmingly high rate of poverty and a large number of land disputes and associated ethnic and tribal conflicts. In its pursuit of solutions, the Government of Liberia began soliciting views through bilateral and multilateral engagements and nationwide consultations on how to strengthen national policies, in particular on security, to reduce the risk of a recurrence of conflict. These national reconstruction efforts, supported by the international donor community, resulted in the formulation of the Government of Liberia’s Poverty Reduction Strategy launched in April 2008 and aimed at reducing poverty to meet the United Nations Millennium Development Goals. The strategy consists of four key pillars: (1) consolidating peace and security; (2) revitalising the economy; (3) improving governance and the rule of law; and (4) providing infrastructure and basic services. In early 2009, Liberian Government representatives and national and international security experts met in the capital, Monrovia, to design a national security mechanism that would identify, prevent, resolve and report on security issues. The resulting system, consisting initially of County Security Councils (CSCs) at county level and District Security Councils (DSCs) at district level,14 was confirmed at a follow-up meeting in the Ministry of Internal Affairs (MIA) in Monrovia. Expected to serve as an early warning/early response mechanism on security issues, the CSC/DSC system was launched on 4 December 2009 in Kakata, Margibi County, at a ceremony attended by superintendents of Liberia’s 15 counties along with the county commanders of the Liberia National Police, the Bureau of Immigration and Naturalization, the Liberia National Fire Service and the Corrections Service. To support the CSC/DSC system—a new model of civilian-security collaboration—the Government of Liberia sought and received support from international partners. The US Government stepped up early, due to the US’ important role in the history of Liberia and fears of renewed destabilisation if land disputes persisted unresolved. Thus in 2011, the Government of Liberia and the US Government agreed to implement a pilot programme with the goal of advancing peace and stability in two counties (Nimba and Lofa) that were particularly prone to land disputes. The pilot programme would establish a network of councils linking local communities with national policymakers. In November 2011, after a competitive procurement process, the US State Department awarded the MLDL project to Tetra Tech DPK, an implementer with experience in rule of law, alternative dispute resolution (ADR) and formal and informal justice systems in Africa and elsewhere. Operating initially in the two pilot counties of Nimba and Lofa and now in two more counties (Bong and Grand Gedeh), all with histories of conflict, MLDL aims to improve

13 The main activities include production of rice, cocoa, coffee, palm oil, sugar cane, cassava, cash crops, livestock, fishery, forestry (mainly pit sawing and charcoal production) and illicit mining. 14 The CSCs are headed by County Superintendents while the DSCs are headed by District Commissioners.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Resolving Disputes and Improving Security in Post-Conflict Liberia 291 the relationship between citizens and local institutions and to collect vital information on community concerns and security issues. In the belief that the DSCs did not reach far enough into the grassroots level, the project proposed to create Community Forums (CFs) as the lowest level community venue to identify and address local security concerns and report unresolved disputes up the chain to DSCs, CSCs, and, in exceptional circumstances, the National Security Council (NSC). As the third leg of the stool, the CFs complete the conceptual framework initially proposed by the Government of Liberia, providing an opportunity for public participation in national security governance and citizen involvement in identifying and resolving disputes at the local level. Engaging local populations in governance also reduces the risk of violent extremism, which can take root in remote areas with weak government oversight.15 Since the project launch in 2011, MLDL has provided extensive training and mentoring to the CFs, DSCs and CSCs. During its first phase,16 MLDL also helped strengthen the capacities of law enforcement by providing limited material support to police, training police officers on community policing and investigations, and working with existing volunteer groups dedicated to monitoring crime in their communities.17 The objective was to improve the ability of security actors to respond to disputes and crimes, thereby reducing conflict (as many larger conflicts start as minor crimes or disputes). The policing activities were intended to complement the work of the CF/DSC/CSC network, helping to head off any brewing conflicts and to improve public perceptions of the police and other government officials, all in the service of advancing stability and peace.

4. Snapshot of the system and its structures The system implemented by MLDL has been designed such that the CFs identify local disputes and security issues at the grassroots level and provide solutions where possible. They refer situations beyond their dispute resolution capacity up the chain to DSCs, which do the same vis-à-vis the CSCs.18 The system gives communities a role in resolving disputes at the local level while also ensuring that the regional and national authorities have the most up-to-date information on security concerns facing residents of rural areas. This two-way information flow fosters local participation, improves government response and increases trust between citizens and their local and national government representatives. One of the system’s most successful interventions was to resolve a dispute that had been brewing for nearly four decades between two communities in the Buu-Yao district of Nimba County, near the Côte d’Ivoire border and close to the scene of the first hostilities in Liberia’s civil war. In 1976, the Yeaten family encroached upon the farmland of the Nutuah family, but in 1983 a local traditional court ruled in favour of the Nutuah family and the Yeaten family relinquished the disputed land. Grumblings of discontent, however, surfaced during Liberia’s civil war. In the 1990s, the Yeaten family forcibly took back the disputed land and even encroached further, under the protective orders of their son, Benjamin Yeaten, then a Major-General in rebel leader Charles Taylor’s National Patriotic Front of Liberia. Even when Benjamin Yeaten became a fugitive, the Yeaten family continued to farm the ill-gotten land while the Nutuah family retaliated by encroaching on a parcel of the Yeaten land. The local traditional elders attempted to resolve this intractable land dispute many

15 United States Agency for International Development (USAID), “The Development Response to Violent Extremism and Insurgency”, p.3, https://www.usaid.gov/sites/default/files/documents/1870/VEI_Policy_Final.pdf [Accessed 13 June 2017]. 16 MLDL Phase I was implemented by Tetra Tech DPK and ran from November 2011 to December 2014, while MLDL Phase II (which began in December 2014 and will run until December 2017) is currently being implemented by The Kaizen Company in partnership with Tetra Tech DPK. 17 MLDL Phase I trained and supported Community Watch Forums, non-profit volunteer groups of concerned citizens serving as the “eyes and ears” of the under-resourced and under-staffed police and working to identify potential flashpoints before they escalate into crime or conflict. MLDL provided modest resources including flashlights, mobile phone credit, and rain ponchos to the Community Watch Forums to facilitate their work. 18 The membership and role of each of these will be outlined in more detail in the next section.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 292 Arbitration times to no avail. When the Buu-Yao DSC and Gbloulay CF, structures created with MLDL assistance, stepped in to resolve the dispute with modest logistical support and mentoring by the MLDL team, local leaders were highly sceptical and expressed their doubts that reconciliation would be possible. The mediation team, comprised of 15 Gbloulay CF members and three Buu-Yao DSC members, successfully applied a mix of traditional and modern ADR processes over four days. Despite the difficulty in reaching the area of conflict for the consultations (whether by motorcycle or on foot), the mediation went smoothly. The Yeaten family addressed the assembled group and aired their grievances dating back to the 1983 settlement. They then listened to the opposing views of the Nutuah representatives, and in the end agreed to let go of the disputed land. Both families signed memoranda of understanding in a subsequent ceremony, at which time the father of fugitive Benjamin Yeaten knelt before the Nutuah family and asked for forgiveness, signalling the end of the enmity that had persisted between their communities. The Nutuah community responded positively, agreeing to return the land they had taken and emphasising that all past animosity was over. MLDL staff and the mediation team successfully guided those involved in the land disputes to a harmonious resolution, and at the time of writing, the peace accord between the two families is still holding. In addition to resolving disputes like these, the network of forums and councils serves as an early warning/early response mechanism, because the CF, DSC and CSC meetings identify potential flashpoints and facilitate timely government reactions. In early 2016, the early warning/early response system proved highly effective when three different DSCs in Nimba County independently raised concerns regarding the proliferation of pistols and other single-barrelled guns, particularly among young people. They referred the issue to the Nimba CSC, which immediately recognised the scope of the security threat and elevated the issue to the NSC through the MIA. The NSC, in turn, passed the report directly to the desk of the President of Liberia, Ellen Johnson Sirleaf. The report provided by the Nimba CSC helped President Sirleaf better understand the threats posed by guns in rural communities and prompted her to instruct the Liberia National Commission on Small Arms to take action. In response, the Commission developed a three-pronged programme that educates citizens on the dangers of firearms, provides compensation to informants and manages newly established voluntary firearm collection points in four counties, including Nimba. Information coming from the forum and council meetings spurs prompt and appropriate government response and allocation of resources to address security issues in remote areas while also providing up-to-date information to higher-level officials as they formulate national security policy. Improving government response is particularly important in developing countries like Liberia where the lack of adequate roads and communication networks makes it difficult for central governments to establish their authority in isolated and rural regions. Governments find it especially challenging to maintain a security presence in such regions where formal institutions may be weak or non-existent, the populace often distrusts the government and the risks of violent extremism are high. As noted in a US Government policy report: “Poorly governed or ungoverned areas may enable violent extremists to establish sanctuaries or safe havens. Poorly governed areas may create passive or active support for such groups by communities who feel marginalized or neglected by a lack of government reach.”19 For this reason, involving remote communities and giving young people, in particular, a role in community governance is “an important option for turning a potential source of

19 USAID, “The Development Response to Violent Extremism and Insurgency”, p.3.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Resolving Disputes and Improving Security in Post-Conflict Liberia 293 instability into an asset”.20 The CFs, DSCs and CSCs, which bring local residents and government officials together, are serving this larger purpose. The next sub-sections introduce in more detail each of the structures making up the security and early warning/early response system.

Community forums The CFs comprise leaders at the most local level, including town chiefs and civil society representatives. Because of their local character, the CFs provide the ideal space for identifying community security concerns and facilitating their resolution via informal means of mediation and conciliation. Historically, elders in rural areas used mediation to help resolve conflicts in the community, and the CFs established with MLDL support strengthen and build on this cultural tradition, incorporating its benefits into the national security apparatus. If a small dispute arises in a town or village, the members of the CF are obliged to identify the parties involved and move the dispute into mediation. If they cannot resolve the dispute, the issue is passed on to the DSC. In the past, when local disputes were not resolved, disputing parties would have had no further recourse because the interior areas of Liberia receive scarce resources from the national Government. In particular, the court system barely covers the remote areas, and even where it exists it is inefficient, at times requiring disputants to wait years for a case to conclude. Corruption is also an issue, and so for all of these reasons, many disputes linger unresolved and create tension, instability and animosity in local communities. The newly established CFs now functioning in several of Liberia’s counties target and make every effort to resolve these local disputes, in the hope of reducing conflict, building trust and fostering stability. Disputes not resolved at the CF level are passed up the chain to the DSC, then to the CSC and then to the NSC (through the MIA), if necessary.

District security councils Liberia’s National Security Strategy directs that the DSCs, like the CSCs, include both government and civil society representatives.21 Thus the DSCs have representation of both traditional leaders and formal state authorities, including paramount chiefs, district officials and law enforcement officials. The DSCs receive information from the grassroots (i.e. CF) level and identify the appropriate next steps to quell security concerns. Isolated incidents and minor disputes not resolved at the CF level are generally resolved at the DSC level, although persistent land disputes or volatile security concerns are passed along and up the chain to the relevant CSC.

County security councils The CSCs are modelled on Liberia’s NSC and are responsible for security policy co-ordination at the county level. The CSC mechanism is codified in Liberia’s 2011 National Security Reform and Intelligence Act s.522; each CSC is chaired by the superintendent of the county, while other members include county heads of police, immigration and the fire service, and civilian authorities such as the paramount chief, clan chiefs and town chiefs.23 The CSC has significant authority to allocate resources to security crises anywhere in the county, and it maintains a direct line of communication to the national Government in

20 USAID, “The Development Response to Violent Extremism and Insurgency”, p.5. 21 National Security Strategy of the Republic of Liberia (2008), p.4, issat.dcaf.ch/fre/content/download/16050 /188151/file/NSSRL.docx [Accessed 13 June 2017]. 22 National Security Reform and Intelligence Act 2011 s.5, Ministry of Foreign Affairs, Liberia. 23 Ibrahim Al-bakri Nyei, Toward Security Sector Decentralization: Liberia’s County Security Councils and Regional Hubs” (Monrovia: Centre for Security Governance, 2015), p.3.

Monrovia and can immediately inform the central authorities of any dangerous situations that may require support. The CSCs report to the Minister of Internal Affairs (a member of the NSC) through the Coordination Secretariat located in the MIA in Monrovia. The Secretariat acts as the linchpin, consolidating information from the CSCs and co-ordinating with other government agencies as needed. MLDL helped establish and provision the Coordination Secretariat, which receives regular monthly reports from CSCs and works to ensure communication among the CSCs, the MIA and the NSC. One commentator describes the CSCs thus: “The local councils are part of the national peace-building efforts to ensure security and peace coordination at the levels of the counties and the districts. The CSC is coordinated through a multifaceted platform with government, civil society, and other local stakeholders acting together, and they are not only responsible for physical security but also act as a mechanism for disaster and crisis management. Through the CSC, civilian players can participate in decision making processes in the security sector. This facilitates a process in which national security policies are informed by both physical security issues and more human-related ones, from socio-economic to disaster management.”24 Since December 2009, 12 CSCs have been established, four of which are currently receiving support from MLDL: those in Bong, Grand Gedeh, Lofa and Nimba counties. The remaining eight CSCs are self-supporting, and six of these were only reactivated in 2016. As they have not received any external support, these new CSCs generally meet sporadically and do not send reports to the NSC, which limits their present functionality.25 Based on the success achieved with the first four CSCs, there is little doubt that these other CSCs would also attain the same operational level were they to receive similar support in the form of capacity building, sustainability planning and resources.

5. Methodology and key success factors MLDL Phase I’s principal task was to establish pilot CFs, DSCs and CSCs in the two counties, Nimba and Lofa, and build their capacity to identify security concerns, resolve disputes, and self-govern. MLDL Phase II expanded the mechanism to two more counties, Bong and Grand Gedeh. This section examines the methodologies and strategies used and identifies the factors that led to the successful implementation of the dispute resolution and early warning/early response mechanism in these four counties.

Local ownership and leadership The most important strategy and success factor for MLDL was its commitment to local ownership and local leadership from the outset. Local ownership in this context means that because “a justice and security sector reform process is of integral concern to the local population”, local representatives should be integrally involved in its formulation.26 Local

24 Ibrahim Al-bakri Nyei, Toward Security Sector Decentralization: Liberia’s County Security Councils and Regional Hubs” (Monrovia: Centre for Security Governance, 2015). 25 As of 2016, it is only in Bong, Grand Gedeh, Lofa and Nimba counties that the CSC/DSC/CF mechanism is functioning as originally envisioned by the Government of Liberia, and this is due to key donor support from the US Government. The self-supported CSC/DSC/CF mechanism has existed in Montserrado and River Gee counties since 2010 and was revived in 2016 in Bomi, Gbarpolu, Grand Bassa, Grand Cape Mount, Margibi, and Maryland counties. Three counties—Grand Kru, Rivercess, and Sinoe—lack the system entirely. With MLDL always having been described as a pilot programme, and with its efforts having been discussed widely on radio and in the news, there is a lot of community interest in the programme. Government officials and the public at large are hoping for support, whether from the US Government or another donor, to expand the system to Liberia’s remaining counties. 26 Annika Hansen and Sharon Wiharta, “The Transition to a Just Order—Establishing Local Ownership After Conflict, A Policy Report”, Folke Bernadotte Academy (2007), p.xvii.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Resolving Disputes and Improving Security in Post-Conflict Liberia 295 ownership is increasingly accepted as a precondition for effective development assistance,27 as contrasted with a “vision of development in which all the answers and all the agency are seen to lie in the hands of foreigners”.28 The consensus is that programmes not shaped by the local culture and driven by local actors are unlikely to be implemented properly or sustained.29 To this end, MLDL engaged local experts to ensure that the dispute resolution system to be used would embody the local culture. Thus the system emphasises traditional community-based concepts of justice rather than more punitive and retributive measures. In a tight-knit rural community based on family, clan and tribe and anchored in social relationships, to simply punish someone who commits a crime and then expect him or her to easily reintegrate back into the society is not realistic and usually contributes to more social instability. It is for this reason that the: “African indigenous justice system employs restorative and transformative principles in conflict resolution[, whereby v]ictims, offenders and the entire community are involved and participate in the definition of harm and search for resolution acceptable to all stakeholders”.30 A dispute resolution framework that allows all parties to air their grievances and that involves all of them in designing and agreeing on a solution—as in the example introduced in s.4 above—is therefore much better positioned to attract lasting support and explains MLDL’s success in generating enduring solutions to conflict, fostering reconciliation and preventing crime. In addition to ensuring that the dispute resolution techniques were culturally appropriate, MLDL developed and now replicates a series of actions to foster local leadership, so that interventions are not viewed as imposed from outside but rather have their genesis in the community. This endeavour can be delicate in the context of a donor-funded initiative, which by its nature provides funding from outside, but MLDL’s success was due both to the astute and nuanced leadership of the project and to the fact that the idea for the security mechanism came from the Government of Liberia itself. To foster local leadership, at the start of each effort to establish a new CF or DSC, MLDL staff first conduct an assessment of a community to gather information on prospective forum or council members and to lay the groundwork for the establishment of the new security structure. The team then approaches the leaders of the relevant village, town or city and introduces the MLDL project and its work, and the leaders, chiefs and government officials then confer with other town members to decide which residents should be nominated to serve. Vetting of each proposed candidate follows, including interviews, references and recommendations from colleagues and peers. Thereafter, MLDL staff and local leaders discuss and carefully examine and finalise the list. The local officials and MLDL jointly plan the inaugural ceremonies and project-led training sessions (on the role of the forum/council and on the early warning/early response concept) for the members of the new structure. The successful implementation of a programme such as MLDL in a rural area with a high illiteracy rate requires caution, tact and persuasion to win over prospective partners. This is achieved by the project engaging in a deliberate and elaborate process of identifying

27 Timothy Donais, “Understanding Local Ownership in Security Sector Reform”, in Local Ownership and Security Sector Reform, the Geneva Centre for the Democratic Control of Armed Forces Yearbook, 6th edn (Geneva: Geneva Centre for the Democratic Control of Armed Forces, 2008), p.3. 28 Joseph Stiglitz, “Towards a New Paradigm for Development: Strategies, Policies, and Processes”, Prebisch Lecture (New York: UNCTAD, 1998). 29 Timothy Donais, “National Ownership and Post-Conflict Peace Building: From Principle to Practice”, Policy Brief No.43 (Waterloo: Centre for International Governance Innovation, 2014), p.1. 30 O. OkoElechi, “Human Rights and the African Indigenous Justice System”, Center for Justice and Reconciliation, http://restorativejustice.org/rj-library/human-rights-and-the-african-indigenous-justice-system/5449/ [Accessed 13 June 2017].

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 296 Arbitration and courting the most influential local leaders such as chiefs, local government administrators, civil society representatives and others in each community and assuring them that their participation is essential. This also fosters a sense of buy-in among community members. This was particularly crucial in 2012, when MLDL began, because the perception was rife that Liberia and its rural areas had been “assessed to death” by an assortment of experts and consultants without much to show in the way of tangible improvements in people’s lives. The MLDL team took these considerations into account, using widespread consultations to constantly reiterate the message that security is everyone’s concern and that MLDL’s role is just to facilitate. Cultivating and relying on local leadership—with MLDL staff taking a back-seat role in public gatherings—has been key to generating and maintaining support for the initiatives.

Community policing In addition to establishing the three levels of structures (CFs, DSCs and CSCs), MLDL Phase I worked with local civilian police to build their investigative skills and strengthen their ties with communities.31 The project’s training programmes covered crime investigation techniques, witness interviewing skills, preservation of evidence and crime scene management, mediation, the role of law enforcement officers in society, criminal intelligence, organised crime and community policing. MLDL provided material resources, such as crime investigation kits and motorbikes, to improve police response, while working to increase community support for law enforcement. As noted,32 MLDL worked with community crime watch groups to complement official police activity. Just as it did in working with the security structures (CFs, DSCs and CSCs), MLDL vigorously pursued a strategy of local ownership and local leadership for its work with the police. The project acted in a facilitative role, helping the police work with communities in devising and implementing solutions that were “tactfully and carefully tailored to the local conditions and cultures”.33 This community-policing approach not only imbued local police with buy-in and a sense of ownership of the project’s activities but also helped them build needed trust as they worked with and alongside community partners. The importance of community-oriented policing cannot be over-emphasised. Through judicious design of community policing activities, MLDL worked to improve the relationship between citizens and their local security institutions so as to better identify and respond to crime and potential flashpoints of future conflict. Provision of minimal equipment, such as flashlights and rain ponchos, motivated members working in community watch groups to support the under-resourced police in identifying and reporting crime. And as noted earlier, involving the local population in governance can erode support for violent extremist groups in communities that otherwise feel “marginalized or neglected by a lack of government reach”.34

Equipment and material support Too often, foreign-funded activities are viewed as temporary or evanescent, disappearing upon a project’s end date. For this reason, the US State Department and MLDL have decided that helping the security structures build or acquire a venue for meetings and offices is important both symbolically and operationally, because it convinces local actors of the permanency of the initiative and fosters sustainability. Accordingly, MLDL has provided

31 MLDL Phase II did not include work on policing. 32 MLDL Phase I trained and supported Community Watch Forums and provided modest resources to facilitate their work. 33 Global Counterterrorism Forum, “Good Practices on Community Engagement and Community-Oriented Policing As Tools to Counter Violent Extremism”, p.1, https://www.thegctf.org/documents/10162/159885/13Aug09_EN_Good +Practices+on+Community+Engagement+and+Community-Oriented+Policing.pdf [Accessed 13 May 2017]. 34 USAID, “The Development Response to Violent Extremism and Insurgency”, p.5.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Resolving Disputes and Improving Security in Post-Conflict Liberia 297 some funding for meeting venues. However, because the funding is limited, MLDL also encourages CFs and DSCs to find their own avenues to raise funds for temporary or permanent shelter, for example by appealing to local government authorities. MLDL generally provides each CF, DSC or CSC with some equipment and material as well, with the goal of building popular support for and improving the effectiveness of these security mechanisms. Provisions have included generators, motorbikes, public address systems, office furniture, computers, printers and solar panels, particularly in the more remote rural areas. When the project was working with law enforcement, MLDL provided motorcycles to the local security agencies and crime scene investigation equipment to the police. With these new materials, police now have the ability to reach remote areas they could not access before. Such modest investments in equipment and supplies improve the effectiveness and raise the profile of the security structures, convincing local residents that they are not temporary, foreign or outside initiatives and building trust in their local government representatives.

Capacity building Capacity building is another key feature of the MLDL approach. With an eye to sustainability, the project focuses on developing and strengthening the skills of the members of the CFs, DSCs and CSCs to perform their functions.35 Capacity building mainly takes the form of mentoring and training in mediation and dispute resolution methodologies, although the project has also covered more mundane topics such as how to run meetings, track security issues raised and prepare minutes and progress reports. After establishing one of the structures, MLDL staff conduct assessments of the members and leaders to determine their level of capacity and training needs. Thereafter, MLDL develops training plans and teaching materials and conducts training sessions to equip members of these structures with the knowledge and tools to undertake their responsibilities. Project funds are used to supply key expertise not available locally: for example, the project hired an international expert in ADR to prepare a comprehensive mediation manual tailored to the local context; another expert prepared survey tools; and still another developed a tool to report on and map community concerns and security incidents. With the goal of enabling trainees to use their training almost immediately, the MLDL team steps aside so that the CFs, DSCs and CSCs organise and run their own meetings, with MLDL providing guidance only as requested. CFs, DSCs and CSCs prepare and distribute reports of their meetings and use the reporting tool to track security concerns and pending disputes. Local ownership, capacity building and sustainability are mutually reinforcing here: the structures are established with local leadership, are trained and equipped to lead meetings and activities from the outset and are therefore well placed to continue functioning after the end of the project.

6. Examples of disputes and security issues addressed As seen in the example set out in s.4 above, the MLDL project has helped resolve even long-standing disputes that were exasperating local residents and officials. During its almost five years of existence to date, the project has continued successfully resolving disputes and has garnered the trust of local community and government leaders. A belief in the objectivity of the project, its staff and the newly established structures has led traditional authorities and government officials to bring security concerns or disputes—some of which had festered for years—to the attention of the MLDL team for resolution by the CF/DSC/CSC network. A snapshot of some of the issues addressed is set out here.

35 In Phase I, MLDL also helped to build the capacities of the police and other law enforcement agencies.

Using early warning/early response systems One example of the effective use of the early warning/early response approach occurred during the Ebola outbreak in Liberia in 2014, which posed a serious security threat to the then two pilot counties and the entire country. Throughout this period, the MLDL-established structures were actively involved in implementing the government-recommended safety procedures and activities, particularly in addressing potential Ebola-related unrest at the local level. With support from the MLDL team, the CFs, DSCs and CSCs exercised their early warning/early response role, implementing appropriate local initiatives and actions and reporting emerging and problematic security concerns higher up the chain, all the way to the NSC and Ministry of Health in Monrovia. Local concerns were brought to the attention of central authorities which then modified national security and health policies and protocols taking into account local realities, while also giving support and material assistance to combat the epidemic. Equally, on a practical level, the MLDL-provided motorbikes allowed local representatives to reach remote areas to implement the health procedures and policies. During the most severe episodes of the epidemic, when MLDL could not operate in the most affected areas, some of the security structures served as important community-based co-ordination centres for the distribution of Ebola-related support provided by the Government and the international community. They also continued to serve as key information resources for the central government as it tried to contain and ultimately eradicate the disease. In serving these vital functions for remote and previously unreachable populations, and without external support or direction, the structures demonstrated their effectiveness and sustainability. Another example of the early warning/early response system was when the CF in the town of Gbloulay dispersed an angry group of citizens in 2013 planning a violent attack in the town of Tiahplay. The Chair of the Gbloulay CF was notified by a community member that a murder had taken place and that the victim’s family was gathering youths in preparation for a revenge attack. Recognising the extreme urgency of the situation, the Chair called CF members and volunteers and asked them to immediately station themselves at the intersection of the road leading to Tiahplay, to intercept the crowd and dissuade them from violent retaliation. The Chair and the intervention team directly addressed the angry mob, asking them to trust the CF and its partner MLDL, which had already informed the Liberia National Police of the situation. The arrival of the police’s Emergency Response Unit calmed the situation, the crowd dispersed and the murder suspects were subsequently arrested. The fact that the rule of law prevailed confirms the important role of the early warning/early response system in breaking cycles of retribution, decreasing conflict and improving public confidence in state security and justice structures. The same community faced another potentially violent situation in 2015. They sought MLDL assistance to reach a peaceful resolution, again highlighting the importance of a permanent, community-led structure to handle disputes and security concerns in remote conflict-prone areas and to pacify youths who may otherwise be susceptible to calls for violence and retribution.

Improving relations with a mining company When the MLDL team began operations in Nimba County in 2012, it encountered community members frustrated by an international corporation’s mining practices that negatively affected land and water use. Residents were unaware of any means by which they could convey their complaints to the company. MLDL staff offered advice and shared negotiation techniques that the community could use, and at a subsequent town hall meeting, more than 100 community members affected by the mining practices expressed their grievances and requested safe drinking water, fair compensation for cash crops, funding for alternative livelihoods and resettlement to non-mining areas. The issues, along with the affected community’s proposed solutions, were conveyed to the Nimba CSC, which agreed to

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Resolving Disputes and Improving Security in Post-Conflict Liberia 299 intervene and subsequently established a committee to work with the corporation and the local representatives. The Nimba CSC continued to provide a platform for citizens to express concerns over the mining activities during the years to follow. At one Nimba CSC meeting, the Liberia National Police and several members of the council reported an event that had endangered multiple towns. The mining company had conducted blasting exercises during the night without giving advance notice to the public. Not knowing the origin of the blasts, entire communities panicked, which resulted in looting, people going into hiding and rumours throughout the region that members of one ethnic group or another were attacking or planning attacks. The CSC agreed to convey an urgent communication to the company that in the future it should provide notice to the community on the radio prior to blasting, and the company agreed. This non-confrontational approach reinforced the importance of using the new channels of communication to address pending issues before they fester and grow. Communities throughout the developing world face increasing attention from multinational corporations, some of which use illegitimate practices. Natural resource extraction, in particular, can negatively affect the economic, environmental and social well-being of local communities. The MLDL model can be replicated in any similar contexts to give a stronger voice to local stakeholders whose views may otherwise be overlooked.

Resolving a school strike MLDL successfully helped resolve a strike action by the academic and support staff of the Child Friendly School in Ganta, Nimba County, in 2014. The school was built by UNICEF because there is a large population of school-age children but insufficient space in the government schools in Ganta, despite a guarantee of free primary education. The teachers had been engaging in intermittent strike actions on several occasions, their main grievance being eight months of unpaid salaries. Among the many security concerns stemming from the strike were the potential for violence and the long-term risks associated with young people not attending school. Matters worsened, with students and parents resorting to street demonstrations for several days in support of the teachers. Monitoring and controlling the student protests, on top of performing everyday police duties, also began to affect the already under-resourced and over-stretched Ganta police. The strikers rejected overtures by local government officials, and the dispute seemed intractable. The Ganta CF, having been mentored to detect looming conflict, saw the need to respond to the strike action and quickly convened a meeting with a cross-section of community actors. Although recognising the position of the teachers and their frustration at working for such a long period without pay, the Ganta CF appealed to them to take into account the plight of the young people and their need for stability and an uninterrupted education. The teachers accepted the appeal of the Ganta CF to go back to their classes, and in return, the CF pledged to use its access to higher authorities in the county and in Monrovia to seek a lasting resolution to the dispute. The Nimba CSC took up the issue with the Ministries of Education and Finance in Monrovia, and eventually the back salaries were paid.

Preventing mob violence An incident in the Buu-Yao District in 2015 involved a man who was attacked by two other men from a different village. He killed one of the men in self-defence and fled to his village police station. The on-duty policeman took him into protective custody but subsequently fled when a large group of men from the deceased’s village came looking for revenge. The mob murdered the man at the police station, which led to demands for retaliation from the victim’s family. MLDL staff, in close co-operation with the village leadership from both sides, convinced the communities to let the formal justice system run its course. Unfortunately, some suspects alleged to have been involved in the murder at the police

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 300 Arbitration station were released prematurely. Tensions between communities rose once more, as the victim’s community sought to recapture the accused persons from the opposing village. In part due to telephones donated by MLDL, local DSC and CSC members were aware of developments in the area and were able to prepare a response before tensions erupted into violence. The Nimba County Superintendent, who was still relatively new to the position, initially intended to approach the matter from a strict law enforcement perspective, but he quickly saw that he could get a better response from the villages by speaking to them as a community leader. Accordingly, MLDL, at the behest of the Superintendent’s Office, organised a community event that featured an anti-mob violence message and aimed to dispel some of the rumours that had been circulating. The town then hosted a mediation session led by a senior law enforcement official. Following this intervention, the community that was protecting the suspects agreed to transfer them to law enforcement officials, while the members of the other community agreed to respect the formal justice process and not take matters into their own hands.

7. Conclusion Many countries share the same types of cultural, economic and political characteristics that have contributed to prolonged discord in Liberia. An emphasis on community participation, local ownership, local leadership and capacity building has earned the MLDL project a position of trust in resolving disputes in rural communities and conveying security concerns up and down the chain from local to regional to national and back again. There is every reason to believe that the methodology conceived by the Government of Liberia and developed by MLDL can be replicated elsewhere to help resolve disputes and prevent conflict and violence. For example, the early warning/early response system could address the precarious security situation in the western region of Côte d’Ivoire, where local land disputes are responsible for persistent instability and the insecurity of the local population. Issues loom larger in communities that are suspicious of central government involvement and look more to traditional or religious leaders for guidance. Many regions in Africa and elsewhere face these challenges and could benefit from MLDL’s methodologies. One appeal of the MLDL framework is its sustainability. The discussion above highlighted the importance of savvy involvement of local leadership in creating the structures, which generates local buy-in. The fact that the dispute resolution framework is drawn from the local culture also leads to its acceptability. Early success in resolving key disputes builds on initial investments and fosters long-term interest in perpetuating the early warning/early response system. With Liberian Government personnel and civilians serving together on the DSCs and CSCs, the councils benefit from both government support and popular interest, which makes their continuing existence more likely. In addition, their equipment, resource and infrastructure needs (meeting rooms, transportation and communication) are modest, which bodes well for sustainability. The other structures (CFs and Community Watch Forums) draw their membership mainly from community residents who are motivated to improve their local security, so again minimal resource support is required. Because these structures are not dependent on donor funds, their prospects for sustainability are high. The Governments of Liberia and the US had a vision for how to identify and address long-standing disputes in Liberia. They were convinced that an effective governance structure for national peace and security requires the co-ordination and integration of actors at the national and local levels. The multi-layered system was implemented initially by experienced rule-of-law implementers, using a modest amount of funding in a short period of time (approximately $1.6 million per year). The system saw success not only with land disputes; as interest grew, community members started identifying and the institutions started resolving other types of disputes and addressing other security concerns, some of which were described in this article. The project-created structures saw success because they originated in Liberian-owned plans and were designed to reflect the local culture. Thus, for example,

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Resolving Disputes and Improving Security in Post-Conflict Liberia 301 they embody a restorative justice perspective which views community ties as a higher priority than punishment or retribution. The system is continuing to strengthen community ties, improve the ability of local organisations to identify potential flashpoints before they erupt into violence, reduce the risk of violent extremism and prevent crime. In this way, MLDL has been helping Liberia’s peace-building efforts, an endeavour that could transform the continent were it implemented more widely.

Wilfred Mutubwa

1. Introduction Arbitration proceeds from an assumption that commercial parties are attracted to arbitration as a means of resolving their disputes over litigation for several reasons including its flexibility, cost effectiveness, expeditious disposal of disputes and the use of an expert neutral. But perhaps key among the attractive attributes of arbitration is its finality or perceived finality. This is most relevant to Kenya, now that it seeks to position itself as the preferred destination for international capital and dispute resolution.1 This article therefore explores the two competing concepts of consistency and predictability of the law through wider and more permissive court intervention in arbitration; and of the finality of the arbitral award by severely limiting scrutiny by domestic courts.

2. Arbitration versus litigation The Arbitration Act 1995 (as amended in 2009) is the principal legislation that regulates both domestic and international arbitrations conducted in Kenya or whose seat is appointed, by party agreement or by default, to be Kenya.2 Parties to arbitration are free to agree on how to conduct their arbitration and indeed as to whether the findings of the arbitrator are subject to an appeal.3 This is referred to as party autonomy. Party autonomy is however subject to public policy safeguards which may include compliance with rules of natural justice and legal requirements of the agreement. It is therefore clear that an agreement as to the finality of an arbitrator’s decision or award must conform with or pass the public policy consideration test. Such test includes consistency with regulatory statutes such as the Arbitration Act. In other words, parties to an arbitration agreement cannot agree that the decision or award of an arbitrator is final when such agreement can be found to be contrary to or to contravene the provisions of the Constitution of Kenya, or a statute such as the Arbitration Act. It is the public policy of Kenya that its constitution and statutes be observed and enforced. It may therefore be argued, with merit, that an agreement on the finality of an arbitral award which has the effect of bypassing or avoiding statutory and constitutional scrutiny of arbitral awards by courts is voidable for violating the public policy of Kenya.

3. The doctrine of stare decisis and consistency of the law versus finality of awards: The dilemma Some commentators have argued that the role of courts in arbitration is to ensure the consistency and predictability of the law.4 This is the essence of the doctrine of stare decisis

1 Through the Nairobi Centre for International Arbitration Act 2013, Kenya seeks to set its capital, Nairobi, as the regional hub for international arbitration. The Nairobi International Financial Centre Bill 2016 seeks to establish Nairobi as the destination of choice for foreign direct investment. 2 Arbitration Act 1995 ss.2 and 3. 3 Arbitration Act 1995 ss.3(6) and 20. 4 See, e.g. Wilfred A. Mutubwa, “The Making of an International Arbitration Hub: A critical Appraisal of the Nairobi Centre for International Arbitration Act, 2013” (2016) 82 The International Journal of Arbitration, Mediation and Dispute Management 135, 139.

302 (2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Consistency and Predictability versus Finality under the Kenyan Arbitration Act 303 which is at the heart of the English common law. Kenya, a recipient of the English common law, under colonial rule,5 has developed its jurisprudence in conformity with the doctrine of precedent; hence its importance when considering the propriety of court intervention in arbitration.

The English position The debate about the need for court intervention and its extent in arbitration is as old as arbitration itself. Indeed, in England, discourse as to the propriety and proportionality of court intervention or interference in arbitration began in 1989. The proponents of deeper court involvement in arbitration matters and in particular in interfering with the findings, on merit, of an arbitrator cite the need to develop common law and consistency in its application as a valid basis for expanding the areas in which courts can interfere with arbitral awards. On the other hand, opponents of this approach, and hence proponents of limited court intervention in arbitration, advance the view that the need to promote London as a preferred destination for the settlement of international commercial disputes and its desirability as a transnational financial hub, do not outweigh the importance and hence the need for consistency and predictability of the common law. Indeed a third school of thought exists. This urges both judicial restraint in arbitration matters and the need to develop the common law. This is a compromise position that suggests a balance between restraint and wider judicial intervention in arbitration matters, particularly the award. This debate remains undecided. Lord Thomas, Lord Chief Justice of England and Wales, in his 2016 Bailii lecture, stated: “[T]he restrictions on appeals implemented by the Arbitration Act 1979, as interpreted by Lords Denning and Diplock in The Nema, and codified in the Arbitration Act 1996, were unduly severe and … more appeals should be permitted to proceed to Court”.6 Pertinently, Lord Thomas further stated: “In retrospect the UK went too far in 1979 and again in 1996 in favouring the perceived advantages of arbitration as a means of dispute resolution in London over the development of the common law; the time is right to look again at the balance.”7 Lord Thomas takes the view that the need for consistency in the law now seems to outweigh the commercial consideration of making London an attractive arbitration centre. Lord Thomas is thus quoted as saying: “There is an increasing realisation … that what matters more to the centrality of the common law, particularly as developed in London, is its use as a basis for doing business. That is, in my opinion, a far more important consideration than the business of dispute resolution in London … the wider interest of the industry and of the common law in general would be much better served by more issues being resolved in court and the law thus developed and clarified.”8 Lord Thomas seems to suggest that it may be useful for the consumers of arbitration as their preferred dispute resolution mechanism and those who prefer London as their preferred

5 The Judicature Act Cap.8 (as amended in 2016) places the official date of receipt of English law into Kenya as 12 August 1897 and requires courts to exercise their respective jurisdictions in conformity therewith. Section 3(1)(c) reads, in part, “the substance of the common law, the doctrine of equity and the statutes of general application in force in England on the 12th August, 1897, and the procedure and practice observed in Courts of Justice in England at that date”. 6 The Right Hon The Lord Thomas of Cwmgiedd, Lord Chief Justice of England and Wales, “Developing commercial law through the courts: rebalancing the relationship between the courts and arbitration”, the 4th Bailii Lecture 2016, 9 March 2016. 7 Lord Thomas, Bailii lecture, 9 March 2016, p.17. 8 Lord Thomas, Bailii lecture, 9 March 2016, p.17.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 304 Arbitration abode for resolving their disputes, to encourage appeals to courts in London from arbitral awards. He also seems to suggest that with consistency and predictability in the law, consumers of arbitration in London have the added ability or advantage of being able to predict, with some measure or degree of accuracy, the outcome of their disputes and to align their business activities accordingly. Lord Thomas, to this extent, may have a point; after all, isn’t it the role of law not only to resolve disputes but to forewarn potential disputants?

