Arbitration Quarterly 1 January 2015 Issue Number 6
Arbitration Quarterly
IN THIS ISSUE Investment Arbitration 03 Yukos v. Russian Federation: Largest Arbitration Award to Date 08 EU Issues Injunction to Obstruct Payment of ICSID Award 11 EU and Canada Conclude Free Trade Agreement with Investment Chapter 14 EU Publishes New Regulation Concerning Financial Responsibility in Investor- State Dispute Settlement 18 UN Adopts Convention on Transparency in Treaty-Based Investor- State Arbitration Regional Focus 21 Agreement for Shanghai – Seated ICC Arbitration Recognized in China 25 Singapore High Court Decision in FirstLink Investments Corp Ltd v. GT Payment Pte Ltd Editors’ Remarks 28 Grynberg v. BP and Statoil: NY Court Disqualifies Arbitrator Welcome to the 2015 opening edition awards and Russia challenges them, will 31 NML v. Argentina: the Lasting Effects of Argentina’s Default of Arbitration Quarterly, Debevoise & provide the denouement and no doubt 34 Refusing to Pay the Advance Plimpton LLP’s review of significant provide arbitration commentators with on Costs: Repudiatory Breach of Contract? developments in international much to feast on. Likewise, the European 37 Indian Supreme Court arbitration over the last few months. Union’s increasing engagement in Continues Pro-Arbitration 2014 was a busy year in international investor-state disputes has prompted Trend arbitration. much discourse. Its “suspension” 40 J&P Avax v. Tecnimont SPA In the investment disputes arena, in injunction preventing Romania from 43 Russian Arbitration Reform Yukos v. Russia the Claimants were paying an ICSID award has generated 45 Russia’s Supreme Arbitrazh Court’s Legacy collectively awarded over US$50 billion, concern about the status and application Arbitration Practice following the tribunal’s ruling that Russia of investment agreements signed by 50 New LCIA Arbitration Rules had breached the Energy Charter Treaty. EU Member States. The EU has also Published This award provided persuasive evidence enacted a new regulation that allocates 54 ICDR Revised Rules Update of the potentially immense impact of financial responsibility, and provides 57 Arbitration Round-up investment agreement protections. Of for cooperation between, the EU and 60 Recent Events course, the next steps in the long-running Member States involved in defending 64 Debevoise International saga, as the Claimants seek to enforce the investment disputes. It will be interesting Dispute Resolution Group Continued on page 2 www.debevoise.com Arbitration Quarterly 2 January 2015 Issue Number 6
Editors’ Remarks to observe how the EU’s more active the Singapore High Court has provided Continued from page 1 involvement will influence the conduct of welcome clarification to the question of investment disputes. the proper law of an arbitration, holding In the United States, the U.S. Supreme that absent an express choice of law, it Court has been occupied by litigation will generally be the law of the seat of the arising from Argentina’s sovereign debt arbitration. This approach accords with a default in 2012. In that context, it has had new specific provision in the LCIA Rules. to consider important issues relating to Arbitral institutions have also been busy. state sovereignty. In particular, it held Both the LCIA and ICDR launched new that the Foreign Sovereign Immunities arbitration rules. In a novel Act does not operate to limit or provide development, both institutions expressly immunity from discovery. In a separate considered the conduct of parties’ judgment, the Supreme Court upheld representatives. While the ICDR injunctions that sought to prevent cautiously indicated that it may in future Argentina from making payment to its supplement its rules to regulate parties’ bondholders that had participated in the representative conduct, the LCIA Rules debt restructuring, without making adopted the more radical step of including payment or settling with other mandatory Guidelines setting a minimum bondholders (including NML) that had standard of conduct, directly enforceable refused to participate in the debt by LCIA tribunals. New arbitration restructuring and instead had obtained centers have also sprung up, in Melbourne, judgments to collect on the defaulted bonds. Australia; Riyadh, Saudi Arabia and Domestic courts have also grappled Belgrade, Serbia, reflecting a trend for with a plethora of significant arbitration- more localized arbitration offerings. related cases, generally continuing a trend These important developments will be of of judgments that promote international interest to businesses operating in a range arbitration as a dispute resolution of jurisdictions. If you wish to discuss mechanism. In China, the Supreme any of the issues raised in this publication People’s Court recognized for the first or any other international arbitration and time that a non-PRC arbitral institution dispute resolutions matters, we would be (in this case, the ICC) could administer delighted to hear from you. an arbitration seated in the PRC. The Very best wishes, Indian Supreme Court has continued its pro-arbitration trend in Reliance v. India, David W. Rivkin in which it held that the Indian courts John B. Missing have no jurisdiction to set aside an arbitral award seated in London and Aimee-Jane Lee where the arbitral agreement was and the International Dispute Resolution governed by English law. Also, in Asia, Group of Debevoise & Plimpton LLP
www.debevoise.com Arbitration Quarterly 3 January 2015 Issue Number 6
Yukos v. Russian Federation: Largest Arbitration Award to Date
On July 28, 2014, the Permanent Court for the repayment of Yukos’ tax debt; of Arbitration published Awards in the and three Yukos arbitrations against Russia • the initiation of bankruptcy proceedings 1 (the “Final Awards”). The Tribunal against Yukos and subsequent sale of the unanimously held that Russia had bankrupt’s property for the repayment unlawfully expropriated OAO Yukos of debts to creditors. Oil Company (“Yukos”) in violation of As a result of the sale of the property of its international law obligations under Yukos, most of the assets were in the end “The Tribunal awarded the Energy Charter Treaty (the “ECT”). acquired primarily by the state-owned the Claimants Accordingly, the Tribunal awarded the companies, Gazprom and Rosneft. US$50.02 billion in Claimants US$50.02 billion in damages, In 2003, in parallel with the tax claims damages, ordered ordered Russia to pay US$60 million to filed against Yukos, a series of criminal Russia to pay US$60 cover approximately 75 percent of the investigations were launched against million to cover Claimants’ legal fees, and imposed the senior Yukos executives resulting in the approximately full costs of the arbitration on Russia. imprisonment of a number of executives. 75 percent of the Background Claimants’ legal fees, The Arbitration Proceedings The Dispute and imposed the The arbitration proceedings took place full costs of the The disputes arose out of actions that under the UNCITRAL Rules and lasted arbitration on Russia.” Russian state authorities took against nearly 10 years. The proceedings Yukos, starting in the early 2000s, were bifurcated, with a preliminary including: phase on jurisdiction and admissibility • in 2003 tax reassessments and (concluding with Interim Awards consequential fines covering the years on Jurisdiction and Admissibility in 2000-2004, that resulted in a record tax November 2009 (the “Interim Awards”)), bill of more than US$24 billion; followed by a merits phase that also • the freezing of Yukos’ assets by a incorporated some issues deferred from Russian court, and the seizing and the preliminary phase. For the merits subsequent auction of a key production phase alone, after receipt of voluminous subsidiary, Yuganskneftegaz (“YNG”), written submissions totaling 2,504
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1. The Tribunal adjudicated three arbitrations, each brought by a different shareholder (Hulley Enterprises Limited, Yukos Universal Limited, and Veteran Petroleum Limited) (the “Claimants”). The arbitrations were heard in parallel, but the Tribunal issued three Awards. See Hulley Enterprises Limited (Cyprus) v. Russian Federation, PCA Case No. AA 226, Final Award (July 18, 2014); Yukos Universal Limited (Isle of Man) v. Russian Federation, PCA Case No. AA 227, Final Award (July 18, 2014); Veteran Petroleum Limited (Cyprus) v. Russian Federation, PCA Case No. AA 228, Final Award (July 18, 2014). The Awards are substantially identical; the only distinction being the damages owed to each shareholder. Collectively, the Claimants held a 70.5 percent shareholding in Yukos. Final Awards, ¶ 69.
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Yukos v. Russian Federation: pages, at least 6,281 exhibits, 9 witness the ECT and Russia’s internal laws were Largest Arbitration Award statements and 19 expert reports, the consistent. The Claimants argued that to Date Tribunal heard the parties in a 22 day the relevant issue was simply whether Continued from page 3 oral hearing held in The Hague in the principle of provisional application late 2012. Unsurprisingly, the dispute of a non-ratified treaty was consistent evolved during the course of the lengthy with Russian law. The Tribunal favored arbitration proceedings. The Claimants’ the Claimants’ interpretation and complaints covered conduct primarily found that the principle of provisional between July 2003 and November 2007, application was not inconsistent with after the arbitration had been initiated. Russian law. See, e.g., Yukos Universal Limited (Isle of Man) v. Russian The Interim Awards on Jurisdiction Federation, PCA Case No. AA 227, and Admissibility Interim Award (Nov. 30, 2009), ¶ 394. The Tribunal had dismissed most of Russia’s jurisdictional objections in its The Final Awards 2009 Interim Awards. Most notably, Jurisdiction and Admissibility the Tribunal had considered the The Tribunal had reserved certain consequences of the fact that Russia jurisdictional objections and had not ratified the ECT and therefore admissibility arguments for the it had not entered into force. The merits phase. In the Final Awards, the ECT itself provides that once it has Tribunal dismissed Russia’s argument been signed by a State it shall apply that, because of the Claimants’ alleged “provisionally pending its entry into “unclean hands,” the Tribunal lacked force for such signatory to the extent jurisdiction, the Claimants’ claims were that such provisional application is not inadmissible, and/or the Claimants inconsistent with its constitution, laws should be deprived of the substantive or regulations.” ECT, Article 45(1). protections of the ECT. Final Awards, Russia had argued that provisional ¶ 1373. However, the Tribunal did note application did not apply because it that the alleged conduct could have an was inconsistent with its internal laws. impact on the Tribunal’s assessment of However, the parties disputed the liability and damages. Id. ¶ 1374. proper interpretation of this carve-out. The Tribunal also rejected Russia’s Russia argued that the relevant issue objection that, based on a carve-out was whether particular provisions of in the ECT, the Tribunal did not have
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Recognition: Debevoise & Plimpton LLP Partner Sophie Lamb named “Rising Star” by Law360.
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Yukos v. Russian Federation: jurisdiction over claims relating to Yukos bankrupt, or for Yukos to have Largest Arbitration Award “Taxation Measures.” ECT, Article 21. been deprived of all of its remaining to Date It held that claims prima facie excluded assets through a hasty and questionable Continued from page 4 by the carve-out would be brought back liquidation process.” Id. ¶ 1180. within the Tribunal’s jurisdiction by The Tribunal was also critical of the an express claw-back provision in the “harsh treatment” suffered by Yukos ECT which provided that Article 13 executives in criminal proceedings, (prohibiting unlawful expropriation) which it said did “not comport with shall apply to taxes. In any event, the the due process of law” and which carve-out could only apply to bona fide indicated that the Russian courts had taxation measures. Id. ¶¶ 1406-1407. been influenced by the state executive. Liability Id. ¶ 1583. Similarly, it highlighted the “intimidation and harassment” The Tribunal found that Russia had suffered by Yukos’ mid-level employees, engaged in a concerted attack on in-house counsel and external lawyers. Yukos. This involved the imposition Id. ¶ 820. The Tribunal found that such of unlawful tax demands which the treatment supported the Claimants’ Tribunal concluded evidenced that submission that the Russian authorities “the primary objective of the Russian nd were conducting a “ruthless campaign Federation was not to collect taxes 2time in 3 years to destroy Yukos, appropriate its assets but rather to bankrupt Yukos and and eliminate Mr. Khodorkovsky as a appropriate its valuable assets.” Id. political opponent.” Id. ¶ 811. ¶ 756. It also included the auction of YNG. The Tribunal found that Russia was Debevoise & Plimpton The Tribunal found that the purchase in breach of Article 13 of the ECT, LLP Receives 2014 price was far below the fair value and which prohibits measures “equivalent Chambers Latin identified Russia’s imposition of massive to nationalization or expropriation,” America International tax liabilities on YNG and its speedy except under specified circumstances Arbitration Award arrangement of the auction as possible (i.e., when for public purpose, non- for the Second Time causes. Id. ¶¶ 1020-1022. The Tribunal discriminatory, under due process of law, in Three Years. concluded that the auction “was in effect and accompanied by compensation). a devious and calculated expropriation Id. ¶¶ 1580-1585. Given this finding, the by Respondent of YNG” with drastic Tribunal considered it unnecessary to consequences for Yukos’ prospects for address the Claimants’ additional claim survival. Id. ¶¶ 1037, 1043-1044. Finally, that by failing to accord their investments the Tribunal reviewed the bankruptcy fair and equitable treatment, Russia’s proceedings and found that it “[could conduct was in breach of Article 10 of the not] accept that it was in any sense ECT. Id. ¶ 1585. proper or fair . . . for the court to declare
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Yukos v. Russian Federation: Notwithstanding the Tribunal’s share in Yukos to be US$30.049 billion Largest Arbitration Award finding of liability against Russia, it and the valuation of the Claimants’ to Date recognized that the Claimants were lost dividends to be US$36.645 billion Continued from page 5 at fault insofar as Yukos’ tax practices (totaling US$66.694 billion). Id. ¶¶ 1822- “contributed in a material way to the 1825. This amount was reduced by 25 prejudice which they subsequently percent to account for the Claimants’ suffered.” Id. ¶ 1634. It apportioned contributory fault, leading to a final 25 percent of responsibility to the damages award of US$50.02 billion (less Claimants. Id. ¶ 1637. than half of the US$114.17 billion in damages sought by the Claimants). Damages and Interest Id. ¶¶ 171, 1827. The Tribunal awarded US$50.02 billion to the Claimants, the largest amount of Appeal and Enforcement damages in history. In arriving at this Russia has declared that it will exhaust figure, the Tribunal first ruled on three all legal avenues to challenge the Awards preliminary issues pertaining to the and resist enforcement. The legal seat selection of the valuation date, causation, of the arbitration is the Netherlands, so and the Claimants’ failure to mitigate. any legal right to challenge the Awards The Tribunal then determined the is governed by Dutch arbitration law. categories of damages to which the In mid-November, it was reported Claimants were entitled as being: that Russia had applied to the Dutch (i) the value of their shares in Yukos as Courts to have the Awards set aside. of the valuation date; and (ii) the value In common with many jurisdictions, of the dividends that would have been under Dutch arbitration law, there is paid to the Claimants by Yukos up to the no right to a substantive “appeal.” This valuation date, but for the expropriation leaves Russia with only very limited of Yukos (as well as pre-award simple grounds upon which it can apply to have interest on these amounts). Id. ¶ 1778. the Awards set aside. These grounds However, the Tribunal rejected the focus on procedural irregularities and assessment of the Claimants’ damages jurisdiction, rather than a substantive based on a potential listing of Yukos analysis of the merits of the Awards. For on the NYSE and a completed merger example, one would expect Russia to try between Yukos and Sibneft, finding that to make an argument that the Tribunal both events were either “too uncertain” wrongly assumed jurisdiction (e.g., or “too speculative.” Id. ¶¶ 1779-1780. because it wrongly found that the ECT Using the Award date as the valuation applied provisionally). However, the date, the Tribunal quantified the substantive correctness of the Tribunal’s valuation of the Claimants’ 70.5 percent Awards is not reviewable on the merits;
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Yukos v. Russian Federation: it will not be sufficient for Russia in light of the Tribunal’s suggestion Largest Arbitration Award to challenge the Awards or contest that Rosneft was an instrumentality to Date enforcement just because the Tribunal of the State. The Tribunal’s findings Continued from page 6 was “wrong.” regarding attribution to the Russian Because the Netherlands is a State of Rosneft’s conduct may help Contracting State to the New York advance that argument. It is also Convention, the Awards are prima facie possible that the Claimants will seek enforceable in any one of the other to receive debts owed to Russia (such 149 Contracting States. There are only as accounts payables) by third-party very limited grounds upon which a companies as a means to enforce the Contracting State may refuse to recognize Awards – a procedure commonly and enforce an award rendered by a known as garnishment. This possibility Tribunal seated in another Contracting should not be ruled out, in particular State. As part of the enforcement by investors owing Russia debts of a process, if Russia persists in non- commercial nature. payment, the Claimants may be able to
“The Claimants have already indicated that they may target the assets of Rosneft in light of the Tribunal’s suggestion that Rosneft was an instrumentality of the State.”
obtain attachments against Russian assets Conclusion outside of Russia, provided that they are The Tribunal’s Final Awards demonstrate “commercial” as opposed to “sovereign” the potentially immense impact of in nature. Sovereign assets are generally the investment protections afforded protected by State immunity. by bilateral investment treaties, free- Depending on the relevant national trade agreements, and multilateral law, the Claimants may not be limited to treaties containing investment chapters. seeking enforcement against the assets Moreover, they also demonstrate the reach owned directly by Russia itself. The of international law, even when a State Claimants may also seek to enforce the has not internally ratified a treaty. In this Awards against the assets of Russia’s respect, the ECT’s provisional application State-owned companies, so long as provisions were of critical importance. they can show that the State-owned For further information, please contact: entity has no separate existence. The Claimants have already indicated that Aimee-Jane Lee [email protected] they may target the assets of Rosneft London, +44 20 7786 9168
www.debevoise.com Arbitration Quarterly 8 January 2015 Issue Number 6
EU Issues Injunction to Obstruct Payment of ICSID Award
In a striking development, the European that, given that the BIT did not contain Commission (the “Commission”) any reference to the EU or to accession, has issued a “suspension” injunction it could not assume that there was preventing Romania from paying an any intention to amend, modify or arbitral award arising from proceedings otherwise detract from the application in Micula & Ors v. Romania (ICSID Case of the BIT. No. ARB/05/20) concluded in 2013. The The Commission’s extraordinary ICSID Tribunal had ordered Romania to intervention in this arbitration comes pay US$250 million to Swedish investors against the backdrop of ongoing on the basis that the withdrawal by reforms within the EU in relation to Romania of certain incentives and foreign investment policy. The Treaty benefits was contrary to the legitimate of Lisbon 2009 transferred exclusive expectations and the protections owed to competence over the field of foreign direct the investors under the Romania-Sweden investment from the Member States to Bilateral Investment Treaty (the “BIT”). the EU’s Common Commercial Policy. Romania has so far complied with the Consequently, Member States are, in terms of the Commission’s injunction. principle, no longer permitted to negotiate
“The extraordinary move by the Commission to enjoin the award . . . has itself prompted many difficult questions about the future operation of investor-state arbitration within Europe.”