The Kenyan context A similar dilemma arises in the Kenyan legal and jurisprudential context, where reliance on the common law or precedent seems to have somewhat dissipated. There is now a trend towards the use of legislation to achieve clarity and consistency in the law. Many common law principles have therefore been enshrined in statute and regulations.9 Although the doctrine of precedent is not entirely lost, it is less important than in the British colonial period. For instance the 2010 Constitution of Kenya art.167(7) is clear that only decisions of the Supreme Court bind the courts below. There is no similar provision of binding effect cascading down from the courts below the Supreme Court. In essence locally developed principles and laws unique to Kenyan culture, which mirror and respond to its social, political and economic experiences, have emerged since independence in many areas, leaving English common law behind. However, many common law principles are now codified in statutory law. The need for consistency in the law and predictability in its application has thus in a way been achieved through statute. Again the “received law” which is stuck at 1897 English law has since evolved, even in England, so there is no justification in applying an archaic set of laws which even the mother country has since moved away from. Thus, unlike England, there seems to be no real need to preserve the consistency and predictability of the common law at the expense of the finality of arbitral awards. The finality of arbitral awards and the attraction of Kenya as an arbitration centre can be said, in the Kenyan case, to be more important than the preservation or the advancement of common law principles. One may also argue, with some persuasive force, that by pegging the received law at 12 August 1897, the drafters of the Kenyan Judicature Act (Cap.8) expected Kenya to develop its own jurisprudence, statutes and principles of equity. Certainly 120 years later Kenya has since achieved these.

4. Statutory, contractual and jurisprudential underpinnings of the finality of arbitral awards Following the promulgation of the 2010 Constitution of Kenya, arbitration has risen to take a prime spot in the Kenyan dispute settlement system.10 Courts and tribunals are now enjoined to promote alternative dispute resolution (ADR), the key feature of which is arbitration. The Arbitration Act 1995 is the principal legislation governing both international and domestic arbitration in Kenya.11 The Arbitration Act 1995 s.32A emphasises the finality of arbitral awards in the following succinct terms:

9 Michael Wabwile, “The place of English law in Kenya” (2003) Oxford University Commonwealth Law Journal 51 and Michael Wabwile, “The Future of the Common law in Kenya” (2002) 20–27 East Africa Law Review 20. 10 Article 159(2)(c) on the manner of exercising judicial authority and the legal system provides that: “In exercising judicial authority, the courts and tribunals shall be guided by the following principles … (c) alternative forms of dispute resolution including reconciliation, mediation, arbitration and traditional dispute resolution mechanisms shall be promoted, subject to clause (3)”. 11 Arbitration Act 1995 s.2 reads: “Except as otherwise provided in a particular case, the provisions of this Act shall apply to domestic arbitration and international arbitration.”

“Except as otherwise agreed by the parties, an arbitral award is final and binding upon the parties to it, and no recourse is available against the award otherwise than in the manner provided by the Act.” An appeal on the merits of an award is therefore only permissible where the parties have, in writing, expressed their intention to do so before commencement of the arbitral proceedings. It is trite and settled law that the Kenyan Court of Appeal only entertains appeals sanctioned by statute or written law.12 Recent jurisprudence emerging from Kenyan courts seems to underscore the substance of the Arbitration Act 1995 s.32A on the finality of arbitral awards.13 The court castigated the High Court for entertaining a challenge to an arbitral award in the following words: “We therefore reiterate that there is no right for any court to intervene in the arbitral process or in the award except in the situations specifically set out in the Arbitration Act or as previously agreed in advance by the parties and similarly there is no right of appeal to the High Court or Court of Appeal against an award except in the circumstances set out in Section 39 of the Arbitration Act.” In yet another decision the Court of Appeal restated the principle of the finality of arbitral awards and put it thus: “The Act, which came into operation on 2nd January, 1996, and the rules thereunder, repealed and replaced Chapter 49 Laws of Kenya, and the rules thereunder, which had governed arbitration matters since 1968. A comparison of the two pieces of legislation underscores an important message introduced by the latter Act: the finality of disputes and a severe limitation of access to courts. Sections 6, 10, 12, 15, 17, 18, 28, 35 and 39 of the Act are particularly relevant in that regard.”14 It seems to be settled by Kenyan superior courts of record that arbitral awards should be final, at least in their decisions on the merits of the disputes. This writer has argued elsewhere that judicial scrutiny of an award through challenging proceedings is not always a bad thing.15 Judicial scrutiny through challenging awards may very well give a stamp of approval to an award and the process leading thereto. It also serves as a quality assurance mechanism which keeps arbitrators in check and alert to possible questions about the process and the manner in which the arbitration was conducted and its final product—the award. So sacrosanct and important is the principle of the finality of arbitral awards and the attendant limitation on court interference to international or transnational business persons that its emphasis can also be gleaned from the standard arbitration clauses/agreements used locally and those that are popular in international arbitration. Examples abound: • The United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Arbitration art.5, from which the Kenyan Arbitration Act substantially borrows. • FIDIC standard form of contract. There seems to be statutory and jurisprudential unanimity with respect to the hallowed principle of the finality of arbitral awards, in both the domestic and the international plane. This principle lies at the heart of the choice of arbitration as the preferred mode of dispute

12 The Constitution of Kenya art.164(3) provides: “The Court of Appeal has jurisdiction to hear appeals from— a) The High Court, and Any other Court or tribunal as prescribed by an Act of Parliament” 13 The Court of Appeal in its decisions in Anne Mumbi Hinga v Victoria Njoki Gathara [2009] eKLR. 14 Kenya Shell Ltd v Kobil Petroleum Ltd [2006] eKLR. 15 See, e.g. Wilfred A. Mutubwa, “The Making of an International Arbitration Hub: A critical appraisal of the Nairobi Centre for International Arbitration Act, 2013” (2016) 82 Arbitration 135, 139.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 306 Arbitration resolution over traditional court litigation. Without it the very essence, and this most distinguishing feature, of arbitration will be lost. It is with the foregoing appreciation in mind that the next part of this paper examines the Arbitration Act 1995 ss.35 and 37 which pose an existential threat to the finality of the arbitral award.

5. Inconsistencies in the Arbitration Act 1995 ss.35 and 37 The finality of an arbitrator’s decision or award is discernible at two levels: finality which implies that no right of appeal lies; and finality on the merits of the decision or award. The Arbitration Act 1995 s.39 recognises that an appeal from the arbitrator’s decision may only lie with the agreement of parties. The appeal contemplated by s.39 applies only in questions of law in an award or decision. International arbitral awards are thereby shielded from any assault by local Kenyan courts. They are further restricted by the same provision to domestic arbitrations only. The finality of an arbitral award is subject to challenge and enforcement proceedings that an aggrieved party may take. The Arbitration Act 1995 ss.35 and 37 are instructive in this respect. Section 35 sets out the grounds upon which the High Court on application may set aside an award. An identical copy of those very same grounds is recited in s.37. In essence, there is no difference in substance between ss.35 and 37 save that s.35 refers to setting aside while s.37 refers to recognition and enforcement of the award. Section 35 is time bound and bars any application for setting aside filed three months after the date of publication of the award, while s.37 does not seem to have a time bar except for the operation of the Limitation of Actions Act (Cap.22) s.4(1)(c), which affects proceedings for the enforcement of arbitral awards.16 A careful and considered study of the Arbitration Act ss.35 and 37 reveals several potential problems with respect to the finality of arbitral awards. But first it is important to underscore how one exercises the right of setting aside an arbitral award. Under the Arbitration Act 1995 s.37(2) a party seeking to set aside an arbitral award has three months from the date of the publication of the award to apply for its setting aside. Failing this, under the Arbitration Rules 1997 r.6 (promulgated by the Chief Justice of Kenya to give effect to court intervention in arbitration matters), either party can proceed ex parte and seek the enforcement of the award.17 The enforcement proceedings under the Arbitration Act s.36 are preceded by a notice to all parties of the filing of the original or certified copies of the award and the arbitration agreement. And now to the potential problems. Note that even if a party does not challenge an award under the Act s.35, that party retains a right to challenge the award on the very same grounds during proceedings for the adoption and enforcement of the award. Yet the drafters of the Arbitration Rules 1997 r.6 were oblivious to the text of the Act s.37 which presumes that a party may object to the recognition and enforcement of an award on the basis of grounds provided therein, which grounds are identical to those under s.35. It therefore follows that enforcement proceedings under the 1997 Rules r.6 rules cannot be ex parte as the rules seem to suggest. It is also clearly possible that a party who has unsuccessfully sought the setting aside of an award under the Act s.35 has a second opportunity, at the recognition stage, to challenge the recognition and enforcement thereof, on the very same grounds, before the very same High Court. The net effect is that the latter applicant will have had an opportunity to circumvent the three-month statutory time bar for undergoing an award set out in the Arbitration Act 1995 s.35. As a result, while there is still a possibility to challenge an award

16 The Limitation of Actions Act (Cap.22) s.4(1)(c) reads: “(1) The following action may not be brought after the end of six years from the date on which the cause of action accrued— (a) Actions to enforce an award.” 17 Arbitration Rules 1997, subsidiary legislation published as Legal Notice No.581, 1997.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Consistency and Predictability versus Finality under the Kenyan Arbitration Act 307 under s.37, even after the elapse of the three months stipulated in s.35, an award cannot be said to be final or binding. Ultimately, there are glaring legislative lacunae in the framing of the Arbitration Act ss.35 and 37 along with the enabling Arbitration Rules 1997 r.6. The consequence is that the arbitrator’s decision and award are robbed of their finality. Commercial disputants may find themselves in a lengthy two-tier setting aside and challenge to litigation in court, which forum they, by electing arbitration as their preferred dispute resolution mechanism, had hoped to avoid in the first place.

6. Conclusion Unlike the UK, the Kenyan position seems to favour the need to establish Kenya as an investment and arbitration hub over the need to test awards in domestic courts and to ensure the consistency and predictability of the law. The High Court in its decision in Prof Lawrence Gumbe v Honourable Mwai Kibaki perhaps put it most aptly: “Our Section 10 is based on the United Nations Model law on arbitration and all countries who have ratified it recognise and enforce the autonomy of the arbitral process. Courts of law can only intervene in the specific areas stipulated in the act and in most cases the intervention is usually supportive and not obstructive or usurpation oriented. If the Kenyan courts refused to recognize this autonomy, we would become a pariah state and could be isolated internationally.”18 A balance in court intervention and restraint should be struck not only to check the arbitral process but also to allow it to retain its finality and expedition. Sections 35 and 37 should be reviewed to remove inconsistencies and unnecessary duplication in the court’s interference with final arbitral awards.

18 Prof Lawrence Gumbe v Honourable Mwai Kibaki [2004] eKLR.

Tim Hardy

Elina Zlatanska

1. Introduction Arbitration has progressively become the preferred method for resolving international commercial disputes. With globalisation and the development of cross-border trade, however, the disputes have grown more complex and the arbitration process has become more contentious.1 As a result, arbitrators are required to deal with multiple procedural issues on a regular basis in a quick, effective and reliable manner. Arbitration laws and rules around the world rarely provide detailed provisions for the conduct and management of the arbitration, leaving it to the arbitrators’ broad discretionary powers to devise a procedure that best suits the specific case. The broad discretion to tailor the proceedings to the particular circumstances of the case and to the needs of the parties is one of the main advantages of arbitration. However, this broad discretion is not without risk.2 Experienced practitioners have developed their own techniques for deciding important procedural matters. One of the implications of this is that those who are unaware of such procedural techniques or do not have sufficient experience to produce their own, risk making the process inefficient, cumbersome and costly by burdening it with unnecessary requests or by borrowing procedures from domestic litigation.3 In addition, errors and bad practices may in time turn into “best practices”4 which can jeopardise the system as a whole in the long run. Moreover, such a discretion can create “anxiety and discomfort”, especially in cases involving parties, counsel and arbitrators from different cultures and legal traditions who may have “conflicting expectations regarding the procedural rules to be followed”5 or who are participating in arbitration for the first time.6 In arbitration, new users, including newly qualified arbitrators and less experienced practitioners, have, by default, limited or no information about how to proceed and what to expect from the arbitration process. These concerns have prompted the arbitral community to develop instruments, such as, inter alia, guidelines, protocols and practice notes, to assist parties and arbitrators in organising the arbitral proceedings and/or to provide guidance in areas where problems with cost and inefficiency were most obvious and where “repeat-offender trouble spots”

1 David Rivkin, “21st Century Arbitration Worthy of Its Name” in Robert Briner et al. (eds), Law of International Business and Dispute Settlement in the 21st Century—Liber Amicorum Karl-Heinz Böckstiegel (Cologne: Heymanns, 2001), pp.661–669. 2 William W. Park, “Arbitration’s Protean Nature: The Value of Rules and the Risks of Discretion” (2003) 19(3) Arbitration International 283. 3 Hans van Hoote, “Arbitration Guidelines: Straitjacket or Compass” in Kaj Hobér, Annette Magnusson and Marie Öhrströmp (eds), Between East and West: Essays in Honour of Ulf Franke (Huntington, NY: Juris, 2010), p.518. 4 Michael Schneider, “Essential Guidelines for the Preparation of Guidelines, Directives, Notes, Protocols and Other Methods Intended to Help International Arbitration Practitioners” in Laurent Levy and Yves Derains (eds), Liber Amicorum en l’honneur de Serge Lazareff (Paris: Pedone, 2011), p.564. 5 Steven Nelson, “Alternatives to Litigation” (1989) 23 The International Lawyer 189. 6 Park, “Arbitration’s Protean Nature: The Value of Rules and the Risks of Discretion” (2003) 19(3) Arbitration International 283, 286–287.

308 (2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators CIArb Arbitration Practice Guidelines: An Overview 309 occur.7 The number of these instruments has proliferated in the past decade.8 However, they are typically designed to clarify and support specific arbitration rules9 or are limited to particular problems.10 As the first learned society in the world to be devoted to education and training in the field of “modern arbitration”,11 CIArb plays a unique role in furthering the profession and in encouraging and facilitating the use of arbitration.12 It has a long-standing history in promoting best practices in the field and offering guidance through research and scholarly publications. This article briefly examines the origin of CIArb’s Arbitration Guidelines and explains the main reasons for their revision. It also provides a general description of the drafting process and a summary of the main amendments of the recently revised Guidelines.

2. The origin of CIArb’s Arbitration Practice Guidelines A guideline of good practice for arbitrators was first published in the CIArb’s journal, Arbitration, in 1991. It states that “an arbitrator should be impartial, independent, competent, diligent and discreet” and provides that an arbitrator should act only when “he is fully satisfied that he is able to discharge his duties without bias or the appearance of bias; that he is competent to determine the issues in dispute and has an adequate knowledge of the language of the arbitration; that he is able to give to the arbitration the time and attention which the parties are reasonably entitled to expect”.13 In 1997 CIArb set up an Arbitration Practice Sub-committee to develop guidelines to provide guidance to arbitrators on how to exercise their powers under the new English Arbitration Act 1996. The aim of the guidelines was “to set out, in non-legal terms and from an objective point of view,” the factors that arbitrators should bear in mind when dealing with a number of procedural issues in order to help them focus on “the more important factors for consideration”.14 The first guideline issued by the Arbitration Practice Sub-committee under the chairmanship of Julian D.M. Lew dealt with applications for security for costs. It was followed by a guideline on applications for provisional relief.15 By 2004 a series of guidelines were produced addressing a wide range of issues, including negotiating terms of remuneration, responding to jurisdictional challenges, conducting arbitrations and making awards in default proceedings, to name just a few. Over the next few years, new guidelines have been added to cover arbitration practices in countries other than the UK. The aim was to include guidance on the laws of the main arbitration centres

7 William W. Park, “The Procedural Soft Law in International Arbitration: Non-Governmental Instruments” in Julian D.M. Lew and Loukas A. Mistelis (eds), Pervasive Problems in International Arbitration (Alphen aan den Rijn: Kluwer Law International, 2006), p.149. 8 See generally Paula Hodges, “The Proliferation of ‘Soft Laws’ in International Arbitration: Time to Draw the Line?” (2015) Austrian Yearbook on International Arbitration 205. 9 See, e.g. HKIAC Practice Notes, http://www.hkiac.org/arbitration/rules-practice-notes; LCIA Guidance Notes, http://www.lcia.org/adr-services/guidance-notes.aspx; and the 2017 SCC Arbitration Rules, http://sccinstitute.com /media/168084/arbitration-rules_eng_17_final.pdf [Accessed 13 June 2017]. 10 See, e.g. the IBA Guidelines for Drafting International Arbitration Clauses (2010); the IBA Rules on the Taking of Evidence in International Arbitration (2010); the IBA Guidelines on Conflicts of Interest in International Arbitration (2014); and the IBA Guidelines on Party Representation in International Arbitration (2013), www.ibanet.org /Publications [Accessed 13 June 2017]. 11 Julio César Betancourt, “The Chartered Institute of Arbitrators (1915–2015): The First 100 Years” (2015) 81(4) International Journal of Arbitration, Mediation and Dispute Management, https://ssrn.com/abstract=2679371 [Accessed 13 June 2017]. 12 It is important to note that CIArb’s role is not limited to arbitration only as it promotes and facilitates the use of various alternative dispute resolution (ADR) mechanisms. For a general overview of the most commonly practised forms of ADR, see Jason A. Crook “What Is Alternative Dispute Resolution (ADR)?” in Julio César Betancourt (ed.), What is Alternative Dispute Resolution (ADR)? (London: CIArb, 2010). 13 “Guidelines of good practice for arbitrators” (1991) 57 Arbitration 81. 14 Julian D.M. Lew, “Introduction to the work of the Arbitration Practice Sub-Committee” (1997) 63 Arbitration 166. 15 Lew, “Introduction to the work of the Arbitration Practice Sub-Committee” (1997) 63 Arbitration 166–167.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 310 Arbitration of the world16 and the most commonly used arbitration rules, including, inter alia, the United Nations Commission on International Trade Law (UNCITRAL) and the International Chamber of Commerce (ICC) rules.

3. Revision of the Guidelines Since the last review in 2011, the field of international commercial arbitration has continued to evolve rapidly. At the same time, the ever-increasing desire for promoting certainty and uniformity in the treatment of procedural issues and the need for providing effective, expeditious and fair resolution of international commercial disputes have prompted the CIArb’s Practice and Standards Committee (PSC), charged with developing and promoting best practice,17 to undertake a wholesale review and redrafting of the 18 existing arbitration guidelines. The underlying objective of the revision was to produce guidelines which can be used by arbitrators sitting anywhere in the world and to ensure that they reflect the latest trends and developments. For these purposes, the PSC decided to redraft the guidelines in such a way as to set out the best international practices with respect to the matters discussed and not to state the law of any particular jurisdiction and the rules of any particular institution.18

4. Review process Preliminary research was carried out on a number of topics in order to trace the latest developments in the international arbitration field and to distil current international practices. The Committee also studied the work done by other arbitral institutions and international organisations. Case law and published arbitral awards were consulted with the aim of drawing general conclusions based on recurring practices and situations across different jurisdictions. In addition, authoritative commentaries and guides were consulted in order to clarify the practices in use in different jurisdictions and examine the views of prominent arbitration practitioners. To ensure that views from around the globe have been taken into account, each guideline has also been peer reviewed by practitioners and academics from CIArb’s international branches and teaching faculty who come from different jurisdictions and represent diverse legal traditions and cultures. In addition, the revised guidelines have been presented at various conferences to seek further input from users.19 General feedback and suggestions for corrections and improvement received through these forums were gathered and taken account of.

16 The Guidelines sought to cover practices in France, Switzerland, the US, Australia, Hong Kong, among others, as well as, more generally, under the UNCITRAL Model Law. 17 For current members of the PSC and the scope of its work, see http://www.ciarb.org/about/governance/standing -committees/practice-standards-committee [Accessed 13 June 2017]. 18 This is in line with what Hans van Houtte once termed “true guidelines”. He advocates that guidelines in international arbitration should “only be drafted on matters where the arbitration community needs guidance”, should be flexible enough to avoid becoming “straitjackets for the arbitration process” and should “reflect true transnational standards”, see Hans van Houtte, “Arbitration Guidelines: Straitjacket or Compass” in Kaj Hober et al., Between East and West: Essays in Honour of Ulf Franke (Huntington NY: JurisNet, 2010), p.528. 19 The first set of revised Guidelines comprising: (1) Guideline on Applications for Interim Measures; (2) Guideline on Applications for Security for Costs; and (3) Guideline on Jurisdictional Challenges was launched at the Singapore Centenary Conference, 3–4 September 2015. They were also subsequently presented in London at a CIArb-Maitland Chambers Panel Debate. For a transcript of the debate, see Julio César Betancourt, Tim Hardy, Simon Nesbitt QC and Paul Klaas, “International Arbitration Guidelines: Safe Ports for Arbitral Storms” (2016) 82 Arbitration 169–182, https://ssrn.com/abstract=2755669 [Accessed 13 June 2017].

5. Main amendments There is only one guideline per topic, unlike the previous tri-partite versions (English, international and UNCITRAL). Any references to the laws of particular jurisdictions and the rules of particular institutions as well as interpretation of case law are excluded from the revised guidelines. Some of the topics of the existing guidelines have been merged into a single guideline and new guidelines and topics have been added. Moreover, the guidelines have been organised to cover various aspects that occur before the formation of the arbitral tribunal, during the arbitral proceedings and at the end of the arbitration. For the purposes of consistency and uniformity, each guideline starts with an introduction setting out its scope, followed by a preamble which explains the reasons for choosing a given subject. Each guideline has been divided into articles stating general principles accompanied by commentaries. Endnotes have been included to provide the reader with additional information on a particular issue. It is important to bear in mind that the Guidelines are designed for international commercial arbitrations although the principles and standards are equally applicable in domestic arbitrations. The Guidelines are not prescriptive and do not contain any legal or professional advice. Rather, they contain suggestions and recommendations that can be used to promote consistent decision-making. They shall not be treated as binding upon the parties or the arbitral tribunal and therefore non-compliance shall not be sanctioned or interpreted as a ground for the setting aside of any award.

6. List of revised Guidelines The Guidelines cover various situations which commonly arise in practice. They are available at the Institute’s website20 and can be downloaded for free. More specifically, in the past 24 months, the PSC has revised and published updated Guidelines on: • Interviewing Prospective Arbitrators • Terms of Appointment and Remuneration • Jurisdictional Challenges • Applications for Interim Measures • Applications for Security for Costs • Documents-only Arbitration Procedures • Party Non-Participation • Drafting Arbitral Awards Part I—General • Drafting Arbitral Awards, Part II—Interest • Drafting Arbitral Awards, Part III—Costs Further Guidelines on experts including tribunal-appointed experts; managing arbitrations and procedural orders; multi-party arbitrations and the use of ADR are to be published in the coming months.

7. Conclusion Recent developments suggest a positive trend towards promoting uniformity in the conduct of arbitrations to make the process more predictable, effective and expeditious.21 By bringing

20 The revised Guidelines can be accessed at https://www.ciarb.org/guidelines-and-ethics/guidelines/practice -guidelines-protocols-and-rules [Accessed 13 June 2017]. 21 Denis Brock and Laura Feldman, “Recent Trends in the Conduct of Arbitrations” (2013) 30(2) Journal of International Arbitration 179–181 and Dipen Sabharwal and Rebecca Zaman, “Vive la difference? Convergence and Conformity in the Rules Reforms of Arbitral Institutions: The Case of the LCIA Rules 2014” (2014) 31(6) Journal of International Arbitration 701.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 312 Arbitration a common approach to the issues that most frequently come before arbitrators, the CIArb’s revised Guidelines could help the arbitration community achieve these objectives. The Guidelines will serve as a useful companion for all those who get involved in international commercial arbitrations, regardless of whether they are newcomers or experienced practitioners. They are living and breathing documents that are constantly improved and updated to accommodate changes in the law and practice. Comments from users are welcome and can be sent to [email protected].

Derek Roebuck

“I wish my performance to be looked on like the bee’s industry; as honey will not lose its taste, or virtue, by reflecting that the insect was only a collector, not author, of its sweetness.” Wyndham Beawes1

1. Introduction In his keynote address on party-appointed arbitrators at the Malaysia Branch’s Inaugural Presidential Lecture,2 Sundaresh Menon CJ graced his introduction with historical references to Ancient Greece and early 17th-century England and France. He understandably had no time for more: “From the Renaissance we can move quickly to the nineteenth-century Alabama Claims”. But there is much more to be said about the practice of parties choosing their own arbitrators, and a knowledge of the practice in England from 1600 to 1800 may prevent false assumptions getting in the way of finding solutions to problems of the present day. In “Odds or Evens: How Many Arbitrators?”3 I wrote: “An odd number seems to us to have such obvious advantages that we take it for granted that parties would always and naturally have preferred it. Yet in England, at the latest from when a state legal system can first be seen to be well established until modern times, that has not been so. The research, which has not gone beyond 1714, has so far not shown when the change took place.” That article was concerned with the phenomenon of even numbers. This considers its significance in the history of party-appointed arbitrators. Our recent research allows us to describe developments from 1700 to 1800 and to show how the old practice died away and the modern took its place.4

2. What was arbitration? In the eighteenth century “arbitrament” and later “arbitration” were freely used to encompass the whole process of dispute resolution, including mediation, as the third parties strove to find a solution. The first English monographs devoted to the law of arbitration were: Matthew Bacon, Compleat Arbitrator (1731), Stewart Kyd, Law of Awards (1791) and John Wilson, Short Treatise (1792). In 1751 Wyndham Beawes published his compendium of mercantile practice Lex Mercatoria Rediviva. Bacon and Kyd were barristers, Wilson a country solicitor and Beawes a merchant. All of them attempted a description of what arbitration was, rather than a scientific definition.

1 Wyndham Beawes, Lex Mercatoria Rediviva or the merchant’s directory: being a compleat guide to all men in business (London, 1752), Preface. 2 Sundaresh Menon, “Adjudicator, Advocate, or Something in Between? Coming to Terms with the Role of the Party-Appointed Arbitrator” (2017) 83 Arbitration 185. 3 Derek Roebuck, “Odds or Evens: How Many Arbitrators?” (2014) 80 Arbitration 8, 9. 4 Derek Roebuck and Francis Calvert Boorman, Arbitration and Mediation in the Eighteenth Century (forthcoming 2018).

Matthew Bacon’s was a poor effort5: “Arbitrament (Arbitrium, Laudum, Compromissum), or an Award, is the determination of two or more persons, at the request of two parties at least”. That was quite wrong. There had never been any problem with having a single arbitrator, but it shows the strength of assumptions at that time. The solicitor John Wilson, 42 years later, made no such mistake, “Arbitration is the order or determination of one or more person or persons, mutually chosen by parties in variance as judges to decide on the matters in controversy”.6 Stewart Kyd’s definition was drawn from a Civil Law source, Jean Domat.7 Nevertheless, he must have thought that it represented English reality in 1791: “That act by which parties refer any matter in difference between them to the decision of a third person is called a submission; the person to whom the reference is made, an arbitrator.” No room there for more than one, but Kyd recognised the difference between law and practice. Though arbitrators were not agents of those who appointed them, the common practice was still for each side to appoint one or two, whom they expected to argue their part. Nevertheless, times were changing: “It is highly improper, however common it may be, for a person nominated as an arbitrator to consider himself the agent of the person on whose behalf he was nominated”.8 Surprisingly little is known of Wyndham Beawes, not even the years of his birth and death, and he has no place in the Oxford Dictionary of National Biography. He was listed in trade directories as a merchant in the City, with an address in Bread Street Hill from 1738 until 1740, when he moved to Token House Yard; he was still there in 1745.9 The title page of his Lex Mercatoria Rediviva10 declares that he acted as British Consul in Seville and St Lucar (now Sanlucar de Barrameda in Cadiz Province); but he went bankrupt in 1748.11 It has fallen to Beawes to explain expressly what the primary sources show only inferentially: “It has been a custom to chuse two, one by each of the contending parties, with a liberty for them to chuse an umpire in case of disagreement, but as this method has on many occasions exposed the arbitrators to some disgusts, from those whose differences they were labouring to reconcile, it has been a practice for some time past to nominate three in the bonds, by which means their different opinions remain secret, and consequently unknown to the concerned, who are too apt to reflect ungenerously on a determination which will naturally differ from the opinion at least of one of the parties, and excite in an uncandid manner a censure, where at least their thanks are due.”12 The change in number must have accompanied different expectations: the parties no longer wanted their appointees to act as their advocates, at least not overtly. It is worth noting Beawes’s assumption that the function of arbitrators was to “labour to reconcile” the parties.

5 By a Gentleman of the Middle-Temple, The Compleat Arbitrator; or the Law of Awards and Arbitraments … (London: Worrall, 1731, reprinted Clark, NJ: The Lawbook Exchange, 2009 with new introduction by Derek Roebuck). 6 John Wilson, A Short Treatise on the Law Relative to Arbitration (Hull: printed for the publisher, 1792), p.1. 7 Jean Domat, Les Lois Civiles dans leur Ordre Naturel (Paris: Coignard, 3 Vols, 1689–1694). 8 Domat, Les Lois Civiles dans leur Ordre Naturel (1689–1694), p.75. 9 He was taxed in the Broad Street Ward in 1735; LMA MS 11316 vol.108; The Intelligencer or, Merchant’s Assistant (London, 1738); J. Osborn, A Compleat Guide to All Persons Who Have Any Trade or Concerns Within the City of London, and Parts Adjacent (London, 1740); The Universal Pocket Companion 5th edn (London, 1745). All this information comes from Dr Boorman’s original research. 10 Wyndham Beawes, Lex Mercatoria Rediviva … (London, 1752). In England by this time the Latin adjective redivivus had come to mean “restored to life”, Derek Roebuck, Arbitration and Mediation in 17th-Century England (Oxford: Holo Books: The Arbitration Press, 2017), pp.25–26; as in Arbitrium Redivivum or the Law of Arbitration … (London: Isaac Cleeve, 1694, “by the Author of Regula Placitandi). 11 The Gentleman’s Magazine (18) 1748 93. 12 Beawes, Lex Mercatoria Rediviva … (1752), p.341.

3. The practice The practice of appointing an even number had prevailed at all levels and in all kinds of dispute. The Government, through the Privy Council, had preferred an even number.13 For example, in 1613 it had commissioned Sir Ferdinando Gorges, Governor of the fort of Plymouth and famous as an early coloniser in North America, and Sir Christopher Harris of Plympton, a town five miles from Plymouth, to resolve a dispute between Pasco Peperill and the Mayor and Commonalty of Plymouth.14 Of course, they were not party appointed, but the Council would allow a party to object to an appointment for sufficient reason. The immemorial practice prevailed into the 18th century. The parties themselves, and sometimes the Government through the Privy Council, and courts from the highest full court of King’s Bench to the lowest individual magistrate, appointed an equal number of arbitrators. Each side would choose one or two. Together they would first try to mediate a settlement if they could. That, not adjudication, was almost always their first objective. If it failed, they would try to identify precisely what separated the parties and provide a procedure for its adjudication, appointing themselves or others to do it. Just one or two well-documented examples must suffice as evidence of the widespread practice of using party-appointed arbitrators in all kinds of dispute. Hundreds similar will be reviewed in Arbitration and Mediation in the Eighteenth Century.

Private arbitration Thomas Turner was born in 1729. He became a general merchant and much else in the village of East Hoathly, just out of Lewes in Sussex, including parish officer and overseer of the poor. He kept a diary from 1754 to 1765, in which he recorded the menu of every meal he ate, at home or away. At least once a week he bemoaned his drunkenness. He insisted he had a light head and that just a glass or two was enough to turn it, but the details show how much he spent and the hours he devoted to tippling. On 4 October 1759 Turner recorded that he had been appointed arbitrator in a dispute about a swarm of bees. Master Bull, with a little boy, had found the swarm on a tree in the grounds of the manor house, Halland Park. They sent a message up to the house to ask if they might take the swarm. A messenger came back to say that Samuel Gibbs the gamekeeper had given his consent. So they took the swarm. But the messenger had for some unknown reason been lying. No consent had ever been asked or given. When he found out, Gibbs put the matter in the hands of an attorney. It was agreed that the dispute be submitted to Turner, arbitrator appointed by the defendants, and John Goldsmith, clerk to the steward of the manor, appointed by Gibbs. They awarded that the defendants should each pay 2s 6d for the honey and wax, and 1s each for the lawyer’s letter. Gibbs admitted that the defendants were poor and honest and had been understandably misled, but insisted on the payment. Then, having asserted his authority, he spent the money on a party for them.

Quarter sessions From the City of London quarter sessions comes ample evidence of the use of arbitration, for example this from Guildhall, 4 November 1732, appointing working-class arbitrators: “The defendants being tried on an indictment at the Guildhall of the City of London on 17 October last and found guilty …, and an action at law being likewise brought against them by the prosecutor, it was recommended by the court and agreed unto by the prosecutor and defendants that all matters in difference between them should be

13 J.R. Dasent et al. (eds), Acts of the Privy Council of England New Series (London: HMSO, 32 Vols, 1890–1964) [APC] 34 270 (3). 14 APC 33.49.

determined by Robert Horne, baker, and John Penkethman, bricklayer; and in case the arbitrators should not agree that then a third person should be indifferently chosen and agreed upon by them whose award should be final.” The arbitrators were to be a baker and a bricklayer. They had been chosen by the parties, with the authority of the court to end not only the civil matter but the criminal prosecution.

Middlesex sessions The records of the Middlesex quarter sessions often refer to magistrates making use of arbitration. An entry of 10 December 1726 preserves an affidavit of Robert Theodorick, feltmaker “that on Tuesday last the prosecutor William Atkins appeared to this deponent (being friend to both parties) and desired that the matter in difference might be referred to two persons in order to agree the same. Upon which this deponent obtained a reference and was himself chosen arbitrator on the defendant’s behalf. And, though he and the arbitrator on the other side treated about the matter till late on Wednesday evening, yet could come to no agreement.” The parties might then incorporate their acceptance of the award in a deed15: “Whereas at the instance of the parties with the consent of their counsel and solicitors the court ordered that all matters in difference between the parties… be submitted to the determination and arbitrament of Titus Taylor, carpenter, and Thomas Long, baker.” Not only the parties there were working class but also the arbitrators. But it was not unusual for a single arbitrator to be preferred, or an odd number. On 20 October 1784 William Gymer, arbitrator, swore that he had made an award by consent of both parties: “seeing no sufficient cause for the commencement of this prosecution, he by his award directed that each of the parties should pay their own costs and that all matters in difference should cease”. In John Wright v John Stickdall it was recorded16: “All matters in difference between the parties was last term by an order of the Court of King’s Bench referred to the arbitration of Henry Damass of the Inner Temple Esq, who has made his award”. An affidavit of 30 October 1789 in R. v Bush on charges of riot and assault shows a submission to three17: “This deponent saith that on Wednesday 21 instant at the request of Daniel Osborn, one of the prosecutors, he went to the Black Horse in Field Gate Street Whitechapel in company with the other deponent James Turner, with Robert Bood, timber merchant, John Bassett, poulterer, and James Morrison, gentleman, as arbitrators, to settle and put an end to the above prosecutions.” Not all observers approved of submitting criminal matters to ordinary men. Edmund Burke, the Irish outsider, ever anxious to show he was even more conservative than his “well-born” fellow Whig MPs, ranted in the House18: “The Justices of Middlesex were generally the scum of the earth, carpenters, brick-makers and shoe-makers, some of whom were notoriously men of such infamous

15 12 April 1774 MSSP LMSMPS506390100. 16 LMSMPS509510025. 17 LMSMPS508500119. 18 The Parliamentary History of England, 1780–1781 (London: Hansard, 1814), Vol.21, p.592.

characters that they were unworthy of any employ whatever; and others so ignorant that they could scarcely write their own names.”

4. Relevance for now Modern attention to problems raised by party-appointed arbitrators has been in the context of international commercial arbitration (ICA).19 The function of ICA is to provide a means of adjudicating a dispute which a party does not believe would be satisfactorily decided by a court in the jurisdiction it would otherwise fall into. Many of those involved in that process would not consider it proper for any ICA arbitrator to attempt to reconcile the parties through any form of mediation. Parties to ICA are deemed to have chosen it freely. They need not have entered into the contract with the ICA arbitration clause if they had not wanted to. That is so, whether the contract is on an institutional form or ad hoc. In most cases, at least in theory, they could have bypassed ICA and chosen a process which appropriately incorporated each side’s own mediators or arbitrators. Perhaps counterintuitively then, the lesson to be learned from the centuries-long tradition, of English parties preferring a process which relied on party-appointed mediator-arbitrators, is that there is no room for them in ICA, or indeed in any quasi-judicial process. Party-appointed arbitrators would then be left to perform their proper function, perhaps with new names taken from the cultures and languages in which they are to perform. It has been suggested that those cultural differences are determined by geography, or with even less scientific rigour, race. The reality is shown by the English experience. It is replicated wherever there are communities in which the prevailing ideology prefers disputes to be settled rather than adjudicated. Some process of mediation/arbitration will be adopted, in which the arbitrators use every means they can to produce an acceptable outcome, acceptable by the parties and the community. Then we may all the better heed the wise words of Menon CJ: “The challenge for us is to think about how best to accommodate this reality against the backdrop of the growing diversity of arbitration users and the modern commercial pressures … so that we preserve the integrity and efficacy of the arbitration process.”20

19 There is an enormous literature: V.V. Veeder, “The Historical Keystone to International Arbitration: The Party-Appointed Arbitrator from Miami to Geneva” (2013) 107 Proceedings of the American Society of International Law 387. 20 Sundaresh Menon, “Adjudicator, Advocate, or Something in Between? Coming to Terms with the Role of the Party-Appointed Arbitrator” (2017) 83 Arbitration 185, 195.

CIArb’s New Arbitration Guidelines: Safe Ports for Arbitral Storms II1

Tim Hardy

Simon Nesbitt

Paul Klaas

Tim Hardy. Good evening, ladies and gentlemen. Welcome to the Maitland Chambers and Chartered Institute of Arbitrators (CIArb) panel debate “Safe Ports for Arbitral Storms, Part II”. We call it “Part II” because we held our first debate last year, and we have the same tribunal appointed this year to deal with some additional arbitral storms.2 Let me introduce the members of the tribunal. Simon Nesbitt QC is an arbitrator and arbitration counsel. He is a Fellow of the Chartered Institute of Arbitrators and has been involved in numerous international arbitrations under all of the major institutional rules including the ICC, LCIA, SIAC, SCC, HKIAC and ICSID rules for clients from a wide range of industry sectors. Before moving to the Bar and joining Maitland Chambers, Simon was Global Co-Head of International Arbitration at Hogan Lovells. He originally qualified as a solicitor in England in 1994 and was admitted as an avocat à la cour in France in 1997. In 2015, he was one of only five solicitors to be appointed Queen’s Counsel. Paul Klaas is dual-qualified as an English barrister and as a member of the Minnesota (USA) bar. He is a Fellow of the Chartered Institute of Arbitrators, a Fellow of the College of Commercial Arbitrators, and a Fellow of the American College of Trial Lawyers. Paul has served as chair, wing, and sole arbitrator and as lead advocate in multiple LCIA, ICC, ICDR, AAA, JAMS, other institutional, industry, and ad hoc arbitrations since the 1980s, and he has taught the international commercial arbitration courses at the Harvard Law School and the University of Minnesota Law School. After 30+ years as a partner at Dorsey & Whitney where he chaired the firm’s international practice and headed the firm’s London office, Paul joined Maitland Chambers and now serves exclusively as arbitrator and mediator. I am Tim Hardy, partner at CMS, and also chair of the CIArb’s Practice and Standards Committee (PSC).3 The PSC has been reviewing and updating its Practice Guidelines for arbitrators in the last 18 months. The Committee has been assisted by Elina Zlatanska, who is sitting in the audience, a Research Fellow provided by the CIArb. The Guidelines are intended to be “cradle to grave” guidelines for arbitrators on the many arbitral storms they will encounter along the way.4 Tonight, we are going to look at five of the Guidelines which have been published within the last six months: (1) Interviewing for Prospective Arbitrators; (2) Party Non-participation, (3) Drafting Awards; (4) Interest; and (5) Costs. We are going to run this evening by reference to a case study which Paul will

1 The transcript of a debate held at Maitland Chambers, London on 13 October 2016. 2 For a transcript of the previous debate held on 22 October 2015, see Julio Cesar Betancourt, Tim Hardy, Simon Nesbitt QC and Paul Klaas, “International Arbitration Guidelines: Safe Ports for Arbitral Storms” (2016) 82 Arbitration 169–182. The transcript can also be downloaded from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2755669 [Accessed 14 May 2017]. 3 The PSC oversees the development and promotion of best practice through policy development, research and guidance in the main disciplines of private dispute resolution (i.e. arbitration, mediation and adjudication), http://www .ciarb.org/about/governance/standing-committees [Accessed 14 May 2017]. 4 For a full list of the Guidelines, please visit http://www.ciarb.org/guidelines-and-ethics/guidelines/practice -guidelines-protocols-and-rules [Accessed 14 May 2017].

318 (2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators CIArb’s New Arbitration Guidelines: Safe Ports for Arbitral Storms II 319 explain to us. Then, having created and discussed various storms, we will look at the Guidelines and see how they help to resolve the issues raised. The Guidelines are written from the perspective of “What should an arbitrator do?” at various stages faced with various problems. But they are equally valuable to students, to practitioners and, of course, to arbitrators. I know there are in the audience some students who have used them; some practitioners who have used them; and some arbitrators who have used them. I do also know that very senior arbitrators have very kindly referred to the Guidelines when they are faced with a problem to remind themselves where they have to go. I commend all of the Guidelines to you. Paul Klaas. The first Guideline we are going to look at is “Interviewing for Prospective Arbitrators”. We propose to illustrate that Guideline by asking all of you to interview a prospective arbitrator—Simon Nesbitt QC—in the context of the following case: We all represent Ms Wood. Ms Wood sold a gem to Mr Boynton. Mr Boynton is a jeweller. Ms Wood came to Mr Boynton and said, “I understand that this gem is a topaz.” Mr Boynton took a look at it and said “Yes, it could be a topaz. I will give you £25 for it” at which point an oral contract was entered into. Mr Boynton gave £25 to Ms Wood, and she delivered the gem to Mr Boynton. The gem turned out to be a diamond worth about £1 million. The only provisions of the contract are (1) the price, (2) Wisconsin law applies and (3) any and all disputes arising from the transaction are to be arbitrated. You, as Ms Wood’s counsel, are thinking of appointing Simon Nesbitt QC as your party-appointed arbitrator. So, let’s interview Simon. Who has a question? Audience 1. Are you familiar with the law of Wisconsin? Simon Nesbitt QC. I have not dealt with any cases under the law of Wisconsin but like most arbitrators I have dealt with many different laws, including laws of other US states such as New York, Texas, and Delaware. Audience 2. Are you familiar with either of the two parties? Simon Nesbitt QC. No, I do not know either of them. Audience 3. Do you have experience of cases in contracts of this type? Simon Nesbitt QC. I have encountered issues of mistake. Audience 4. Is this a consumer arbitration and are you specifically qualified as a consumer arbitrator? Simon Nesbitt QC. It is not for me to say whether it is a consumer arbitration. I do not know enough about the parties to answer that question. Audience 5. What do you know about jewellery? Simon Nesbitt QC. I know that a topaz is different from a diamond. I know nothing about the gemstone industry or the chemical constituent elements of any sort of gemstone. Audience 6. What is your availability? Simon Nesbitt QC. I have good availability over the next 12 to 18 months. Audience 7. How many arbitrations are you currently involved in as chair, sole, wing? Simon Nesbitt QC. I am sitting in about a dozen arbitrations at the moment; three as chair, four as sole arbitrator, and as co-arbitrator in the remainder. Audience 8. What is the earliest date that you are available for a hearing? Simon Nesbitt QC. That would depend upon how long the hearing is going to be. I could easily accommodate a one week hearing during the next 12 to 18 months with reasonable flexibility. Audience 9. What are your fees? Simon Nesbitt QC. If it is an institutional arbitration, those would be set by the institution. If it is an ad hoc arbitration, I charge on an hourly rate basis of 100 groats per hour. Paul Klaas. So, colleagues, are you getting to what you really, really want to know about Simon Nesbitt QC yet? Audience 10. Have you ever had an award challenged? Simon Nesbitt QC. No. Audience 11. How many outstanding awards do you have?

Simon Nesbitt QC. You mean where the hearing has been concluded and the award is still in process? I’d say less than 5. Audience 12. Do you issue your awards on time, or do you need to apply for extensions? Simon Nesbitt QC. I always issue them on time. Never apply for extensions. Audience 13. Are you free of conflict of interest according to the IBA Guidelines on Conflicts of Interest? Simon Nesbitt QC. Yes. Paul Klaas. Colleagues, have you found out what you really want to know yet? [Silence] Simon Nesbitt QC. All the questions have been very appropriate so far! [Laughter] Tim Hardy. You are making my job much easier and I am very happy with that. Simon Nesbitt QC. If you would like to ask any inappropriate questions, please go ahead. Audience 14. Have you ever considered a case of mutual mistake of fact? Simon Nesbitt QC. Yes, I have. Audience 14. How many times? Simon Nesbitt QC. Three or four. Audience 14. Can you give me the names of the awards and the parties? Simon Nesbitt QC. No, I cannot. They are not public. Audience 14. What was the outcome in those cases? Simon Nesbitt QC. I do not think that I can answer that question. Audience 14. Even without giving any names? Simon Nesbitt QC. No. Paul Klaas. Simon, have you ever met a jeweller who did not know a topaz from a diamond? Simon Nesbitt QC. I do not know any jewellers. Paul Klaas. Do you have any experience with cases that appeared to be mutual mistake but turned out to be a fraud? Simon Nesbitt QC. Hmmm. [Laughter] Tim Hardy. Let us have a quick look at the Guideline and see what help it gives us to decide whether the questions were appropriate or not. A good place to start is Article 1, paragraph 1, on page 3 “Subject to the caveats detailed in this Guideline, arbitrators may agree to be interviewed by a party prior to an appointment as part of the selection process. The mere fact that a prospective arbitrator had been interviewed by one of the parties only, prior to an appointment, should not, of itself, be a ground for challenge.” So far you have not done anything wrong. If you turn to page 4, commentary on Article 1, the last sentence says, “However, since a conversation exceeding the appropriate scope could be a ground for challenge, prospective arbitrators should take great care to avoid any aspect of the interview providing grounds for challenge.” The next thing I would draw to your attention is that the Guideline suggests on page 6 at the bottom, “Before accepting a request for an interview, prospective arbitrators should agree in advance the limits of the interview with the interviewing party. The place, the timing, the names and roles of the participants and the scope of matters to be discussed should be set out in an agenda exchanged before the interview takes place.” That would assist the arbitrator resist any inappropriate questions, should they be raised. Under paragraph b, on top of page 7, it is suggested that this Guideline itself may by agreement serve as the basis upon which interviews are to be conducted. In that way again, arbitrators, who familiarise themselves with the Guideline before the interview, would have protections built in to help them. You will see on the next couple of pages discussion of issues that should be dealt with in any protocol you agree such as the nature and place of interview, interviewing team, duration of the interview, reimbursement, whether the fact of the interview should be disclosed, and taking notes and recording the interview. It is

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators CIArb’s New Arbitration Guidelines: Safe Ports for Arbitral Storms II 321 important to mention that the previous version of this Guideline had recommended recording the interview and providing a transcript to the opposing party. We have removed this from the revised Guideline because that practice was followed, hardly ever, if at all. The interviewing of arbitrators is still relatively rare here, but I would say it is becoming more common. It is already common in some jurisdictions. In making these assertions I am relying particularly on a couple of surveys which have been done, one by Queen Mary University of London5 and one by a group of lawyers in Sweden who did a survey of practitioners in Sweden and the United States just to see what was going on.6 The survey showed that in the US interviewing arbitrators is pretty common, so much so that lawyers there did not consider it necessary to disclose that an interview has taken place. In Sweden, where the lawyers are less familiar with the practice, they were more inclined to disclose the fact that an interview has taken place but not the actual detail of the interview. That said, however, the Guideline recommends that if you accept a request to participate in an interview, you should make your own note of the interview, as an arbitrator, in case there is later a challenge so you have a record that demonstrates that nothing inappropriate took place. There is a handy list of the matters that can be discussed with a prospective arbitrator in Article 2, on page 9. For example, it is fine to discuss past experience in arbitrations and attitudes to general conduct of arbitral proceedings. This evening, we had lots of questions from the audience about experience of this particular type of dispute, consumer disputes, mistake of fact, but nothing about attitudes to arbitration. There were some questions about speed of arbitration, how quickly Simon produces awards, whether he produces his awards on time and Simon is nodding to confirm that he does, again, as if we were in doubt. [Laughter] There were also some questions on the second issue—expertise in the subject matter—that is permissible. Availability—including expected timetable of the proceedings and the expected dates of the hearing—we did not get into that in detail but such enquiries are permitted. I would like now to draw your attention to Article 3 where we have matters that should not be discussed. Again we have a handy list of matters that should not be discussed: specific facts or circumstances of the case, the positions or arguments of the parties, the merits of the case and/or the prospective arbitrator’s views on the merits, parties’ arguments and/or claims. Simon did not offer any inappropriate answers, even when Paul began asking him inappropriate questions. Simon Nesbitt QC. Paul intentionally tried to cross the line with his question “Have you ever dealt with a case which is basically a fraud masquerading as a mistake of fact case?” Why did you feel that that one crossed the line, Paul? Paul Klaas. Well, it is in the form of a question but it is still an argument. Simon Nesbitt QC. Yes, I agree. Tim Hardy. This gives you a flavour what is in the Guideline and gives you some guidance as to interviewing prospective arbitrators, I hope. To move the debate forward to the next Guideline we’re discussing this evening, Simon will set the scene. Simon Nesbitt QC. We are now moving on to look at the newly revised Guideline on Party Non-participation. Just to set the scene, we are sticking with the Wood v Boynton case study, which incidentally, is a real Wisconsin case from 1885.7 Although I think that Paul updated the monetary values somewhat to the present day.

5 Queen Mary University of London and White & Case LLP, 2012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process (London: Queen Mary University of London and White & Case LLP, 2012), pp.6–9. 6 Niklas Elofsson, “Ex Parte Interviews of Party-Appointed Arbitrator Candidates: A Study Based on the Views of Counsel and Arbitrators in Sweden and the United States” (2013) 30(4) Journal of International Arbitration 381–405. 7 Wood v Boynton, 64 Wis. 265, 25 N.W. 42 (1885).

Paul and I are now the arbitrators in deliberations. The hearing took place seven months ago. The respondent—Mr Boynton—did not appear but the tribunal is satisfied that he had full notice of the arbitration, received copies of all the correspondence, and received notice that the hearing was taking place. At the hearing, Ms Wood called an expert witness, a jeweller, the thrust of whose testimony was that no reasonably competent jeweller would mistake a diamond for a topaz. So, Paul, we have gone through the hearing; the respondent had full opportunity to appear and to reply to the case that has been put against him but chose not to participate. However, we have heard the claimant’s side of the story, and we have both expert and factual evidence. So, let’s just write the award, since it is pretty obvious that the claimant has won. Paul Klaas. I think that the first thing that we should do is to determine whether we should be doing anything. What is the basis for our jurisdiction here? Simon Nesbitt QC. Well, we have clear evidence from the claimant that the parties have agreed that there be an arbitration. Paul Klaas. You mean Ms Wood’s testimony that there were only three provisions to the oral contract: the price, that Wisconsin law applies, and that we are going to arbitrate disputes? Do you find that testimony plausible? Simon Nesbitt QC. Yes, I find Ms Wood to be a very convincing witness. In any event, we have no option but to take her word for it because the respondent has not taken the opportunity to come and rebut her evidence. What can we do? Paul Klaas. So whatever the plaintiff offers, you take, without questioning it? Simon Nesbitt QC. There are two parties to this arbitration. One has deliberately buried his head in the sand and refused to turn up, so we are entitled to continue. Paul Klaas. Maybe because the respondent never agreed to arbitrate. Simon Nesbitt QC. But surely Mr Boynton should have at least turned up to say “I do not know why this arbitration is happening, I do not know what an arbitration is, and I certainly never agreed to it”. Paul Klaas. This entire arbitration is based on Ms Wood’s claim that, when she sold what she thought was a topaz for £25, she entered into an oral agreement to arbitrate. That just isn’t plausible, and it’s our only basis for doing anything. Besides, even if we were supposed to be arbitrating, she failed to prove her case. Under Wisconsin law, you need to prove fraud to get rescission. She did not prove anything of the nature. Simon Nesbitt QC. Prove fraud? Where is this coming from? Paul Klaas. Wisconsin! [Laughter] Simon Nesbitt QC. But that is not what the claimant’s lawyer pleaded. Paul Klaas. He was wrong. Simon Nesbitt QC. We are entitled to hear the arguments that are put to us and, if the other side does not turn up and does not put a contrary legal argument, then we have to decide based on the arguments that have been presented to us. Paul Klaas. But, surely, we should apply Wisconsin law. Wisconsin law provides: no fraud, no rescission. Simon Nesbitt QC. How do you know what Wisconsin law says? You are not a Wisconsin lawyer. Paul Klaas. I looked it up. [Laughter] Simon Nesbitt QC. You looked it up? When? Paul Klaas. Last week. Simon Nesbitt QC. Don’t you think you should have looked at it before or during the hearing? Paul Klaas. Fair point. I didn’t. Neither did you. [Laughter] But, Wisconsin law does require fraud before rescission. How can we issue an award granting rescission when we only have Ms Woods’s negligence evidence?

Simon Nesbitt QC. The correct approach is for us to receive the arguments, legal and factual, of the parties. Only one party bothered to turn up. If the claimant has presented an incorrect position on the law, well, that’s too bad for the respondent, isn’t it? Paul Klaas. So we should issue an award applying incorrect law? Simon Nesbitt QC. I only have your word for it that it is incorrect. I am not sure your word is good enough. Paul Klaas. You can check. Simon Nesbitt QC. Even if I were remotely sympathetic with your approach of arguing the case on behalf of the respondent and saying Wisconsin law is X rather than Y, let’s say that you are correct that in order to rescind the contract Ms Wood has to demonstrate that Mr Boynton committed fraud. We have evidence from an independent expert on behalf of the claimant which says that no reasonably competent jeweller would mistake a diamond for topaz. This is more than enough for me to make a finding of fraud. Paul Klaas. All that expert tends to prove is that Mr Boynton was negligent. We have no evidence of fraud and therefore we cannot get to rescission. Surely, our obligation is to find the facts correctly, to apply the proper law, and get a just result. Simon Nesbitt QC. No, our obligations are to hear what the parties have to say and make our decision on the basis of what they put to us. Paul Klaas. You are neutral, and I am neutral. I would not value my appearance of neutrality over getting to a just result. Simon Nesbitt QC. To use an English law phrase, if I may, you are on a frolic of your own. I think we might need some help. Tim? [Laughter] Tim Hardy. Let’s see if the Guidelines shed any light on this confrontation. Essentially, we have two distinct issues: (1) is there an agreement to arbitrate that gives the tribunal jurisdiction? and (2) can an arbitrator raise a new issue? If we look at the Guideline on Party Non-participation, Article 1, on page 2, “When faced with a non-participating party, before proceeding with the arbitration, arbitrators should satisfy themselves, to the extent that they are able to on the limited information available, that the claimant has a prima facie case and that all parties were properly notified of the proceedings.” This is at the very outset. In the scenario Simon and Paul present, we are well advanced in the arbitration and suddenly a jurisdictional issue has come along which really we ought to have dealt with a long time ago. However, we are where we are and there is further guidance on this issue under paragraph 2, on page 4, which says, “Where a party is not present, it is good practice for arbitrators to consider jurisdictional issues even if no challenge has been raised by one or other of the parties”. Again, at the outset, we ought to have considered this and decide whether we had jurisdiction. But the tribunal failed to do so. This Guideline refers to another Guideline, which we looked at last year, specifically devoted to jurisdictional challenges.8 This Guideline stresses the need to deal with jurisdictional issues early on under Article 1, paragraph 3, “Upon being appointed, arbitrators should satisfy themselves, without making any detailed enquiry, that the parties have entered into a valid arbitration agreement, that they have been properly appointed and that the dispute falls within the scope of the arbitration agreement.” Now, do arbitrators have an obligation to pursue this further or we just take what the parties say? There is some guidance in paragraphs 5 to 7, on page 9, which deal with arbitrators’ raising the issue of jurisdiction in the absence of a challenge: “Where arbitrators identify a jurisdictional issue which the parties have not raised, the question arises as to whether they should take any active steps to draw the parties’ attention so that they can make submissions on this point. Arbitrators should normally not raise issues on their own. However, in some situations, they should

8 See CIArb Guideline on Jurisdictional Challenges (2015), http://www.ciarb.org/guidelines-and-ethics/guidelines /practice-guidelines-protocols-and-rules [Accessed 14 May 2017].

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 324 Arbitration examine their jurisdiction on their own motion, regardless of the fact that no party has raised any challenge.” An example of this is where one party decides not to participate in the arbitration and “arbitrators should consider and rule on their jurisdiction with respect to that party, regardless of whether any challenge has been raised”. Simon Nesbitt QC. The question is the extent of the enquiry the tribunal should be making if you have got only one party present who is swearing blind that there was an arbitration agreement. Do you need to go beyond that and, if so, how can you go beyond that? Tim Hardy. I agree that, in the fact scenario, this has been raised too late. There were plenty of opportunities to raise this at the hearing when the claimant was there and gave her evidence. I have to say that I completely agree with Simon, so we are in a majority of two. Simon Nesbitt QC. Paul is wrong, again. [Laughter] Paul Klaas. There is a difference between being in the minority and being wrong. [Laughter] Tim Hardy. That deals with the first issue. The second issue is that Paul has suddenly become an expert in Wisconsin law. Do we have any guidance on this in the Guideline? I am pleased to say that we do and I can refer you to page 5 at the top, paragraph b: “Arbitrators should make an impartial and independent assessment of all arguments and evidence presented by the participating party in order to satisfy themselves that the claims of the participating party are well founded in fact and in law. Arbitrators should not simply accept the contentions of the participating party without enquiry.” That seems to suggest that, particularly, if we have some knowledge, although it is imprecise and presented by a lawyer… Simon Nesbitt QC. …not qualified in the relevant jurisdiction… Tim Hardy. …who tells us that Wisconsin law has a very important principle which has not been advanced to us. We need to determine whether we should make our own enquiry into this now and raise it. Simon Nesbitt QC. In the context of the Guidelines, this raises the question of what is meant by “enquiry”. Can it include an independent research by the tribunal, which, I appreciate, is a whole subject of its own, or is it limited to making enquiries of the participating party? Tim Hardy. The Guideline says, “If, however, the contention goes to some feature of the case being advanced by the participating party, it may be appropriate to put the point to the participating party to seek its answer and refer to that answer in any subsequent reasoned award.” We’ve had a hearing and Paul did not raise this point at that time. Do we consider that we ought to now refer this back to the participating party and take their view? Have we closed the record? Simon Nesbitt QC. We may have done! This actually raises an interesting question of whether the tribunal should declare the proceedings closed at the end of an oral hearing when there has been non-participation by one or more parties. Should you leave the door open, going back ostensibly to both parties (but probably only one of them is going to respond) with follow up questions, or even calling them back for a further hearing once you have thought about things a bit more? Tim Hardy. I have certainly seen that done. I was an advocate in an arbitration recently where we waited six months after the hearing before the arbitrators declared the record closed and we thought: “Well, they finished their deliberations.” And indeed this was exactly what had happened. Paul Klaas. What if the tribunal is convinced that the law is different from that which was put to them by the parties, do you really issue the award based on the law that was put by the parties?

Tim Hardy. No, I would have serious concerns if I were sitting here in a real-life case. Even though you are very late in the day and even though you have been appointed by the party who benefits from raising this late… Paul Klaas. Not that this would conceivably affect my neutrality. [Laughter] Tim Hardy. Of course, not! I would, personally, want to look at this more carefully. How do you feel about that, Simon? Simon Nesbitt QC. I can be persuaded. Tim Hardy. I think that we unanimously agree that we ought to refer this back to the participating party and invite them to make submissions. Paul Klaas. Both parties! Tim Hardy. Yes, you are absolutely right. We will refer to the participating party, copying the non-participating party. Audience 15. We heard that Paul was appointed by the non-participating party. But if the party is not participating presumably they have not appointed an arbitrator? Tim Hardy. The party may have appointed them and then decided not to participate. Actually this happens quite frequently. Audience 15. Would then the arbitrator carry some responsibility to make sure that the party on whose behalf he has been appointed has its arguments heard? Tim Hardy. Absolutely, it would not make any difference to that duty. Paul Klaas. One role of a party-appointed arbitrator is to ensure that the party that appointed him or her has its position heard. With a non-participating party, the arbitrator may not be clear as to what the party’s position is, and the arbitrator may feel forced into a quasi-advocacy role. The arbitrator simply has to resist that, it seems to me, or the arbitrator impairs neutrality. I would let the appearance of neutrality defer a little bit before making a real error of law, such as that we are positing here, where it is clear to the arbitrators that the only submission they have received on the law is wrong. The scenario is constructed in this way to raise the very serious problem of two important paradigms that we should be honouring, but we cannot honour both at the same time. So, what do you do? Tim is correct; we can always refer back to the parties. But, ultimately we might still be in a position where we know that what the parties have told us is wrong. Then what do you do? Audience 16. You challenge the parties, ask them to explain why this is the position they are taking, and you decide whether you are persuaded by their arguments. If you are not persuaded, then you apply the law that you know is right. Paul Klaas. I agree with you. You ultimately have to go with the law which is right, whether this is their position or not. Audience 17. Don’t you also have to consider the issue of cost to the participating party? Simon Nesbitt QC. The costs may overall be increased by this further work. The answer is that this is just one of the crosses that the claimant has to bear, if they go into the arbitration process. There will be as full and fair arbitration as there can be, and if that involves additional costs, then so be it. Audience 18. I used the predecessor of the Guideline in an arbitration 18 months ago and it was very helpful. There were a number of points in the claim which we, a three-member tribunal, considered raised questions. And because they raised questions, we [raised] those with the claimant and the non-participating party. There were also a whole range of questions which were raised in solicitors’ correspondence by the non-participating party before the arbitration started. As he had not participated in the arbitration, they would have been raised by a cross-claim in defence and we considered it right not to consider these matters as were not raised by the participating party and we concentrated on matters relevant to establishing the claim. This is what we did using the Guideline. Paul Klaas. To keep the scope within the proper bounds and keep the costs under control, you do, at some point, have to limit what the non-participating party gets to inflict upon a proceeding that they are scorning.

Audience 19. I was just wondering if the law of the seat would have had any impact on this particular dispute. Tim Hardy. Let me just say that if you read these Guidelines carefully, you will constantly see a mantra in there which is to check the provisions of the arbitration agreement, including any arbitration rules and/or the lex arbitri, etc. It is fundamental to always keep this in your mind. Audience 20. Is the tribunal convinced that the non-participating party has been served and had full knowledge that the hearing was going ahead? Can you shed some light on what steps … the tribunal took to convince itself that the non-participating party has been well informed of the hearing? Simon Nesbitt QC. This was one of the assumptions to simplify the case study. But in practice you would want some documentary evidence that the request for arbitration, subsequent statement of case, etc have been physically delivered to the respondent’s last known address, whether it is courier receipts or something that has been countersigned. It is tempting to rely upon emails these days but, I think, it is quite risky. If you have a written contract that specifies an email address for service, you might be entitled to rely upon that, but it is prudent to follow up email correspondence with hard copies sent by courier with acknowledgment of receipt, etc. Paul Klaas. Surely in these circumstances we communicate with the non-participating party every way we can think of, every time we can think of. It is extremely uncomfortable and you want to do … everything you can and document efforts to communicate as clearly as you can by all means, electronic, paper, phone, whatever it takes. Tim Hardy. If you look at the Guideline, page 6, paragraph b: “Arbitrators should be satisfied that all communications have been sent to the non-participating party in due time. They may require the participating party to produce evidence of delivery of the notice of arbitration and, any other documents, to the non-participating party. The addresses of the parties for communication are usually identified in the contract and most national laws and arbitration rules contain specific provisions as to how notifications should be effected. In the absence of any provisions, communications should be sent to the party’s habitual residence, place of business, email or any other means of communication that provides a record of transmission, or, if none of these can be found after making reasonably enquiry, then at the last known place of business or residence of the non-participating party.” Simon Nesbitt QC. Moving on to the final three Guidelines on Drafting Arbitral Awards that we are going to discuss together, and back to the case study. Paul and I are back in deliberations. The chairman is not here, and we are discussing the drafting of the award. Paul, I think we have a bit of an issue with our chairman. He has not been replying to emails and has not been engaged with the arbitration at all since we finished the hearing. He has not responded to any of our attempts to contact him. All we have had is, as you know, one line saying that he may have a lot more free time next month. It seems to me that in these circumstances we should wait until he is available. Paul Klaas. Shocking as it is, I disagree with you! I think that we should proceed. You and I … have an obligation to issue a timely award to these parties. Simon Nesbitt QC. Where do you get this obligation from? There is nothing in the arbitration agreement that sets a time limit for us to issue an award. Paul Klaas. I do not even think there is an arbitration agreement so that is a little bit problematic. But surely, we have an obligation to issue a timely award. The two of us can issue an award as easily as the three of us. Majority is as good as unanimous. Simon Nesbitt QC. It is not unreasonable to wait until the chairman is available. He was at the hearing and he is entitled to participate in the deliberations. I think we should wait. Paul Klaas. Well, he has disappeared. Simon Nesbitt QC. He is just not available.

Paul Klaas. I think we should proceed. If you look at the surveys, one of the main complaints parties have about arbitration is the time that it takes to issue an award. We have already waited too long; we should issue an award now. Simon Nesbitt QC. I still do not understand where this obligation on us to comply with a particular time period comes from. Paul Klaas. Natural justice, the Earthly firmament, and our obligations as arbitrators. Simon Nesbitt QC. Okay, let’s say for the sake of argument, that I am willing to accept that we can proceed without the chairman and that we should do so relatively soon. As it happens, I have a draft of the award here, one that I prepared earlier. I started drafting it actually a couple of weeks after we were first appointed. [Handing papers] Paul Klaas. I see the claimant has won! You are not prejudging the case, are you? Simon Nesbitt QC. I did not write that bit until after we had the hearing. Paul Klaas. I see now why your expenses throughout this arbitration have been higher than mine. [Laughter] Simon Nesbitt QC. But we have an award, so where is the problem? Paul Klaas. Even if the claimant wins, as you propose, I see you have not awarded her interest. Simon Nesbitt QC. Well, she did not claim interest. Why should I award interest? Paul Klaas. Because, under Wisconsin law, we should put her in position as good as she would have been if the transaction had not occurred. Simon Nesbitt QC. It is up to her to claim it. It is not up to us to think “well, probably she should have claimed interest, so let’s put it in.” Paul Klaas. Tim? Tim Hardy. Let’s have a look and see if the Guidelines give us any help on this. The first issue I would like to address is whether there is any obligation to issue an award in a timely and efficient manner. The Guideline on Drafting Arbitral Awards—Part I, Article 1, paragraph 4, on page 2 says: “Arbitrators should make their award in a timely and efficient manner.” There is some discussion on terms of time limits on page 5, “Many national laws and arbitration rules do not specify any time limits within which the arbitrators must make their final award, leaving the matter to the arbitrators’ discretion.” Paragraph c continues, “In the absence of any specified time limit arbitrators should determine the appropriate time frame for making an award after taking into account the particular circumstances of the case, bearing in mind that good practice is to conduct the arbitral proceedings without delay and make awards in a timely manner.” There is further guidance on page 12, under Article 3, paragraph 2: “Arbitrators should attempt to make a decision unanimously. If they cannot reach a decision unanimously, the decision may be rendered by the majority.” So, technically, Paul and Simon themselves may be able to issue an award which would stand up to scrutiny. There is one further guidance on page 13, paragraph c, “If one arbitrator refuses to participate in the deliberations without good reason, the other arbitrators may proceed in the arbitrator’s absence after giving appropriate notice of the meeting and offering an opportunity to submit comments on the issues to be decided.” The correct thing for Paul and Simon to do, having had their deliberations, is to write to the missing chairman and invite him to now participate. In the case where the remaining arbitrators proceed with the deliberations, they should draft the award and ask the arbitrator who refuses to participate to review it, giving that arbitrator another opportunity to submit comments. The next issue is: can the arbitrators of their own volition where there has not been a claim decide there ought to be interest? Article 1, paragraph 1 on page 2 of the Guideline on Drafting Arbitral Awards—Part II, “Arbitrators should establish what powers they have, if any, to award interest under the arbitration agreement, including any arbitration rules and the lex arbitri as well as the substantive law applicable to the contract.” Do we need to turn to our expert on Wisconsin law? Paul Klaas. Oh, no!

[Laughter] Simon Nesbitt QC. So Tim, if you are seeking to make an award of interest in a vacuum, what is your starting point? Do the Guidelines give us any help on that? Tim Hardy. They do. If we turn to page 4, paragraph 2: “Arbitrators should encourage the parties to agree, or at least to discuss, the issue of interest at an early stage in the arbitral proceedings, such as the preliminary meeting or case management conference.” So we are a bit late. However, “If no claim at all is made for interest and the arbitrators consider that this is an oversight, they would be justified in drawing the oversight to the attention of the parties, subject to the provisions of the arbitration agreement including any arbitration rules and/or the lex arbitri.” Again this is good guidance that these arbitrators have clearly failed to follow. [Laughter] Taking into account the particular circumstances of the case and the stage where we are, my opinion is that this is too late and it should have been raised. The claimant had plenty of opportunity to do so, get advice by the lawyers, but did not do so. We should therefore make the award on the basis of the claim made without interest. Audience 21. What if you are conducting the arbitration in a jurisdiction where there is no arbitrator immunity? According to the Guideline, arbitrators should raise the issue of interest. Simon Nesbitt QC. The answer would be, “Wait, hang on, you are the claimant and it was up to you to claim interest, if you wanted it.” Tim Hardy. I had a case where the arbitral institution gave the tribunal the wrong denomination, so the award was denominated in US dollars instead of pounds sterling. It had to go back to the institution, so we did not get the revised award for five more months. Then, they did not deal with the interest issue for the accruing period. Audience 22. Let me raise a broader issue. You are all volunteers writing these Guidelines but I have a growing concern with them. I represent quite often professionals in disciplinary hearings and I sit on disciplinary tribunals. Now, in one of the cases the issue is about accepting appointments and there are Guidelines about that. The problem with the Guidelines, if they are going to be used in disciplinary hearings, you have to take it that they are not drafted in a disciplinary manner. There are two options: option A, you carve out at the beginning that these are not to be used in CIArb disciplinary hearings or option B, you actually draft them as rules and not guidelines and you know you are subject to disciplinary hearings. Your Guidelines are now going to be used now in one of the most expensive disciplinary hearings that have ever been heard by CIArb. I do not think that this was anticipated when you started drafting them. Volunteers! It is great what you do but be aware that they are going to be used not to guide but to discipline! Tim Hardy. We are very much aware of that and there was a debate about that very issue at the PSC as to what we should do about that, and whether the Guidelines should be written, and what language should be used. Editorially, we are very careful to state that nothing is mandatory but rather it is a recommendation as to best practice. It does make it clear that there may be exceptional circumstances which mean that other behaviour is appropriate. You have a fundamental problem there: are you going to provide guidance or not? If not, then, I think, the community is poorer and does not get the benefit of experience that the Guidelines can deliver. We have had that debate at length and we have decided to promulgate these Guidelines. We have written them after consultation, they are not just written by a small committee; they are written and peer reviewed by a committee of lawyers in 13 different jurisdictions. Then they are shared among 60 members of the CIArb’s teaching faculty from its Branches all over the world to capture from there what their experiences and practices are in their jurisdictions and you will see, if you read them carefully, that from time to time we make reference that there are different practices in different parts of the world and therefore what may be acceptable in one jurisdiction may not be acceptable in another jurisdiction. Therefore, great care should be taken and you need to take account of the arbitration agreement, the arbitration rules, the lex arbitri, etc.

Paul Klaas. Arbitrators are not the only professionals that issue guidelines. But in saying “they are going to be used not to guide but to discipline” I think that you are not correct. We use them to guide, and we use them to discipline. The question is about balance rather than an alternative. The doctors, for example, have made exactly the same judgment that the arbitrators have. The doctors think that the guidance that comes from general guidelines is worth it, even though they also then face possibly on occasion misguided use of those same guidelines in disciplinary proceedings. As far as I know, every profession has made the same judgment. Simon Nesbitt QC. On that note, we shall close the proceedings. Before that I would like to offer huge thanks to Tim for umpiring and chairing us so very, very ably. Thank you very much indeed! [Applause]

Improving Arbitration: Responsibilities and Rights

Neil Andrews

Introduction No procedural system is perfect. But that does not mean that we should not try to improve the present system. How might arbitration improve? The argument here is that real progress does not require further elaboration of the arbitration rule book. Instead the success of arbitration practice depends substantially on (A) appreciation of the exacting responsibilities of those engaged in the arbitral process and (B) satisfying parties’ procedural rights within that process. In my opinion, the right way round is to start by examining matters from the perspective of responsibilities. This concentrates the mind positively on ways in which the practice of arbitration can be improved. Only then should one move on to rights, which tend to narrow the focus to matters of minimal protection. Rights can be absolutely satisfied even if no one is fully satisfied. And within a complex system such as arbitration or court litigation, rights might become hollow if the overall process is seriously underperforming.

A. Responsibilities of non-parties We will consider the responsibilities of six sets of non-parties: (1) the parties’ lawyers, (2) the tribunal, (3) arbitral institutions, (4) the courts, (5) the legal system, and (6) the wider international order. (On these see, respectively, Sections I to VI below). If those involved at points (1) to (5) fail to discharge their responsibilities, the result might be injustice or inconvenience and the tarnishing of arbitration’s image. As for (6), within the global system as a whole, it would be catastrophic if the main players were to lose practical access to civil justice of any sort: no longer trusting each other’s courts, nor willing to resort to arbitration.