The EU had participated in the individual BITs with non-EU countries arbitration as amicus curiae in support (as these will be replaced with EU-wide of Romania’s position that it did not BITs), and the Commission has indicated breach the BIT because withdrawal that all existing intra-EU BITs should be of the various incentives had been terminated (because they are presumed required to comply with EU law, namely to breach EU law by providing advantage to eliminate state aid. However, the to certain Member States’ investors over Tribunal rejected these arguments. It others, and hindering the enforcement observed that Romania was not a party and coherent application of EU law). to the EU when the BIT was negotiated The full consequences of this and concluded in 2003. It further held competence shift from Member States
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to the EU are not yet clear. However breach. There is as yet no consensus on EU Issues Injunction to Obstruct Payment of these reforms have given rise to much which obligation prevails in such cases ICSID Award uncertainty about the status and fate of conflict, or how such conflicts should Continued from page 8 of investment agreements signed by otherwise be resolved. EU Member States. In addition, the The injunction has also raised questions extraordinary move by the Commission about the status and applicability of to enjoin the award in Micula & Ors v. EU law in the context of investor-state Romania (ICSID Case No. ARB/05/20) arbitration. In Micula, the Commission has itself prompted many difficult argued that EU law formed part of the questions about the future operation of applicable law in investment treaty investor-state arbitration within Europe. arbitration, and therefore arbitrators
One of the main questions raised ought to apply BITs in light of EU law. by the injunction is the vexing issue However, there are open questions of the interaction between Member about how EU law should properly be States’ obligations under EU law characterized in the context. Is EU law and their obligations under public to be treated as “international law” and international law. As a signatory to therefore applicable under the terms the ICSID Convention, Romania has of the ICSID Convention and BITs, or an obligation under Article 53 of that is it to be viewed as more akin to the treaty to “comply with the terms of the “domestic law” of Member States? At the award.” The Commission’s injunction heart of this conundrum is the doctrinal means that Romania is now in breach assertion of the European Court of of its international obligations, and that Justice that EU law is a sui generis the EU is arguably complicit in that legal regime, separate and apart from
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www.debevoise.com Arbitration Quarterly 10 January 2015 Issue Number 6
EU Issues Injunction to general international law. The divergent enforcement of the award after Romania Obstruct Payment of decisions in Electrabel v. Hungary1 indicated that, in light of the injunction, ICSID Award and AES v. Hungary2 underscore the it was unable to pay the award if Continued from page 9 jurisprudential uncertainty surrounding the annulment proceedings were this issue. unsuccessful. The Claimants in Micula More generally the EU has cast have started enforcement proceedings serious doubt on the validity of BITs in the United States. The Claimants signed between EU Member States have also instituted proceedings against (so-called intra-EU BITs), having taken the Commission seeking to quash the the position that intra-EU BITs should injunction, on the basis that it was ultra be phased out. However, this view has vires the Commission’s power. been met with skepticism from Member The EU’s extraordinary intervention States and has been openly rejected by in this arbitration signals a general arbitral tribunals (See, e.g., Eastern Sugar upheaval and change in the investor- v. Czech Republic, Partial Award, March state arbitration regime in Europe. The 27, 2007; and Eureko v. Slovakia, Award arbitration community will no doubt on Jurisdiction, October 26, 2010). be watching developments in this case, Moreover, all BITs provide specific and the wider reforms being undertaken requirements for termination and usually under the auspices of the European provide that they remain in effect for a Commission. At stake is nothing less lengthy period of years after termination. than the reliability and future of the It seems improper for the EU to attempt investment protection regime in Europe. simply to declare them terminated. For further information, please contact: In the midst of this legal and policy Nicola Leslie uncertainty, the saga with respect to [email protected] Micula & Ors v. Romania continues. London, +44 20 7786 5462 Romania has initiated annulment Conway Blake proceedings, and an ICSID annulment [email protected] committee has now been constituted. London, +44 20 7786 5403 The committee has lifted a stay on the
1. Electrabel S.A. v. Republic of Hungary, ICSID Case No. ARB/07/19, Decision on Jurisdiction, Applicable Law and Liability, November 30, 2012. 2. AES Summit Generation Limited and AES-Tisza Erömü Kft v. The Republic of Hungary, ICSID Case No. ARB/07/22, Award, September 23, 2010. www.debevoise.com Arbitration Quarterly 11 January 2015 Issue Number 6
EU and Canada Conclude Free Trade Agreement with Investment Chapter
On August 5, 2014 the European Union non-discriminatory manner and against and Canada signed the Comprehensive payment of prompt, adequate and Economic and Trade Agreement effective compensation. (“CETA”). One of the most notable Notably, the parties were unwilling aspects of this agreement – the full to allow the interpretation of either text of which was made public in the fair and equitable treatment late September – is the inclusion of a standard or the obligation not to effect comprehensive regime of investment indirect expropriation to be guided by protection. The inclusion of such developing international law on the provisions is illustrative of a shift within subject, preferring instead to adopt a the EU since the entry into force of much more prescriptive approach as the Treaty on the Functioning of the to what constituted a breach of these European Union (the “Lisbon Treaty”) standards. The annex that seeks to on December 1, 2009; whereas previously define indirect expropriation is notable investors had to rely on bilateral for expressly providing that non- investment treaties entered into by discriminatory measures whose purpose individual Member States for protection, is to protect legitimate public welfare the EU now has exclusive competence objectives (such as health, safety and the in the area of foreign direct investment environment) do not constitute indirect by virtue of Article 207 of the Lisbon expropriations, unless the measures Treaty. CETA must now be ratified by are so severe as to appear manifestly individual Canadian provinces and the excessive. 28 Member States of the EU before it Additionally, host states are forbidden can enter into force. from discriminating against foreign The protections provided by the investors, both vis-à-vis domestic investment chapter of CETA are largely investors (the so-called national consistent with current international treatment obligation) and investors practice, although there are a number from third states (the provision of of interesting nuances. Host states so-called most-favored nation (MFN) are obliged to grant foreign investors treatment). Second, the investment fair and equitable treatment and full chapter imposes obligations relating to protection and security. Host states are the establishment of investments: host also prevented from expropriating, either states are prevented from imposing on directly or indirectly, the investments foreign investors (i) certain measures of foreign investors, except for a public designed to limit market access; or purpose, under due process of law, in a (ii) certain performance requirements.
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EU and Canada Conclude These two sets of provisions contain provision of government support in the Free Trade Agreement with three particularly interesting elements. field of trade in services. Investment Chapter First, the MFN obligation does not apply In the event that a dispute cannot be Continued from page 11 to dispute settlement provisions. One settled during a mandatory period of of the more contested questions in the consultation, disputes are to be settled jurisprudence of investment treaty cases by international arbitration under (i) the is whether an investor is entitled to use International Centre for the Settlement an MFN obligation to take advantage of Investment Disputes (ICSID); (ii) the of more favorable dispute-settlement ICSID Additional Facility Rules; and provisions in another investment treaty (iii) the UNCITRAL Arbitration Rules. entered into between the host state and The inclusion of investor-state arbitration a third party. By expressly stating that was criticized by some commentators, the MFN obligation does not apply to who suggested that this would lead to dispute settlement, the parties have important public policy decisions being avoided this difficult issue. Second, decided by arbitrators sitting behind substantive obligations included in closed doors.
“It is apparent that the parties have gone to great lengths to counter the perception that disputes arising from the investment chapter would be decided ‘in secret’.”