B. Parties’ procedural rights Rights concerning arbitration arise at three main stages: (i) pre-commencement or threshold rights: this concerns the right to select arbitration; (ii) process rights: here there is the right to obtain a confidential, speedy and efficient conduct of the reference; (iii) the outcome right: each party has the right to receive an award which is binding and a successful claimant or counter-claimant has a right to an award which is enforceable (and the right to obtain enforcement of that award), treated, respectively, in Sections VII to IX below. Although this discussion proceeds by reference to responsibilities and rights in turn, we should note that sometimes responsibilities and rights can overlap, notably in the context of the responsibilities of lawyers, the tribunal and the courts. But what type of arbitration should we have in mind? There is a great variety. In this discussion I will be making the following assumptions: (i) neither party is a sovereign state (and so ICSID arbitration1 is not under discussion here);

1 (ICSID, Rules of Procedure for Arbitration Proceedings (Arbitration Rules) (International Centre for Settlement of Investment Disputes, 2006) (pp.101ff. at http://www.sloarbitration.eu/Portals/0/Arbitrazno-pravo/CRR_English -final.pdf [Accessed 3 June 2017]); A. Escobar and K. Hill, “Multilateral and Bilateral Investment Treaties in the United Kingdom”, in J.D.M. Lew, H. Bor, G. Fullelove, J. Greenaway (eds), Arbitration in England (Alphen aan den Rijn: Kluwer, 2013), ch.14; Nigel Blackaby, Constantine Partasides, Alan Redfern and Martin Hunter, Redfern

(ii) the dispute arises from a commercial transaction (in particular, the dispute has arisen with respect to a written transaction to which the parties are businesses, neither party being a “consumer”, in the technical legal sense); (iii) the arbitration is consensual,2 founded on an ex ante arbitration clause; the parties have agreed to London arbitration; and they have probably incorporated institutional rules (but they need not have done so); (iv) the seat is England and Wales; the arbitration will be governed by the Arbitration Act 19963 (we will not be concerned with that remote possibility of arbitration at Common Law outside the statute); if a court becomes involved, it will generally be the Commercial Court, part of the Queen’s Bench Division, based in London; the arbitration will probably have some cross-border4 element; the parties need not be British; nor need any member of the tribunal be domiciled within, or a citizen of, the UK; the parties’ lawyers are probably based in the UK or, at least, they are familiar with the London legal scene; (v) a dispute has now arisen and arbitration proceedings are contemplated; even if the main transaction is itself legally challenged, the “separability” principle5 ensures that there is no false start. And so we are off. The discussion is not intended to be Anglo-centric. The main issues examined here are applicable globally.6 and Hunter on International Arbitration (6th edn, Oxford University Press, 2015), ch.8; David St John Sutton, Russell on Arbitration (24th edn, London: Sweet & Maxwell, 2015), 3-018ff.; R. Doak Bishop, J. Crawford, W.M. Reisman (eds), Foreign Investment Disputes: Cases, Materials and Commentary (2nd edn, Alphen aan den Rijn: Kluwer, 2014). This type of arbitration has provoked sharp public criticism: comments collected in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (Alphen aan den Rijn: Kluwer, 2016), 1.29ff.; and by L. Nottage, 5.17ff. 2 Andrea Marco Steingruber, Consent in International Arbitration (Oxford: Oxford University Press, 2012) (Oxford International Arbitration Series). On arbitration clauses, G. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (4th edn, Alphen aan den Rijn: Kluwer, 2013) and D. Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (3rd edn, London: Sweet & Maxwell, 2015). On the ramifications of consent to arbitrate: Neil Andrews, Arbitration and Contract Law ( Dordrecht: Springer, 2016), chs 2 and 4; Neil Andrews, Andrews on Civil Processes (Cambridge: Intersentia Publishing, 2013), vol.II (Arbitration and Mediation), chs 9 and 10; Neil Andrews, The Three Paths of Justice: Court Proceedings, Arbitration and Mediation in England (Dordrecht: Springer, 2012), ch.10; “Arbitration and the Expanding Circle of Consenting Parties” in R. Nazzini (ed), International Construction Arbitration (forthcoming); Neil Andrews, “Arbitration and Consent to Institutional Rules: Unlocking the Door to a More Liberal Regime of Joinder and Consolidation” (forthcoming); S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 1.45 (summarising G. Born’s bilateral arbitration treaty suggestion), and chs 8 to 12 (various authors). 3 From an English perspective: J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above)1 above); R. Merkin, Arbitration Law (London: Informa, (updating service)); Lord Mustill and Stewart Boyd, Mustill and Boyd: Commercial Arbitration: Companion Volume (London: Butterworths, 2001); Redfern and Hunter on International Arbitration (2015) (fn 1 above); Russell on Arbitration (2015) (fn 1 above); Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above); Neil Andrews, Andrews on Civil Processes vol.II (2013) (fn 2 above); Neil Andrews, The Three Paths of Justice (2012) (fn 2 above). 4 G. Aksen et al., Global Reflections on International Law, Commerce and Dispute Resolution: Liber Amicorum in Honour of Robert Briner (Paris: ICC, 2004); J.C. Betancourt (ed), Defining Issues in International Arbitration (Oxford: Oxford University Press, 2016); G. Born, International Commercial Arbitration (3rd edn, Kluwer, 2014), (3 vols); S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above); L.W. Newman and R.D. Hill (eds), Leading Arbitrators’ Guide to International Arbitration (3rd edn, New York: Juris, 2014); W.W. Park, Arbitration of International Business Disputes: Studies in Law and Practice (Oxford: Oxford University Press, 2006); J. Paulsson, The Idea of Arbitration (Oxford: Oxford University Press, 2013); N. Rawding, G. Fullelove, P. Martin, “International Arbitration in England: A Procedural Overview”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.18; Catherine A. Rogers, Ethics in International Arbitration (Oxford: Oxford University Press, 2014). 5 Arbitration Act 1996 s.7; see explanatory remarks in Fiona Trust and Holding Corporation v Privalov [2007] UKHL 40; [2007] 4 All E.R. 951, at [10] (Lord Hoffmann) and UR Power GmbH v Kuok Oils and Grains Pte Ltd [2009] EWHC 1940 (Comm); [2009] 2 Lloyd’s Rep. 495; [2009] 2 CLC 386, at [33] to [40] (Gross J). Generally, UNCITRAL Model Law (1985, revised 2006), Art.16(1); S.M. Schwebel, “The Severability of the Arbitration Agreement” in International Arbitration: Three Salient Problems (Cambridge: Grotius Publications, 1987), pp.1 to 60. 6 On the geographical spread of international commercial arbitration, see S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 1.14 to 1.16 (also referring to other chapters in that work).

But let us first take stock of how the parties have reached this stage and whose responsibility it has been to review the decision to arbitrate.

I. The responsibility of the lawyers

A. The decision to arbitrate It is not by accident that a client finds itself participating in arbitration, although the actual decision might have been left to the lawyers who constructed the relevant deal. On discovering that the jaws of arbitration stand open ready to receive another dispute, the client might well exclaim, echoing Oliver Hardy: “Well, here’s another nice mess you’ve gotten me into.”7 Consider the surprise of the small American commercial agent which alleges that it has been kept out of commission fairly earned but finds that, by acceding to a giant company’s arbitration clause, it has signed up to arbitration in London, or Paris or Geneva. No access to summary judgment in the High Court. Debt collection has become a nightmare. How did the client find itself in this arbitral pickle?8 Were the options considered? Was this option explained by its lawyer? Did anyone think it through? Or has one, perhaps both, of the parties become caught on a nasty piece of jagged boiler-plate? Lord Saville notes that there is in practice a range of arbitration clauses, at one extreme the agreement stating simply, “Arbitration in London”.9 And William Park has commented: “arbitration clauses are often sloppy cut-and-paste jobs that tempt disaster when the transaction becomes unravelled”.10 A fundamental responsibility, even before the main contract is formed, is that the lawyer should invite a client to look ahead and consider the strategic options of how a dispute will be managed; where and by whom it will be adjudicated; and how judgment or an award will suit the potential judgment or award creditor. The decision is delicate. The stakes can be enormous: the process and outcome might ruin the business. As Gary Born notes:11 “Almost every international commercial controversy poses a critical preliminary question—‘Where, and by whom, will this dispute be decided?’ The answer … often decisively affects a dispute’s eventual outcome. It can mean the difference between winning and losing …” The main12 choice is between arbitration and court litigation.13 But there is the tertium quid of the hybrid arbitration clause, that is, one party having the additional right to opt out of court proceedings in England by taking the case to arbitration or, conversely, the

7 From the film, Another Fine Mess (1930): per Oliver Hardy. 8 From the film, Thicker than Water (1935), per Oliver Hardy: “Well, here’s another nice kettle of fish you’ve pickled me in!” 9 Naviera Amazonica Peruana v Cie Internacional de Seguros del Peru [1988] 1 Lloyd’s Rep. 116, 118 to 119, CA, per Kerr LJ; failing party agreement on selection of the arbitrator, the court can appoint an arbitrator, Arbitration Act 1996 s.18(3)(d); for other short clauses which have been upheld: Tritonia Shipping Inc v South Nelson Products Corp [1966] 1 Lloyd’s Rep. 238, CA; Mangistaumunaigaz Oil Production Association v United World Trade Inc [1995] 1 Lloyd’s Rep. 617, Potter J; Hobbs Padgett & Co (Reinsurance) Ltd v Kirkland Ltd [1969] 2 Lloyd’s Rep. 547, CA; on these, see Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above), 2.32. 10 W.W. Park, Arbitration of International Business Disputes: Studies in Law and Practice (2006) (fn 4 above), p.377. 11 G. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (4th edn, Alphen aan den Rijn: Kluwer, 2013), p.1. 12 For a list of further options, S. Friel, “Arbitration in Context”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), 3-11ff. 13 Neil Andrews, “The Foreign Party’s Choice between Arbitration and Court Litigation: Points Weighing Against Arbitration”, in S. Shetreet and W. MacCormack (eds), The Culture of Judicial Independence in a Globalised World (Leiden: Brill, 2016), ch.20.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Improving Arbitration: Responsibilities and Rights 333 alternative right to opt out of arbitration and instead bring proceedings before an English court.14 If arbitration is preferred, many points must be considered, notably15: the choice of seat (but perhaps with a different venue for actual hearings); choice of language (although hardly a choice for the English); if institutional arbitration is desired16 (as distinct from ad hoc arbitration),17 which institution should be chosen; the size of the tribunal and criteria for its appointment (Jivraj v Hashwani (2011)18 decided that the appointment of arbitrators is not governed by employment provisions prohibiting selection by reference to religion); the location and nature of assets available for eventual enforcement; and, lest we forget, the issue whether s. 69 of the 1996 Act will be excluded (on this see the last paragraph of Section V below) (or s.69’s sibling provision, s.45, the latter concerning preliminary points of law). What of the lawyer’s possible advice on these matters? The law seems clear: the lawyer must assume an advisory role on the eventual use of dispute resolution if that topic was part of the lawyer’s retainer. Advice requires carefully identifying, explaining and assessing the options. Thereupon the final choice is the client’s. That type of advisory legal input has been carefully worked out by the courts in some contexts. For example, a much litigated context concerns guarantees in support of an ailing family business. Here a family business is run by one of the spouses. The business is in danger. A secured guarantee is required from the other spouse as a condition of the relevant business loan being extended or increased. In that context, the Etridge case (2002)19 and Padden v Bevan Ashford (2011)20 emphasise lawyers’ demanding responsibility to advise a prospective guarantor on the ins-and-outs and the pitfalls of providing a secured guarantee. No such protocol exists concerning the fateful decision to insert a dispute resolution clause into the transaction. But we can easily transplant the analysis to that context.

B. Commencement Once it becomes clear that a dispute must proceed to arbitration, both parties’ lawyers will oversee the process of commencement. Steps must be taken to appoint the tribunal. That process of appointment might not be plain sailing. If each arbitration party can appoint its tribunal member, the lawyers will assist and advise in making that selection and fixing this

14 NB Three Shipping Ltd v Harebell Shipping Ltd [2004] EWHC 2001 (Comm); [2005] 1 All E.R. (Comm) 200 (Morison J) (one party having right to prefer arbitration); Law Debenture Trust Corp plc v Elektrim Finance BV and others [2005] EWHC 1412 (Ch); [2005] 2 All E.R. (Comm) 476 (Mann J) (one party having right to prefer court litigation); the Sulamerica case [2012] EWCA Civ 638; [2013] 1 W.L.R. 102 at [30] (Moore-Bick LJ: courts lean against such a construction); G. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (4th edn, Alphen aan den Rijn: Kluwer, 2013), pp.28 to 29, 121 to 122; S. Nesbitt and H. Quinlan, “The Status and Operation of Unilateral or Optional Arbitration Clauses” (2006) 22 Arbitration International 133; D. Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (2015) (fn 2 above), 4.31; Redfern and Hunter on International Arbitration (2015) (fn 1 above), 2.94 to 2.98 (and noting a problem under Russian law); David St John Sutton, Russell on Arbitration (2015) (fn 1 above), 2-018, 2-019. 15 David St John Sutton, Russell on Arbitration (2015) (fn 1 above), 2.065 (19-point “checklist”); Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above), 2-11; G. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (2013); S.P. Finizio and D. Speller, A Practical Guide to International Commercial Arbitration: Assessment, Planning and Strategy (London: Sweet & Maxwell, 2010), ch.2; W.W. Park, Arbitration of International Business Disputes: Studies in Law and Practice (2006) (fn 4 above), p.377ff. 16 Redfern and Hunter on International Arbitration (2015) (fn 1 above), 1.146ff, charting this landscape. 17 Redfern and Hunter on International Arbitration (2015), 1.141 to 1.145; R. Enock and A. Melia, “Ad Hoc Arbitration…”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.6. 18 Jivraj v Hashwani [2011] UKSC 40; [2011] 1 W.L.R. 1872; C.M. Baker, L. Greenwood, P. Wautelet, T. Kruger, G, Coppens (eds), The Practice of Arbitration: Essays in Honour of Hans van Houtte (Oxford: Hart, 2012), pp.15 to 22. 19 Royal Bank of Scotland plc v Etridge (No.2) [2001] UKHL 44; [2002] 2 AC 773, HL, at [64] to [68] (Lord Nicholls); Jackson and Powell on Professional Liability (8th edn, London: Sweet & Maxwell, 2016), 11-215. 20 Padden v Bevan Ashford [2011] EWCA Civ 1616; [2012] 1 W.L.R. 1759, at [26] to [54] (Lord Neuberger MR); see also Hackett v CPS [2011] EWHC 1170 (Admin); [2011] Lloyd’s Rep. FC 371, at [73]ff. (Silber J).

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 334 Arbitration appointment.21 Selection of a President will often trigger anxious involvement by the parties’ lawyers. It is common for the selection process by party appointment to take several months. This is a source of delay and expense. The position is unsatisfactory.22 By contrast, court litigation delivers a single judge and there is no opportunity for squabbling over his or her identity. Consider how a potential claim would be progressing if litigation had been chosen, rather than arbitration. Under the English court system, prospective parties must comply with a mandatory prelude to commencement: the elaborate, tedious, protracted and expensive foxtrot of satisfying the pre-action protocols. However, attempts have been made to lighten the pre-action system within English multi-track civil proceedings.23 The pre-action phase looks like an own goal for the litigation system in its competition with arbitration. But there is in fact no clear advantage here for arbitration. Instead arbitration has also developed a warm-up phase. Parties might commit themselves to an arduous steeple-chase by inserting a multi-tiered dispute resolution clause24: negotiation; mediation; arbitration or court proceedings. Is that a good idea? Or is it just a trip-wire for the eventual enrichment of mediators and the parties’ advisors? Let us briefly consider the possibility that the dispute resolution clause requires compliance with (1) a negotiation phase and/or (2) a mediation phase. If (2) is in issue, the position is reasonably straightforward: provided the mediation commitment is sufficiently clear (on this see the guidance of the Court of Appeal in the Sulamerica case, 2012),25 arbitration should not be commenced prematurely.26 More problematic is (1): the possibility of a specified negotiation stage. The matter was examined in the Emirates case (2014)27 by Teare J. He upheld a negotiation clause (forming part of a wider dispute resolution clause), restricted to a fixed period of four weeks, requiring the parties to conduct “friendly” negotiations as the mandatory prelude to commencing arbitration proceedings. He decided that the negotiation clause operates as a condition precedent to valid arbitral proceedings. But he held that, on the facts, there had been no failure to comply with this requirement. And so the relevant arbitration had been commenced validly. Teare J distinguished28Walford v Miles (1992)29 in which the House of Lords held that an agreement to negotiate in good faith or reasonably was void for uncertainty. The Walford case concerned a negotiation commitment within the principal agreement which was “subject to contract” and not yet established. By contrast, Teare J in the Emirates case noted that the negotiation agreement was contained within a dispute resolution clause ancillary to a valid primary agreement (and the point can be extended: the negotiation clause was

21 A. Gomez-Acebo, Party-Appointed Arbitrators in International Arbitration (Alphen aan den Rijn: Kluwer, 2016). 22 Stephen York, Paper delivered to the Civil Justice class, University of Cambridge, February 2007. 23 Civil Procedure (London: Sweet & Maxwell, 2017) (“The White Book”), vol.1, s.C; R. Jackson, The Reform of Civil Litigation (London: Sweet & Maxwell, 2016), ch.8, commenting at 8-018 that, following the Burn Committee’s revisions, “the new slimmed down Practice Direction Pre-Action Protocols gives concise guidance …”. See also Neil Andrews, Andrews on Civil Processes (2013) (fn 2 above), vol.1 (Court Proceedings), 4-03 to 4-11. 24 D. Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (2015) (fn 2 above), ch.18; comparative analysis in E. Kajkowska, Enforceability of Multi-Tiered Dispute Resolution Clauses (Oxford: Hart/Bloomsbury, 2017). 25 Sulamerica Cia Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638; [2012] 1 Lloyd’s Rep. 671. 26 Cable & Wireless v IBM United Kingdom Ltd [2002] EWHC 2059 (Comm); [2002] 2 All E.R. (Comm) 1041 (Colman J). 27 Emirates Trading Agency Llc v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm); [2015] 1 W.L.R. 1145, notably at [59] to [64] (Teare J) (and see fn 29); Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above), 2.42 to 2.47; D. Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (2015) (fn 2 above), 18.07. 28 Emirates Trading Agency Llc v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm); [2015] 1 W.L.R. 1145, at [29] and [59]. 29 Walford v Miles [1992] 2 AC 128, HL; on which see Neil Andrews, Contract Law (2nd edn, Cambridge: Cambridge University Press, 2015), 2.07ff.; Neil Andrews, Contract Rules (Cambridge: Intersentia, 2016), Article 6.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Improving Arbitration: Responsibilities and Rights 335 supportive of the arbitration agreement, in that negotiation was a mandatory prelude to arbitration). Teare J concluded that, in the context of a multi-tier or other complex dispute resolution clause, English courts should recognise negotiation obligations as legally binding.30 The clause in the Emirates case itself prescribed that there should be “fair, honest and genuine discussions aimed at resolving a dispute”. Surprisingly, the judge thought these certain enough.31 For the moment it is necessary to comply with this decision. But the Emirates decision has been criticised by a leading commentator, David Joseph QC.32 Whatever the merits of this development, Teare J in the Emirates case cannot be accused of insularity: he cited extensively from an Australian decision,33 and referred to developments in Singapore,34 as well as arbitral jurisprudence in the ICSID context (investment disputes).35

C. Conduct of the arbitration During this long phase, the obligations of lawyers are complex and demanding.36 The primary duty towards the client is one of professional care to promote that party’s interests in the current dispute. In particular, the lawyer will discharge its responsibility in many ways: (i) by taking instructions from the client; (ii) complying with the tribunal’s directions; (iii) seeking to advance the client’s interest in achieving the best possible outcome; (iv) presenting the case at the hearing; (v) advising upon the outcome and whether a challenge should be made, or at least clarification sought; (vi) advising further on enforcement of a positive award. But the constraining and indeed pre-existing and continuing obligation of the lawyer is towards the overarching interest of the system of justice as a whole. At any rate that wider duty is emphasised within the court system. In English civil proceedings an advocate (whether a barrister, solicitor or solicitor-advocate) owes: “a duty to the court to act with independence in the interests of justice”, as well as a duty to comply with prescribed professional rules, and “[both sets of duties] shall override any obligation which the person may have … if it is inconsistent with them.”37 The CPR (1998), governing civil proceedings in England and Wales, also proclaims: “The parties are required to help the court to further the overriding objective”.38

30 Emirates Trading Agency Llc v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm); [2015] 1 W.L.R. 1145, at [47], [50]. 31 Emirates Trading Agency Llc v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm); [2015] 1 W.L.R. 1145, at [64]. 32 D. Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (2015) (fn 2 above), 18.07 (also noting p.648 n.31 criticism in Arbitration Law Monthly (Dec. 2014) and by L. Flannery and R. Merkin, “Emirates Trading, good faith, and pre-arbitral ADR clauses: a jurisdictional precondition?” (2015) 31 Arbitration International 63); in a later case, Emirates Trading Agency LLC v Sociedade de Fomento Industrial Private Ltd [2015] EWHC 1452 (Comm); [2016] 1 All E.R. (Comm) 517, at [59] to [63], Popplewell J considered that Teare J’s decision was sound; Teare J’s decision was considered by Males J in DS Rendite Fonds Nr v Titan Maritime SA Panama [2015] EWHC 2488 (Comm) at [15] to be confined to the context of a condition precedent to arbitration. 33 Emirates Trading Agency Llc v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm); [2015] 1 W.L.R. 1145, at [42] to [46], citing United Group Rail Services v Rail Corporation New South Wales (2009) 127 Con L.R. 202. 34 Emirates Trading Agency Llc v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm); [2015] 1 W.L.R. 1145, at [54], citing International Research Corp plc v Lufthansa Systems Asia Pacific Pte Ltd [2012] SGHC 226 (upheld on the legal analysis, [2013] SGCA 55 at [54] to [63]). 35 Emirates Trading Agency Llc v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm); [2015] 1 W.L.R. 1145, at [57], citing Tulip Real Estate Investment and Development Netherlands BV v Republic of Turkey (ICSID Case No.ARB/11/28), at paras 56 to 72. 36 Lord Hacking and S. Berry, “Ethics in Arbitration: Party and Arbitral Misconduct”, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), ch.13, notably 13.05 to 13.25; G. Pendell and J. Huard-Bourgois, “Rights and Duties of the Parties and Counsel”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.17; Catherine A. Rogers, Ethics in International Arbitration (2014) (fn 4 above), chs 1 and 3. 37 Access to Justice Act 1999 s.42. 38 CPR 1.3; considered Chilton v Surrey CC [1999] C.P.L.R. 525, CA.

Such a wider duty is not directly articulated within the arbitration system. Nevertheless, section 40(1) of the Arbitration Act 1996 hints at such a broad perspective. It states: “The parties shall do all things necessary for the proper and expeditious conduct of the arbitral proceedings.” As for the need for legal professionalism and integrity, the LCIA (2014)’s Annex39 (drawing inspiration from the IBA’s Guidelines on Party Representation in International Arbitration, 2013)40 lists three overarching ethical duties (compendiously described as “good and equal conduct”)41: (1) to refrain from obstructing the process;42 (2) to display honesty in the presentation of information,43 including avoidance of dishonest concealment;44 (3) the third duty is not to try to influence the tribunal unfairly.45 It would be surprising if these obligations were not capable of recognition as implied terms of the arbitration agreement.46 Breach of the LCIA ethical standards can give rise to sanctions,47 which are listed at Article 18.6 of the LCIA Rules as “(i) a written reprimand; (ii) a written caution as to future conduct in the arbitration; and (iii) any other measure necessary to fulfil within the arbitration the general duties required of the Arbitral Tribunal under Articles 14.4(i) and (ii)”. Those “general duties” presented at Article 14.448 of the LCIA Rules (2014) are a direct copy of section 33(1)(a) and (b) of the Arbitration Act 1996: see first paragraph of Section VIII below for a six-point analysis of the tribunal’s duties under section 33(1) of the 1996 Act.

II. The responsibility of arbitrators Arbitrators also have complex responsibilities.49 Perhaps the foremost responsibility is to get the job done and done successfully: a well-known precept50 is that a tribunal must ensure that its award will be legally binding and thus capable of being recognised and (where appropriate) enforced. But satisfying that obligation is no easy matter and requires great skill and diligence. Prospective arbitrators must resist the temptation of becoming inappropriately involved. “Inappropriate” means either (i) that their antecedent associations render them apparently

39 Annex to the LCIA Rules (2014), “General Guidelines for the Parties’ Legal Representatives”, which operates within the framework of Articles 18.5 and 18.6 of the same Rules. see also LCIA Rules (2014) Arts 18.5, 18.6; S. Wade, P. Clifford, J. Clanchy, A Commentary on the LCIA Arbitration Rules 2014 (London: Sweet & Maxwell,, 2015), 18-022 to 18-29, 33-001 to 33-021. 40 For comment, Lord Hacking and S. Berry, “Ethics in Arbitration: Party and Arbitral Misconduct”, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), 13.15ff; M. Hwang and J. Hon, “A New Approach to Regulating Counsel Conduct in International Arbitration” in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), ch.22; Redfern and Hunter on International Arbitration (2015) (fn 1 above), 1.179 ff. 41 Annex to the LCIA Rules (2014), “General Guidelines for the Parties’ Legal Representatives”, para 1. 42 Annex to the LCIA Rules (2014), “General Guidelines for the Parties’ Legal Representatives”, para 2. 43 Annex to the LCIA Rules (2014), “General Guidelines for the Parties’ Legal Representatives”, para 3. 44 Annex to the LCIA Rules (2014), “General Guidelines for the Parties’ Legal Representatives”, para 5. 45 Annex to the LCIA Rules (2014), “General Guidelines for the Parties’ Legal Representatives”, para 6. 46 Whether an implied term of law or of fact. See, respectively, Article 102 and Article 104; and Andrews, Contract Rules ( 2016) (fn 29 above). 47 Annex to the LCIA Rules (2014), “General Guidelines for the Parties’ Legal Representatives”, para 7; for comment, Lord Hacking and S. Berry, “Ethics in Arbitration: Party and Arbitral Misconduct”, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), 13.08 to 13.23; S. Wade et al., A Commentary on the LCIA Arbitration Rules 2014 (2015) (fn 39 above), 18-022 to 18-029; 33-001ff. 48 LCIA Rules (2014), Article 14.4; S. Wade et al., A Commentary on the LCIA Arbitration Rules 2014 (2015) (fn 39 above), 14-011 to 14-014. 49 ss.33, 40(1), Arbitration Act 1996; Mustill and Boyd: Commercial Arbitration: Companion Volume (2001) (fn 3 above), pp.30–37; see also P. Hodges and J. Greenaway, “Duties of Arbitrators”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.15; for a suggested list of their duties, R. Mullerat, “The Liability of Arbitrators…” (2006), http://www.josemigueljudice-arbitration.com/xms/files/02_TEXTOS_ARBITRAGEM/01 _Doutrina_ScolarsTexts/arbitrators__impartiality_and_independence/mullerat_ilability_arbs.pdf [Accessed 4 June 2017]; Catherine A. Rogers, Ethics in International Arbitration (2014) (fn 4 above), chs 2, 8 and 9. 50 eg, Article 42, ICC Arbitration Rules (2017); similarly, Article 32.2, LCIA Rules (2014); J.D.M. Lew, L.A. Mistelis and S.M. Kröll, Comparative International Commercial Arbitration (Alphen aan den Rijn: Kluwer, 2003), p.276.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Improving Arbitration: Responsibilities and Rights 337 less than impartial51 (suppression of material issues can easily backfire), or (ii) that they are time poor. As for (ii), the danger that the arbitrator might become over-stretched,52 prospective arbitrators owe a duty to make full and fair disclosure of commitments or problems which might affect the arbitrator’s availability for the proposed appointment. They should not say, “yes, yes, yes”, like children in a sweet-shop. The upshot is that under the arbitral mandate the arbitrator has a duty of disclosure on at least two topics (issues relating to impartiality and availability).53 But in practice, both matters are likely to be the subject of express discussion and positive assurance. For example, the LCIA Rules (2014) (Article 5.4) require each arbitral candidate to disclose in a written declaration any information concerning these matters. The duty is a continuing one, lasting for the duration of the relevant arbitration, with respect to matters affecting impartiality (Article 5.5). Upon acceptance, the arbitrator’s mandate54 is to stick faithfully and diligently to the task. The mandate must not just be started, but it must be finished, unless the parties call the whole thing off.55 From the outset the tribunal has two managerial responsibilities.56 These concern: (i) timing and planning and (ii) frugality, that is, controlling cost. Each arbitration is a project which should have a clear target date. It should be planned and co-ordinated from the outset. The governing responsibility should be sensible and effective time-management and the pursuit of justice at proportionate cost.57 The CIArb Arbitration Rules (2015) provide a rich check-list of matters to be considered during case management.58 These include: communications;59 defining the issues;60 prescription of deadlines;61 presentation of written submissions;62 exchange of documents;63

51 K. Daele, Challenge and Disqualification of Arbitrators in International Arbitration (Alphen aan den Rijn: Kluwer, 2012); D. Foster and J. Barratt, “Challenges to and Replacement of Arbitrators”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.16; Neil Andrews, Andrews on Civil Processes, vol.II (2013) (fn 2 above), 4.34ff. (and literature cited at p.123 n.25); S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 1.36, and A. Mourre, ch.23 in the same work. 52 P. Hodges and J. Greenaway, “Duties of Arbitrators” in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), 15-53, 15-57, noting ICC Rules (2017), Article 11(2). 53 Generally, on the absence of duties to disclose in English law, Neil Andrews, Contract Rules (2016) (fn 29 above), Article 76. 54 On the “contractual” and (quasi-judicial) “status” theories of arbitrators, Redfern and Hunter on International Arbitration (2015) (fn 1 above), 5.50 ff; P. Hodges and J. Greenaway, “Duties of Arbitrators” in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), 15-49 to 15-53; R. Mullerat, “The Liability of Arbitrators …” (2006) (fn 49 above); Catherine A. Rogers, Ethics in International Arbitration (2014) (fn 4 above), ch.9; in Jivraj v Hashwani [2011] UKSC 40; [2011] 1 W.L.R. 1872 at [23], Lord Clarke said: “It is common ground … that there is a contract between the parties and the arbitrator”. (On the Jivraj case, Catherine A. Rogers, Ethics in International Arbitration (2014) (fn 4 above) 9.22ff); K/S Norjarl A/S v Hyundai Heavy Industries Co Ltd [1992] QB 863, 884 to 885, CA (Sir Nicolas Browne-Wilkinson V-C: trilateral contract between the parties and the arbitrator, plus “quasi-judicial status”). 55 Even if the substance is settled in full, the tribunal might need to make an agreed award (s.51, Arbitration Act 1996) and sort out some loose ends (s.51(5)); see material in fn 78 below. 56 For summary of managerial techniques, M.E. Schneider, in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 25.7ff; and noting the ICC publication on Techniques for Controlling Time and Cost (revised 2012), https://cdn.iccwbo.org/content/uploads/sites/3/2015/11 /ICC-Arbitration-Commission-Report-on-Techniques-for-Controlling-Time-and-Costs-in-Arbitration-2012.pdf [Accessed 4 June 2017]. 57 On heavy arbitration costs, L. Nottage in Brekoulakis, Lew, Mistelis (eds) (2016) (fn 1 above), 5.14. 58 Appendix II to the CIArb Arbitration Rules (2015), https://www.ciarb.org/docs/default-source/das/ciarb -arbitration-rules.pdf?sfvrsn=2 [Accessed 4 June 2017]. 59 Appendix II to the CIArb Arbitration Rules (2015), https://www.ciarb.org/docs/default-source/das/ciarb -arbitration-rules.pdf?sfvrsn=2 [Accessed 4 June 2017] at para.13. 60 Appendix II to the CIArb Arbitration Rules (2015), https://www.ciarb.org/docs/default-source/das/ciarb -arbitration-rules.pdf?sfvrsn=2 [Accessed 4 June 2017]at para.14. 61 Appendix II to the CIArb Arbitration Rules (2015), https://www.ciarb.org/docs/default-source/das/ciarb -arbitration-rules.pdf?sfvrsn=2 [Accessed 4 June 2017] at para.29. 62 Appendix II to the CIArb Arbitration Rules (2015), https://www.ciarb.org/docs/default-source/das/ciarb -arbitration-rules.pdf?sfvrsn=2 [Accessed 4 June 2017] at para.17. 63 Appendix II to the CIArb Arbitration Rules (2015), https://www.ciarb.org/docs/default-source/das/ciarb -arbitration-rules.pdf?sfvrsn=2 [Accessed 4 June 2017] at para.18.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 338 Arbitration witnesses and experts;64 organisation of the hearing;65 the nature of the award.66 The ICC Rules (2017)67 also emphasise the need for case management. Michael E. Schneider has urged the arbitral community to reflect on whether the tribunal’s essential function is to act as a detached referee, or whether it might intervene more actively, and at an early stage, to pinpoint the substance of the dispute: to act as a “problem solver”.68 A pervasive responsibility concerns fairness in the treatment of parties. Parties must be treated equally. Unilateral communications are prohibited. The tribunal must be seen to be bending over backwards to give each side an equal chance to influence the formation of an accurate69 and complete award which finally determines the relevant issue(s) in dispute. The tribunal must give effect to a spontaneous settlement reached by the parties after the process has commenced.70 We must here pass over the possibility that in some systems of arbitration the tribunal might be permitted, even expected, to switch horses and engage in procuring a settlement or even conduct a mediation within an arbitration.71 The culminating hearing should not be allowed to run out of control. Evidence, factual72 or expert,73 and argument will be received fairly and efficiently.74 The award should be given within weeks, rather than months.75 We will have more to say about the contents and nature of that award. One limit to the tribunal’s responsibility is that it is not concerned with the enforcement of the award.76 If the award is not voluntarily satisfied, it will be necessary to bring enforcement proceedings within the courts. Indeed one of the responsibilities of the arbitral tribunal is to respect the limits of its responsibility. There will come a point when the tribunal has no further responsibility. This is the cut-off point. They have ceased to be competent to act: the tribunal is now functus officio.77

64 Appendix II to the CIArb Arbitration Rules (2015), https://www.ciarb.org/docs/default-source/das/ciarb -arbitration-rules.pdf?sfvrsn=2 [Accessed 4 June 2017] at paras 21 and 22. 65 Appendix II to the CIArb Arbitration Rules (2015), https://www.ciarb.org/docs/default-source/das/ciarb -arbitration-rules.pdf?sfvrsn=2 [Accessed 4 June 2017] at para 26 and 27. 66 Appendix II to the CIArb Arbitration Rules (2015), https://www.ciarb.org/docs/default-source/das/ciarb -arbitration-rules.pdf?sfvrsn=2 [Accessed 4 June 2017].at para.28. 67 Article 24, ICC Rules (2017); P. Hodges and J. Greenaway, “Duties of Arbitrators”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), 15-56. 68 M.E. Schneider, “The Uncertain Future of the Interactive Arbitrator: Proposals, Good Intentions and the Effect of Conflicting Views on the Role of the Arbitrator”, in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), ch.25. 69 W.W. Park, “Arbitrators and Accuracy” (2010) 1(1) Journal of International Dispute Settlement 25 to 53. 70 Arbitration Act 1996 s.51. 71 Neil Andrews, The Three Paths of Justice (2012) (fn 2 above), ch.11. 72 J. Tirado, S. Petit, M. Keen, “Factual Evidence”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.23. 73 H. Bor, “Expert Evidence”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.24. 74 L. Shore, “Document Production, Witness Statements, and Cross-Examination: The Enduring Tensions in International Arbitration”, in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), ch.3; R. Marghitola, Document Production in International Arbitration (Alphen aan den Rijn: Kluwer, 2015). 75 For an extreme instance, Lord Hacking and S. Berry, “Ethics in Arbitration: Party and Arbitral Misconduct”, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), 13.29. 76 On the New York Convention (1958) and enforcement, see fn 104 below. 77 G. Fullelove, “Functus Officio?”, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), ch.24; NYK Bulkship (Atlantic) NV v Cargill International SA [2014] EWCA Civ 403; [2014] 2 Lloyd’s Rep. 103, at [45] (court’s power to remit an award under Arbitration Act 1996 s.69(7)(c); on further appeal it was held (Lord Clarke dissenting) that no remission was necessary because the award was correct, [2016] UKSC 20; [2016] 1 W.L.R. 1853); G. Fullelove, “Functus Officio?” in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), ch.24 at 24.29 ff, on Hussmann (Europe) Ltd v Ahmed Pharaon [2003] EWCA Civ 266; [2003] 1 All E.R. (Comm) 879, at [78] to end (Rix LJ) (Arbitration Act 1996 s.67; award “of no effect”, because respondent not a true party; arbitral tribunal remaining competent to make new award against true party); Fullelove at 24.35 ff, on Dawes v Treasure & Son Ltd [2010] EWHC 3218 (TCC); [2011] 2 All E.R. (Comm) 569, notably at [29] and [32] (Akenhead J) (parties’ settlement not an immediate termination of tribunal’s powers; considering 1996 Act s.51). See also Sun United Maritime Ltd v Kasteli Marine Inc [2014] EWHC 1476 (Comm); [2015] 1 W.L.R.

Let us end this brief consideration of the arbitrator’s role by asking what should be the motivational factor which underpins these heavy burdens? It is not fear of being sued: for arbitrators enjoy substantial, not quite absolute, immunity from civil suit.78 Is money the main driver? Admittedly, the pro bono arbitrator is a rare bird.79 However, it would be cynical and inaccurate to conclude that the general motivation is simply to win a stream of fees. Arbitrators assume a highly trusted office which imposes high standards of probity, diligence, and exactitude.80 A reputation for consistent discharge of these exacting responsibilities is beyond price.

III. The responsibility of arbitral institutions Arbitral institutions are custodians of discipline and professionalism.81 They can strive to prevent the pool of arbitrators from becoming stagnant. They can pioneer new techniques. They can set and maintain standards. They can guide and advise, not admit, suspend, exclude, fine.82 They might assume a more active role in the way arbitration proceedings are pursued and awards drafted. A controversial issue is whether arbitral institutions should have greater control over appointment of arbitrators. Would it be better if parties ceased to make their own appointments and instead the nominated arbitral institution controlled83 the way in which the tribunal is constituted, at the same time respecting the parties’ criteria? But the reality is that no arbitral institution is going to deprive parties of their cherished capacity to select or at least nominate (see, for example, LCIA (2014), Article 5.7) a wing-arbiter. It would be suicidal for an arbitral institute to go it alone by completely abolishing that possibility for matters conducted under its own set of rules. Nor is Parliamentary legislation likely to fetter the system of party appointments: for such a

1527, at [18] to [20] (Hamblen J) (following settlement of the main claim, the tribunal is not functus officio and so remains competent to determine whether a settlement includes agreement concerning costs; 1996 Act s.51 considered). 78 Arbitration Act 1996 s.29 confers civil immunity upon an arbitrator or arbitral institution who or which is acting (or failing to act), provided the culpability does not involve “bad faith”; Mustill and Boyd: Commercial Arbitration: Companion Volume (2001) (fn 3 above), 300; on arbitral immunity outside England, R. Mullerat, “The Liability of Arbitrators…” (2006) (fn 49 above), Section V (adopting J. William Rowley (gen ed), Arbitration World — Jurisdictional Comparisons, The European Lawyer, Reference Series (3rd edn, London: The European Lawyer Futurelex Ltd, 2010)); P.A. Karrer, “Responsibility of Arbitrators and Arbitral Institutions”, in L.W. Newman and R.D. Hill (eds), Leading Arbitrators’ Guide to International Arbitration (2014) (fn 4 above), ch.6 (with bibliography at n 5 therein); Redfern and Hunter on International Arbitration (2015) (fn 1 above), 5.47ff; J.D.M. Lew (ed), The Immunity of Arbitrators (London: Lloyd’s of London Press, 1990); C. Hausmaninger, “Civil Liability of Arbitrators—Comparative Analysis and Proposals for Reform” (1990) Journal of International Arbitration 7; F. Bachand and F. Gélinas (eds), The UNCITRAL Model Law after 25 Years (New York: Juris, 2013), 10; Catherine A. Rogers, Ethics in International Arbitration (2014) (fn 4 above), 9.36 ff. 79 “arbitrators rarely see their work as a charitable service to be performed pro bono publico”, W.W. Park, Arbitration of International Business Disputes: Studies in Law and Practice (2006) (fn 4 above), 381. 80 T. Schultz and R. Kovacs, “The Law is What the Arbitrator Had for Breakfast: How Income, Reputation, Justice, and Reprimand Act as Determinants of Arbitration Behaviour”, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), ch.23. 81 R Gerbay, “The London Court of International Arbitration”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.4; Tony Marks and J.C. Betancourt, “The Chartered Institute of Arbitrators”, in J.D.M. Lew, H.Bor et al., Arbitration in England (2013), ch.5; Lord Hacking and S. Berry, “Ethics in Arbitration: Party and Arbitral Misconduct”, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), ch.13, notably 13.24 to 13.29; Pierre A. Karrer, “Responsibility of Arbitrators and Arbitral Institutions”, in L.W. Newman and R.D. Hill (eds), Leading Arbitrators’ Guide to International Arbitration (2014) (fn 4 above), ch.6; Catherine A. Rogers, Ethics in International Arbitration (2014) (fn 4 above), 2.52ff; 6.64 to 6.69. 82 M. Hwang and J. Hon, “A New Approach to Regulating Counsel Conduct in International Arbitration”, in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 22.19ff, on the disciplinary function of institutions; for sceptical remarks, J. Paulsson, The Idea of Arbitration (Oxford: Oxford University Press, 2013), pp.281 to 291. 83 J. Paulsson, The Idea of Arbitration (2013) (fn 82 above), chs 5 and 9, notably pp.276 to 291; Paulsson’s lecture delivered at the University of Miami, 29 April 2010: (2010) 25 ICSID Review 339, http://www.arbitration-icca.org /media/0/12773749999020/paulsson_moral_hazard.pdf [Accessed 4 June 2017]; and further comment by Joseph Mathews, (2010) 25 ICSID Review, at 356 and David D. Branson, (2010) 25 ICSID Review, 367; see also David D. Branson, “American Party-Appointed Arbitrators: Not the Three Monkeys” (2004) 30 U Dayton L Rev 1.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 340 Arbitration restriction would render the relevant jurisdiction less competitive in the international market. Finally, international accord on this point is also most unlikely. What of a more moderate system enabling parties to make their own appointments, provided their appointees are taken from a list held by the relevant arbitral institution? But, it might be objected, why should the market be confined in this way? What if the chosen institution’s list of competent persons for that type of dispute is very short, or most candidates are conflicted or unavailable, having been booked for other cases? Might it be enough to have party-appointees double-checked by an arbitral institution? But, it might be objected, would this not risk conferring on arbitral institutions too much opportunity for “black-balling”? And might not the institution and the aggrieved party become embroiled in a war over the exercise of the institutional veto? However, (as Neil Kaplan QC acutely observed following this lecture) the danger of party-appointee favouritism can be reduced if each side is permitted to make confidential nominations to the institution, the latter then making the relevant appointment without disclosing which side nominated each tribunal member (to avoid representative imbalance, the President should not be a unilateral nominee, although he or she could in principle be a joint party nominee). It is crucial that each nominee-arbitrator must remain (certainly during the currency of the arbitration) ignorant of which side nominated him or her. Even if this secret is kept in the vault, the system summarised in the preceding paragraph is not beyond criticism. Thus it might be that an unscrupulous arbitrator, unaware which party had nominated him or her, would be tempted to “split the baby”, so as not to alienate either party (for example, recommending that a damages award be reduced by half, on the basis that the claimant was contributorily negligent to that degree, whereas the true view is that the damages should have been awarded in full). This is an impure version of impartiality, because the arbitrator is no longer actuated to discover and give effect to the objective merits of the parties’ rival cases. Instead improper pecuniary calculations (the prospect of attracting more nominations) have warped the arbitrator’s approach. Subject to that type of impure motivation, the confidential nomination system is an attractive step in the right direction. Overhanging all these institutional projects is the danger of concealed dishonesty. Even if the system of institutional appointment or veto is implemented and seems on the surface to be working well (or the confidential nomination system is adopted, as explained in the preceding two paragraphs), a peep behind the curtain might reveal that arbitral institutions in some jurisdictions are not administered in a fair and honest manner but are guilty of crony-favouritism and corruption. In short, there is no fail-proof fix to the longstanding challenge of eliminating party-appointee bias or its appearance. Finally, regulating the appointment of tribunal members in institutional arbitration would be incomplete because non-institutional arbitration, so-called ad hoc agreements, would remain unregulated.

IV. The responsibility of the courts The judiciary within England and Wales, consistent with section 1 of the Arbitration Act 1996, bears a heavy legal obligation to provide efficient and fair supervision of arbitration and to support the process.84 Protective measures, notably freezing relief, can be granted by the court before arbitral proceedings begin.85 Court proceedings, if inconsistent with an arbitration agreement, must be stayed.86 The award might be challenged under section 67

84 K. O’Callaghan and J. Finnis, “Support and Supervision by the Courts”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.20. 85 Neil Andrews, Andrews on Civil Processes vol.II (2013) (fn 2 above), 13.16 ff. 86 Arbitration Act 1996 s.9(1).

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Improving Arbitration: Responsibilities and Rights 341 or 68 of the 1996 Act.87 The award might be open to challenge on a point of substantive English law under section 69 (on which see the last paragraph of Section V below). And, of course, the courts might be required to make decisions concerning recognition and enforcement of awards (see, notably, second paragraph of Section VI below). The court’s responsibility is complex. Five elements stand out: (i) it must act in support of the arbitral process before commencement, and (ii) during and after commencement; (iii) the court must examine on specified grounds the validity of the award and the fairness of the process;88 (iv) it must assist during the enforcement phase; (v) but, especially with respect to (ii), it must not over-interfere: it must show measured restraint.89Section 1(c) of the Arbitration Act 1996 states: “the court should not intervene except as provided by this Part.” I have called this relationship between the arbitral process and the courts one of “qualified autonomy”.90 This expresses the idea that the arbitral process is not just a gated form of justice, out of public view, but it is also an independent activity, provisionally free from judicial interference.91 Qualified autonomy encompasses: (i) judicial support and restraint: the courts provide support for the system of arbitration, but they are not expected to intervene excessively during the process; (ii) Kompetenz-Kompetenz: arbitral tribunals enjoy the capacity to make a provisional determination of the validity and scope of their (suggested) jurisdiction; (iii) confidentiality92; but there are situations where the wider interests of justice require disclosure of information ordinarily protected by arbitral confidentiality93; and (iv) finality: arbitral awards are not subject to appeal on the merits, although in England there is a restricted possibility of an appeal to the Court on a point of English law under section 69 of the 1996 Act (on which see the last paragraph of Section V).

87 The High Court can hear a challenge to an award where it is alleged that the tribunal lacked jurisdiction (Arbitration Act 1996 s.67), or that there has been a “serious irregularity affecting the tribunal, the proceedings or the award” (1996 Act s.68); on s.68, see Lesotho Highlands Development Authority v Impreglio SpS [2005] UKHK 43; [2006] 1 AC 22, at [27]; D. Wolfson and S. Charlwood, “Challenges to Arbitration Awards”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.25. 88 R. Khodykin, “National Court Review of Arbitration Awards: Where do we go from here?”, in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), ch.16. 89 Cetelem SA v Roust Holdings Ltd [2005] EWCA Civ 618; [2005] 1 W.L.R. 3555, 3571, at [61]. 90 Neil Andrews, Andrews on Civil Processes vol.II (2013) (fn 2 above), 3.19 to 3.22; Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above), 1.13 to 1.15. 91 Luca Radicati di Brozolo, “The Impact of National Law and Courts on International Commercial Arbitration: Mythology, Physiology, Pathology, Remedies and Trends” (2011) 3 Cahiers de l’Arbitrage: Paris Jo of Int’l Arbitration 663; and (same author) “The Control System of Arbitral Awards” (2011) ICCA Congress Series 74; Wang Shengchang and Cao Lijun, “The Role of National Courts and Lex Fori in International Commercial Arbitration”, in L.A. Mistelis and J.D.M. Lew (eds), Pervasive Problems in International Arbitration (Kluwer, 2006), 155 to 184; H. Alvarez, “Autonomy of the International Arbitration Process”, ibid, at 119 to 140; J.D.M. Lew, “Achieving the Dream: Autonomous Arbitration?”, in J.D.M. Lew and L.A. Mistelis (eds), Arbitration Insights: Twenty Years of the Annual Lecture of the School of International Arbitration (Kluwer, 2007), 455 to 484; J. Paulsson, “Interference by National Courts”, in L.W. Newman and R.D. Hill (eds), Leading Arbitrators’ Guide to International Arbitration (2014) (fn 4 above), ch.2; S.C. Boyd, “The Role of National Law and National Courts in England”, in J.D.M. Lew (ed), Contemporary Problems in International Arbitration (London, 1986), 149 to 163; and J.M.H. Hunter, “Judicial Assistance for the Arbitrator”, ibid, 195 to 206. 92 Michael Wilson and Partners Ltd v Emmott [2008] EWCA Civ 184; [2008] Bus L.R. 1361; see second para of Section VIII below. 93 Michael Wilson and Partners Ltd v Emmott [2008] EWCA Civ 184; [2008] Bus L.R. 1361.

The private world of arbitration is dependent on the public system of courts. But in some jurisdictions it is not possible to depend in this way. The judges might be incompetent. They might be subject to bribery or governmental influence. They might not display impartiality and independence. They might be antagonistic to arbitration and obstructive. There might be great delay in the hearing of arbitration matters. The advantage of a fast journey down the private toll-road of arbitration might be lost when the case hits the congested public road system, notably because an award is challenged or during enforcement proceedings. It is pleasing, therefore, to note that the English Commercial Court is an elite body of experienced judges with a feel for business law. It is expected that the court will interact sensitively and constructively with the arbitration world. These judges have enjoyed pre-bench careers which have brought them into regular contact with arbitration. On retirement, sometimes taken early, these judges will become available to sit as arbitrators. These linkages are valuable. An atmosphere of hostility, suspicion and resentment between courts and arbitration would be disastrous. So too would be a corrupt or incompetent or fickle mishandling of arbitration matters by the courts.94 The London arbitration world is spared these horrors. To conclude on the judicial-arbitral interface: the “one stop” arbitral system (bypassing entirely the court system) is an ideal.95 Absolute arbitral autonomy would spiral into disaster.96

V. The responsibility of the legal system Arbitration requires wider support within the legal community. It should be a feature of undergraduate legal education and not just the monopoly of specialist postgraduate courses.97 The quality of justice administered by arbitrators can exceed that available from over-busy courts where judicial morale is low. The wider legal system is interested in maintaining a large volume of arbitration. Arbitration will normally also ease the burden placed on the court system, reducing the courts’ back-logs. Conversely, the arbitration system removes court fees. Furthermore, potential judgments disappear out of sight and become confidential awards. Lord Thomas in his BAILII lecture (2016)98 alleged that commercial arbitration can starve English law of guidance on niche matters of commercial law. The treasure house of commercial jurisprudence is kept under

94 Redfern and Hunter on International Arbitration (2015) (fn 1 above), 1.132 to 1.134, noting, at n 138, comments by T. Landau and J. Paulsson (T. Landau, “Arbitral lifelines: The protection of jurisdiction by arbitrators”, in A. van den Berg (ed), International Arbitration 2006: Back to Basics? (Alphen aan den Rijn: Kluwer, 2007), 282–287; Paulsson made a similar point, that international arbitration is “the only game in town”, in his talk at McGill University on 28 May 2008, “International arbitration is not arbitration”. See n 139 QMW Survey, 2013 (“2013 Corporate Choices in International Arbitration: Industry Perspectives”, http://www.arbitration.qmul.ac.uk/research/2013/ [Accessed 4 June 2017]. 95 Fiona Trust and Holding Corporation v Privalov (also known as Premium Nafta Products Ltd v Fili Shipping Co Ltd) [2007] UKHL 40; [2007] 4 All E.R. 951; [2008] 1 Lloyd’s Rep. 254, at [13] (Lord Hoffmann). 96 A disaster averted by repeal of the 1985 Belgian law, which had rendered arbitration hermetically sealed from the courts: S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 1.56. 97 On the study of arbitration, S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 1.22 to 1.27, and chs 26 to 36. 98 Lord Thomas CJ, “Developing commercial law through the courts: rebalancing the relationship between the courts and arbitration” (BAILII Lecture, 2016), https://www.judiciary.gov.uk/wp-content/uploads/2016/03/lcj-speech -bailli-lecture-20160309.pdf [Accessed 4 June 2017]; for a review of the comments on that speech, Neil Andrews, “London Arbitration and Brexit” (2016) http://www.ciarb.org/docs/default-source/ciarbdocuments/events/2016 /november/arbitration-and-brexit-2016.pdf [Accessed 4 June 2017]; revised as Neil Andrews, “Arbitration and Streamlined Courts post-Brexit” (2017) ZZP International forthcoming; see also Neil Andrews, “Arbitral Awards and Errors of English Law: Refining The Law-Making Function of the Judicial Appeal System” in S. Shetreet (ed), The Culture of Judicial Independence: Rule of Law and World Peace (Leiden: Martinus Nijhoff Publishers, 2014), 340 to 362; Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above), 8-12ff.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Improving Arbitration: Responsibilities and Rights 343 lock and key because of the confidentiality rule (on which see the second paragraph of Section VIII below), unless awards are published in redacted form.99 Section 69 of the 1996 Act creates the possibility of an appeal on a point of English substantive law. This causes an arbitration matter to become publicly visible and the relevant point might become part of the English case law. In fact the Commercial Court is slow to grant permission under section 69.100 And the parties, by precise wording,101 can exclude recourse to section 69 (by contrast section 67, jurisdiction, and section 68, serious procedural irregularity, cannot be excluded by agreement). The LCIA Rules (2014) exclude section 69, no doubt for reasons of global competitiveness.102 It is submitted that, unless the level of exclusion becomes intolerably high, the legal system should continue to permit consensual exclusion of section 69.

VI. The responsibility of the international legal order The trading nations of the world have a responsibility to maintain a flourishing system of international commercial arbitration. The main international response to this global need to foster arbitration is the New York Convention (1958).103 Its impact is considerable, Julian Lew referring to it as “the bedrock of the success of international arbitration”.104 First, it enshrines the principle of mutual recognition of the exclusive commitment to arbitrate.105 Stays are mandatory “unless [the court] finds that the said agreement is null and void, inoperative or incapable of being performed”.106 Secondly, the NYC (1958) enables awards to be recognised and enforced.107 But no one pretends that this process will be necessarily swift and unproblematic. There is no wriggle room for independent national procedural innovation under the NYC system. Thus the UK Supreme Court held in IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation (2017) that the enforcing court has no general power to order security for costs against award debtors wishing to resist enforcement under the NYC (1958) regime. 108Article VI of the NYC (1958) (incorporated as section 103(5) of the Arbitration Act 1996) permits such security only where the foreign enforcement proceedings are adjourned pending an application before the court of the seat “for the setting aside or suspension of the award”.

99 For example, AB Corpn v CD Corpn (“The Sine Nomine”) award of 19 November 2001; noted J. Beatson, “Courts, Arbitrators and Restitutionary Liability for Breach of Contract” (2006) 118 LQR 377. 100 The report by V.V. Veeder and A. Sander (2009) notes that the Commercial Court (London), considered 36 applications in 2006, and granted leave in 9; in 2007, 58, leave granted in 13; in 2008, 57, leave granted in 14; disclosing an average of 50 a year, with leave granted in 12 (noted M. O’Reilly, “Provisions on Costs and Appeals: An Assessment from an International Perspective”, paper delivered at the British Institute of International and Comparative Law conference, February 2010). 101 Gloster J in Shell Egypt West Manzala GmbH v Dana Gas Egypt Ltd [2009] EWHC 2097 (Comm); [2010] 2 All E.R. (Comm) 442. 102 LCIA Rules (2014), Article 26.8. 103 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (NYC), on which the literature is voluminous. 104 J. Lew in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), p.xx, para 15. 105 Article II.1, NYC (1958). 106 Article II.3, NYC (1958); see also Article 8(1), UNCITRAL Model Law (1985, revised 2006); similarly, Arbitration Act 1996 s.9(4); D. Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (2015) (fn 2 above), ch.11. 107 Articles III to V, NYC (1958); besides literature cited fn 104 above, see Redfern and Hunter on International Arbitration (2015) (fn 1 above), 11.40ff; G. Born, International Commercial Arbitration (3rd edn, Alphen aan den Rijn: Kluwer, 2014), ch.26; David St John Sutton, Russell on Arbitration (2015) (fn 1 above), 8.25 ff; Neil Andrews, Andrews on Civil Processes vol.II (2013) (fn 2 above), ch.20. 108 IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation [2017] 1 W.L.R. 970, at [24], [25], [30], [41] (Lord Mance, others agreeing).

Another prominent example of international collaboration is the soft law industry.109 Consider the staggering rise of the UNCITRAL Model Law (1985, revised 2006).110 Note also the importance111 of the IBA’s (International Bar Association) 112Rules on the Taking of Evidence in Commercial Arbitration (2010 revision),113 its Guidelines on Conflicts of Interest in International Arbitration (2014),114 and its Guidelines on Party Representation in International Arbitration (2013 revision);115 and note also, in ad hoc arbitration, the importance of the UNCITRAL Arbitration Rules (2013).116 The International Law Association has also produced recommendations on the doctrine of res judicata in the arbitral context.117 There is much scope for further mutual learning and common standards. But uniformity should be avoided. Documents like the UNCITRAL Model Law (1985, revised 2006),118 much more successful than Esperanto,119 should not be regarded as the last and only word. Leading arbitration nations should not surrender their right to try out new techniques or retain procedures. Finally, the NYC (1958) signatory jurisdictions have a duty to improve their own civil court systems so that commercial cases are handled competently and reliably. Such an improvement would be attractive for two reasons: first, the courts must provide an efficient and just system for reviewing or enforcing awards; secondly, foreign courts in some jurisdictions might then provide a serious option to commercial arbitration so that there is more than one game in town. Arbitration will not continue to deliver efficient and cost-effective justice if there is no competition from the court system.

VII. The parties’ freedom to choose arbitration The parties’ freedom to choose arbitration is in fact a cascade of choices: (i) a decision to arbitrate; (ii) a further commitment to arbitrate and not to litigate; (iii) selection of how and

109 S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 1.17 (also referring to other chapters in that work, notably P. Friedland, ch.21); see also F. De Ly, at 2.10 ff. 110 F. Bachand and F. Gélinas (eds), The UNCITRAL Model Law after 25 Years (New York: Juris, 2013); S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 1.19; D Lewis, The Interpretation and Uniformity of the UNCITRAL Model Law on International Commercial Arbitration (Alphen aan den Rijn: Kluwer, 2016). 111 Their importance is acknowledged by Lord Saville, “Some Reflections on the Making of International Arbitration Agreements for the Resolution of Commercial Disputes”, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), 6.23. 112 Accessible at: http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx#Practice Rules and Guidelines [Accessed 4 June 2017]. 113 See preceding note; and see Neil Andrews, Andrews on Civil Processes vol.II (2013) (fn 2 above), 4.43ff and Redfern and Hunter (2015) (fn 1 above), 6.95 ff. 114 IBA Guidelines on Conflicts of Interest in International Arbitration (2014); ASM Shipping Ltd v TTMI Ltd [2005] EWHC 2238 (Comm); [2006] 2 All ER (Comm) 122, at [43] (Morison J); Neil Andrews, Andrews on Civil Processes vol II (2013) (fn 2 above), 4.43 ff; Redfern and Hunter on International Arbitration (2015) (fn 1 above), 4.84 ff. 115 Accessible at http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx#Practice Rules and Guidelines [Accessed 4 June 2017]. For comment, Lord Hacking and S. Berry, “Ethics in Arbitration: Party and Arbitral Misconduct”, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), 13.15ff; Redfern and Hunter on International Arbitration (2015) (fn 1 above), 1.179ff; see also LCIA Rules (2014), Articles 18.5, 18.6; and Annex to those Rules; for comment, S. Wade et al., A Commentary on the LCIA Arbitration Rules 2014 (2015) (fn 39 above), 18-022 to 18-029, 33-001 to 33-021. 116 Thomas H. Webster, Handbook of UNCITRAL Arbitration (2nd edn, London: Sweet & Maxwell, 2015); S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 1.19. 117 F. De Ly and A. Sheppard, “ILA Final Report on Res Judicata and Arbitration” (2009) Arb Int 67 to 82; see also A. Sheppard, “Res Judicata and Estoppel”, in B. Cremades and J. Lew (eds), Parallel State and Arbitral Procedures in International Arbitration (Paris: ICC Publishing, 2005); Neil Andrews, Andrews on Civil Processes vol.II (2013) (fn 2 above), 17.13 ff. 118 F. Bachand and F. Gélinas (eds), The UNCITRAL Model Law after 25 Years (New York: Juris, 2013). 119 S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 1.21 n 35, noting W. Melis’s use (1991) of this metaphor (Esperanto/shared procedural language).

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Improving Arbitration: Responsibilities and Rights 345 where to arbitrate; (iv) the parties’ mutual commitment to abide by the result of the arbitration. All four choices are founded on the principle of freedom of contract.120 As for (i), cross-border arbitration is often chosen because neither party wishes to be subject to the opponent’s home court.121 However, not everyone has a real choice because in some jurisdictions the public courts are not a serious option: hence the aphorism, “for international trade, transnational commercial arbitration is increasingly the only game in town”.122 As for (ii), the agreement to arbitrate precludes resort to other forms of legal disputation. This so-called “negative obligation”, the undertaking not to deviate from the exclusive commitment to arbitrate, was the foundation of the UK Supreme Court’s decision in the AES case (2013).123 The commitment to English arbitration proceedings also precludes resort to non-English judicial challenges to the award (the “seat” underpinning that award being England and Wales), as the English Court of Appeal held in C v D (2007).124 But the agreement to arbitrate is not an agreement never to bother the court in any respect during the resolution of the relevant dispute. It does not preclude applications to the court for protective relief, 125 or to obtain anti-suit relief to enforce the arbitration agreement (for example, the AES case, 2013);126 or to assist in the process of appointment;127 or to present a challenge to an award (notably under sections 67 and 68 of the Arbitration Act 1996); or, of course, enforcement proceedings, including enforcement under the NYC (1958) (for example, the Dallah case, 2010).128 As for (iii), procedural specification, the parties enjoy a wide freedom to shape the arbitral process by agreement. Section 1 of the Arbitration Act 1996 states: “the parties

120 Neil Andrews, Contract Rules (2016) (fn 29 above), Article 1. 121 Stanley Burnton LJ has noted: “the perceived need to protect one party against litigation before the courts of the country of the other party which are thought to be less than objective and unbiased in their decisions”: AES case: Ust-Kamenogorsk Hydropower Plant JSC) v AES Ust-Kamenogorsk Hydropower Plant LLP [2011] EWCA Civ 647; [2012] 1 W.L.R. 920, at [194]. Hans Smit, “Annulment and Enforcement of International Arbitral Awards: a Practical Perspective”, in L.W. Newman and R.D. Hill (eds), Leading Arbitrators’ Guide to International Arbitration (2014) (fn 4 above), ch.38 at 921 to 924; see also Neil Andrews, Andrews on Civil Processes (2013) (fn 2 above), vol.1 (Court Proceedings), 16.49 to 16.51, concerning Yukos Capital Sarl v OJSC Rosneft Oil Co [2012] EWCA Civ 855; [2013] 1 All E.R. 223; sequel, [2014] EWHC 2188 (Comm); [2014] 2 Lloyd’s Rep. 435, on which Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above), 9.02). 122 V.V. Veeder, “On Reforming the English Arbitration Act 1996”, in J. Lowry and L. Mistelis, Commercial Law: Perspectives and Practice (London: Lexis Nexis, 2006), 243, at 14.33; the phrase has reverberated, eg Redfern and Hunter on International Arbitration (2015) (fn 1 above), 1.133, noting that T. Landau (2007) and J. Paulsson (2008) have also used this phrase: T. Landau, “Arbitral lifelines: The protection of jurisdiction by arbitrators”, in A. van den Berg (ed), International Arbitration 2006: Back to Basics? (2007), 282–287; J. Paulsson, “International arbitration is not arbitration”, talk at McGill University on 28 May 2008 (both fn 94 above). 123 Ust-Kamenogorsk Hydropower Plant JSC) v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35; [2013] 1 W.L.R. 1889, at [23] to [28] (Lord Mance); Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above), 4.17. 124 C v D [2007] EWCA Civ 1282; [2008] 1 Lloyd’s Rep. 239; Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above), 4.18; on the so-called “Bermuda Form”, R. Jacobs, L. Masters, P. Stanley, Liability Insurance in International Arbitration: The Bermuda Form (2nd edn, Oxford: Hart, 2011). 125 The court has a power to issue a freezing injunction under Arbitration Act 1996 s.44(3) in cases of “urgency”, on the application of a party or “proposed” party; in the absence of “urgency” the court can grant freezing relief only if the parties or arbitrator requests: Arbitration Act 1996 s.44(4); the court should not use the general power of the SCA 1981 “to get round the limitations of section 44” (Rix LJ, in Ust-Kamenogorsk Hydropower Plant JSC) v AES Ust-Kamenogorsk Hydropower Plant LLP [2011] EWCA Civ 647; [2012] 1 W.L.R. 920, at [56]). But the arbitral tribunal cannot grant freezing relief (limits of Arbitration Act 1996 s.39(1) explained in Mustill and Boyd: Commercial Arbitration: Companion Volume (2001) (fn 3 above), 330 to 331; also at 314 to 315, also citing the DAC Report, at [201] to [203] (“these draconian powers are best left to be applied by the Courts”) (and see Report (2006) on the Arbitration Act 1996, at [49] to [54]. 126 Ust-Kamenogorsk Hydropower Plant JSC) v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35; [2013] 1 W.L.R. 1889. 127 Principally Arbitration Act 1996 s.18(2) to (4). 128 Dallah Real Estate & Tourism Holding Co v Pakistan [2010] UKSC 46; [2011] 1 AC 763; Jan Kleinheisterkamp, “Lord Mustill and the courts of tennis—Dallah v Pakistan in England, France and Utopia” (2012) 75 MLR 639; S. Besson, in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 4.40 ff.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 346 Arbitration should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest.”129 As for (iv), abiding by the result, the commitment to arbitrate includes the clear implication130 that the losing party (having exhausted opportunities to bring legitimate challenges) will comply with the award. The parties are not contemplating an advisory opinion, but instead a mandatory vindication of the claim or a binding rejection of it.

VIII. The parties’ right to a confidential, speedy and efficient arbitration Section 33(1)(a) and (b) of the Arbitration Act 1996 impose various duties on arbitral tribunals. Six elements can be identified: (i) each party should receive a reasonable opportunity to influence the result and (ii) to respond to the opponent’s case; (iii) procedures should adaptable and appropriate; in particular, the tribunal should aim to reduce (iv) delay131 and (v) expense; generally, the tribunal must adopt a fair process which culminates in (vi) the dispute being resolved. The parties enjoy corresponding rights or procedural expectations in each respect.132 The 1996 Act is not the only source of procedural rights. English law recognises an implied term that the arbitration proceedings will be conducted in accordance with the common law’s recognition of arbitral confidentiality.133 That was the deliberate legislative abstention made in England and Wales: to allow the courts to regulate this issue, without statutory regulation or guidance (although the Scots have legislation on this matter).134 But there is no implied term yet recognised concerning the conduct of the proceedings. Questions of speed and case management are left to the tribunal’s discretion, subject to party consent. And the Arbitration Act 1996 prescribes directives aimed at ensuring co-operation between the parties and the tribunal in the achievement of a just, efficient, and well-marshalled process.135 Moreover, the statute begins with this “mission statement” (section 1(a)): “the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense”. Are these empty pieties? How much weight can arbitrators throw around without appearing ridiculous? Unlike a court, arbitrators owe their appointment to the parties’ agreement. Furthermore, the parties jointly control refinements to the process.136 A complication is that some arbitrators come with baggage from their former lives: they are former judges; they are adjudicative re-treads. When they sat as judges, they expected parties to comply strictly with procedural obligations and directions, on pain of dismissal of the defaulting party’s case. English lawyers are familiar with the modern rise of judicial management, including costs budgeting, and use of automatic sanctions, in respect of which

129 The parties’ consensual power is qualified by the “mandatory” provisions listed in the 1996 Act Sch.1. 130 eg, Article 26.8, LCIA (2014); Article 34.2, CIArb Rules (2015); Article 35(6), ICC Rules (2017); similarly, Article 34.2 UNCITRAL Arbitration Rules (2010); the UNCITRAL Model Law (1985, revised 2006) is silent on this matter. 131 On “expeditiousness”, F. De Ly in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 2.20ff. 132 G. Pendell and J. Huard-Bourgois, “Rights and Duties of the Parties and Counsel”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.17, at 17.02. 133 Michael Wilson & Partners Ltd v Emmott [2008] EWCA Civ 184; [2008] 1 Lloyd’s Rep. 616; Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above), ch.7; J. Lew, “Confidentiality in Arbitrations in England”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), ch.21; K. Noussia, Confidentiality in International Commercial Arbitration (Dordrecht: Springer, 2010); Redfern and Hunter on International Arbitration (2015) (fn 1 above), 2.161 ff. 134 Rule 25, Arbitration (Scotland) Act 2010; as noted in Neil Andrews, Arbitration and Contract Law (2016) (fn 2 above), 7.20; for background, Hew R. Dundas, “Arbitration in Scotland”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), 27-60 to 27-65. 135 Arbitration Act 1996 ss.33 (1), 40(1). 136 Arbitration Act 1996 s.1(b): “the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest”.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Improving Arbitration: Responsibilities and Rights 347 the parties seek relief under CPR 3.9, guided by the Court of Appeal’s revision in the Denton case (2014)137 of the Mitchell case (2013).138 Emeritus judges, even if they quickly morph to become eminent arbitrators, appreciate that they have entered a new environment. No longer can they lord it over the parties. No longer can they be bossy and fussy in the name of “The Overriding Objective”. Arbitral disciplinary deficit is a crucial problem.139 Arbitration presupposes that both parties will play ball in a positive spirit. That is impliedly what the parties agreed to do and it is how their lawyers should approach the game. Arbitral tribunals cannot be expected to operate as lone disciplinarians.140 A culture of co-operative procedural compliance is needed. But this is a challenge. Parties to arbitration come from different legal cultures. Their lawyers might never again appear before that set of tribunal members. The traditional restraints of the English advocacy system might be diluted within the arbitration room. It might be that the arbitral tribunal’s hand can be strengthened by institutional rules intended to ensure that matters do not drift and that a grip is taken to prevent over-complication of the case by the parties and their lawyers. Section 33(1)(b) of the Arbitration Act 1996, although directed at tribunals, arguably provides the framework for this: “The tribunal shall … (b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.”

IX. Rights with respect to awards It is helpful to consider the award141 from the perspective of the parties’ rights. There are four rights in play.

A decision must be made First, there is a right to an award, that is, one which is dated and in writing. The tribunal cannot refuse to make one. Even if it decides that it cannot make a substantive award, it must at least make a determination regarding the absence of jurisdiction. That itself counts as an award.142 If a majority award can be made, that award must be given. No tribunal member can veto the giving of an award. At best he or she can dissent.143

137 Denton v TH White Ltd [2014] EWCA Civ 906; [2014] 1 W.L.R. 3926 (noted A. Higgins (2014) CJQ 379; J.R. Williams (2014) CJQ 394). On post-Denton case law, R. Nayer (2016) 35 CJQ 97 to 112; and see Thevarajah v Riordan [2015] UKSC 78; [2016] 1 W.L.R. 76, at [21] to [23] (Lord Neuberger) (noted J. Carroll (2016) 35 CJQ 113 to 120). 138 Mitchell v News Group Newspapers [2013] EWCA Civ 1537; [2014] 1 W.L.R. 795 (noted S. Sime (2014) CJQ 133). 139 M. Hwang and J. Hon, “A New Approach to Regulating Counsel Conduct in International Arbitration”, in S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), ch.22. 140 On the tribunal’s capacity to make a peremptory order, Arbitration Act 1996 s.41(5) and (7); the tribunal’s ultimate power to respond to continued default is restricted to adverse inferences, precluding further material, and adverse costs decisions (1996 Act s.41(7)(a) to (d),); for “back up” from the court, 1996 Act s.42; an award by default is not possible, The Departmental Advisory Committee on Arbitration (DAC) Report of February 1996 on Arbitration Bill 1996 at [211]. 141 General remarks, Bernardo M. Cremades, “The Arbitral Award”, in L.W. Newman and R.D. Hill (eds), Leading Arbitrators’ Guide to International Arbitration (2014) (fn 4 above), ch.33. 142 A partial award on jurisdiction establishes issue estoppel: the same matter cannot be reopened during challenge of the final award under Arbitration Act 1996 s.67: Emirates Trading Agency LLC v Sociedade de Fomento Industrial Private Ltd [2015] EWHC 1452 (Comm); [2016] 1 All E.R. (Comm) 517 (Popplewell J). 143 The benefits and demerits of dissents are considered by B.M. Cremades, “The Arbitral Award”, in L.W. Newman and R.D. Hill (eds), Leading Arbitrators’ Guide to International Arbitration (fn 141 above), at 820, 821.

The tribunal has jurisdiction Secondly, the award must be consistent with the tribunal’s jurisdiction.144

The award is not delayed unduly Thirdly, the award must be given without undue delay. Much can be done to promote this need for reasonable expedition. The ICC Rules prescribe a six month period between closure of the Terms of Reference and the giving of an award, but the period can be extended.145

Clear and adequately reasoned award Fourthly, the award must provide a clear and reasoned answer to the relevant dispute.146 The need for reasons is made express in the LCIA Rules (2014),147 the ICC Rules (2017),148 the CIArb Rules (2015).149 The Arbitration Act 1996 adopts this as the presumptive approach.150 This is also the approach within both the UNCITRAL Model Law (1985, revised 2006)151 and the UNCITRAL Arbitration Rules (2013).152 The need for reasons means that arguments must be addressed within the award. Similar issues can arise when seeking to defend an award for the purpose of enforcement under the NYC (1958). But reasoning should not become a sacred art-form. The quest for perfection in award-writing would be intolerable: most awards would be imperfect; award debtors would triple their efforts to pick over the award in a captious and pedantic manner in order to postpone the evil hour of compliance; it would be time-consuming and costly to try to satisfy this standard; and expensive and time-consuming to deal with challenges; even excellent arbitrators might decline to take appointments. What should be the level or intensity of reasons in this context? What is the essential core of an adequately reasoned award? The reasonable expectation should be that the award must answer the issue (specifying the relief granted, including matters of quantum, interest, and costs, as well as dates for implementation or payment) and adequately explain how this conclusion was reached. The award should summarise the tribunal’s response to the evidence and submissions. As for the legal basis, it should be enough if the applicable rule is accurately found, stated and applied. Elaborate demonstration of the thought process should not be insisted upon. The award is not to be posted in a law journal. It is not the first draft of a Ph.D. dissertation. Thus Redfern and Hunter (2015) suggest that “what is needed is an intelligible decision, rather than a legal dissertation”; adding, “the parties want to read the essential reasoning underlying the decision, not a lesson in the law”.153 If the parties have not agreed to exclude an appeal under section 69 of the Arbitration Act 1996 (on which see the last paragraph of Section V) it is implicit that the award should

144 Arbitration Act 1996 s.67 provides scope for a challenge; generally, Neil Andrews, Andrews on Civil Processes vol.II (2013) (fn 2 above), 18.14ff; S. Jarvin and A. Leventhal, “Objections to Jurisdiction”, in L.W. Newman and R.D. Hill (eds), Leading Arbitrators’ Guide to International Arbitration (2014) (fn 4 above), ch.22; for an overview, Ust-Kamenogorsk Hydropower Plant JSC) v AES Ust-Kamenogorsk Hydropower Plant LLP [2011] EWCA Civ 647; [2012] 1 W.L.R. 920, at [82] (Rix LJ). 145 Article 31, ICC Arbitration Rules (2017). 146 Arbitration Act 1996 s.68(2)(f), a “serious irregularity” might arise if there is “uncertainty or ambiguity as to the effect of the award”, provided this produces “substantial injustice”. 147 Article 26.2, LCIA Rules (2014). 148 Article 32.2, ICC Rules (2017 revision). 149 Article 34(3), CIArb Rules (2015). 150 Arbitration Act 1996 s.52(4). 151 Article 31(2), UNCITRAL Model Law (1985, revised 2006). 152 UNCITRAL Rules (2013), Article 34.3; Thomas H. Webster, Handbook of UNCITRAL Arbitration (2nd edn, London: Sweet & Maxwell, 2015), 34-01ff. 153 Redfern and Hunter on International Arbitration (2015) (fn 1 above), 9.161.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Improving Arbitration: Responsibilities and Rights 349 descend to legal detail to the extent that it becomes possible to review the accuracy of the tribunal’s selection and application of the relevant legal rules, doctrine, and principles. Questions of balance and pragmatic common sense underpin the English case law which has considered these matters. Those decisions154 can be summarised as follows.

1. A complete decision is needed A tribunal cannot leave undecided a pleaded issue, notably a specific claim155 (unless of course, the claim has been later abandoned by the claimant). Similarly, each pleaded defence should be the subject of decision (again, unless the defence has been withdrawn).

2. The decision must be within the scope of the reference An award cannot give effect to a matter (whether by way of a claim or defence) if that matter has not been pleaded and so lies outside the tribunal’s jurisdiction.156

3. Assessing the adequacy of reasoning It is enough that the award adequately conveys the tribunal’s decision on central issues as well as the basis for that decision.157 The standard of reasoning is whether the award adequately demonstrates that the tribunal has addressed the relevant issue158 and supplied a decision on the relevant point or issue, as well as a comprehensible reason for reaching that conclusion,159 making due allowance for the fact that an award has been written by “commercial men and women” rather than trained lawyers.160 The tribunal need not explain “each step” in its evaluation of evidence, nor need it explain how or why the chosen degree of weight has been attached to a particular item of evidence.161 An arbitrator can draw inferences from primary facts in reaching a factual determination, and it is enough that the arbitrator has focused on the central point and applied his or her mind to that issue when reaching a conclusion.162 The courts lean in favour of upholding awards rather than upsetting them.163 They will not be drawn into a nit-picking search for ambiguous expression (instead the award should

154 P. Hodges and J. Greenaway, “Duties of Arbitrators”, in J.D.M. Lew, H. Bor, et al., Arbitration in England (2013) (fn 1 above), 15-11 to 15-14. 155 Ronly Holdings Ltd v JSC Zestafoni G Nikoladze Ferroalloy Plant [2004] EWHC 1354 (Comm); [2004] 1 CLC 1168, at [23] (Gross J). 156 Ronly Holdings Ltd v JSC Zestafoni G Nikoladze Ferroalloy Plant [2004] EWHC 1354 (Comm); [2004] 1 CLC 1168 (Gross J) (set-off point requiring reference to a different transaction) (s.68(2)(b) refers to the “tribunal exceeding its powers”). 157 Ispat Industries Ltd v Western Bulk Pte Ltd [2011] EWHC 93 (Comm), at [14] citing Fidelity Management SA v Myriad International Holdings BV [2005] EWHC 1193 (Comm); [2005] 2 Lloyd’s Rep. 508 (Morison J), noting Colman J in World Trade Corp v Czarnikow Sugar [2004] EWHC 2332 (Comm); [2004] 2 All E.R. (Comm) 813; Van der Giessen-de-Noord v Imtech Marine [2008] EWHC 2904 (Comm); [2009] 1 Lloyd’s Rep. 273; s.70(4) permits the court to order a tribunal to state its reasons in “sufficient detail” in respect of an application or appeal under ss.67 to 69. 158 Fidelity Management SA v Myriad International Holdings BV [2005] EWHC 1193 (Comm); [2005] 2 All E.R. (Comm) 312, at [10] and [18] (Morison J). 159 Pace Shipping Co Ltd v Churchgate Nigeria (“The Pace”) [2009] EWHC 1975 (Comm); [2009] 2 CLC 446, 454; approved Louis Dreyfus Commodities Suisse SA v MT Maritime Management BV (“the MTM Hong Kong”) [2015] EWHC 2505 (Comm); [2016] 1 Lloyd’s Rep. 197, at [16], per Males J (noted Y. Goh and M. Yip [2016] LMCLQ 34 to 41). 160 AK Kablo Imalat San Ve Tic AS v Intame [2011] EWHC 2970 (Comm), at [25] (Teare J). 161 World Trade Corporation Ltd v C Czarnikow Sugar Ltd [2004] EWHC 2332 (Comm); [2004] 2 All E.R. (Comm) 813, at [9] (Colman J). 162 London Underground Ltd v Citylink Telecommunications Ltd [2007] EWHC 1749 (TCC); [2007] 2 All E.R. (Comm) 694, at [37] and [42] (Ramsey J). 163 A K Kablo Imalat San Ve Tic AS v Intame [2011] EWHC 2970 (Comm), at [25] (Teare J).