agreements with third states are only However, it is apparent that the parties deemed to be “treatment” for the have gone to great lengths to counter purposes of the MFN provision if the the perception that disputes arising from host state in question adopts measures the investment chapter would be decided to give effect to these obligations. “in secret.” The investment chapter Merely including such provisions in an not only incorporates the UNCITRAL investment treaty entered into with a Rules on Transparency in Treaty-based third state is not sufficient. Finally, there Investor-State Arbitration (for more are substantial carve-outs from all of on this issue see UNCITRAL Adopts the market access, national treatment Long-Awaited Rules on Transparency in and MFN obligations: these obligations Treaty-Based Investor – State Arbitration, do not apply in the field of public Issue 3, Arbitration Quarterly), but procurement, and are not breached expressly broadens the scope of these by either government subsidies or the provisions to permit an even greater
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EU and Canada Conclude volume of information to be made requirements would not be able to bring Free Trade Agreement with public than would otherwise be the case. its claim in investor state arbitration, Investment Chapter Consequently, members of the public but would instead be obliged to resort to Continued from page 12 are permitted to attend hearings, review national courts. the briefs submitted by the parties, and The investment chapter of CETA has examine all of the underlying documents clearly been carefully negotiated. submitted in the case. There is also the It contains all of the protections one facility for both ordinary members of might expect, although its prescriptive the public and states that are not party to nature might mean that it is unable to a particular proceeding to submit amicus keep up with subsequent developments briefs. The access enjoyed by the public in international investment law. The to arbitrations under the investment parties are to be commended for the chapter of CETA is therefore equivalent inclusion of extensive transparency to, or potentially better than, that obligations. It will be interesting to see enjoyed to proceedings before ordinary whether a similar approach is adopted in civil courts. the investment chapter of the The obligation to arbitrate is limited Transatlantic Trade and Investment in scope: it applies only to the sections Partnership, which is currently being on non-discriminatory treatment (the negotiated between the EU and the national treatment and MFN obligations) United States. and investment protection (the most For further information, please contact: important elements of which are Jane Rahman the obligations on fair and equitable [email protected] treatment, full protection and security, London +44 20 7786 5463 and expropriation). Importantly, therefore, an investor alleging breach of a host state’s obligations with regard to market access or performance
www.debevoise.com Arbitration Quarterly 14 January 2015 Issue Number 6
EU Publishes New Regulation Concerning Financial Responsibility in Investor-State Dispute Settlement
Introduction the Regulation will work in practice, and On August 28, 2014, the European whether it could increase the costs of Union (the “EU”) published Regulation relevant arbitrations. (EU) 912/2014 (the “Regulation”) as Scope of Regulation a framework for managing investor- The Regulation applies to proceedings state disputes concerning investment which are brought after September 17, agreements to which the EU or the 2014, and which arise under investment EU and EU member states (“Member agreements to which the EU, or the States”) are parties. While the EU and its Member States, are parties Regulation principally serves to allocate (currently, the Energy Charter Treaty financial responsibility between the EU and the Comprehensive Economic and Member States for such disputes, it Trade Agreement with Canada). The also covers related areas: European Commission is negotiating • allocating responsibility for the costs treaties with investment protection of defending investor-state disputes; provisions with China and Myanmar, • determining which of the EU and and free trade agreements with the the relevant Member State will act as U.S., India, Japan, Singapore, Thailand, respondent; Vietnam and Morocco. Any agreements • imposing general and specific arising from these negotiations are likely requirements on the EU and Member to fall within the scope of the Regulation. States to cooperate in defending a The underlying principle of claim; and the Regulation is that financial responsibility for a particular dispute • providing for which entity will be will be attributed to the party whose primarily responsible for payment of conduct caused it – i.e., if a dispute arises any award made against the EU or a from a Member State’s conduct, that Member State. Member State will bear proportionate In principle, investors and Member financial responsibility for the dispute, States should welcome the clarification whereas if a dispute arises from the brought by the Regulation. However, it conduct of an institution, body, office remains unclear how certain elements of or agency of the EU, the EU will bear
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EU Publishes New Regulation proportionate financial responsibility. is responsible for all or part of the Concerning Financial For the purposes of the Regulation, conduct giving rise to the dispute; or Responsibility in Investor- financial responsibility includes both the State Dispute Settlement • a dispute addresses a specific legal Continued from page 14 costs of any award or settlement, and issue which is also being addressed in any costs arising from proceedings. The a claim against the EU at the World EU has the final say on the allocation of Trade Organization. financial responsibility between the EU and any relevant Member State where The latter seeks to ensure that consistent the EU acts as respondent in a claim. arguments are presented before all forums. There are exceptions to the underlying A Member State may decline to act principle of the Regulation. Where a as respondent in favor of the European Member State’s conduct is required Commission. The preamble to the by applicable EU law, and where such Regulation suggests, by way of example, conduct prompts a dispute, the EU will that such an option is expected to be bear financial responsibility arising exercised where a Member State does from the dispute. Alternatively, a not have the requisite technical expertise Member State may also accept financial to defend a particular claim. When the responsibility of its own accord. EU acts as respondent, it is required
“Financial responsibility includes both the costs of any award or settlement, and any costs arising from proceedings.”
The Regulation also provides whether to ensure its defense protects the the EU or a Member State will act as financial interests of the Member State respondent in a dispute. The appropriate concerned. respondent will depend in part upon Which of the EU or the relevant whether the Member State or the EU is Member State pays an award or responsible for the conduct giving rise to settlement will depend on which of the dispute. As a general rule, a Member the EU or a Member State acts as State will be respondent except where the respondent. Generally, when the EU EU elects to act as respondent. The EU acts as respondent, the Regulation may do so where either: provides for the EU to pay to the • the EU would bear all or part of the claimant the entirety of any award financial responsibility, or an EU made and costs from the arbitration institution, body, office or agency proceedings in the first instance.
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EU Publishes New Regulation The EU is subsequently entitled to State may decide to settle, it must do Concerning Financial repayment of the proportion of the so in consultation with the European Responsibility in Investor- award and costs for which a Member Commission and may only accept a State Dispute Settlement Continued from page 15 State bears financial responsibility. The settlement that is compatible with European Commission has the final EU law and is enforceable against decision on the financial responsibility that Member State only. Where to be allocated between a Member the Member State bears only partial State and the EU in a dispute where the financial responsibility, the European EU is the respondent, and ultimately Commission has discretion either to can overrule the objections of a refuse a Member State’s request to settle, Member State thereto. The European or, where the European Commission “Significant emphasis is Commission is also entitled to require considers that settlement would be in placed on the regular financial contributions from a Member the best interests of the EU, ultimately consultations and State during the course of a dispute in has discretion to compel settlement extensive exchange respect of foreseeable or incurred costs of the dispute, provided that such of information of the proceedings. settlement does not have any financial between the EU and The Regulation also governs the conduct or budgetary implications for the a Member State both of a dispute. Significant emphasis is placed relevant Member State. on the regular consultations and extensive at the beginning and Comment: exchange of information between the EU throughout the life • The Regulation is a novel mechanism and a Member State both at the beginning of a dispute.” to allocate financial responsibility and throughout the life of a dispute. In and responsibility for conduct of a particular, the European Commission may claim between the EU or European require consultations with the Member Commission and Member States. State on any point of law or other matter of EU interest raised by a dispute. Such • The Regulation sets out a reasonably provisions apply even where a Member clear mechanism for the allocation State bears sole financial responsibility of financial responsibility between and acts as respondent. the EU and its Member States for any Settlement of a dispute is also subject dispute arising in respect of investment to extensive European Commission agreements to which the EU is a party. involvement where the EU is the • In light thereof, it has been suggested respondent and the Member State bears that a claimant should protect its any or all financial responsibility for a interests and bring its claim against dispute. Generally, where the Member both the EU and the relevant Member State bears full financial responsibility State, in case there is any uncertainty for the dispute, while only that Member or grounds for challenge on this point.
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www.debevoise.com Arbitration Quarterly 17 January 2015 Issue Number 6
EU Publishes New Regulation • There is some concern that the • However, the added consultation and Concerning Financial decision as to which of the EU and its information exchange requirements Responsibility in Investor- Member States will act as respondent between the European Commission State Dispute Settlement Continued from page 16 is generally made by the EU rather and the Member States will likely than the applicable arbitral tribunal, increase the costs of arbitration and to what extent, if any, such proceedings against the EU or a decision making power undermines Member State. the independence and impartiality • Furthermore, it is unclear how the of the arbitration process. Further application of certain provisions of the concern has been raised as to what Regulation might play out in practice. recourse a claimant may have if the • The Regulation is significant given decision regarding which should act that any future EU-level agreements as respondent is later deemed to have with investment protection will been incorrect, particularly given that replace equivalent Member States’ the Regulation is silent on this point. existing bilateral investment treaties. • There are some other areas of The Regulation accordingly will uncertainty; for example, there is no become increasingly central to the explicit mechanism prescribing how the conduct of investor claims against EU will pay the portion of any award for Member States and the EU. which it is financially responsible where For further information, please contact: a Member State is the respondent of a dispute. This may suggest that such Aimee-Jane Lee [email protected] cases are expected to be rare. London, +44 20 7786 9168 • In principle, investors should welcome Patrick Taylor the introduction of the Regulation, [email protected] London, +44 20 7786 9033 as where the EU is the respondent Jonny McQuitty - Trainee Attorney (subject to limited exceptions), it [email protected] provides for payment of any award London, +44 20 7786 5405 or settlements to be made by the EU in the first instance. It is reasonable to expect that this may result in easier and faster recovery of awards, particularly where there is any dispute between the EU and the relevant Member State as to what financial responsibility each party bears.
www.debevoise.com Arbitration Quarterly 18 January 2015 Issue Number 6
United Nations General Assembly Adopts Convention on Transparency in Treaty-Based Investor-State Arbitration
On December 10, 2014, the United apply. The Transparency Rules are Nations General Assembly adopted optionally available for use in non- the United Nations Convention on UNICTRAL Investor-State Arbitrations. Transparency in Treaty-Based Investor- The Convention expands the State Arbitration (the “Convention”).1 application of the Transparency The adoption of the Convention comes Rules to investor-State arbitrations in the midst of a long debate about the initiated pursuant to investment proper balance among States’ desire treaties concluded before April 1, 2014, to attract foreign investment, their irrespective of the applicable arbitration obligation to protect the public interests rules. Thus, rather than having to of citizens and the environment, and the renegotiate individually a multitude allocation of public funds. of existing treaties, State parties can The primary purpose of the indicate their consent to the application Convention is to extend the application of the Transparency Rules in arbitrations of the United Nations Commission on brought under those treaties by signing International Trade Law (“UNCITRAL”) the Convention. The Transparency Rules on Transparency in Investor-State Rules will apply to such arbitrations Arbitration (the “Transparency Rules”),2 if the respondent State is a party to which came into effect on April 1, 2014. the Convention and either (i) the On their own terms, the Transparency claimant investor is from a State that Rules already apply to Investor-State is party to the Convention; or (ii) the Arbitrations conducted under the claimant investor agrees to application UNCITRAL Arbitration Rules brought of the rules. under an investment treaty which A State party to the Convention was either (i) concluded on or after may make a reservation excluding the April 1, 2014; or (ii) concluded before application of the Transparency Rules April 1, 2014 and where either the in relation to investor-State arbitrations parties to the dispute or the relevant (i) initiated under specific, identified contracting States to the treaty3 have investment treaties; or (ii) conducted agreed that the Transparency Rules under arbitration rules other than the
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1. http://www.un.org/ga/search/view_doc.asp?symbol=A/69/17 (The text of the Convention is appended to the UNCITRAL Report as Annex I.) 2. http://www.uncitral.org/uncitral/uncitral_texts/arbitration/2014Transparency.html. 3. In the case of multilateral treaties where the state of the claimant and the respondent State have so agreed. www.debevoise.com Arbitration Quarterly 19 January 2015 Issue Number 6
United Nations General UNCITRAL Arbitration Rules and in (including, for example, the pleadings, Assembly Adopts Convention which it is a respondent. A State party transcripts of hearings and orders, on Transparency in may also exclude application of the Treaty-Based Investor- decisions and awards of the Tribunal). State Arbitration Transparency Rules through consent of Furthermore, the Transparency Rules Continued from page 18 the investor claimant, as described in the prima facie provide for public hearings, prior paragraph. thus allowing public access to hearings As we explained in a previous article for the presentation of evidence or for announcing UNCITRAL’s adoption of oral arguments. the Transparency Rules (see UNCITRAL The Transparency Rules also codify Adopts Long-Awaited Rules on Transparency a procedure to allow amicus curiae in Treaty-Based Investor-State Arbitration, participation, which certain tribunals Issue 3, Arbitration Quarterly), reflecting have permitted in the past either by the public interest involved in investment exercising their general powers granted arbitrations, the Transparency Rules under the relevant arbitration rules or
“These progressive and innovative provisions, however, are not limitless. The Transparency Rules include important exceptions that protect confidential or protected information, and aim to protect the integrity of the arbitral process.”
introduced innovative provisions aimed at instrument (e.g., Article 15(1) of the increasing “public access to information UNCITRAL Arbitration Rules or Article and documents concerning arbitration 44 of the ICSID Convention) or where proceedings, as well as [providing] greater specifically provided (e.g., Rule 37(2) opportunity for non-parties to participate” of the ICSID Arbitration Rules 2006). in the proceedings. The Transparency Rules also permit Specifically, the Transparency submissions by non-disputing States Rules provide for the publication of party to the treaty and specify that the information at the commencement of tribunal shall admit any such submissions the proceedings (such as the names of on issues of treaty interpretation. the parties, the economic sector involved These progressive and innovative and the relevant treaty under which the provisions, however, are not limitless. claim is being made) and the publication The Transparency Rules include of key documents in the arbitration important exceptions that protect
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www.debevoise.com Arbitration Quarterly 20 January 2015 Issue Number 6
United Nations General confidential or protected information, Mauritius, and it will enter into force Assembly Adopts Convention and aim to protect the integrity of the six months after the date of deposit of on Transparency in arbitral process. the third ratification instrument. There Treaty-Based Investor- State Arbitration The adoption of the Convention is also a six-month delay before the Continued from page 19 signifies that the Transparency Rules Convention will bind a State party that could potentially apply to disputes ratifies the Convention after its entry arising out of the estimated 3,000 into force. bilateral and multilateral treaties On December 10, 2014, the United concluded before April 1, 2014 and Nations General Assembly also currently in force. However, the designated a Transparency Registry, in Convention will only apply to those which UNCITRAL will make available arbitrations commenced after the to the public the information on Convention enters into force (or investor-State arbitrations specified by subsequently takes effect for the the Transparency Rules (found at http:// relevant parties). Moreover, the www.uncitral.org/transparency-registry/ Convention does not affect investor- registry/index.jspx). State arbitrations initiated pursuant to For further information, please contact: a contract. Importantly, the Convention Aimee-Jane Lee specifies that a claimant cannot invoke [email protected] a most favored nation clause in a treaty London, +44 20 7786 9168
to apply, or to avoid the application Joseph B. Rome of, the Transparency Rules under the [email protected] New York, +1 212 909 6499 Convention. The Convention will be opened for Lucila I.M. Hemmingsen New York, +1 212 909 6582 signature on March 17, 2015, at a signing [email protected] ceremony to be held in Port Louis,
www.debevoise.com Arbitration Quarterly 21 January 2015 Issue Number 6
Agreement for Shanghai – Seated ICC Arbitration Recognized in China
In April 2014, the Supreme People’s of the subject matter to be arbitrated; Court (the “SPC”) of the People’s and (c) designation of an arbitration Republic of China (the “PRC”)1 published commission to administer the its decision in Anhui Longlide Packing arbitration. Article 16 does not address & Printing Co., Ltd. v. BP Agnati S.R.L. whether the designated “arbitration in the Guide on Foreign-Related commission” (the term used in the Commercial and Maritime Disputes PRC for arbitral institutions) may be Trial.2 In Longlide, the SPC recognized foreign. Article 10 of the Arbitration the validity of an arbitration clause that Law, however, states that arbitration selected the International Chamber of commissions shall be established by the Commerce (the “ICC”) as the arbitral departments and chambers of commerce institution that would administer any of certain specified municipalities and arbitration under the relevant contract, cities in the PRC, and that they shall but designated Shanghai as the arbitral be registered with the corresponding seat. In doing so, the PRC – for the local judicial administrative first time – suggested that a non-PRC departments. Since Article 10 only arbitral institution could administer an specifies how arbitration commissions arbitration seated in the PRC. may be established in the PRC, most practitioners and commentators on PRC Arbitration Law PRC arbitration have taken the view The Arbitration Law of the People’s that only PRC arbitral institutions may Republic of China (the “Arbitration be selected by the parties, to satisfy the Law”)3 mandates that all arbitrations requirements of Article 16. seated in the PRC be administered In addition to this interpretation by an arbitral institution – ad hoc of the Arbitration Law, the view that arbitrations, such as those governed only PRC arbitral institutions may by the UNCITRAL rules are not administer PRC-seated arbitrations has permitted. Article 16 of the Arbitration been influenced by several PRC court Law sets forth the requirements for decisions. In Züblin Int’l GmbH v. Wuxi a valid arbitration agreement. It Woco-Tongyong Rubber Engineering requires: (a) expression of the parties’ Co., Ltd.,4 for example, a construction intent to arbitrate; (b) identification
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1. For the purposes of this article, PRC refers only to Mainland China. 2. [2013] Min Si Ta Zi No. 13. The decision was internally issued on March 25, 2013. The Guide on Foreign-Related Commercial and Maritime Disputes Trial is the official gazette of the SPC for guiding cases on foreign-related commercial and maritime disputes adjudicated by the SPC. 3. Zhong Cai Fa [Arbitration Law] (promulgated by the Standing Comm. Nat’l People’s Cong., Aug. 31, 1994, effective Sept. 1, 1995). 4. [2003] Min Si Ta Zi No. 23. www.debevoise.com Arbitration Quarterly 22 January 2015 Issue Number 6
Agreement for Shanghai arbitration was conducted under rendered by a Beijing-seated tribunal. But – Seated ICC Arbitration an arbitration clause that stated: it did so on the ground that the challenge Recognized in China “Arbitration: ICC Rules, Shanghai to the recognition and enforcement of Continued from page 21 shall apply.” The resulting award was the award was time barred; the court did challenged in enforcement proceedings not proceed to address the merits of the before the Wuxi Intermediate People’s argument. Since then, there have been Court, which held that the arbitration few other decisions or guidance that clause was void because it failed to have provided further clarification as to identify a valid arbitration commission. whether foreign arbitral institutions may The Court’s holding was upheld by the administer arbitrations seated in the PRC.
“Longlide, therefore, represents yet one more step in the liberalization of international arbitration in the PRC, suggesting that foreign arbitral institutions can administer arbitrations seated in the PRC.”