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 350 Arbitration be read “in a fair and reasonable way without minute textual analysis or a meticulous legal eye endeavouring to pick holes, inconsistencies and faults”).164 The tribunal must address an essential issue in the award, so that the parties are not left to infer that a submission on that point could simply be ignored as hopeless.165 If one member of the tribunal dissents, the majority need not address the dissentient’s evidential concerns. It is enough that they dealt with the relevant point and their reasoning for adopting their own position is clear.166 There is no need for the tribunal to supplement the analysis presented by a party, by raising a point not made by that party.167

4. Avoiding surprise Independent evidence gathering by the tribunal without proper reference to the parties will not be tolerated.168 But a tribunal is allowed to rely on its own expertise when assessing a clearly identified issue.169 The parties must not be wrong-footed and taken by surprise because the tribunal has taken a new point or given the kiss of life170 to a point which was considered to be dead171 (this danger is greater when arbitration is conducted on documents alone). “Surprise” here means either that the tribunal has reached a decision on a point without any warning to the parties or at least without the point being sufficiently “flagged”.172

5. The finality principle must be respected Section 68 of the Arbitration Act 1996 (“serious irregularity”) cannot be used to conduct a judicial reconsideration of findings of fact or law.173

X. Concluding remarks I will end by noting that two themes have emerged.

The rise of procedural technicality The modern tendency is for arbitration to become enmeshed in increasingly complex rules. But the tendency must be resisted.

164 Pace Shipping Co Ltd v Churchgate Nigeria (“The Pace”) [2009] EWHC 1975 (Comm); [2009] 2 CLC 446, 454 to 455 (Teare J). 165 Buyuk Camlica Shipping Trading and Industry Co Inc v Progress Bulk Carriers Ltd [2010] EHWC 442 (Comm); [2011] Bus L.R. D 99, at [38] (Gavin Kealey QC, sitting as a Deputy High Court judge); similarly, Ascot Commodities NV v Olam International Ltd 8 November 2001; [2002] CLC 277, 284 to 286 (Toulson J) (Commercial Court) (central point missed; award set aside; fresh start required). 166 Ispat Industries Ltd v Western Bulk Pte Ltd [2011] EWHC 93 (Comm), at [15] to [17]. 167 ED & F Man Sugar Ltd v Belmont Shipping Ltd [2011] EWHC 2992 (Comm); [2012] 1 All E.R. (Comm) 962, at [14], [15], [21] (Teare J). 168 Norbrook Laboratories v Tank [2006] EWHC 1055 (Comm); [2006] 2 Lloyd’s Rep. 485, at [139], [142], and [154] to [156] (Colman J). 169 JD Wetherspoon plc v Jay Mar Estates [2007] EWHC 856 (TCC); [2007] B.L.R. 285, at [18], [25], [26] (Judge Peter Coulson QC); see also Thomas Borthwick (Glasgow) Ltd v Faure Fairclough Ltd [1968] 1 Lloyd’s Rep. 16 (Donaldson J) (which ante-dates s.68 of the 1996 Act). 170 Omnibridge Consulting Ltd v Clearsprings (Management) Ltd [2004] EWHC 2276 (Comm), at [58] (R. Siberry QC, deputy High Court judge); similarly, OAO Northern Shipping v Remolcadores De Marin SL (“The Remmar”) [2007] EWHC 1821 (Comm); [2007] 2 Lloyd’s Rep. 302, at [7] and [28] ff (Gloster J). 171 Pacol Ltd v Joint Stock Co Rossakhar [2000] CLC 315, 322 to 323 (Colman J). 172 Brockton Capital LLP v Atlantic-Pacific Capital [2014] EWHC 1459 (Comm) (Field J) at [22], [30] and [31]. 173 Lesotho Highlands Development Authority v Impregilo Spa [2005] UKHL 43; [2006] 1 AC 221; Bandwith Shipping Corporation v Intaari [2006] EWHC 3155, at [45]; Arduina Holdings BV v Celtic Resources plc [2006] EWHC 2532, at [77]; Brockton Capital LLP v Atlantic-Pacific Capital [2014] EWHC 1459 (Comm), at [33] (Field J), citing Sonatrach v Statoil [2014] EWHC 875 (Comm) at [14], [17] and [18] (Flaux J); Omnibridge Consulting Ltd v Clearsprings (Management) Ltd [2004] EWHC 2276 (Comm), at [58] (R. Siberry QC, deputy High Court judge).

As the size of the English White Book174 makes clear (the largest commentary on the English civil procedural code), there is no limit to the capacity of intelligent and well-meaning lawyers to render a procedural subject ever more difficult and detailed. Lord Saville (2016), one of the architects of the 1996 Act, has commented175: “The arbitral process has become increasingly expensive, notwithstanding substantial efforts by arbitral institutions and others to limit costs.” He adds that the days are “long gone”176 when charterparty disputes were resolved by two arbitrators, each being a party-appointee, without legal advocacy, an umpire177 being used if they could not agree, in a “simple, quick, and inexpensive manner”.178 In short, he notes that the current arbitral procedure in commercial matters “has become much more like that of the London Commercial Court.”179 In modern commercial matters, arbitrators are not local people enjoying high social esteem or familiarity with village or regional custom and practice. Compare Rene David’s wistful evocation of the amateur arbitrator: “The arbitrator was [once upon a time] chosen “intuitu personae”, because the parties trusted him [or her] or were prepared to submit to his authority; he was a squire, a relative, a mutual friend or a man of wisdom, of whom it was expected that he would be able to devise a satisfactory solution for a dispute.”180 Modern tribunal members are subject-experts or lawyers. Institutional or ad hoc arbitration proceedings over which they preside often involve complex factual and technical matters. The procedural system within which such disputes are heard has become highly legalistic.181 Arbitral practice is examined in large treatises182 in which the reader can roam over a vast range of statutory and case law material, international conventions, soft law declarations of best practice, shifting and competing juristic opinion. Spice is added by competition between legal systems and national centres. For lawyers, this technicality and change are fascinating and lucrative, but also bewildering and very tiring. Procedural convergence of commercial arbitration and top-end court litigation is ominous but not irreversible. It is ominous because of the modern tendency for rules to proliferate and to cross-pollinate. However, despair is premature. One can contrast with the mighty White Book the slim booklets of the LCIA (2014) or CIArb (2015) or ICC (2017) rules, supplemented with the relatively short Arbitration Act 1996.

Responsibilities to support the system of arbitration This is the second theme. Without decent judges, expensive court rooms and state-of-the-art procedural codes are worthless. Similarly, the great stack of modern arbitration law is nothing more than procedural machinery, with an elegant underpinning of juristic values and procedural aspiration.183 It is the people, the hands, operating this machinery who count.

174 Civil Procedure (London: Sweet & Maxwell, London, annual editions); not the only commentary on the CPR (1998), but the most detailed; the rules themselves have become very bulky. 175 Lord Saville, “Some Reflections on the Making of International Arbitration Agreements for the Resolution of Commercial Disputes”, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), 6.25. 176 J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), 6.25. 177 An umpire is a person whose task is to cut the Gordian knot if a tribunal of an even number is divided and, where the number is four or more, no majority emerges: Arbitration Act 1996 s.21; Mustill and Boyd: Commercial Arbitration: Companion Volume (2001) (fn 3 above), 286. 178 Lord Saville, in J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), 6.24. 179 J.C. Betancourt (ed), Defining Issues in International Arbitration (2016) (fn 4 above), 6.25; similarly, S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn 1 above), 1.18 (also referring to other chapters in that work). 180 R. David, Arbitration in International Trade (Deventer: Kluwer, 1985), 29; cited in Redfern and Hunter on International Arbitration (2015) (fn 1 above), 1.121 n 121. 181 Redfern and Hunter on International Arbitration (2015) (fn 1 above), on the tendency for arbitration to resemble court litigation (“judicialisation”); see also R.B. Lillich and C.N. Brower (eds), International Arbitration in the 21st Century: Towards Judicialization and Conformity (Leiden: Brill Publishing, 1994). 182 For example, the three-volume encyclopaedia, G. Born, International Commercial Arbitration (3rd edn, Alphen aan den Rijn: Kluwer, 2014). 183 S. Brekoulakis, J.D.M. Lew, L. Mistelis (eds), The Evolution and Future of International Arbitration (2016) (fn.1 above), 1.26: “international arbitration is more than a body of black letter rules”.

Skilfully used, in the right hands, the machinery can yield accurate and just outcomes. Responsibilities, properly identified, consistently discharged, will vindicate rights. The focus should be upon the central responsibilities of the parties, arbitrators, institutions, and the wider system. This is a collective endeavour. Each arbitration is a joint venture which should be approached co-operatively, even if matters quickly become fractious. Maintaining the flow of arbitration and invigorating that system are matters which involve all regular participants. Arbitration is the practice of an exacting discipline by a community of procedural experts. It is entirely dependent on human goodwill and co-operation. That must be founded on a proper appreciation of the responsibilities borne by those involved or interested in arbitration. Arbitration’s rule book should not become an ever-expanding spider’s web in which the parties are eventually eaten alive in a leisurely arachno-fest.

The Enforcement of Adjudicators’ Awards under the Housing Grants, Construction and Regeneration Act 1996: Pt 63

Kenneth T. Salmon

1. Introduction The Act means the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009 Pt 8. The “new” provisions apply to contracts entered into on or after 1 October 2011. The main Regulations are contained in the Scheme for Construction Contracts (England & Wales) Regulations 1998 (the Principal Regulations).1 They have been amended by the Scheme for Construction Contracts (England & Wales) (Amendment) (England) Regulations 2011.2 The new Scheme applies only to contracts for construction operations in England entered into on or after 1 October 2011. For earlier contracts the Principal Regulations apply. There are separate regulations for contracts for work in Scotland applicable to contracts made on or after 1 November 2011.3 The new Regulations apply only to contracts for work in Scotland entered into on or after this date. For earlier contracts the Scheme for Construction Contracts (Scotland) Regulations 19984 applies. There are new separate regulations for Wales, applicable to contracts for construction operations in Wales entered into on or after 1 October 2011.5 A reference to “the Scheme” is to the Principal Regulations for England and Wales, or the Scheme for Scotland, as the context so requires. The law is stated at 12 April 2017. This Part contains a decision on an important point of principle and practice concerning Pt 8 proceedings to challenge the correctness of adjudicators’ decisions, cases on jurisdiction and natural justice including a decision of the Scottish Outer House of the Court of Session. Also reported is a case of enforcement after trial, as much for the court’s comments about the amendment to s.107 of the Act, as its subject matter.

2. Enforcement—principles and practice—whether open to defendant to challenge decision as wrong See Hutton Construction Ltd v Wilson Properties (London) Ltd.6 Hutton sought to enforce the decision of the adjudicator who had awarded them £491,944.73. Wilson did not raise any jurisdictional challenge and did not allege any breach of the rules of natural justice. They sought leave to defend the summary judgment application on the grounds that the adjudicator was wrong to reach the conclusion that he did. Hutton

1 Scheme for Construction Contracts (England & Wales) Regulations 1998 (SI 1998/649). 2 Scheme for Construction Contracts (England & Wales) (Amendment) (England) Regulations 2011 (SI 2011/2333). 3 Scheme for Construction Contracts (Scotland) Amendment Regulations 2011 (SI 2011/371). 4 Scheme for Construction Contracts (Scotland) Regulations 1998 (SI 1998/687) (S.34). 5 Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (Wales) Regulations 2011 (SI 2011/1715) (W.194). 6 Hutton Construction Ltd v Wilson Properties (London) Ltd [2017] EWHC 517 (TCC); [2017] C.I.L.L. 3949, per Coulson J, 16 March 2017.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 353 354 Arbitration said this was not a legitimate approach. The court noted the stance taken by Wilson was increasingly common amongst those who were dissatisfied with an adjudicator’s decision. It raised fundamental points of principle and practice.

The relevant principles (1) If the adjudicator decided the issue referred to him, and he broadly acted in accordance with the rules of natural justice, his decision would be enforced.7 Decisions had been enforced on that basis even where it was shown the adjudicator had made an error.8 (2) There were two narrow exceptions to the above principle. First, where there was an admitted error.9 The second concerned the proper timing, categorisation or description of the relevant payment application, payment notice or pay less notice.10 This exception must concern an issue that is “a short and self-contained point, which requires no oral evidence or any other elaboration than that which is capable of being provided during a relatively short interlocutory hearing” and which can be decided by way of declaration as happened in Geoffrey Osborne (above). It was then said by way of emphasis that this procedure would rarely be used. Moreover it was common ground in Caledonian that if the adjudicator was wrong that the documents in question did not constitute a proper claim for payment or a payee’s notice, the payless notice was valid. (3) What no one could have then predicted was the proliferation of what are (unhappily) called “smash and grab” cases: those based on the contention that the other party had failed to serve a proper or timeous application for payment or payment/payless notices, thereby automatically entitling the claiming party to the sums claimed no matter how controversial. The significant increase in these cases stemmed from what the court considered to be the ill-considered amendment to the 1996 Act and the excessive prescription of payment terms leading to provisions of unnecessary complexity. The judge also was aware of the widely held view that this problem had been inadvertently compounded by the run of authorities starting with ISG Ltd v Seevic College11 which prohibited a second adjudicator from dealing with an interim valuation of an interim payment already awarded by an adjudicator. (4) What was the court to do in the situation where a successful party succeeded because the other party had failed to serve a notice in time or comply with some similar provisions?

Subsequent authorities The court reviewed the subsequent authorities which broadly demonstrate that the point taken by a defendant on enforcement is a straightforward argument that the adjudicator was wrong as to whether a notice was invalid or valid and was seeking a declaration to that effect. The claimant may issue its own enforcement proceedings or the parties may agree that if the defendant loses its Pt 8 claim, it will pay the sums awarded by the adjudicator.

7 Macob Civil Engineering v Morrison Construction Ltd [1999] B.L.R. 93; 64 Con L.R. 1. 8 Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2001] 1 All E.R. (Comm) 1041; [2000] B.L.R. 522; (2001) 3 T.C.L.R. 2. 9 Geoffrey Osborne v Atkins Rail Ltd [2009] EWHC 2425 (TCC); [2010] B.L.R. 363. The error was admitted by everyone including the adjudicator and, because there was no arbitration clause, the court could make the final decision on the point. 10 Which could be said to date from Caledonian Modular Ltd v Mar City Developments Ltd [2015] EWHC 1855 (TCC); [2015] B.L.R. 694; [2015] T.C.L.R. 6. 11 ISG Construction Ltd v Seevic College [2014] EWHC 4007 (TCC); [2015] 2 All E.R. (Comm) 545; [2015] B.L.R. 233.

This broadly consensual approach is seen in a number of cases,12 all involving Pt 8 claims by the defendant seeking a final determination by way of declaration of the issue and all involved at least a tacit understanding that the parties’ rights and liabilities turned on whether the particular notice was in time or valid. Secondly, the existence of the separate Pt 8 claim meant the court knew from the outset what was going to be involved. This was critically important for the making of directions on paper by the judge and fixing a hearing within 28 days of the commencement of proceedings. Such a hearing is routinely listed to last for not more than half a day but can be longer if it is clear from the outset that the issues are more involved, in which case there will be less concern about fixing it within 28 days. Kersfield is a good example of this latter sort of case involving extensive pre-reading, a whole day’s hearing and a reserved judgment. The court was of the opinion that the practice had grown up and worked relatively well only because there was a large measure of consent between the parties from the outset; problems had arisen where there was no such consent.

The proper approach where there is no consent The defendant must first issue a Pt 8 claim setting out the declarations it seeks or at least indicate in a detailed defence and counterclaim to the enforcement claim what final declarations it seeks. The former course is preferable. Any suggestion of a less formal approach in the TCC Guide para.9.4.3 was to be taken as superseded by the guidance given in the judgment in Hutton (at [16]). The defendant must be able to demonstrate that: (a) there is a short and self-contained issue which arose in the adjudication and which the defendant continues to contest; (b) that issue requires no oral evidence, or any other elaboration beyond that which is capable of being provided during the interlocutory hearing set aside for the enforcement; (c) the issue is one which, on a summary judgment application, it would be unconscionable for the court to ignore. In practice it would mean showing for example that the adjudicator’s construction of a contract clause was beyond any rational justification; or his calculation of the relevant time periods was obviously wrong; or he wrongly categorised a document as, say, a payment notice when, on any view, it was not capable of being so described. In a disputed case, anything less would be contrary to principle and authority. It was axiomatic that even then an issue could only be considered if the consequences were clear cut. If the effect of the issue was disputed that must be taken into account. An arguable interleaving of issues would almost certainly be fatal to a suggestion that the challenge fell within the limited exception. Such a dispute would need to be resolved quickly at the enforcement hearing. The time constraints would mean it would be rare for the court to decide that though there is a dispute about the effect, it could be raised as a defence to the enforcement. In the view of the court many of the applications currently made by disgruntled defendants outside of the consensual process (noted above) were an abuse of the process of the court. A defendant who unsuccessfully raised this sort of challenge would almost certainly have to pay the costs of the entire action on the indemnity basis. However if the claimant does not agree with the defendant’s proposal to deal with the issue on enforcement when it

12 Leeds City Council v Waco UK Ltd [2015] EWHC 1400 (TCC); [2015] T.C.L.R. 5; 160 Con L.R. 58; Manor Assets Ltd v Demolition Services Ltd [2016] EWHC 222 (TCC); Bouygues (UK) Ltd v Febrey Structures Ltd [2016] EWHC 1333 (TCC); [2016] C.I.L.L. 3849; Kersfield Developments (Bridge Road) Ltd v Bray & Slaughter Ltd [2017] EWHC 15 (TCC); 170 Con. L.R. 40; [2017] C.I.L.L. 3929; and Surrey and Sussex Healthcare NHS Trust Ltd v Logan Construction (South East) Ltd [2017] EWHC 17 (TCC); [2017] B.L.R. 189; 170 Con. L.R. 65.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 356 Arbitration transpires that the issue falls within the limited exception, the claimant runs the risk of being penalised in costs.

The facts of the case The contract between the parties was the JCT Standard Form of Building Contract, without quantities, 2011. The court described the payment provisions at cll.4.9–4.17 as “prolix, convoluted and desperately difficult to operate in practice” whilst acknowledging this was due at least in part to the amendments to the 1996 Act. The dispute concerned Hutton’s Application for Payment No.24. And whether there was a valid interim certificate or payment notice in response. Amongst other things Wilson argued that its payless notice was actually an interim certificate but in any case was valid as to timing and content. The adjudicator rejected all of Wilson’s submissions. Wilson indicated in correspondence that it was intending to resist enforcement but unhelpfully did not say on what grounds. It served no defence and counterclaim. Its evidence raised issues about previous applications, raised matters not raised in the adjudication, set out a history but not why the adjudicator was wrong or what declarations it sought. Its later issued Pt 8 claim did not set out the declarations sought.

The challenge to the decision The court decided that Wilson’s challenge could not be considered in the enforcement hearing because: (1) The challenge should have been the subject of a Pt 8 claim from the outset. The correspondence and witness evidence did not make clear the basis of the challenge or the declarations sought. (2) Even the Pt 8 claim was inadequate. (3) The claim form did not address the major issue in the adjudication, namely whether the document relied could have been a payless notice (or indeed an interim certificate) in any event in the absence of any proper information setting out how Wilson arrived at a nil valuation. In this respect the Pt 8 claim form was not only late but incomplete. (4) The points now raised were a re-run of all the issues in the adjudication; indeed Wilson sought to rely on other matters too. (5) Wilson wanted to rely on a number of factual matters—some of which, if properly set out, might have been agreed, but Hutton had not had time to properly consider its response. The documents suggested there might well be disputes. (6) There was nothing unconscionable in this approach. The adjudicator had fully and carefully considered all the issues. (7) Standing back and considering the ramifications of all the above, in a case in which the adjudicator’s decision ran to 73 closely typed paragraphs and lasted over a month, it was not right to let Wilson shoehorn into the time available for the enforcement hearing the entirety of the adjudication dispute. That would turn adjudication into a two-stage process.

Comment This decision is important in a number of respects. It restores to the forefront of enforcement, the fundamental principle of “pay now, argue later”. It lays down new limits to one of the two exceptions to this principle, namely that the court will only look at short, clearly defined, determinative issues where the facts are substantially agreed or not in issue, and which are brought before the court by a consensual approach or properly and in strict compliance with

Pt 8 proceedings. It sets out what the defendant must show in order to succeed. It seeks to limit both the number and scope of the growth of Pt 8 claims seeking to overturn decisions of the adjudicator as “wrong”, coupled with a salutary warning on costs. It is also worth adding that the court cannot be asked to make what would be a final decision where the contract provides that disputes are to be finally resolved by arbitration, not litigation. Last, the case is interesting for the views of a senior TCC judge on the amendments to the payment and notice provisions of the Act and the attempts of at least one popular standard form of contract to cope with them.

3. Enforcement following trial of issue See RSC Contractors Ltd v Anthony Conway.13 The claimant, RSC, claimed £59,551.65 inclusive of interest pursuant to the decision of an adjudicator dated 25 November 2015. On 6 May 2016, the defendant, Mr Conway, successfully obtained leave to defend the claim “limited to the sole ground that the adjudicator had no jurisdiction, because it is said he has wrongly concluded that there was one construction contract for the works at the three sites”. The trial of that issue took place on 4 April 2017. The background was that RSC carried out groundworks for Mr Conway as a sub-contractor at three sites. RSC said there was one oral contract for the work at all three sites. Mr Conway maintained there were three separate oral contracts and that, in consequence, the adjudicator did not have the necessary jurisdiction. That was now the only issue for the court to decide. Section 108(1) of the Act provided that “A party to a construction contract has the right to refer a dispute arising out of the contract for adjudication”. It was common ground that the Scheme applied. The orthodox view is that s.108(1) allows the reference of a single dispute to adjudication, and there have been a number of cases where the attempted reference of more than one dispute at the same time was found to have deprived the adjudicator of jurisdiction. The court now proceeded to decide this case on the orthodox basis that an adjudicator approved under the Scheme could only decide one dispute at a time albeit that view had been ameliorated by the broad interpretation given by the courts to the word “dispute”—see Fastrack Contractors Ltd v Morrison Construction Ltd.14 The court concluded that on the balance of probabilities RSC’s case was to be preferred and that there was one single contract between these parties concerning the three different sites. There was a single dispute about what was due under that contract. The adjudicator therefore had the necessary jurisdiction to decide that claim. Since that was the only point which prevented the enforcement of the adjudicator’s original decision on 6 May 2016, it meant that RSC was entitled now to the sum claimed, together with interest. The court regretted very much the time and cost that had been wasted on the process, which it considered to be due to the amendments to the 1996 Act. As originally enacted, the 1996 Act would not have permitted this dispute to have been progressed in this way, because s.107 ensured that it was only when the contract was in writing that adjudication provisions were incorporated. That provision was designed to promote certainty. Section 107 was, in the court’s view, unthinkingly repealed, meaning that (as here) adjudicators had to grapple with entirely oral contracts, with all the uncertainty and contention that such a situation might engender. In addition, in such cases, even if an adjudicator finds an oral contract, the responding party may (again as happened here) obtain permission to defend on enforcement, because only rarely would a disputed oral agreement be the subject of a

13 RSC Contractors Ltd v Anthony Conway [2017] EWHC 715 (TCC), per Coulson J, 4 April 2017. 14 Fastrack Contractors Ltd v Morrison Construction Ltd [2000] B.L.R. 168; 75 Con. L.R. 33; (2000) 16 Const. L.J. 273.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 358 Arbitration successful summary judgment application. Thus in this case, the result of the repeal of s.107 had been a process lasting 16 months and the incurring of large sums by way of costs. That was the opposite of the quick, cheap dispute resolution service that adjudication was intended to provide.

4. Jurisdiction—assignment and reassignment of benefits—interest on liquidated damages See Mailbox (Birmingham) Ltd v Galliford Try Ltd.15 Mailbox sought the enforcement of the adjudicator’s decision awarding it £2,477,152 plus interest plus 75% of the adjudicator’s fees. Galliford Try (GTC) resisted on the grounds that Mailbox had assigned the benefit of the contract between the parties to a third party bank and had no right to issue the proceedings. GTC also resisted the entitlement to interest on the grounds that the Late Payment of Commercial Debts (Interest) Act 1998 did not apply to obligations to pay liquidated damages. Mailbox was a special purpose vehicle set up to develop a mixed-use retail and office space in Birmingham and it entered into a contract with GTC incorporating the conditions of the JCT Design and Build Contract (2011 edition) as amended by the parties. Most of the works had been carried out when Mailbox purported to determine GTC’s employment and disputes arose as to responsibility for delay, liquidated damages, the value of the final account and the lawfulness of the termination. Mailbox contended that the assignment to the third party bank was by way of charge and both parties well understood that and treated Mailbox as the employer throughout. If that was wrong then in any case there was an effective reassignment before the adjudication commenced. After considering the contract, the purported assignment, a debenture, the notices of assignment and the Law of Property Act 1925 (LPA) s.136, the court concluded that the assignment was effective and satisfied all the requirements of the LPA: the assignment under the debenture was absolute; it was in writing under the hand of Mailbox; and express notice was given in writing to GTC. Equally the reassignment was effective as the deed of reassignment was executed either two days before the notice of adjudication or at the latest on the same day as the notice. Thus all rights and benefits had been reassigned in equity to Mailbox. Therefore the adjudicator had jurisdiction to make the award he did and his decision was valid. Following consideration of disclosure and witness evidence, the court decided it had before it all the materials necessary to determine the issues in dispute and there was no prospect of GTC defending the claim. The adjudicator had decided Mailbox was entitled to interest on liquidated damages under the 1998 Late Payment Act. It was common ground between the parties that the damages were not a qualifying debt under the Act. The adjudicator had no jurisdiction to award interest under the provisions of that Act. The appropriate rate under the Senior Courts Act 1981 s.35A was 2% above base rate. GTC was not to be penalised by any higher rate for its challenge which, on the basis of paucity of documents adduced in the adjudication, was not unreasonable.

5. Jurisdiction—scope of dispute referred See AECOM Design Build Ltd v Staptina Engineering Services Ltd.16

15 Mailbox (Birmingham) Ltd v Galliford Try Ltd [2017] EWHC 67 (TCC); [2017] B.L.R. 180; 170 Con. L.R. 219, per O’Farrell DBE J, 26 January 2017. 16 AECOM Design Build Ltd v Staptina Engineering Services Ltd [2017] EWHC 723 (TCC) per Fraser J, 5 April 2017.

AECOM made a Pt 8 claim against Staptina seeking declarations in relation to a decision by an adjudicator, Ms Gaynor Chambers, dated 10 January 2017 (the decision). This was the third adjudication she had conducted between the parties. AECOM claimed that certain discrete parts of the Decision were unenforceable because, in those limited respects, the adjudicator acted outside her jurisdiction and/or in breach of natural justice. AECOM did not however seek to impugn the enforceability of the decision as a whole, merely the parts identified which it sought to have severed from the remainder of the decision. For pragmatic reasons Staptina did not object to severance if that is what it came to. In the circumstances the court was not asked to decide whether severance would otherwise have been appropriate. AECOM was main contractor to Thames Water Utilities Ltd for certain treatment works and engaged Staptina to undertake the mechanical installation for those works. The sub-contract between AECOM and Staptina was on the NEC Engineering and Construction Short Subcontract form June 2005, with amendments dated September 2011, and bespoke amendments (the sub-contract). After the first adjudication, AECOM terminated its sub-contract with Staptina by letter (the Termination Letter), pursuant to cl.90.3 of the sub-contract. It read: “we terminate the Contract pursuant to Clause 90.3 — final sentence — Reason 5”. The Termination Letter also stated, amongst other things, that termination did not affect Staptina’s ongoing obligations to correct defects, a list of which was attached to the Letter and gave Staptina notice that if it did not correct them within two weeks, the defects would be corrected by a third party and the costs claimed from Staptina. A second adjudication followed in which AECOM’s disputed entitlement to make deductions from the gross valuation of Staptina’s works, for delay, damages and the absence of final documentation was decided on 18 July 2016. Thereafter Staptina appointed construction consultants, BEA, to act on its behalf and in a letter dated 28 October 2016 BEA wrote to AECOM setting out its involvement. BEA also issued an application “for payment of the amount due on termination”. The letter from BEA disputed the entitlement to make any deduction for the cost of defects pursuant to a termination for “Reason 5”. In turn it claimed a sum of just over £2.02 million as “The Amount Due on Termination 30 March 2016”. The reply to that letter by AECOM was important. Staptina relied on it as showing how the dispute referred to adjudication should be construed. AECOM sent a lengthy response setting out its assessment of the amount due. It also provided an assessment of the cost of outstanding works and defects and detailed sub-contractors’ charges or costs to do each item of work, with average prices, leading to a total average for defects of £220,622. The parties could not agree and BEA, acting for Staptina, issued a Notice of Adjudication dated 24 November 2016. This third adjudication referred to adjudication a dispute “whether you [AECOM] can make any deductions from our client following your termination of our client’s employment under the Sub Contract on 30 March 2016. On a proper construction of the amount due on termination pursuant to Reason 5 (your reason for termination of our client’s employment under the Sub Contract) you are not entitled to deductions for the cost of Defects or for any other reason. The Referring Party’s claim is for a declaration that following termination pursuant to Reason 5 of the Sub-Contact the Respondent was/is not entitled to make any deductions against the Referring Party’s termination account for alleged Defects not rectified or at all, or such declaration as the Adjudicator deems proper.” In her decision, the adjudicator dealt with a matter of principle which had been referred to her for determination. As was clearly understood, the dispute concerned the principle of deductions, and not the actual calculation(s) in terms of how much money could be deducted for each, if AECOM’s case were successful, and deductions were permitted. Staptina’s case

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 360 Arbitration was that no deductions were permitted at all, because Staptina did not have the opportunity to correct such alleged defects as were present. The adjudicator decided that AECOM was in principle entitled to make deductions. The decision stated: “31. All that is referred pursuant to the current Notice is the underlying principle, namely whether or not termination for convenience pursuant to Reason 5 leads to a right in principle for AECOM to make the two relevant deductions from Staptina’s application. 32. However, I am empowered to decide how the sums to be deducted are to be assessed in the event that I find that deductions can be made, rather than simply stating that some form of deduction can be made in principle and no more.” She went on to find that those deductions must be confined to the sum it would have cost Staptina to remedy the relevant defect either before completion or during the defect correction period which was not a basis of assessment that either party had put forward. Ms Chambers did not deal with any quantification or calculation of what sums AECOM could, as a matter of fact, deduct. She directed that Staptina pay her fees. AECOM’s application, put very simply, contended that the question of how the sums to be deducted were to be assessed, i.e. whether they were to be limited to the sums that it would have cost Staptina to remedy the relevant defect, was not referred to the adjudicator for determination at all. Accordingly, Ms Chambers had no jurisdiction to deal with that matter. All she was entitled to do by way of answering the dispute was simply to answer the dispute referred to her as either “Yes—AECOM is entitled to make deductions for defects” or “No—AECOM is not entitled to make deductions for defects”. Even if the adjudicator did have jurisdiction to deal with that aspect of the matter, AECOM submitted that there was a breach of natural justice because it did not have a chance to meet that case against it concerning how, in principle, the deduction(s) for defects were to be quantified. A peculiarity arose from a fourth adjudication currently under way between the parties before Mr Wood. This adjudication was proceeding as though the Decision the subject of this Pt 8 claim was not a fully valid and binding decision. This was not a course agreed by both parties; it was a presumption made by AECOM that its Pt 8 claim would succeed. The court felt it was “entirely inappropriate … and contrary to authority” to take this course which “[a]part from any considerations of oppression … runs the very real risk of incurring considerable wasted costs, duplication of effort, and potentially (in other cases) proceedings for injunctive relief”. It was simply not open to a party in a subsequent adjudication to advance a case which relied on an earlier adjudication decision being treated as not binding, unless that decision had been overturned or had been found not to be enforceable. AECOM put its challenge to the decision on two bases: lack of jurisdiction and breaches of natural justice. First, it challenged whether that part of the decision that decided how deductions for defects should be calculated was part of the dispute that was referred. If the court was against it on that matter, it contended that the proceedings were unfair because AECOM had had no opportunity of meeting the case against it in that respect.

Jurisdiction AECOM defined the dispute as being whether deductions were permitted by AECOM, but not how. Staptina defined the dispute as “a wide point of principle”: whether deductions could be made by AECOM, following a termination for Reason 5, in respect of defects and outstanding works. It submitted that this was not a dispute which could be answered “yes” or “no”. It could be answered as it was with a “qualified yes”.

The court said it should be remembered that adjudication was not a final resolution of any particular dispute. Although the challenge here was only to part of the decision the same principles applied, namely that AECOM could avoid the temporarily binding effect of the decision only by demonstrating that it was made either without jurisdiction or in breach of the principles of natural justice. The court referred to the principles concerning how the question of construing a dispute referred to adjudication should be approached.17 At [48] Carr J stated that the Notice of Adjudication defined the ambit of the adjudicator’s jurisdiction and that any jurisdictional issues would be considered by reference to the nature, scope and extent of the dispute identified in that notice. However, Carr J also stated that the Notice of Adjudication and Referral Notice are not necessarily determinative, as the background facts also need to be considered. Further, the court should not adopt an overly legalistic analysis of what the dispute between the parties is. The ambit of the reference could unavoidably be widened by the nature of the defence or defences advanced by a responding party. The court firmly rejected the submission that the adjudicator was only entitled to answer the issue whether AECOM was permitted to make deductions for defective work with an answer of either “yes” or “no”. A dispute could not be defined by its potential answers. It would be a wholly circular approach to consider the scope of jurisdiction of an adjudicator, and the nature of the dispute that was referred to her, by reference to one of two (or even any) potential answers. A dispute was defined by the matters in the various documents, including the Notice of Adjudication, Referral and pleadings, the pre-adjudication correspondence claims and assertions and also the evidence submitted to the adjudicator. If there were only two answers available, yet an adjudicator were to choose (perhaps incorrectly) a third, that did not go to her acting outside her jurisdiction. That would be answering the right question but in the wrong way. That is not the same as answering the wrong question. In any case the court was of the view that the Notice of Adjudication and Referral in this case did in express terms include the question of how, in principle, the deductions were to be performed. The question also arose out of the Termination Letter when considered in relation to the relevant clauses of the sub-contract dealing with defects, i.e. cll.40.1–40.2 and 41.1–41.2. It was to be borne in mind that Staptina’s case was that AECOM was not entitled to make deductions at all, but in its Response, AECOM asserted that “the Contractor” was entitled to make its assessment by reference to the cost of third party correction. Given that cl.42.1 expressly stated: “the Contractor assesses the cost of having the Defect corrected by other people and the Subcontractor pays this amount” (emphasis added), it plainly concerned deductions for defective work, and the principle of how those deductions were to be calculated, namely the cost of having the defects “corrected by other people” as the clause itself put it. That was the point that AECOM submitted formed no part of the dispute referred to the adjudicator. That submission was rejected as it was one of the defences raised by AECOM to the case against it. That resolved the issue of jurisdiction.

Natural justice The adjudicator decided that the deductions for defects should be assessed by reference to the cost to Staptina of carrying out the necessary works. AECOM’s natural justice complaint was that it had no proper opportunity of addressing that basis because the adjudicator arrived

17 Stellite Construction Ltd v Vascroft Contractors Ltd [2016] EWHC 792 (TCC); [2016] B.L.R. 402; 165 Con L.R. 108.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 362 Arbitration at her view by her “going off on a frolic of her own”, without drawing the parties’ attention to her intention and inviting submissions. The correct approach was considered in Roe Brickwork Ltd v Wates Construction Ltd18 where a losing party said that a point had been decided by an adjudicator that was not argued. Edwards-Stuart J there stated that “there is no rule that a judge, arbitrator or adjudicator must decide a case only by accepting the submissions of one party or the other. An adjudicator can reach a decision on a point of importance on the material before him on a basis for which neither party has contended, provided that the parties were aware of the relevant material and the issues to which it gave rise had been fairly canvassed before the adjudicator”. In the judgment of the court, that latter passage of Edwards-Stuart J aptly summarised the position in this case. The adjudicator decided a point of importance on the basis of the material before her, and on a basis for which neither party had contended, and she was entitled to do so. The point was one of contractual construction, and the way that deductions could be applied by AECOM (if at all) given the termination that had occurred. The parties were aware of all the relevant material—this comprised the sub-contract, the Termination Letter, the letter dated 18 November 2016 and Appendix 3. All of these documents were before the adjudicator, and each party provided submissions in relation to them.

Catch-all provision A certain amount of time was spent at the hearing debating what was called the “catch-all” provision in the Notice of Adjudication, i.e. “or such declaration as the Adjudicator deems proper”, repeated in the Referral Notice. The adjudicator considered that this wording was wide enough to entitle her to provide the answer she considered to be correct—in other words, to go outside the two potential answers proposed to her, one by either party. Staptina was inviting the adjudicator, if she did not accept the case that no deductions were permitted, to make such declaration as she thought proper in relation to the dispute. That was entirely conventional and proper, and the declaration that she made was in the judgment of the court wholly regular in terms of natural justice. It was not necessary that the court answer the “catch-all” point definitively, given the nature of its other findings. However the authorities suggested how the dispute that is referred is to be considered. Words inviting alternatives of relief, as are often found in Adjudication and Referral Notices, are part of the material to be considered by the court and most unlikely to be determinative on their own. They should not be seen by parties as giving any adjudicator carte blanche to go outside the scope of the dispute referred. AECOM was not entitled to the declarations sought in the Pt 8 proceedings and they were dismissed.

6. Natural justice—late submission of information See Bell Building Projects Ltd v Arnold Clark Automobiles Ltd.19 The pursuer, Bell, was to design and build a new car showroom for Arnold Clark (ACL). Work commenced in June 2015 and continued until 4 March 2016 when ACL terminated the contract. The dispute was referred to adjudication and the adjudicator Mrs Lindy Patterson QC decided that ACL was in repudiatory breach; this was accepted by Bell, bringing the contract to an end on 8 March 2016.

18 Roe Brickwork Ltd v Wates Construction Ltd [2013] EWHC 3417 (TCC). 19 Bell Building Projects Ltd v Arnold Clark Automobiles Ltd [2017] CSOH 55; 2017 G.W.D. 12-174, per Lord Tyre, 29 March 2017.