SPC in 2004. Notably, however, the Longlide v. Agnati decision only addressed the failure to On October 28, 2010, Anhui Longlide specify an arbitration commission under Packing & Printing Co., Ltd. (“Longlide”) Article 16; it did not address whether the entered into a tripartite sales contract with ICC would have been a valid selection. B.P. Agnati S.R.L. (“Agnati”) and another Subsequent to Züblin, in its Chinese party. Longlide is based in Anhui Interpretation on Certain Issues Relating Province, China, while Agnati is an Italian to the Application of the Arbitration company. The contract contained the Law of the PRC, the SPC clarified, among following arbitration clause: other things, that a failure to designate an “Any dispute arising from or in arbitral institution would not invalidate connection with this contract an arbitration agreement if the institution shall be submitted to the Court of can be ascertained from the arbitral rules Arbitration of the International 5 referenced in the agreement. But again, Chamber of Commerce for the particular circumstances of Züblin, final arbitration by one or where a foreign arbitral institution’s rules more arbitrators appointed in were referenced, were not addressed. accordance with its rules. The In 2008, in Duferco S.A. v. Ningbo Arts place of jurisdiction shall be 6 & Crafts Imp. and Exp. Co., the Ningbo Shanghai, China. The arbitration Intermediate People’s Court refused shall be conducted in English.” to invalidate an ICC award that was
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5. 2006 SPC Interpretation, Art. 3. 6. [2008] Yong Zhong Jian Zi No. 4. www.debevoise.com Arbitration Quarterly 23 January 2015 Issue Number 6
Agreement for Shanghai After a dispute arose, Agnati instituted provided in the PRC without specific – Seated ICC Arbitration arbitral proceedings against Longlide authorization, and the Chinese Recognized in China pursuant to the arbitration clause. arbitration market was not yet open Continued from page 22 Longlide objected to the arbitration to foreign institutions. In designating and challenged the clause’s validity in an institution that could not legally the Hefei Municipality Intermediate administer arbitrations in the PRC, the People’s Court in Anhui Province arbitration clause was deemed invalid (the “Intermediate Court”) on three under PRC law. grounds. First, it argued that only The Intermediate Court’s decision was arbitral institutions recognized by submitted to the Anhui High People’s the Arbitration Law could administer Court (the “High Court”) for approval arbitrations seated in the PRC, and the under the PRC’s Reporting System ICC was not so recognized. Second, it (explained below). The majority of the argued that allowing the ICC (a foreign High Court rejected the decision, finding arbitral institution) to administer that the arbitration clause was valid arbitrations in the PRC would because it contained the three elements violate Chinese judicial sovereignty required by Article 16 of the Arbitration and therefore be contrary to public Law. Without further elaboration, the policy. Third, it argued that any ICC majority held that there was no legal award rendered in the PRC should be basis to invalidate the clause on the a “domestic award” governed by the ground that foreign arbitral institutions, Arbitration Law, which could not be such as the ICC, cannot conduct recognized or enforced under the New arbitrations in the PRC. The minority, York Convention.7 however, adopted the reasoning of the The Intermediate Court first held that Intermediate Court. the Arbitration Law governed Longlide’s Although not required to do so, the challenge, as the contract did not specify High Court sought the SPC’s opinion a governing law, which meant that the on its decision because the case was law of the seat (Shanghai) determined novel in the PRC and the court had the governing law of the arbitration divergent opinions. In its one-page agreement.8 The court then held that, reply, the SPC agreed with the High pursuant to Article 10 of the Arbitration Court majority on the ground that the Law, arbitration services could not be arbitration clause satisfied the elements
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7. It should be noted that even if an award rendered by a tribunal constituted pursuant to the Longlide arbitration agreement were to be treated as “domestic,” it should still be considered a foreign-related award, at least on the basis that one of the parties to the underlying agreement was foreign. See Opinions of the SPC on Certain Issues Concerning the Application of the Civil Procedure Law, Art. 304. Foreign-related awards, though rendered in the PRC, may be enforced there on grounds nearly identical to those available under the New York Convention. See Arbitration Law Art. 71 & PRC Civil Procedure Law Art. 260. 8. 2006 SPC Interpretation, Art. 16. www.debevoise.com Arbitration Quarterly 24 January 2015 Issue Number 6
Agreement for Shanghai of Article 16, noting that the arbitration arbitrations are only rejected after – Seated ICC Arbitration clause stipulated the requisite arbitral careful consideration by multiple, and Recognized in China institution with sufficient clarity. often more experienced, jurists. There Continued from page 23 Analysis and Conclusion is no similar system for the reporting of non-foreign-related arbitration By only focusing on the requirements agreements and awards. of Article 16, the SPC suggested that Although Longlide has been published Article 10 does not serve to limit the by the SPC as a “guiding case” – a practice type of arbitral institution that may it uses to promote national uniformity be selected by the parties – the SPC’s in the judiciary – it should be noted that concern seems to be only that one the decision, as with all court decisions be selected with sufficient certainty. in the PRC, will only have persuasive Longlide, therefore, represents yet effect. As a civil law country, courts in one more step in the liberalization the PRC are not bound by the principle of international arbitration in the of legal precedent. (This contrasts with PRC, suggesting that foreign arbitral PRC Opinions, which the PRC issues institutions can administer arbitrations to clarify points of law, and which have seated in the PRC. the force of law.10) Thus, while Longlide The Longlide decision also highlights will likely be looked to in subsequent the benefits of the Reporting System, cases addressing this issue, it remains which was established in 1995 for advisable to wait for greater certainty foreign-related arbitrations. Under this that arbitration agreements providing system, any court decision that refuses for PRC-seated arbitrations administered to recognize or enforce a foreign-related by foreign arbitral institutions will be arbitration agreement or award must enforced, before agreeing to enter into be reported to the next higher court such agreements. for consideration of the issue.9 If the higher court agrees with the decision For further information, please contact:
to refuse recognition or enforcement, Corey Whiting it must further report the case to the [email protected] SPC for confirmation in order for the Hong Kong, +852 2160 9817 lower court’s refusal to become final. Sebastian Ko [email protected] This system ensures that foreign-related Hong Kong, +852 2160 9817
9. An agreement is “foreign-related” if one of three factors applies: one of the parties to the agreement is foreign; the subject matter of the agreement is located outside the PRC; or the facts establishing, altering, or terminating the parties’ relationship occurred outside of the PRC. See Opinions of the SPC on Certain Issues Concerning the Application of the Civil Procedure Law, Art. 304. 10. See Provisions of the Supreme People’s Court Concerning Work on Guiding Cases, [2010] Fa Fa No. 51. www.debevoise.com Arbitration Quarterly 25 January 2015 Issue Number 6
Singapore High Court Decision in FirstLink Investments Corp Ltd v. GT Payment Pte Ltd – Choosing the Law of the Arbitration Agreement
In the recent decision of FirstLink expressly agree not to bring Investments Corp Ltd v. GT Payment Pte the disputes to any other court Ltd and others [2014] SGHCR 12, the jurisdictions, except as agreed Singapore High Court held that where here to the Arbitration Institute there has been no express choice of of the Stockholm Chamber of law, the proper law of an arbitration Commerce” (the “Arbitration agreement will generally be the law of Agreement”). the seat of the arbitration. Ignoring the Arbitration Agreement, In FirstLink, a dispute arose following the plaintiff commenced a claim against the plaintiff’s (a public company the defendants in the Singapore courts incorporated in Singapore) alleged (the second and third defendants being violation of an agreement (the “Contract”) companies related to the first defendant), between the parties, which resulted in the and by way of response, the defendants first defendant suspending the plaintiff’s sought a court ordered stay of the account. The governing law of the litigation to allow for the dispute to be Contract was not straightforward: arbitrated. The plaintiff challenged the “This Agreement is governed application and argued that the Arbitration by and interpreted under the Agreement was “null and void, inoperative laws of Arbitration Institute or incapable of being performed.” of the Stockholm Chamber The plaintiff argued that: (i) generally, of Commerce as such laws are in the absence of any express provision applied to agreements entered as to the proper law of an arbitration into and to be performed entirely agreement, the proper law would be within Stockholm.” the same as the substantive law of an The Contract also contained an arbitration agreement; (ii) here, the arbitration clause: substantive law of the Arbitration “Any claim will be adjudicated Agreement was the “law” of the by Arbitration Institute of Arbitration Institute of the Stockholm the Stockholm Chamber of Chamber of Commerce; and (iii) it was Commerce. You and GTPayment nonsensical for an arbitration agreement agree to submit to the jurisdiction to be governed by the “laws” of an of the Arbitration Institute international arbitral institute, such as of the Stockholm Chamber the Stockholm Chamber of Commerce, of Commerce. Both parties which only provides a framework of
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www.debevoise.com Arbitration Quarterly 26 January 2015 Issue Number 6
Singapore High Court rules applicable to govern the procedure In respect of the second stage of the decision in FirstLink of an arbitration. SulAmérica test, Leong AR disagreed Investments Corp Ltd v. In deciding whether to order the stay, GT Payment Pte Ltd – with what he termed the “rebuttable Choosing the Law of the Assistant Registrar Leong (“Leong AR”) presumption” that the English Court Arbitration Agreement began by addressing the first limb of of Appeal in SulAmérica created – that Continued from page 25 the plaintiff’s argument. At the outset, the express substantive law of a contract Leong AR observed that the general would be taken as the proper law methodology for determining the law governing an arbitration agreement such governing an arbitration agreement was that “in a competition between the chosen set out in the leading English Court substantive law and the law of the chosen of Appeal decision of SulAmérica Cia seat of the arbitration, all other facts being Nacional De Seguros S.A. and others v. Enesa equal, . . . the law will make an inference Engenharia S.A. [2012] EWCA Civ. 638, that the parties have impliedly chosen which presented a three-stage test: the substantive law to be the proper law (i) the parties’ express choice; (ii) the applicable to the arbitration agreement.”
“All things being equal, the mere fact of an express substantive law in the main contract would not in and of itself be sufficient to displace the parties’ intention to have the place of the seat be the proper law of the arbitration agreement.”
parties’ implied choice in the absence Instead, Leong AR concluded that of an express choice; and (iii) where the opposite was true. In his view, the parties had not made any choice, not only could it not be assumed that the proper law would be the law with commercial parties want the same which the arbitration agreement has law to govern both their substantive its closest and most real connection. relationship as well as their relationship Each of the stages was to be examined when resolving disputes but, as a result separately and in that order. Leong AR of a desire for neutrality in disputes, “welcomed” the SulAmérica methodology the “natural inference would instead be – he noted that the same test was also to the contrary.” As well as referring used in Singapore when determining the to two decisions of the English courts substantive law governing commercial in support of his position (Premium contracts and that, as a matter of Nafta Products Limited and others v. Fili Singaporean law, arbitration agreements Shipping Company Limited and others should be construed like any other [2007] UKHL 40 (House of Lords) and form of commercial contract – but he C v. D [2007] EWCA Civ 1281), Leong questioned the “precise application” of AR also looked to Article V(1)(a) of the the methodology. New York Convention, which renders Continued on page 27
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Singapore High Court an arbitral award unenforceable if the arbitration and, consequently, the parties decision in FirstLink arbitration agreement is invalid under had impliedly chosen the law of Sweden Investments Corp Ltd v. the law of the country where the award as the proper law applicable to the GT Payment Pte Ltd – Choosing the Law of the was made, if there had not been a choice Arbitration Agreement. Arbitration Agreement of proper law, and Article 34(2)(a)(i) In rejecting the plaintiff’s argument Continued from page 26 of the Model Law, which specifies that that the proper law of the Arbitration an arbitral award can be set aside if the Agreement was the “law” of the arbitration agreement is invalid under Arbitration Institute of the Stockholm the law of the seat. Chamber of Commerce, Leong AR did As a result, and while cautioning that not then have to go on and consider determining the implied proper law of whether the “laws” of an international an arbitration agreement was a question arbitral institute, such as the Stockholm of construction that would turn on the Chamber of Commerce, could stand as facts of a case, Leong AR rejected the the valid proper law of an arbitration plaintiff’s argument and held that, agreement. However, Leong AR “In the absence of indications to the considered the issue in some detail contrary, the reasons above would and, although he ultimately reserved ordinarily compel the law to find judgment on the issue, he did note that parties have impliedly chosen that where an arbitral institution had the law of the seat as the proper a clear system of rules and consistent law to govern the arbitration application of principles, that might be agreement, in a direct competition enough to “persuade a court to find that, between the chosen substantive at least on the prima facie threshold, law and the law of the chosen such an arbitration agreement would seat of arbitration. All things be valid, but only for the specific being equal, the mere fact of an purpose of staying court proceedings, express substantive law in the which does not preclude a jurisdictional main contract would not in and of challenge before the arbitral tribunal, or itself be sufficient to displace the a complete review of the question by the parties’ intention to have the law enforcement court.” of the seat be the proper law of the Given that it is not uncommon arbitration agreement.” for courts to be faced with flawed or Leong AR went on to conclude that ambiguous arbitration agreements, the given the specific referral of disputes to observations from Leong AR in this case the Stockholm Chamber of Commerce, will prove to be helpful guidance for and the absence of any express clause parties and tribunals in the future. prescribing a different place in which For further information, please contact: arbitration proceedings were to be Xia Li conducted, the parties had impliedly [email protected] selected Sweden as the seat of any Hong Kong, +852 2160 9822
www.debevoise.com Arbitration Quarterly 28 January 2015 Issue Number 6
Grynberg v. BP and Statoil: NY Court Disqualifies Arbitrator from Kazakh Oil Dispute
On July 17, 2014, the Supreme Court Grynberg initiated arbitration against of the State of New York disqualified BP (the “BP Arbitration”) and Statoil an arbitrator from a consolidated (the “Statoil Arbitration”) separately. arbitration involving energy companies BP One of the key issues was the allegation Exploration Company Limited (“BP”) and that BP and Statoil had classified certain Statoil ASA (“Statoil”) for failing to abide “signature bonus” payments to the by an earlier court order. Jack J. Grynberg, government of Kazakhstan as costs of et al., v. BP Exploration Operating Co. Ltd., doing business, deducting a proportionate et al., index number 1116840/04 in the amount of those payments from the Supreme Court of the State of New York. share of profits to which Grynberg Given that, generally, U.S. courts give great was entitled. Grynberg argued that the deference to decisions of arbitrators and payments were in fact bribes and could there is a general presumption in favor of not be considered legitimate costs of upholding arbitration awards if challenged, doing business. this is a highly unusual decision, although After many years of arbitration, on the circumstances are also highly unusual. February 9, 2010, Mr. Hochman issued an Jack J. Grynberg had entered into a joint award in the BP Arbitration dismissing venture with BP and Statoil to develop all of Grynberg’s claims for additional an oil field off the shores of Kazakhstan payments under the settlement in the Caspian Sea. In 1999, Grynberg agreements. Mr. Hochman rejected entered into settlement agreements with Grynberg’s argument as to the alleged BP and Statoil, separately, to resolve a bribes holding that “as long as the dispute arising out of the operation of signature bonuses were paid, the issue of the oil field. As part of the settlements, whether the signature payments were or the parties agreed to resolve any dispute were not bribes was not a relevant issue.” thereunder through arbitration and No final award has yet been issued in the agreed to appoint Stephen Hochman Statoil Arbitration. as the sole arbitrator or, if he was BP then filed a motion with the first unavailable, a three-person tribunal. instance court, the Supreme Court of The settlement agreements provided the State of New York (the “Supreme that BP and Statoil were to pay Grynberg Court”), to confirm the award and a certain portion of the net profits from Grynberg filed a cross-motion to vacate their interests in the field. Claiming to it. The Supreme Court ultimately be entitled to additional funds pursuant confirmed the award. Grynberg to these settlement agreements, appealed, and the Appellate Division,
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Grynberg v. BP and Statoil: First Department, subsequently grounds for vacating an award: (i) where NY Court Disqualifies reversed the Supreme Court’s decision, the award was procured by corruption, Arbitrator from Kazakh vacated the award, and remanded to Oil Dispute fraud, or undue means; (ii) where there Continued from page 28 the arbitrator to determine the nature was evident partiality or corruption of the signature bonus payments. In in the arbitrators, or either of them; particular the First Department held that (iii) where the arbitrators are guilty of “[c]ontrary to the arbitrator’s finding, misconduct in refusing to postpone the deducting a payment intended to be a hearing, upon sufficient cause shown, bribe to a public official is unenforceable or refusing to hear evidence pertinent as violative of public policy.” and material to the controversy; or of On November 27, 2013, Mr. Hochman any other behavior by which the rights issued a new award in the BP Arbitration of any party have been prejudiced; and refusing to make the determination (iv) where the arbitrators exceed their required by the First Department (i.e., powers, or so imperfectly executed them
“The First Department held that “[c]ontrary to the arbitrator’s finding, deducting a payment intended to be a bribe to a public official is unenforceable as violative of public policy.”