Bell sought damages, the claim was disputed and that (second) dispute was referred to adjudication on 30 September 2016 and Mr L.C.B. Bunton was appointed adjudicator. The Scheme for Construction Contracts (Scotland) Regulations (the Scheme) applied. The date for the decision, initially 30 October 2016, was extended by three agreements eventually to 21 November 2016. ACL’s response was submitted on 7 October, Bell’s reply on 24 October and ACL’s rejoinder on 11 November. Mr Bunton issued his decision on 21 November, finding Bell entitled to £1,010,323.08. In its action Bell claimed payment of that sum. ACL sought to reduce the decision on the grounds of breach of the rules of natural justice. By agreement, the action was disposed of “without proof” (i.e. summarily). The adjudication was complex, with a large number of issues and a considerable volume of documentary materials was submitted. By 14 November there were two outstanding issues concerning: (i) Bell’s claim for loss and expense (comprising mainly staff costs) due to delays; and (ii) a contracharge claimed by ACL for the cost of remedying defective work. The problems leading to the contested enforcement arose in the final 10 days of the adjudication when between 12 and 21 November there was voluminous email traffic between the parties and the adjudicator concerning the substantiation of the sums claimed in respect of the two outstanding issues. In very brief summary this is what happened. The adjudicator asked for further information of Bell’s loss and expense claim. He proposed a meeting to discuss the ACL claim for rectification of defects. Bell offered inspection of records at its premises. The adjudicator asked ACL if it wished to be present indicating he would not inspect unless it was. ACL objected, alleging unfair process, in that the adjudicator was making Bell’s case for it and ACL also accused him of bias in so doing. Bell decided to provide the information by copy records. Four lever arch files were to follow on that Friday night. ACL objected to the late provision of such information. The adjudicator responded the same evening saying the information consisting of salaries and payment of invoices was being provided in that form due to ACL’s objection to his visiting Bell’s offices to inspect records. He commented that he had three full days to look at the new information, as did ACL. He noted that he was still awaiting ACL’s comments on the rectification works. The information from Bell was also to be delivered by link to a dropbox, though it would not include the documents vouching for staff costs sent on a memory stick. At 21.09 the same evening the adjudicator noted that nothing had arrived. He asked for the salary information “for now”. Meantime a hitch occurred in delivery of the materials to ACL’s lawyers. It reached the adjudicator that night but not ACL’s lawyers. The next day, Saturday 19 November, there were further exchanges: the adjudicator suggested a 24-hour extension to review the new information (noting that he had no difficulty in doing so). At 15.23 he sent an email to ACL with five questions for them about the defects (no meeting having taken place). ACL’s lawyers noted that they had not received the four lever arch files the previous night. The adjudicator emailed back saying that if ACL felt disadvantaged, now was the time to say so. ACL’s lawyers emailed back saying they were disadvantaged. They reiterated their objection in principle to the materials sent on Friday being considered by the adjudicator and said their quantity surveyor, Mr Hickey, would not have time to respond due to family commitments. The adjudicator said the materials were to demonstrate that the costs claimed by Bell had been paid and all that was required was a simple cross-check. By this time ACL was complaining that the adjudicator had made up his mind. There followed a series of recriminatory emails between the parties’ solicitors. On Sunday morning 20 November Bell’s lawyers sent the adjudicator and ACL the staff costs on the previously missing memory stick. The adjudicator confirmed that the information supplied by Bell confirmed the staff costs. The focus shifted to the contra-claim. At 12.25 on that same Sunday the adjudicator required ACL to provide “as soon as possible” a copy of the signed final account with each sub-contractor and evidence of what had been paid to the contractor (Chas Smith) for the remedial works. ACL duly provided answers to the five questions and the schedule of sub-contractor works and costs. At 15.15, the adjudicator summarised his three remaining concerns “with 24 hours to go” concerning vouching for

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 364 Arbitration certain main contractor costs, what had been paid to sub-contractors and where he considered certain comments of Bell remained unanswered. On Monday the adjudicator suggested an extension of time to 17.00 on Wednesday 22 November to enable ACL to deal with the outstanding points. Bell agreed. ACL did not respond. The adjudicator then sent an email complaining that he had been bombarded with materials, and was not prepared to issue a decision with which he was not completely satisfied. He said he would write to the Managing Directors of Bell and ACL and tell them he would resign and why, unless he was given an adequate extension of time (of two days). ACL reiterated that it had supplied the details of the sums paid to Chas Smith and the request for the sub-contractor information was more detailed than necessary and came too late in the process. Bell’s solicitors insisted that, in the absence of agreement to an extension from ACL, the adjudicator issue his decision that day. After a further two rounds of exchanges it became clear that ACL was not going to submit any further information: it had not the time nor was it necessary. The decision would not in its view be fair or enforceable. The adjudicator issued his decision that day, 21 November 2017. He awarded Bell £1,010,323.08 against a claim of £1,424,133.84 including £28,751.09 for loss and expense against a claim of £289,491.42. The loss and expense awarded comprised largely the salary costs of four staff members as set out in Appendix II to his award. In relation to that element he commented that it “was a very simple exercise to analyse Bell’s internal accounting system to confirm the weekly rates charged were perfectly valid”. He rejected ACL’s claim for rectification costs, stating that despite “a flurry of further submissions right at the end, and two days before the issue of this Decision. Nonetheless I have been able to give the whole issue my detailed consideration”. He rejected the claim (as with others) for lack of substantiation. ACL’s complaints were: (1) With regard to the loss and expense claim, it had been given no meaningful opportunity to present a response to the information provided by Bell at the very end of the process. (2) The adjudicator had failed to address its claim for contra-charges in a proper fashion; his request for additional vouching was left until the day before the decision when he had no proper opportunity to consider what was submitted. Bell naturally claimed that the process had been fair. In the alternative the offending parts of the decision could be severed. As to the law relating to adjudication and natural justice Lord Tyre referred to the opinion of Lord Drummond Young, thus20: “1. The overriding principle of natural justice required that each party be given a fair opportunity to present its case. Subject to that, procedure was entirely under the control of the adjudicator. 2. In considering what is fair, it was important to bear in mind the strict time limits applicable to adjudication, consequently time for comment might be severely restricted. 3. If the contention of either party contains material that is not touched upon in the contentions of the other, it may [be] desirable to give that other party an opportunity, however short, to comment.” It was a feature of adjudication that the restricted period available for the decision may result in very short times being given to the parties to respond to requests for information or documents, or submissions made by the other side. His Lordship also found helpful

20 Costain Ltd v Strathclyde Builders Ltd [2004] SLT 102; 2004 S.C.L.R. 707; 100 Con. L.R. 41.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Adjudicators’ Awards: Housing Grants, Construction and Regeneration Act 1996 365 guidance in the comments of Coulson J21 that one had to approach an alleged breach of the rules of natural justice with a certain amount of scepticism, as the concepts of natural justice were not easy to reconcile with the swift and summary nature of adjudication. In the event of a clash, the starting point was to give priority to the rough and ready nature of the adjudication process. In addition, the court should have regard to two other considerations. That although the adjudication process could be reopened by arbitration or litigation it was generally not, so this was not a reason to dilute the application of the rules of natural justice. The question for the court was not whether there was actual injustice but whether an opportunity arose for injustice to be done. The court decided there was no breach of the rules of natural justice because: (1) It was a complex adjudication covering a number of issues. Three extensions of time were agreed and no one suggested the adjudicator was not doing his best to complete the task in the time given to him. It was obvious and inevitable that some matters would be dealt with close to the deadline, vouching being required once a decision on the merits had been taken. The course of action proposed by the adjudicator (inspection of records at the premises of one party with the other party in attendance) was within the powers given him under the Scheme para.13 and was not unfair of itself. ACL’s refusal to participate was unreasonable and a major contributory factor to vouching having to be addressed over the final weekend. (2) The late receipt of information of the materials provided in lieu of the visit did not create actual injustice or the opportunity for injustice to arise. The adjudicator indicated that he only intended to look at staff costs and this was a modest exercise and a limited task. (3) The adjudicator had adopted a reasonable approach to the contra-charges including seeking substantiation of the rectification costs. There was no obligation on the adjudicator to seek the documents he had asked for. It was ACL’s responsibility to include any necessary vouching to support its claim. It would not have been a breach of natural justice for the adjudicator to refuse to allow the claim without affording ACL the chance to provide further proof. He had several times proposed a short extension of time, to which proposals ACL failed to respond. (4) Although unnecessary for deciding the point, Bell’s fall-back position was that if there had been a breach of the rules of natural justice in one or both of the ways complained of, the vitiated part of the decision could be severed. This was a single dispute even though it was possible to identify the sums involved in the different issues. To make any deductions would be to rewrite the decision and that was impermissible on the preponderance of authority.

7. Natural justice—decision on basis for which neither party contended See AECOM Design Build Ltd v Staptina Engineering Services Ltd (at 5. Jurisdiction—scope of dispute referred, above).

8. Summary

Enforcement—principles and practice—whether open to defendant to challenge decision as wrong See Hutton Construction Ltd v Wilson Properties (London) Ltd.

21 Dorchester Hotel Ltd v Vivid Interiors Ltd [2009] EWHC 70 (TCC); [2009] B.L.R. 135; [2009] C.I.L.L. 2676.

Where there is no consensual approach and a defendant wishes to challenge a decision as being wrong he must first issue a Pt 8 claim setting out the declarations he seeks or do so in a detailed defence and counterclaim, including the final declarations sought. Any suggestion of a less formal approach in the TCC Guide para.9.4.3 was to be taken as superseded by the guidance given in the judgment. In order to succeed, the defendant must be able to demonstrate that there is a short and self-contained issue which arose in the adjudication and which he continues to contest; that the issue requires no oral evidence, or any other elaboration beyond that which is capable of being provided during the interlocutory hearing set aside for the enforcement; and that the issue is one which, on a summary judgment application, it would be unconscionable for the court to ignore. The court also gave a costs warning.

Enforcement following trial of issue See RSC Contractors Ltd v Anthony Conway. Following the trial of the issue, the court found that there was one contract, therefore a single dispute and that the adjudicator therefore had jurisdiction. The judgment also comments on the amendment to s.107 of the Act.

Jurisdiction—assignment and reassignment of benefits—interest on liquidated damages See Mailbox (Birmingham) Ltd v Galliford Try Ltd. The assignment was effective and reassignment was both effective and in time so the decision was made with jurisdiction. Liquidated damages were not a “qualifying debt” under the Late Payment of Commercial Debts (Interest) Act 1998, therefore the adjudicator did not have jurisdiction to award interest under that Act.

Jurisdiction—scope of dispute referred See AECOM Design Build Ltd v Staptina Engineering Services Ltd. A dispute was not to be defined by its potential answers. It would be a wholly circular approach to consider the scope of jurisdiction of an adjudicator, and the nature of the dispute that was referred to her, by reference to one of two (or even any) potential answers. A dispute was defined by the matters in the various documents, including the Notice of Adjudication, Referral and pleadings, the pre-adjudication correspondence claims and assertions and also the evidence submitted to the adjudicator.

Natural justice—late submission of information See Bell Building Projects Ltd v Arnold Clark Automobiles Ltd. The restricted period available for the decision may result in very short times being given to the parties to respond to requests for information or documents, or submissions made by the other side. One had to approach an alleged breach of the rules of natural justice with a certain amount of scepticism. The concepts of natural justice were not easy to reconcile with the swift and summary nature of adjudication and in the event of a clash, the starting point was to give priority to the rough and ready nature of adjudication. Although the adjudication process could be reopened by arbitration or litigation it was generally not, so this was not a reason to dilute the application of the rules of natural justice. The question for the court was not whether there was actual injustice but whether an opportunity arose for injustice to be done.

Natural justice—decision on basis for which neither party contended See AECOM Design Build Ltd v Staptina Engineering Services Ltd. The adjudicator decided a point of importance on the basis of the material before her, and on a basis for which neither party had contended, and she was entitled to do so.

Hew R. Dundas

Part 1: Arbitration Application No.2 of 20161 (Scotland): A “Legal Error” challenge to an arbitral award

1. Introduction Readers of this series of Case Notes will, I am sure, permit me the small indulgence in this landmark article of returning to my origins and writing about the state of arbitration in the Scottish courts. This article will be in two parts, the first considering the most recent arbitration case and the second briefly surveying Scottish arbitral jurisprudence under the 2010 Act. The Stop Press postscript reports on an interesting case concerning confidentiality in Scottish arbitration. Debate occasionally resurfaces in England as to whether the Arbitration Act 1996 (the 1996 Act) s.69 should be amended, repealed or retained but, in Scotland, we took the view that: (i) the 10-Year Survey of the working of the 1996 Act showed a 4:1 majority in favour of the status quo; and (ii) the business community wanted a right of challenge but one that would have a very high threshold. Consequently, as has been considered previously in Arbitration,2 the 2010 Act sets the bar rather higher than under the 1996 Act, the latter already restrictive.

2. The facts Arbitration Application No.2 of 2016 was an application for leave to appeal (LTA) against three parts of an arbitrator’s award and was made under r.69 on the grounds that the arbitrator had erred on three points of Scots law, with the right to make such an appeal being constrained by r.70. Such an appeal may be made only with the agreement of the parties or with leave of the court but, there having been no such agreement in the present case, leave of the court was therefore required. In 2008 the appellant and the respondent entered into a contract in terms of which the latter undertook to carry out certain construction works for the former at its business premises. In 2009 a series of disputes arose in relation to the parties’ rights and obligations under the contract and, following two separate adjudications, the parties submitted their dispute to arbitration. Following various proceedings, the arbitrator issued a First Part Award in July 2011 and a corrected3 one shortly afterwards. In March 2012 the arbitrator issued a Second Part Award, again corrected shortly after, then in July 2012 a Third Part Award. Following a further 15 days of hearings the arbitrator considered written closing submissions and heard oral submissions in September 2014 and issued a Fourth Part Award in August 2016, correcting it in October 2016.

1 Arbitration Application No.2 of 2016 [2017] CSOH 23; 2017 G.W.D. 6-79, 9 December 2016 per Lord Doherty; as is usual in Scotland (Arbitration (Scotland) Act 2010 (the 2010 Act) s.15 refers), the names of the parties are not given and neither party was represented. Under r.70(5) the LTA application was determined without a hearing. It is not at present known what happened to Arbitration Application No.1 of 2016. In this Case Note references in the form s.00 are to section 00 of the 2010 Act, and references to r.00 are to rule 00 of the Scottish Arbitration Rules (the SAR) contained in Sch.1 thereto. 2 See Hew R. Dundas, “The Arbitration (Scotland) Act 2010: Converting Vision into Reality” (2010) 76 Arbitration 1, 2. 3 Pursuant to r.58, very similar to the 1996 Act s.57.

The appellant sought to challenge parts of the Fourth Part Award on the ground of legal error, contending that: (i) as a result of the first error the award made in respect of waste disposal exceeded (by £183,737.50) the award which ought to have been made; (ii) as a result of the second error the award made in respect of payments for lagging was at least £400,000 greater than it ought to have been; and (iii) as a result of the third error the award made in respect of civil works exceeded (by £808,795.42) the award which ought to have been made.

3. The law In terms of r.70(3), leave to make a legal error appeal may be granted only if the court is satisfied: “(a) that deciding the point will substantially affect a party’s rights; (b) that the tribunal was asked to decide the point; and (c) that, on the basis of the findings of fact in the award (including any facts which the tribunal treated as established for the purpose of deciding the point), the tribunal’s decision on the point (i) was obviously wrong, or (ii) where the court considers the point to be of general importance, is open to serious doubt.”

4. The decision

The challenge to the award for waste disposal The appellant contended that the arbitrator had “plainly erred” in finding that the parties’ contract contained no fixed price for any element of the works and no effective brake on possible over-expenditure by the contractor. It maintained that the correct contractual position was as stated in its application and that the arbitrator’s findings had “obviously [been] contrary” to that. He had therefore also failed to have given effect to the proper construction of cl.52.1 and Appendix E of the contract and, since the issue of the proper construction of cl.52.1 concerned the interpretation of the NEC3 standard form of contract, the appeal raised a point of general importance. Had the arbitrator construed these provisions of the contract properly he ought to have concluded that the heads of cost claimed by the respondent for waste disposal were either included within s.4 (civil works) or, alternatively, fell to be included within the Fee (i.e. the heads of cost detailed in Appendix E). Accordingly the respondents had no entitlement to be paid anything in respect of this head of claim so the arbitrator’s decision on it was obviously wrong. Alternatively the appeal raised an issue of general importance concerning the construction of cl.52.1 of NEC3 and the arbitrator’s decision relating to waste disposal was at least open to serious doubt. In opposing grant of LTA, the respondents contended that: (i) once the sum said to have been involved here (£183,737.50) was viewed in the context of the value of the whole dispute between the parties the proper conclusion was that the arbitrator’s decision on the point did not substantially affect any party’s rights; (ii) the arbitrator’s construction of the relevant provisions of the contract was correct, failing which it was at least a possible construction of the contract which was not obviously wrong; (iii) the point which the appellant was now making in relation to cl.52.1 was not one which the arbitrator had been asked to decide; (iv) the arbitrator’s decision in relation to waste disposal did not raise any point of general importance, nor, in any case, was his decision open to serious doubt. Lord Doherty first considered the relationship between the £183,737.50 claimed to the (approximate) £1,566,000 total of the Fourth Part Award and held that it was sufficiently large that deciding the point would substantially affect a party’s rights. However, he was also satisfied that the petitioner’s submissions to the arbitrator had not included the contention that, on a proper construction of cl.52.1 and Appendix E, costs for waste disposal which

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 370 Arbitration were not included within ss.4 or 10 (of Appendix E) were deemed to be included in the Fee, i.e. that that point of law had not been fairly and squarely placed before the arbitrator.4 Since the arbitrator had not been asked to decide that point the condition in r.70(3)(b) had not been met. In any case, Lord Doherty considered that the arbitrator’s construction of the contract and his decision thereon appeared to be arguably correct and the latter’s conclusion that the costs being claimed were not costs falling within s.4 was plausible. The appellant’s attempt to show that the arbitrator’s decision had obviously been wrong necessitated the overcoming of a stringent test but His Lordship was “very far from persuaded that such a finding can be made here”. Nor was the judge satisfied that the proposed appeal raised any point of general importance, the parties’ contract departing from the standard form NEC3 Option C in several significant respects, thereby making it bespoke. A decision on appeal in this instance would be unlikely to have any wider resonance so unlikely to be a decision of general importance. In any case, he was not persuaded that the arbitrator’s decision was open to serious doubt.

The challenge to the award reflecting sums paid for lagging The appellant contended that the arbitrator had erred in law in making the award which he had for lagging work in so far as the award exceeded £90,094.96. The excess said to have been awarded was not less than £400,000 whereas £90,094.96 was the price for which a sub-contractor (SC) had contracted to carry out lagging work in terms of a sub-contract between them and the respondent which the appellant had approved. However, SC had not carried out all of the work it had contracted to do and, so it was contended, the respondents had claimed not only for the work that SC had done but also for the remainder of the lagging work which it had performed itself. In so far as the total costs claimed for lagging work exceeded £90,094.96 the costs ought not to be recoverable. On a proper construction of cl.11.2(23) “the amount of payments due to Subcontractors for work which is subcontracted” meant payments due in terms of the sub-contract. Given the existence of the sub-contract no sum in excess of £90,094.96 ought to be recoverable as a Defined Cost, whether that sum was claimed as an amount paid to SC or as another cost incurred by the respondents to “Provide the Works” in terms of cl.11(2)(13), otherwise the latter would effectively be recovering twice for the same work. The arbitrator’s error involved a misconstruction of cl.11.2(23) and his decision had obviously been wrong or, if not obviously wrong, both open to serious doubt and raising a point of general importance. The respondent contended that the sum said to be involved—not less than £400,000—ought to be viewed in the context of the global value of the parties’ disputes and that if that was done it was clear that deciding this point would not substantially affect a party’s rights. In any case the arbitrator had been correct to have proceeded on the basis that all of the sums spent by the respondent on lagging were required in order to “Provide the Works” in terms of cl.11.2(13) and were part of the Defined Cost in terms of cl.11.2(23). Further, none of the costs claimed were “Disallowed Costs” so the arbitrator had not erred in construing the contract terms. In addition, his decision had not obviously been wrong and this appeal did not raise a point of general importance. The decision turned upon the particular circumstances in which SC had been engaged. Lord Doherty was satisfied that the £400,000 was sufficiently large5 that deciding the point would substantially affect a party’s rights but he was not satisfied that the appellant had demonstrated that, on the basis of the facts which the arbitrator had found, his decision had been erroneous in law and obviously wrong. Further, he was unconvinced that the proposed appeal on this point raised a point of general importance but, instead, the decision

4 Safeway Stores Plc v Legal & General Insurance Society [2004] EWHC 415 (Ch); [2005] 1 P. & C.R. 9. 5 To the outsider, £400,000 sounds large and, in addition, £400,000 ÷ £1,566,000 is 26%, hardly insignificant … .

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Challenge to Arbitral Award and Survey of Scottish Arbitral Jurisprudence 371 turned on the rather unusual terms which the parties had agreed. In any case, in his view the correctness of the arbitrator’s decision was not only not open to serious doubt but, in fact, had been entirely correct. The arbitrator had concluded that, on a proper construction, the contract did not provide that the necessary lagging work was to be done by the respondent for a fixed price and the appellant’s Closing Submissions to the arbitrator had not maintained otherwise. Construing the language of the contract in its documentary, factual and commercial context there was simply no basis for concluding that it provided that the respondent would do the lagging work for a fixed price and the judge was in no doubt that the arbitrator’s conclusion in this regard had been correct.

The third suggested error of law The appellant contended that the arbitrator had erred in law in making the award for s.4 (Civil Works) which he had made. The legal error was said to have been that the arbitrator’s finding had not been supported by the evidence and was in fact contradicted by it. Lord Doherty understood the criticism to be that the arbitrator had erred: (i) in accepting the valuation evidence of Mr S on this aspect of the dispute because it lacked “any contemporaneous factual basis”; and (ii) in disregarding the valuation of £506,741 which had been agreed between the parties’ representatives in respect of the December 2008 application for payment. The financial consequence of this error of law was said to be £808,795.42. The respondent contended that there was no error of law on the part of the arbitrator, its position in the arbitration having been that the claim had to be built up from £0 rather than from any figure previously agreed for the purposes of amounts claimed or paid in the interim applications. Mr S had given evidence as to how that ought to have been done and, with minor modifications, the arbitrator had accepted Mr S’s approach which he had been entitled to have done. It could not be said that he had fallen into any legal error which had resulted in his decision being obviously wrong and, in addition, the appellant had: (i) not suggested to the arbitrator that it was not legally open to him to adopt Mr S’s approach; and (ii) not asked the arbitrator to decide the point which was now being advanced. Lord Doherty was satisfied that the appellant had not contended before the arbitrator that it had not been legally open to him to have accepted Mr S’s approach so it followed that the arbitrator had not been asked to decide the point which the appellant was now advancing and the requirement in r.70(3)(b) was not satisfied. His Lordship was also satisfied that this challenge was essentially a challenge to the basis of the findings in fact in the award rather than a true legal error appeal falling within the ambit of r.69. In any case Lord Doherty was not satisfied that this aspect of the arbitrator’s decision was vitiated by any error of law which resulted in his decision being obviously wrong. It had been open to him on the evidence before him to have accepted Mr S’s valuation approach and he had not been legally bound to have rejected that evidence and to have preferred the approach contended for by the petitioner. Neither Mr S nor the arbitrator had been constrained to have proceeded on the basis of the valuation which had been agreed for the purposes of the December 2008 application. Lord Doherty therefore refused to grant LTA.

5. Comments/Concluding remarks This case may sound broadly familiar to English readers since there have been many similar challenges there where the appellant attempts to dress up its attack on the arbitrator’s findings in the cloak of a legal error appeal. Lord Doherty’s robust dismissal of the present attempt, particularly when taken with Lord Woolman’s commonsensical approach (see Case 6 below), shows the Scottish judiciary to be wholly on top of matters.

Part 2: Survey of Scottish arbitral jurisprudence post-2010: The Scottish judiciary’s approach to appeals against awards The judiciary were active and greatly valued participants in the 2008/09 development of the 2010 Act hence would have been well aware of its objectives and the policies underpinning it. One of those policies was to minimise judicial involvement even in comparison with the restricted judicial involvement under the 1996 Act; while this has been covered in detail before,6 it is helpful to summarise it here: (i) all first instance decisions, except appeals against awards, are final and there is no right of appeal; (ii) in respect of appeals against awards, there is a possible appeal to the (appellate) Inner House but the threshold is set very high indeed, it being intended that only cases as fundamental as Northern Pioneer7 or Golden Victory8 will be capable of appeal; (iii) there is no right of appeal to the UK Supreme Court at all.9 Only eight cases (including that considered in Pt 1 above) under the 2010 Act have given rise to reported decisions and seven of those involve appeals against awards and the eighth an appeal against a jurisdictional ruling by an arbitrator; while the low number relates in part to the 2010 Act’s highly restricted scope for judicial involvement it is probably at least as much due to the small number of arbitrations taking place in Scotland.

1. Case 110 This was the very first 2010 Act reported case and was an application for LTA for legal error (rr.69 and 70 refer). Neither party was represented and, under r.70(5), the application was determined without a hearing. The actual details of the case do not concern us here and, instead, we focus on Lord Glennie’s11 general observations; as he said,12 “this Opinion13 addresses certain procedural matters14 with a view to offering guidance to practitioners”. Importantly (see above) he said this15: “Since the Act was closely and unashamedly modelled on the [1996] Act, and reflects the same underlying philosophy, authorities on that Act … in relation to questions of interpretation and approach will obviously be of relevance. There is no point in re-inventing the (arbitration) wheel. In the written submissions relating to this application, both parties have helpfully referred to authorities on the approach to granting leave to appeal under the English Act.” [Author’s emphasis added] He also said the following: “[26] … I also consider that the point is one of general importance. It arises under a standard form of building contract. … While I am not prepared to say … that the arbitrator was obviously wrong … I have formed the view that his decision is open to serious doubt. … These are matters which will no doubt

6 Dundas, “The Arbitration (Scotland) Act 2010: Converting Vision into Reality” (2010) 76 Arbitration 1, 2. 7 CMA CGM SA v Beteiligungs KG MS Northern Pioneer Schiffahrtsgesellschaft mbH & Co [2002] EWCA Civ 1878; [2003] 1 W.L.R. 1015; [2003] 3 All E.R. 330. 8 Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] UKHL 12; [2007] 2 A.C. 353; [2007] 2 W.L.R. 691. 9 In contrast, subject to obtaining leave (where necessary), any decision by a first instance judge under the 1996 Act, even a s.45 one, is capable of appeal all the way to the UKSC. 10 Arbitration Application No.3 of 2011 [2011] CSOH 164; 2012 S.L.T. 150 per Lord Glennie, 5 October 2011. 11 He was then the designated “Arbitration Judge” (r.100.2 of the Rules of the Court of Session (RCS) refers) by whom all arbitration applications are normally heard. 12 Arbitration Application No.3 of 2011 [2011] CSOH 164; 2012 S.L.T. 150 at [1]. 13 “Judgment” in English terminology. 14 In 2010 Lord Glennie had chaired the Rules Sub-Committee which developed RCS 100 covering arbitration so his very useful observations on how the RCS are to apply to arbitration applications are of particular importance but the minutiae of court procedure do not concern us here. 15 Arbitration Application No.3 of 2011 [2011] CSOH 164; 2012 S.L.T. 150 at [8].

be explored in more detail at the hearing of the appeal16 and it would not be appropriate to say more at this stage. [28] The point [relating to para.363 of the award] was presented in the petition as a point of law, on the basis that averments in the pleadings about that other tender could not necessarily be said to be irrelevant …. I am not persuaded that [this is applicable to] an evidential point. … Giving a sensible interpretation to what is written there, I think the arbitrator was saying no more than that this evidence was not going to help him and was not sufficiently probative to justify its admission. [29] I do not consider that this issue raises a point of law. Pleadings in arbitration need not, indeed normally should not, follow the form of pleadings in common use in the Court of Session. It is for the arbitrator to decide questions as to the admissibility, relevance, materiality and weight of any evidence: R28(1)(b). It is not to be assumed that the absence of averments directly on the point will mean that evidence relating to it is inadmissible. Even if the averments are excluded, the evidence may still be admitted. That is for the arbitrator. The petitioners complain that the arbitrator misunderstood the potential relevance of the evidence. If so, so be it. That is not a complaint which the court can entertain. They can try again, at an appropriate stage, to persuade him of its relevance. The exclusion of the averments from the pleadings seems to me to be irrelevant to that question, though ultimately that is for the arbitrator to decide, not the court. [30] Even if the question is one of law, I am not persuaded that the arbitrator was obviously wrong. That is the test that has to be met, since is not suggested that this point is one of general importance. They fail to meet it on this second point.” [Author’s emphasis added.] In the present author’s respectful submission, this widely applauded Opinion made an excellent start to Scottish jurisprudence under the 2010 Act.

2. Case 217 This was a r.69 (legal error) appeal18 (in fact, upheld) and Lord Glennie made an important distinction between LTA and the appeal itself: “[22] The question before the court is whether the arbitrator erred in law in a material way in his approach to fixing a market rent for [certain items]. If he did, the case should be sent back to him to reconsider the market rent in light of all the evidence and applying the correct legal approach. This may seem obvious, but it needs to be stated because, in the [respondent’s submissions], it was sought to be argued that the court should not interfere with the decision of the arbitrator in his award unless he was not just wrong but “obviously wrong”. In other words, it was contended that the “obviously wrong” test for the grant of leave to bring a legal error appeal [R70(3)] should carry over to the merits of the appeal itself. That was said, in the note of argument, to be consistent with the policy and intention of the 2010 Act. At the hearing of the appeal, [Counsel for] the respondents did not press this point. In my view, she was right not to do so. It is, to my mind, clear that the “obviously wrong” test … is a threshold test. There is no warrant for the argument that the same test

16 See Case 3 below. 17 Arbitration Application No.2 of 2011 [2011] CSOH 196; [2011] Hous. L.R. 72 per Lord Glennie, 9 November 2011. 18 Arbitration Application No.1 was a r.68 (serious irregularity) appeal arising out of the same dispute; it fell away consequent on the refusal of LTA under r.69. Lord Glennie queried why there had been two separate applications.

should apply also to the hearing of the appeal on its merits. At that stage, the court is simply concerned with the question whether, on the point of law raised in the appeal, the arbitrator made a legal error and, if so, what consequences flow from that.” Having refused to grant LTA, Lord Glennie made another important observation: “[31] … At the motion for further procedure, I granted a motion for anonymity in terms of s.15 of the 2010 Act and [RCS] 100.9. In setting out and explaining my decision, I have attempted to respect both the letter and spirit of this requirement for anonymity, though the subject matter of the lease makes the task somewhat difficult. This difficulty is likely to be encountered to some degree, though possibly not in the acute form in which it arises here, whenever arbitration applications come before the courts, particularly since, subject to the statutory protection of anonymity in arbitration cases where an order is made under s.15, there is a public interest in open justice. It was agreed at the end of the hearing that in the first instance I should issue my Opinion to the parties without publishing it more widely, to enable them to make representations as to whether there should be publication and, if so, whether any details could be omitted without removing from my decision such sense as it might otherwise have. …” The award was in fact upheld and the appeal dismissed.

3. Case 319 This gave rise to no points of general principle concerning arbitration but it should be noted that the case was a legal error appeal (rr.69 and 70 refer) against an award in a dispute relating to construction works carried out by the respondent at the claimant’s premises; what is interesting is that: (i) this appeal arose from that leave granted in Arbitration Application No.3 of 201120; and (ii) it is unclear why the parties sought anonymity at the LTA stage but waived it at the appeal stage. In any event, the appeal was dismissed.

4. Case 421 This was a rent review case and the appeal was for both “serious irregularity” (r.68) and “legal error” (r.69) and Lord Glennie had previously granted LTA under r.69. The claimant now sought an order from the court that the arbitrator should reconsider his award. The judge upheld the legal error appeal, quashed the arbitrator’s determination and remitted the whole matter to him for reconsideration, saying that “it was for him to determine the appropriate minimum and maximum levels [of rental], though I hope that he will gain some assistance from the terms of this Opinion”.

5. Case 522 This was the first ever decision on a jurisdictional ruling under the 2010 Act (rr.19 and 20 refer; although G1 Venues (G1) appealed under r.67, the judge could not see how that rule

19 SGL Carbon Fibres Ltd v RBG Ltd [2012] CSOH 19; 2013 S.L.T. 307, 27 January 2012. 20 Arbitration Application No.3 of 2011 [2011] CSOH 164; 2012 S.L.T. 150. 21 Manchester Associated Mills Ltd v Mitchells & Butler Retail Ltd [2013] CSOH 2; 2013 S.C.L.R. 440 per Lord Malcolm, 10 January 2013. With Lord Glennie having dealt with the application for LTA, self-evidently a different judge had to hear the appeal itself. 22 Petition by G1 Venues Ltd [2013] CSOH 202; 2014 G.W.D. 4-75 per Lord Malcolm, 27 December 2013.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Challenge to Arbitral Award and Survey of Scottish Arbitral Jurisprudence 375 could be engaged since no award had been issued),23 the arbitrator having held that he had no jurisdiction. The petitioners owned property on the ground and basement floors of a building in Glasgow and the respondents owned property on the first, second and third floors. A Deed of Conditions governing the building gave rise to (owner-created) regulations concerning “the preservation, cleaning, use or enjoyment of the common property, or any part thereof”; the Deed included an arbitration agreement, specifying that the arbitrator was to be the Dean of the Royal Faculty of Procurators (DRFP) in Glasgow, whom failing, such arbitrator as shall be appointed by the Sheriff.24 G1 Group plc, G1 Venues’ parent, served the appropriate notice on the DRFP within time but the respondent objected that the notice of arbitration was defective since G1 Group owned no property at the premises in question. The arbitrator held a hearing in July 2012 to debate the jurisdictional issue and, in May 2013, issued a decision upholding the objection and declining jurisdiction. The key question was whether a black-letter approach or a broader commercial one should be adopted in respect of the notice; the judge’s Opinion includes several points of general relevance: “[13] The whole background … indicates that the reference to the parent company rather than G1 Venues Limited was a mistake which would not mislead anyone who had knowledge of the circumstances …. [Counsel for] the respondents submitted that the jurisdictional argument under [R21] was essentially the same as that put forward in the context of the legal error appeal, for which leave was refused. However the rules for granting leave for legal error appeals are restrictive—hence the refusal—whereas in respect of jurisdictional challenges, such as under [R21], no leave is required. I consider that I am not prevented from considering the [R21] appeal on its merits—indeed I am bound to do so. [16] In my opinion, the error here, far from going to the heart of the proceedings, can be regarded as a technical or immaterial mistake, which would not mislead the respondents, nor the arbitrator once he was informed of the full facts. … In my opinion the arbitrator misdirected himself by concentrating only on the impression which an arbitrator would gain when opening the letter. I prefer the view that, when deciding upon his own jurisdiction, he should have considered the reasonable reaction of the other parties to the dispute. In any event, whoever may be identified as the reasonable recipient of the notice, he is understood to be aware of the factual background. Furthermore the arbitrator did not consider the intention of the parties to the deed in respect of the requirements for notices under condition fifteenth. [17] … I will uphold the [R21] appeal against the arbitrator’s decision and remit the whole matter to him to deal with the merits of the dispute. Despite the now long delay since the passing of the resolution, I understand that the issue remains live between the parties.” [Author’s emphasis added] Tellingly (and commendably), the judge added an Addendum to his Opinion: “[18] Over ten months elapsed between the [hearing] and the arbitrator’s decision. Those acting as arbitrators should keep in mind that the founding principles of the 2010 Act include that arbitrations should be resolved without unnecessary delay.” [Author: Hear Hear!]

23 An application for LTA under r.69 had already been rejected by Lord Woolman for the same reason. 24 i.e. the local District Judge in non-Scots terminology.

6. Case 625 This was a combined rr.68 (serious irregularity) and 69 (legal error) appeal concerning a 125-year lease of a hotel with 14-year rent reviews potentially leading to arbitration under the auspices of the RICS Scotland; the tenant contended that the annual rent should remain as was, while the landlord argued for a 214% increase and the arbitrator arrived at +129%. The parties had sought anonymity in terms of s.15. The arbitration was, as customary in such cases, conducted by the surveyor arbitrator as a “desktop” exercise, with the parties being represented by surveyors. Also as customary, the arbitrator requested the surveyors to identify any point of law that arose during the course of the proceedings. He also asked them to declare what role they intended to adopt in the arbitration26 and both the surveyors replied “advocate” with the consequence that they required the permission of the arbitrator before proffering their own opinion evidence. The landlord’s surveyor (the LS) applied an earnings-based valuation and he also calculated the market rental value per hotel room. In arriving at his conclusions, he had assumed that a new tenant would carry out a major redevelopment of the hotel to maximise its trading potential and he used comparable evidence from seven other hotels. Each of his two valuations resulted in a similar figure. The tenant’s surveyor (the TS) applied a different basis of valuation and was highly critical of the LS’s approach suggesting, inter alia, that the latter’s opinion should be ignored because he had not acted within the confines of his role as an advocate. The TS summarised his views on the LS’s valuation as follows: “[It] has no basis in fact, disregards the terms of the lease and bears no relation or regard to the rent review assumption that the property be valued as the subject property in its 1970 configuration. The valuation approach is so fundamentally flawed, ill-founded and wrong that I respectfully request that it should be disregarded in its entirety.” Subsequently, the arbitrator issued his determination in a very concise form. Lord Woolman restated some general principles, noting that the 2010 Act had been modelled on the 1996 Act and he agreed with Lord Glennie’s observations in Arbitration Appeal No.3 of 201127 that English decisions provided helpful guidance in this area. The founding principles set out in the 2010 Act s.1 underpinned all questions of arbitration in Scotland where those principles reflected and restated a long line of authority. For example, in Zermalt Holdings v Nu-Life Upholstery Repairs,28 Bingham J had stated “as a matter of general approach, the courts strive to uphold arbitration awards. They do not approach them with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults in awards and with the objective of upsetting or frustrating the process of arbitration. Far from it. The approach is to read an arbitration award in a reasonable and commercial way, expecting, as is usually the case, that there will be no substantial fault that can be found with it.” More recently, Lord Clarke stated in Hashwani v Jivraj29: “One of the distinguishing features of arbitration that sets it apart from proceedings in national courts is the breadth of discretion left to the parties and the arbitrator to structure the process for resolution of the dispute.”

25 Arbitration Application No.1 of 2013 [2014] CSOH 83; 2014 G.W.D. 16-284 per Lord Woolman, 9 May 2014. 26 That standard query follows RICS guidance on the matter: Surveyors Acting as Advocates, 2nd edn (2009) and Surveyors Acting as Expert Witnesses, 3rd edn (2009); the guidance states that surveyors must inform a tribunal whether they intend to act as an advocate, expert witness, or (exceptionally) in a dual role. 27 Arbitration Application No.3 of 2011 [2011] CSOH 164; 2012 S.L.T. 150. 28 Zermalt Holdings v Nu-Life Upholstery Repairs [1985] 2 E.G.L.R. 14; (1985) 275 E.G. 1134. 29 Hashwani v Jivraj [2011] UKSC 40; [2011] 1 W.L.R. 1872 at [61].

The tenant’s Counsel submitted that there had been serious irregularity in the arbitration because: (a) the LS had acted not only as an advocate but also as an expert; (b) the arbitrator had himself acted as an expert; (c) his reasoning had been deficient or absent; and (d) he had wrongly taken into account inadmissible material. Counsel contended that a fresh arbitration should take place before a new arbitrator.

7. The r.58 (slip rule) issue The landlord’s Counsel raised a preliminary point, submitting that the appeal was incompetent because the tenant had failed to exhaust its rights of appeal or review within the arbitral process (r.71(2) refers). The main thrust of the tenant’s challenge concerned the arbitrator’s allegedly inadequate reasons. It should therefore have asked the arbitrator to clarify or remove any ambiguity in his determination within 28 days of the award being issued (r.58 refers). If a problem remained thereafter, the tenant could have asked the court to direct the arbitrator to give further reasons (r.71(8)). While the judge agreed with the tenant’s Counsel that r.58 did not allow an arbitrator to rewrite a determination, he disagreed with the submission that it concerned only minor matters such as typographical errors. In the judge’s view, r.58 did provide significant corrective powers implementing the philosophy that arbitration is intended to be a stand-alone process with its own remedial mechanisms. The author comments here that this is very interesting since the judge has somewhat widened the applicability of r.58 beyond that which had been envisaged in 2010 based on the 1996 Act s.57; that said, such widening is clearly correct in principle. Even if the tenant had made a r.58 application, the questions concerning acting as an expert and taking account of inadmissible evidence would have remained. The judge declined to uphold the competency challenge, for the reasons set out below.

8. The r.68 (serious irregularity) appeal The judge made three general points (derived from English jurisprudence) about serious irregularity appeals: (1) they were designed as “a long stop available only in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected”30; (ii) the court will not intervene on the basis that it might have done things differently, or expressed its conclusions on the essential issues at greater length; (iii) such an appeal can succeed only if there has been substantial injustice so that a dissatisfied party has to meet a high test.

Had the landlord’s surveyor acted as an expert witness? The arbitrator was required to determine “the admissibility, relevance, materiality and weight of any evidence” (r.28(1)(b)) so the LS’s use of language such as “in my opinion” was insufficient ground for challenge. Such challenge would arise under r.68 only if it could be established that the arbitrator had himself acted irregularly in consequence of the LS’s conduct.

Had the arbitrator acted as an expert? The tenant contended that, given the arbitrator’s reasoning (or lack thereof) on the key issues, his selection of figures and his approach generally, he had departed from his appointed

30 The Departmental Advisory Committee on Arbitration (DAC) Report on Arbitration Bill 1996 (DAC Report), para.280 as cited, e.g. in Walsall MBC v Beechdale Community Housing Association Ltd [2005] EWHC 2715 (TCC); [2006] Arb. L.R. 63; however, Lord Woolman does not mention Christopher Clarke J’s observation in Bandwidth Shipping Corporation v Intaari (the Magdalena Oldendorff) [2006] EWHC 2532 (Comm) at [61] (undisturbed on appeal [2007] EWCA Civ 998; [2008] 1 Lloyd’s Rep. 7) that that passage was not intended to add any gloss to, or to displace the language of, s.68 of the 1996 Act.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 378 Arbitration role and had instead issued what was in fact his own view on the matter, thereby breaching r.68(2). The judge was unpersuaded since the lease envisaged that any arbitration be a practical exercise carried out quickly by an experienced surveyor who would be expected to deploy his knowledge in arriving at his decision. There was nothing in the award to indicate that the arbitrator had stepped beyond his role.

Failure to give reasons The tenant’s Counsel argued that his client was entitled to proper reasons and that the arbitrator’s reasoning had been “in many cases obscure, not apparent to the parties or, in some instances, non-existent”. He further contended that the arbitrator’s conclusion had emerged out of nowhere. Dismissing these arguments, the judge cited English authority to the effect that: (i) an arbitrator is only required to deal with the essential issues, not every point that is raised31; and (ii) an award may be upheld, even if the reasoning is poor and unimpressive.32 One approach was to ask whether the award made sense and it did here: even although the arbitrator’s reasoning was very brief, it was sufficient to explain the conclusion he reached. The fact that in some instances he “averaged” the figures presented by the respective surveyors was not surprising and did not require elaborate analysis. An exercise of professional judgment of this type is not readily susceptible to elaborate reasons. For that reason the judge declined to order additional reasons under r.71(8).

Comparative materials The rent review clause called for an open market valuation so the only relevant information was that available to the hypothetical tenant.33 The tenant argued that it had been a serious irregularity for the LS to have referred to confidential information about a particular hotel but: (i) it was only one out of the seven hotels relied upon as comparators; and (ii) the TS had responded fully to the trading information. The judge rejected this ground on the basis that it was a point of law, not a serious irregularity.

9. The r.69 (legal error) appeal The tenant alleged that the arbitrator had failed: (i) to have determined the relevance and admissibility of opinion evidence proffered by the LS; (ii) to have acted as arbitrator, substituting his own judgment; (iii) to have analysed the evidence placed before him; (iv) to have rejected as inadmissible or irrelevant evidence relating to one hotel; (v) to have carried out a proper calculation and instead “averaged” the submissions of the parties; (vi) to have analysed the parties’ submissions on gross and net operating profit. The judge found it surprising that the tenant had relied upon the same factors for both branches of its case. If something was an error of law, it could not also be an irregularity but the grounds relied upon by the tenant were not genuine points of law. Essentially, the tenant was criticising the arbitrator for not providing fuller reasoning but valuation was more of an art than a science and the arbitrator’s task had been to have exercised his professional judgment to arrive at the correct figure. It followed that the threshold test for making a legal error appeal was not made (r.70(4) and RCS 100.8(2)).

31 Fidelity Management SA v Myriad International Holdings BV [2005] EWHC 1193 (Comm); [2005] Lloyd’s Rep. 508 at [9]. 32 Compton Beauchamp Estates Ltd v Spence [2013] EWHC 1101 (Ch); [2013] 2 P. & C.R. 15 at [79]. 33 Cornwall Coast Country Club v Cardgrange Ltd [1987] 1 E.G.L.R. 146; (1987) 282 E.G. 1664.

Had the arbitrator’s decision been obviously wrong? For a decision to be obviously wrong, it must involve something in the nature of a major intellectual aberration or “making a false leap in logic or reaching a result for which there was no reasonable explanation”34 but no such finding could be made here. The arbitrator had used his professional judgment to arrive at the rental figure on the basis of the submissions presented to him. Concluding, the judge rejected the application for leave to appeal.

10. Conclusions concerning Scottish jurisprudence With the caveat that eight such cases constitute a very small sample compared to the hundreds or more such cases in England, it is already clear (and no surprise at all) that Scottish jurisprudence is squarely on track. All those (many others in addition to CIArb Scottish Branch) involved in developing the 2010 Act can be justly proud of a great achievement.

Stop Press: A Postscript SAR r.26 imposes a confidentiality regime in Scotland which applies to all arbitrations in Scotland unless the parties have opted to disapply it; that rule is largely based on the judgment of Lawrence Collins LJ in Emmott v Michael Wilson, particularly [107] thereof.35 The 2010 Act s.15 is closely allied to r.26 and allows a party to any civil proceedings relating to an arbitration to apply to the court for an anonymity order. The Scottish courts have, very sensibly, interpreted this as not only merely withholding names but also withholding information about the parties which might lead to their being identifiable.36 The very recent case North Lanarkshire Council (the Council) v Stewart & Shields Ltd (S&S)37 examined the interplay between s.15 and R26 and the judge’s conclusions substantially reflected the intentions behind the drafting. The Council sought a s.15 anonymity order which S&S (a construction company) opposed because: (i) the Council had already referred to the arbitration, including the outcome, in its Financial Accounts published (as required by statute) on its website; (ii) prohibiting S&S from being able to refer to the outcome of the arbitration as this would be prejudicial to the Council’s commercial interests. Concerning (i), the disclosure included the name of S&S and the work to which the contract related. The local newspaper had reported the story accordingly. By reason of its publication on the petitioner’s [the Council’s] website, available as part of the World Wide Web, it had, as the judge put it, been published urbi et orbi. The parties had entered into a contract for certain construction works and, after a period of time, the Council purported to terminate the contract on the basis that S&S had allegedly failed to have proceeded regularly and diligently with the works. The dispute had been referred to arbitration and the outcome thereof had, so far, been in favour of S&S: in the arbitrator’s First Part award, he had found that the Council’s notices of termination had been ineffective and, in his Third Part Award, he had determined that, on the merits, the ground for termination had also been ill-founded.38 None of these awards were any longer challengeable, which is why the Council had had to make due provision in its Financial

34 HMV UK Ltd v Propinvest Friar Ltd Partnership [2011] EWCA Civ 1708; [2012] 1 Lloyd’s Rep. 416. 35 Emmott v Michael Wilson & Partners LLP [2008] EWCA Civ 184; [2008] 2 All E.R. 193; [2008] 1 Lloyd’s Rep. 616. 36 Arbitration Application No.2 of 2011 [2011] CSOH 196; [2011] Hous. L.R. 72 at [22] and [31], per Lord Glennie, 9 November 2011; contrast this with a recent matrimonial case in England, M v M, where the anonymised judgment told readers that the plaintiff was a retired famous singer and the respondent a retired model … 37 North Lanarkshire Council (the Council) v Stewart & Shields Ltd (S&S) [2017] CSOH 76; 2017 G.W.D. 15-233, per Lady Wolffe, 5 May 2017. 38 The Second and Fourth Part Awards dealt with the expenses (“costs” in English terminology) of the First and Third awards, respectively.

Accounts. The subject matter of the present proceedings was the arbitrator’s Fifth Part Award (the FPA) which had dealt with loss and quantification. S&S submitted that the relevant information was already in the public domain, i.e., on the Council’s website; concerning the FPA, it was irrelevant that the Council’s disclosure had related to earlier awards since the arbitration proceedings were a single set of ongoing proceedings and the arbitrator would be functus only upon issue of his final award. It was common ground that the Council’s disclosure had fallen into one of r.26’s exceptions39 to confidentiality but r.26 was inapplicable unless the information was not, and never had been, in the public domain.40 S&S’s alternative argument was that it fell into one of the exceptions in s.15 because it would otherwise be disadvantaged in tendering for public works contracts because it would have to state that it had been in a dispute but would be prevented from stating that it had been successful in the arbitration. The Council submitted that the present proceedings were not within the public domain and could therefore still be confidential for the purposes of r.26(4)(d). The only matter that was in the public domain was that the Council had not been entitled to terminate S&S’s appointment under the contract and no other awards of the arbitrator were in the public domain so the Council was entitled to keep that information confidential. The Council also submitted there was no “public domain” proviso in s.15 as there was in r.26(4); had the draftsman wanted to provide for such a proviso, he could readily have done so as a further subparagraph in s.15(2) but he had not. S&S responded (inter alia) that: (i) the definition of “any civil proceedings relating to the arbitration” in r.26(4) extended to the present proceedings and was not time-limited; (ii) what was to be protected, but which the Council had already disclosed, was the arbitration and the identity of the parties to that arbitration.

The judge’s decision Lady Wolffe noted the sharp difference in the parties’ approach to the s.15/r.26 interface, the Council emphasising the differences in wording between s.15 and r.26, in particular, the omission in s.15(2) of any “public domain” exception, whereas S&S argued that these two provisions should be read together. She also noted that both r.26 and s.15 are part of the Act so that there were no considerations of secondary legislation. While r.26 was a default (i.e. opt-out) rule, the parties had not opted out here. It was therefore appropriate to consider, first, the impact of r.26 on arbitrations to which it applied before considering the proper scope of the power under s.15. Rule 26 sought to protect against disclosure of “confidential information” which related to “the arbitration”. Breach of such an obligation is actionable unless disclosure can be brought within any of the exceptions in r.26(1)(a)–(g). For present purposes, the critical element in r.26(1) was that concerning “confidential information” (as defined in r.26(4)). Significantly, r.26(4) included “any civil proceedings relating to the arbitration” in respect of which an order under s.15 had been granted. There was, accordingly, an express link between r.26 and s.15, negating the disjunctive reading of r.26 and s.15 implicit in the Council’s approach. The overriding “public domain proviso” in the definition of “confidential information” was that this information “is not, and never has been, in the public domain”. Any information falling within r.26(4)(a)–(c) that has ever been in the public domain is not “confidential information” and, as a consequence, there was no duty of confidentiality in respect of what was, by definition, non-confidential information. Section 15 did not seek to secure a wholesale preservation of the confidentiality obligation in all the respects covered by r.26, in particular, not seeking to prevent disclosure of the dispute itself, the fact that it has gone to arbitration or its outcome. The section was to secure

39 Rule 26(1)(c)(iii) where disclosure was necessary in order to enable the Council to perform its public functions properly. 40 Rule 26(4)(d).

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Challenge to Arbitral Award and Survey of Scottish Arbitral Jurisprudence 381 the anonymity of the parties by prohibiting disclosure of their identity in any report of the court proceedings arising out of the arbitration proceedings so, therefore, the power available under s.15 was of very limited scope. That did not mean, however, that the exercise of that power was divorced from, or without regard to, the arbitration proceedings which led to the court proceedings or the necessity of the preservation (or otherwise) of the confidentiality of those earlier arbitral proceedings. In other words, whether the obligation of confidentiality has been observed or breached in respect of the arbitration proceedings was, in the judge’s view, highly relevant to the exercise of the power under s.15 to grant anonymity in its own report of the court proceedings flowing from those arbitration proceedings. The matter could be tested this way: if the confidentiality obligation had been observed in respect of the arbitration proceedings, it would be a disincentive for the aggrieved party to challenge any arbitral award if it necessarily meant that its anonymity would be lost, hence the limited power in s.15 to preserve anonymity. Conversely, breach of the r.26 confidentiality obligation has two consequences: (i) any breach can be actionable under r.26(1) unless one of the exceptions in r.26(1)(a)–(g) applies as was the case here; (ii) a breach of confidentiality, like cracking an egg, can only be done once. Confidential information having been disclosed, it is no longer confidential and it cannot become “undisclosed”; r.26(4) says “is not, and has never been, in the public domain” so, in such circumstances r.26 has no further application. It does not matter that there is no like proviso at the end of s.15(2) as is contained at the end of r.26(4): structurally, it would be out of place at that point in s.15(2) and, functionally, it was unnecessary. In terms of the structure of r.26, the proviso was part of the threshold element of “confidential information” in r.26(1), discussed above. The fact that information was in the public domain was not one of the defences to an actionable breach. Further, not all of the exceptions or defences in r.26(1) were within the control of, or justiciable before, the court: see r.26(1)(a), (b) or (g). However, the remaining defences (in r.26(1)(c)–(f)) find their exact parallel in subparas (a)–(d) of s.15(2). In circumstances where there has in fact been disclosure, this also affects the exercise of the power under s.15. Of course, one result is that the information is no longer confidential information, for the purposes of r.26, but such a disclosure is also problematic for any motion for an order under s.15. It is inept, to say the least, to seek an order from the court prohibiting disclosure of something that has already been disclosed to the world. Putting this in terms of s.15(1), where there has already been disclosure of the parties’ identities to the world, it was, in the judge’s opinion, a legal solecism to suggest that the court can ever be “satisfied” (for the purpose of s.15(2)) that disclosure is required or justified for one of the purposes in subparas (a)–(d) of that subsection. It was necessarily implicit to the exercise of the power in s.15(1) that there was still something that is disclosable to be protected, i.e. that the parties’ identities are still confidential and (for the purposes of s.15(1)) are still susceptible to anonymisation. No order of the court under s.15 purporting to prohibit disclosure of the identities of the parties in the report of these proceedings can achieve the statutory purpose of anonymity. The judge accepted S&S’s submission that the arbitration was a single ongoing process, encompassing the several awards made and to be made, and that this was supported by the fact that the arbitrator was not functus until he had issued his final award. In any event, by reason of the Council’s published Financial Accounts, there had already been disclosure of the parties’ identities, even if that had not extended to disclosure of the outcome of all of the awards. That was sufficient to render the making of an order under s.15(1) inept and the Council’s s.15 application was therefore dismissed. Lady Wolffe considered the exceptions in s.15(2) but she did not have to decide on their applicability. The Council would give no undertaking that any disclosure by S&S within the context of the pre-qualification questionnaires was not actionable under r.26 so that, had this been a live issue, she would have accepted that S&S had satisfied her that refusal of anonymity of these proceedings was necessary under either s.15(2)(b) or (d).

Comment The author respectfully commends the judge for what he considers to be a wholly correct judgment that is squarely within the intentions behind the drafting of r.26 and s.15. Given that r.26 started life in an English judgment by Lawrence Collins LJ, it may be that some of the present judgment will assist English practitioners in any similar case.

Marine de Bailleul

1. Introduction In this case note, I summarise the recent decision of the Paris Court of Appeal in Serafín García Armas and Karina García Gruber v Bolivarian Republic of Venezuela (García v Venezuela).1 In order to put this decision into context, I start by analysing the important jurisdictional issue raised in García v Venezuela: the possibility for dual nationals to sue their own state of nationality under a bilateral investment treaty. After outlining Venezuela’s challenges to the tribunal’s jurisdiction over claims brought by dual Spanish-Venezuelan nationals, I set out the key holdings of the Paris Court of Appeal in deciding to reject Venezuela’s set-aside application. Finally, I describe the main implications of the Paris court’s decision for international arbitration in the future. In other words, what does this decision mean and what does it entail for international arbitration?

2. Background: the issue of dual nationality in García v Venezuela In 2012, Serafín García Armas and his daughter Karina García Gruber brought a US $1.1 billion claim under the Spain-Venezuela BIT in response to a series of Venezuelan state measures affecting their investments, including the expropriation of their investments in the food retailing and distribution industry with no compensation. The key issue for purposes of determining the tribunal’s jurisdiction related to the claimants’ dual nationality: the claimants were both Spanish and Venezuelan, and wanted to sue one of their countries of nationality, Venezuela. García Armas was born in Spain and moved to Venezuela in the 1960s. He lost his Spanish nationality in 1972 when he became a Venezuelan national, but reacquired it in 2004. He possessed both nationalities at the time the contested measures were adopted and the Treaty claim was filed. García Gruber is a Venezuelan national by birth and acquired Spanish citizenship in 2003, keeping her Venezuelan nationality at all times. Venezuela raised a number of objections to the tribunal’s jurisdiction, including that the Spain-Venezuela BIT and international law do not allow dual nationals to bring an international claim against their own state; that the claimants’ dominant and effective nationality was Venezuelan; and that their investments were not protected because the claimants were not Spanish nationals at the time they initially made those investments [emphasis added]. On 15 December 2014, the arbitral tribunal issued a decision on jurisdiction rejecting all of Venezuela’s objections. The tribunal ruled that the BIT did not exclude claims by dual nationals, and, therefore, found that it had jurisdiction over the Spain-Venezuela BIT claims filed by the Garcías against Venezuela. In so doing, the tribunal gave primacy to the specific provisions of the Spain-Venezuela BIT over implied principles and the general rules of customary international law, as the BIT was the lex specialis. The tribunal examined the BIT’s language and found that the BIT did not contain express restrictions against dual nationals bringing claims against either contracting state. It also observed that both Venezuela and Spain had signed BITs with other states that had expressly excluded dual nationals from their protections, which shows that the denial of the Treaty’s benefit must be contained expressly in its text. As a result, given the absence of any express limitations in the

1 Underlying decision on jurisdiction UNCITRAL Arbitration Rules, PCA Case No.2013-3, Set-aside decision 25 April 2017 (Case No.RG 15/01040).

Spain-Venezuela BIT prohibiting dual nationals from advancing claims against their own states, it was sufficient that the Garcías had Spanish nationality. To hold otherwise, according to the tribunal, would have been to revise the text of the BIT by adding a restriction that could have been negotiated by the contracting parties (as it was in other BITs) but was not. Arbitrators Grebler and Tawil formed a majority in concluding that for the purposes of determining subject matter jurisdiction, it was sufficient for the claimants to hold Spanish nationality on the date of the alleged treaty breach and on the date of the commencement of the arbitration. At those dates, both claimants held Spanish nationality. In a dissenting opinion, arbitrator Oreamuno held that the nationality requirement must also be satisfied on the date of making the investment in Venezuela. Nonetheless, he agreed that the arbitral tribunal had jurisdiction, because the claimants were Spanish nationals when they made at least part of their investment. Arbitrator Oreamuno’s argument thus had no influence on the outcome of the decision [emphasis added].

3. Venezuela’s challenge to the arbitral tribunal’s jurisdiction While the case continued in its merits phase, Venezuela applied on 14 January 2015 to set aside the arbitral tribunal’s decision on jurisdiction before courts in Paris, the seat of the arbitration. Venezuela invoked the grounds for annulment established by the French Code of Civil Procedure art.1520, which provides: “An award may only be set aside where: (1) the arbitral tribunal wrongly upheld or declined jurisdiction; or (2) the arbitral tribunal was not properly constituted; or (3) the arbitral tribunal ruled without complying with the mandate conferred upon it; or (4) due process was violated; or (5) recognition or enforcement of the award is contrary to international public policy.” Specifically, relying on art.1520(1), Venezuela argued that the jurisdictional award should be annulled in its entirety because the arbitral tribunal wrongly upheld jurisdiction to hear the dispute. In essence, Venezuela maintained that the tribunal did not have jurisdiction because the Spain-Venezuela BIT and international law do not allow dual nationals to bring an international claim against their own state. Venezuela also argued that the claimants did not have Spanish nationality in 2001 when they acquired their shares and made their investment. According to Venezuela, the arbitral tribunal ruled without complying with the mandate conferred upon it pursuant to the Code of Civil Procedure art.1520(3), because it failed to apply the terms of the BIT and international law for the purpose of determining its jurisdiction. On 28 February 2017, the claimants objected to Venezuela’s set-aside application, and requested the Paris Court of Appeal to confirm and enforce the arbitral tribunal’s decision on jurisdiction.

4. Key rulings of the Paris Court of Appeal On 25 April 2017, the Paris Court of Appeal issued a decision partly upholding Venezuela’s challenge. Importantly, however, while the court partially annulled the jurisdictional award, it has not altered the arbitral tribunal’s key ruling that dual nationals can bring claims under the Spain-Venezuela BIT against either contracting state. To reach this conclusion, the Paris Court of Appeal examined the issue of the time at which the claimants were required to hold Spanish nationality in order to benefit from, and bring claims under, the Spain-Venezuela BIT.

The key holdings of the Paris Court of Appeal are as follows: • The time at which Spanish nationality should be considered is the time at which the claimants made their investment. The key reasoning underlying the court’s holding was based on the text of the BIT. The court pointed out that the Spain-Venezuela BIT defines investment as “every kind of asset invested by investors from one Contracting Party in the territory of the other Contracting Party”, while investors were defined in part as “physical persons who hold the nationality of one of the Contracting Parties and who make investments in the territory of the other Contracting Party”. For the court, these definitions suggested that a protected investment could not merely be passively “held” by investors, but must be actively “invested” by investors in the host state. Importantly, the court determined that this “necessarily entailed a condition of nationality of the investor at the date of the investment”. Accordingly, the court supported arbitrator Oreamuno’s view of the temporal aspect of the tribunal’s jurisdiction: the claimants must hold Spanish nationality on the date of the making of their investment in Venezuela in order to bring claims under the BIT. • Part of the jurisdictional award should be annulled, because it incorrectly holds that the only key dates for the analysis of nationality are the date of the alleged violations and submission of the dispute to arbitration. In the court’s view, the majority of the arbitral tribunal failed to consider whether the claimants held Spanish nationality on the date of their investment in Venezuela. Instead, the majority of the arbitral tribunal found that for the purpose of determining subject matter jurisdiction, it was sufficient for the claimants to hold Spanish nationality on the date of the treaty violations and commencement of the claim. It is on the basis of this failure that the Paris Court of Appeal decided to partially annul the jurisdictional award of 15 December 2014. • The rest of the jurisdictional award should be confirmed, including the determination that the BIT does not exclude claims by dual Spanish-Venezuelan nationals. The court determined that contrary to what Venezuela alleged, the Spain-Venezuela BIT did not expressly remove the rights of dual nationals to bring claims under the BIT, and there were no grounds to draw a distinction where one did not exist. The court further found that the BIT was intended to create favourable conditions for investment between the two countries, and this intention would only be partly satisfied if dual-national claims were not covered. Since Venezuela had provided for this option in the BIT, it must accept the consequences of this choice, including the admission of dual-national claims. The court also rejected Venezuela’s view that there was now a customary international law prohibition on nationals pursuing international claims against their own state. In the court’s opinion, there was no consensus in investment arbitration on a principle of “effective nationality” under which a tribunal would identify the state with which an individual has the strongest and “effective” connection, despite any other citizenships held. To put it in a nutshell, the Paris Court of Appeal ruled that the Garcías’ award must be partially annulled, in so far as it determined that the investors’ shares were investments under the BIT without consideration of the investors’ nationality at the date of their investments. Further, the Paris Court of Appeal affirmed the main proposition in the

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 386 Arbitration jurisdictional award that dual nationals have standing to bring claims under the BIT and the arbitral tribunal has jurisdiction to hear those claims. The court rejected all other objections from Venezuela, confirmed the rest of the jurisdictional award and declared it to be enforceable.

5. Key implications for international arbitration The García v Venezuela dispute is being closely watched because of its implications for other investment treaty claims brought by dual nationals against one of their countries of nationality. According to the news and analysis service Investment Arbitration Reporter, the claim is only one of several investment treaty claims currently under way against Venezuela brought by other members of the García family over similar measures, including one filed by nine dual Spanish-Venezuelan nationals in June 2015, for which a jurisdictional hearing has yet to occur. As a result, the questions of nationality addressed in the Paris court ruling are likely to be further debated in those proceedings, and we should be on the lookout for these decisions. The key implication of the decision of the Paris Court of Appeal is that it left intact the main proposition that the Spain-Venezuela BIT does not exclude claims by dual nationals. Even though the Paris court ruled that another key date should be taken into account for the purpose of determining the tribunal’s subject matter jurisdiction over dual nationals—i.e. the date of the making of the investment, and not only the date of the alleged treaty violation or commencement of the arbitration—the court reaffirmed the main ruling from the arbitral tribunal in García v Venezuela: dual Spanish-Venezuelan nationals have standing to bring BIT claims against their own country of nationality, and an arbitral tribunal will have jurisdiction to hear those claims. The underlying reasoning is that had Spain or Venezuela intended to exclude duals nationals from their definition of protected investors, they would have done so directly in the text of the BIT. Simply put, one should not interpret a treaty in a way that is contrary to its textual interpretation. In the case at hand, the text of the Spain-Venezuela BIT does not contain any limitation with respect to dual nationals; therefore, dual nationals are protected investors and may bring BIT claims against either contracting state. Another key implication emerging from the above discussion is that respondent states will face great difficulties in challenging an arbitral tribunal’s jurisdiction. If a contracting state to a BIT objects to the arbitral tribunal’s jurisdiction based on the claimant’s dual nationality, this objection would easily fail where the BIT in question does not exclude claims by dual nationals. One only needs to look at the text of the BIT: had a contracting state intended to exclude dual nationals, it would have expressly done so in the text of the treaty. The decisions of the arbitral tribunal and the Paris Court of Appeal in García v Venezuela strongly support this conclusion. Furthermore, the Paris Court of Appeal decision implies two things for international arbitration: (1) arbitral tribunals will have to examine three relevant dates for purposes of determining their jurisdiction ratione personae over dual nationals; and (2) the court of the seat of the arbitration has significant powers in assessing an arbitral tribunal’s subject matter jurisdiction. First, the Paris Court of Appeal ruled, in essence, that the relevant time for determining nationality is the time of the making of the investment in the host state—not simply the time of the breach or commencement of the claim. That being so, when ruling upon its own jurisdiction over claims brought by dual nationals against one of their states of nationality, an arbitral tribunal shall take into account the nationality of the claimant at the date he or she made the investment. Additionally, in order to be on the safe side, arbitral tribunals shall also take into consideration the claimants’ nationality at the date of the treaty breach and submission of the dispute to arbitration, like the García arbitral tribunal.

Secondly, this ruling shows that the Paris court—the court of the seat of the arbitration—has great powers to review a jurisdictional award as well as the appropriateness of an arbitral tribunal’s subject matter jurisdiction over dual nationals suing their own state. Indeed, in García v Venezuela, the Paris court has not only reviewed the reasoning and conclusion of the arbitral tribunal in the jurisdictional award, it has also introduced a new principle for the purpose of determining the tribunal’s jurisdiction over dual nationals.

International Arbitration: Law and Practice in Switzerland, by Gabrielle Kaufmann-Kohler and Antonio Rigozzi, (Oxford University Press, 2015), 664pp., £175, ISBN: 978-0-19967-975-1.

This work is a new edition of a text that in previous editions was published in the French language and hence only accessible with difficulty to Anglophone members of the arbitral profession. Thanks to a change in publisher, the work is now available in English and will, no doubt, be welcomed warmly by those who practise arbitration with a seat in Switzerland, most commonly in Zurich, Geneva or Lausanne. The book provides a masterly treatment of the subject and benefits from the rich experience of its star duo of authors, Gabrielle Kaufmann-Kohler and Antonio Rigozzi, each in his/her own right being held in the highest regard by the local and international arbitral community. The book is unique in its approach in that it goes far beyond the boundaries of arbitration law and practice in Switzerland. It provides, with admirable clarity, a comprehensive introduction to the concepts of arbitration more generally and as such can serve the function of a primer to the practice and procedure of arbitration as an alternative means of dispute resolution. Of course, the text ultimately focuses on arbitration in Switzerland, but its conceptual foundations, which form a substantial part of the whole, find application in the wider context of arbitration anywhere in the world. One further unique feature of the text is the interposition of excerpts from mostly Swiss court rulings or scholarly writings of relevance to arbitration, which prompts a critical discussion of the subject in context. This approach, I think, is borrowed from student editions published by Oxford University Press in other areas of law and makes this text exceptionally student friendly. Further, the analysis throughout is comparative in that references are made to not only local but also international arbitration laws, rules and case law, especially of German, French and Italian origin (given, no doubt, existing historical and cultural influences). Depending on the subject, UK and US case law precedent also find mention. International and supranational arbitration instruments (including those of a soft law nature) also feature prominently throughout the text. It finally deserves mention that Switzerland is the cradle of many a specific type of arbitration, such as sports arbitration and the arbitration of domain name disputes. Procedural specificities of those types of arbitration are referenced where appropriate. The work is divided into eight main chapters: Ch.1 discusses in impressive detail the concept and sources of arbitration and is a rewarding read for any student of international arbitration. Chapter 2 introduces the law of arbitration in Switzerland, focusing mainly on an analysis of the seat and the distinction between domestic and international arbitration from a Swiss perspective. Chapter 3 provides a comprehensive discussion of the form and content of the arbitration agreement, including questions of construction (both the personal and subject-matter scope) and arbitrability under Swiss law. The selection and constitution of the arbitral tribunal, including the challenge of arbitrators, are discussed in Ch.4. Chapter 5 deals with questions of the proper jurisdiction of the arbitration tribunal on the basis of the tribunal’s Kompetenz-Kompetenz and the court’s power to review the proper scope of a tribunal’s jurisdiction under Swiss law. This chapter also addresses the problem of anti-suit injunctions. Chapter 6 is dedicated to the conduct of the proceedings once a tribunal has been constituted. This chapter places emphasis on fundamental rules of procedure as well as specific requirements imposed by the applicable institutional or other rules, including the hierarchy in their application. The chapter also discusses the availability of provisional measures in support of the arbitration from the arbitral tribunal and the Swiss courts, as the case may be. It also includes sample materials, such as standard terms of reference and draft

388 (2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators Book Reviews 389 procedural orders to assist advising counsel and burgeoning arbitrators in practice. Chapter 7 maps the determination of the law governing the merits of the arbitration (whether ex officio or otherwise), including considerations of the application of transnational laws, trade usages, principles of equity (arbitration ex aequo et bono), etc. This chapter also examines in some detail the role played by international public policy and overriding mandatory rules. Finally, Ch.7 provides detail on the form and content requirements of an arbitral award under Swiss law as well as the drafting process of the award. The final chapter, Ch.8, is dedicated to a discussion of the annulment and enforcement of the local and international arbitration awards before the Swiss courts. The work contains the usual front and end matter. In addition, the authors have included a 50-page table of cases indexing all Swiss court case law precedent referenced in the work. This helps navigate relevant local court case law and serves as a welcome basis for further research. I would not hesitate to recommend this work to anyone who studies the practice and procedure of arbitration in Switzerland. To make it usable in the classroom, the publisher may wish to consider issuing a more affordable student edition, possibly in a soft (rather than in the presently existing hard) cover.

Gordon Blanke

Summaries of UAE Courts’ Decisions on Arbitration 2012–2016, by Hassan Arab, Lara Hammoud and Graham Lovett (eds), (Paris: ICC Publishing, 2017), 180pp., £57, ISBN: 978-9-28842-0412-0.

This is the second edition of a book of the same title published by the same publisher in 2013.1 That title contained in summary format a number of key rulings of the UAE courts over the period 1993–2012, including in particular the Abu Dhabi and Dubai Courts of Cassation, the UAE Federal Supreme Court and the Fujairah Court of First Instance, of relevance to the practice and procedure of arbitration in the UAE. The title under review here is based on the same concept, but focuses on rulings issued over the period 2013 to 2016 and adds rulings of the Dubai International Financial Centre (DIFC) courts.2 By way of background, arbitration in the UAE is governed by the arbitration-relevant provisions of the 1992 UAE Civil Procedures Code, also referred to as the “UAE Arbitration Chapter”.3 The provisions of the UAE Arbitration Chapter are, in turn, subject to the interpretation of the UAE courts, which serve as curial courts in arbitrations seated in the UAE. Given their civil law origin, the UAE courts are not familiar with the concept of binding case law precedent (stare decisis), nevertheless lower courts take guidance from the higher courts and in particular the courts of cassation, and this in turn has given rise to the formation of a jurisprudence constante in UAE court case law over the past 25 years, including in the field of arbitration.4 Even though the UAE courts have proven to be more arbitration-friendly than outsiders often care to acknowledge, there are mandatory procedural requirements that foreign practitioners in particular need to be aware of in order to ensure the enforceability of an arbitral award in the UAE. Guidance, therefore, on matters of due process and procedural formalities from the point of view of the UAE courts is indispensable to navigate a UAE-seated arbitration process successfully. It is this objective that the

1 H. Arab, L. Hammoud and G. Lovett (eds), Summaries of UAE Courts’ Decisions on Arbitration (Paris: ICC Publishing, 2013). 2 Given that the subject matter is not the same in the two books, it is probably not entirely correct to speak of a second edition. It would have been more accurate to refer to the present title as a second volume. 3 For a full article-by-article commentary on the UAE Arbitration Chapter by reference to relevant UAE case law precedent, see G. Blanke, Commentary on the UAE Arbitration Chapter (London: Sweet & Maxwell, 2017). 4 To this effect, see Blanke, Commentary on the UAE Arbitration Chapter (2017), p.viii.

(2017) 83 Arbitration, Issue 3 © 2017 Chartered Institute of Arbitrators 390 Arbitration publication under review pursues. In doing so, it promotes familiarity with the construction of the key provisions of the UAE Arbitration Chapter over time and provides the reader with a good basis for further research on a case-by-case basis. As already mentioned, this second edition also includes four key rulings of the DIFC courts. The DIFC courts serve as curial courts in arbitrations seated in the DIFC, a free zone carved out of the heart of Dubai. The DIFC is a fully functioning, stand-alone common law jurisdiction that benefits from its own arbitration law, the DIFC Arbitration Law, which in turn is based on the UNCITRAL Model Law. Arbitration users in the UAE hence have a choice between free zone or offshore arbitration in the DIFC and onshore arbitration seated in mainland UAE.5 For the avoidance of doubt, this book is a source book, compiling in summary format primary source material, i.e. the text of UAE and DIFC court rulings in the English language.6 In this sense, this book is not a case law commentary, but a useful primary research tool that assists the reader to gain a better understanding of the operation of individual provisions of the UAE Arbitration Chapter and the DIFC Arbitration Law in context through the lens of curial court case law precedent. The book thus does not include any secondary source commentary. With this qualification in mind, the book makes a valuable contribution to the increasing number of English research materials on arbitration in the UAE, which—over the past 20 years—has grown into one of the leading arbitration hubs in the Middle Eastern region. It continues in the tradition of older publications with a similar objective.7 Importantly, the idea of the work was initially conceived by the Steering Committee of the UAE-ICC Commission on Arbitration and ADR,8 hence its publication under the auspices of the International Chamber of Commerce (ICC). This book is a must-have for anyone who practises or has a research interest in arbitration in the UAE. For the avoidance of doubt, given its historical relevance, it will survive the adoption of a Federal UAE Arbitration Law, which has been mooted for later this year.9

Gordon Blanke

5 For further detail, see Blanke, Commentary on the UAE Arbitration Chapter (2017), para.I-041 and following; G. Blanke, “Arbitration in the DIFC” in B. Gessel (ed.), The Challenges and the Future of Commercial and Investment Arbitration—Liber Amicorum Prof. Jerzy Rajski (Warsaw: Court of Arbitration/Lewiatan, 2015), pp.587–605; and G. Blanke, “United Arab Emirates” in G. Blanke (ed.), Arbitration in the MENA (Huntington, NY: Juris, 2016), pp.UAE-1-UAE-117 and UAE-30-UAE-UAE-34. 6 For the avoidance of doubt, even though most DIFC court rulings are available on the official website of the DIFC courts, UAE court rulings are often only available to the parties involved and then only in Arabic. 7 For example, R. Price and E. Al Tamimi, United Arab Emirates Court of Cassation Judgments 1989–1997 (Kluwer Law International, 1998); and R. Price and E. Al Tamimi, United Arab Emirates Court of Cassation Judgments 1998–2003 (Leiden: Brill, 2005). 8 Of which the editors used to be members and of which the lead editor, Hassan Arab, and the reviewer are at present Vice-Chairs. 9 For analogical reasoning on the continued relevance of any commentaries on the UAE Arbitration Chapter after the adoption of a stand-alone UAE Federal Arbitration Law, see G. Blanke, Commentary on the UAE Arbitration Chapter (2017), pp.viii-ix.