determining whether the signature that a mutual, final, and definitive award bonus payments were bribes). In the new upon the subject matter submitted was award, Mr. Hochman explained that the not made. Public policy is not one of First Department had erred on the law by the grounds provided in the FAA for vacating the award on the basis of public vacating an award. policy, which basis was not authorized Grynberg then filed a motion to vacate under the U.S. Federal Arbitration Act the new award and requested that the (the “FAA”), and encouraged the parties BP Arbitration be given to another to appeal the decision to the New York arbitrator. On April 2, 2014, the Supreme Court of Appeals. Court issued a decision remanding the The FAA provides that any party to BP Arbitration to an arbitration panel arbitration can apply to a U.S. federal instead of to Mr. Hochman. The Supreme court for an order confirming an Court’s ruling was based on the fact that arbitration award within one year of (i) Mr. Hochman explicitly stated in his the issuance of the award. Only for very new award that he refused to comply limited reasons enumerated in sections with the First Department directive 10 and 11 of the FAA will a court not and (ii) the new award made it clear confirm the award. Specifically, section that it was not addressed solely to the 10 of the FAA only provides four parties but was instead directed to the
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Grynberg v. BP and Statoil: Court of Appeals to convince it that fields as a joint venture and both of them NY Court Disqualifies the First Department was incorrect were making signature bonus payments Arbitrator from Kazakh when it failed to uphold his first award. to these officials,” the Supreme Court Oil Dispute Continued from page 29 Specifically, Mr. Hochman had stated in held that consolidating the two the new award that “if he had to decide arbitrations would be appropriate. the factual issue of whether the payments Consequently, given that the made by BP were or were not bribes, it arbitrations needed to be consolidated, would be inconsistent with his ethical the Supreme Court found that Mr. duties to the arbitration process and the Hochman “must be disqualified from New York Court which is to support being the arbitrator in the Statoil the arbitration process.” Based on this Arbitration as he has already been statement, the Supreme Court held that disqualified from resolving the signature the “arbitrator would not be able to fairly bonus payment issue and that will be the make a determination with respect to primary issue to be determined in the the issue remanded to him by the First consolidated arbitration.” Additionally, Department.” the Supreme Court independently Grynberg then brought this most found that Mr. Hochman should be recent action to the Supreme Court disqualified from being the arbitrator to (i) disqualify Mr. Hochman from in the Statoil Arbitration “based on any further participation in the his refusal to follow the unambiguous Statoil Arbitration; (ii) consolidate directive of the First Department.” The the Statoil and the BP Arbitrations; and Supreme Court further held that, based (iii) discharge Mr. Hochman from any on the actions taken by Mr. Hochman further participation as an arbitrator in to date, the “arbitration process would any existing or future disputes relating not be free of appearance of bias if Mr. to the parties’ settlement agreements. Hochman were permitted to continue With regard to Grynberg’s petition as arbitrator in either of the two to consolidate the two arbitrations, arbitrations.” the Supreme Court found that “it is According to public records, it appears appropriate to order that proceedings that BP has appealed this last decision be consolidated in arbitration where of the Supreme Court, which will they involve common issues of law and further delay a final resolution of the fact and where there is a possibility underlying dispute. that separate arbitrations could result For further information, please contact: in separate rulings.” Given that Corina Gugler Grynberg was dealing with Kazakhstan [email protected] government officials in seeking to New York, +1 212 909 6524 “explore, develop and produce the oil
www.debevoise.com Arbitration Quarterly 31 January 2015 Issue Number 6
NML v. Argentina: the Lasting Effects of Argentina’s Default
In 2001, Argentina defaulted on its against those assets. Argentina opposed sovereign debt. In the wake of that default, the subpoenas on the grounds that the Republic declared a moratorium on they violated the Foreign Sovereign payment of its debt, and a number of Immunities Act (the “FSIA” or the “Act”). creditors, located both within and outside The District Court rejected Argentina’s the United States, brought suit in U.S. contention, and the Second Circuit Courts. Some of these cases dissipated as affirmed, holding that “because the creditors chose to participate in Argentina’s Discovery Order involves discovery, 2005 and 2010 restructurings (the not attachment of sovereign property, “Exchange Bondholders” now in possession and because it is directed at third-party of “Exchange Bonds”). Others refused to banks, not at Argentina itself, Argentina’s participate in the restructurings and sought sovereign immunity is not infringed.” final money judgments against Argentina EM Ltd. & NML Capital, Ltd. v. Republic (the “Non-Tendering Bondholders”). of Argentina, 695 F.3d 201, 205 (2d Cir. Faced with the Republic’s refusal to pay 2012). The Supreme Court granted these judgments or make payments on its Argentina’s petition for certiorari. non-restructured debt, many of the Non- In its 7-1 decision written by Justice Tendering Bondholders have spent over Scalia with a dissent by Justice Ginsberg, a decade looking for ways to recover on the Supreme Court affirmed, holding their bonds. The efforts of one creditor that the FSIA did not limit discovery by in particular, NML Capital Ltd. (“NML”), virtue of Argentina’s sovereign status. have sparked two significant legal battles The Supreme Court began by observing that have reached the United States that Rule 69(a)(2) of the Federal Rules Supreme Court (the “Supreme Court”). of Civil Procedure permits broad discovery in post-judgment execution, International Discovery of Sovereign Assets but clarified that the “single” question before the Supreme Court was whether After winning several judgments the FSIA “specifies a different rule when against Argentina in the District Court the judgment debtor is a foreign state.” for the Southern District of New Republic of Argentina v. NML Capital, York (the “District Court”) to collect Ltd., No. 12-842, 134 S. Ct. 2250, 2255 on the defaulted bonds, NML served (June 16, 2014). The Supreme Court subpoenas on two non-party banks, found that it did not. Bank of America and Banco de la Nación First, it held that the FSIA provides Argentina, to obtain information on no additional immunity from discovery. Argentina’s extraterritorial assets While the text of the FSIA provides with the goal of seeking enforcement Continued on page 32
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NML v. Argentina: express immunities from jurisdiction the district court whether the discovery the Lasting Effects of and execution, “[t]here is no third is warranted.” Those limitations will no Argentina’s Default provision forbidding or limiting doubt be the subject of future litigation. Continued from page 31 discovery in aid of execution of a The Pari Passu Litigation foreign-sovereign judgment debtor’s NML also prompted an appeal to the assets.” The Court refused to draw Supreme Court based on the pari passu meaning from this silence, noting that clause – a clause contained in many of the “[t]he question . . . is not what Congress defaulted debt instruments that requires ‘would have wanted’ but what Congress equal treatment among bondholders. enacted in the FSIA.” Second, the Supreme Court held that In the context of its claims on the creditors may obtain discovery relating defaulted bonds that had not yet to assets worldwide without a showing gone to judgment, NML argued that that those assets are attachable under the Argentina breached the pari passu clause
“Faced with the Republic’s refusal to pay these judgments or make payments on its non-restructured debt, many of the Non-Tendering Bondholders have spent over a decade looking for ways to recover on their bonds.”
FSIA. In its view, “the reason for these by making interest payments to the subpoenas is that NML does not yet know Exchange Bondholders while failing to what property Argentina has and where it pay the Non-Tendering Bondholders and is, let alone whether it is executable under moved to enforce its so-called “Equal the relevant jurisdiction’s laws.” Justice Treatment” rights. Ginsberg dissented on this point on the In February 2012, the District Court ground that she believed the permissible issued orders enjoining Argentina from scope of discovery should be limited by making payments to the Exchange what is attachable under the FSIA. Bondholders without making payment Despite the very broad language of the to the Non-Tendering Bondholders, such opinion, the Supreme Court expressly as NML. NML Capital, Ltd. v. Republic of limited its scope, noting “this appeal Argentina, No. 08 Civ. 6978 (TPG) (S.D.N.Y. concerns only the meaning of the Act” Feb. 23, 2012). The Second Circuit and there is “no reason to doubt that . . . substantially affirmed the injunctions ‘other sources of law’ ordinarily will bear in October 2012. NML Capital, Ltd. v. on the propriety of discovery requests Republic of Argentina, 699 F.3d 246 (2d of this nature and scope.” It went on Cir. 2012). After remanding the orders to explain that such “sources of law” for clarification to the District Court, include “settled doctrines of privilege the Second Circuit again affirmed the and the discretionary determination by amended injunctions in August of 2013, Continued on page 33
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NML v. Argentina: but stayed enforcement pending a review pari passu injunctions. So far, these the Lasting Effects of by the Supreme Court. NML Capital, Ltd. efforts have been largely unsuccessful, Argentina’s Default v. Republic of Argentina, 727 F.3d 230 (2d and most of the attempted payments to Continued from page 32 Cir. 2013). In June 2014, the Supreme the Exchange Bondholders still have not Court denied certiorari and the injunctions been completed. These evasion attempts entered into effect. have, however, embroiled a multitude In the wake of the denial of certiorari of formerly uninvolved third-party by the Supreme Court, the battle banks and financial institutions in this between Argentina and its creditors increasingly complex dispute. Earlier intensified. The next interest payment this month, Argentina went so far as on the Exchange Bonds was due on to pass a law that, among other things, June 30, with a one-month grace would permit a change in the payment period before Argentina would enter jurisdiction of the Exchange Bonds so as into default for failing to make timely to circumvent the injunctions. payment. In the face of the injunctions, Though there has been some talk about Argentina seemingly would have to a renewed willingness to negotiate in 2015, choose whether to (i) settle with the after the Rights Upon Future Offers Clause David W. injunction holders, (ii) pay the Exchange in the Exchange Bonds expires, Argentina Bondholders and the injunction holders has steadfastly refused to negotiate with Rivkin became in equal proportionate amounts, or (iii) the Non-Tendering Bondholders, and has President of the default on its obligations to the Exchange eschewed meetings convened by the Special International Bar Bondholders which would be the second Master. The Republic’s recalcitrance has Association on default in just over a decade. led additional Non-Tendering Bondholders On June 30, Argentina attempted to to file for similar pari passu injunctions January 1, 2015. make a payment on the Exchange Bonds in an attempt to enforce their payment without making any payment on the rights. Though the future of negotiation injunction holders’ debt, but the District and settlement remains unclear, it has Court blocked such payment. A Special become increasingly clear that unless Master was then appointed to facilitate Argentina begins working towards reaching settlement during the next 30 days in a global resolution with all of its creditors, order to avoid default, but no resolution Argentina will continue to be frozen out was reached and, by most accounts, of international financial markets and the Argentina defaulted on its debt again on Argentine economy will continue to suffer. July 30. Argentina claims that no default For further information, please contact: occurred because it made the payments Floriane Lavaud due, even though those payments [email protected] were blocked and not received by the New York, +1 212 909 6445 Exchange Bondholders. Marisa R. Taney Since July 30, Argentina has continued [email protected] New York, +1 212 909 6138 its attempts to evade the impact of the
www.debevoise.com Arbitration Quarterly 34 January 2015 Issue Number 6
Refusing to Pay the Advance on Costs: Repudiatory Breach of Contract?
Arbitration rules generally provide BDMS Limited (the “Claimant”) to that the parties to arbitration must commence proceedings in the High Court. equally share the costs of the arbitration In BDMS, the parties had entered into pending a final award by the tribunal. a consultancy agreement that provided This can be a very significant sum, and for the payment of certain “success fees.” respondents commonly refuse to pay A dispute arose between them for the their share of the costs. This is often alleged failure to pay those fees. The tactical, in order to put financial pressure consultancy agreement contained an on the claimant. Until recently, it was arbitration agreement providing for ICC not known whether potentially serious arbitration seated in London, before a adverse consequences might arise from sole arbitrator. such deliberate refusal where the seat of The arbitration the arbitration is in England. The Claimant initiated ICC arbitration Earlier this year, the Commercial in London and, pursuant to Article 30 of Court of England & Wales (“the the ICC Rules, the ICC fixed the advance Commercial Court”) considered whether on costs at US$27,000. Each party was a refusal by a party to arbitration asked to contribute US$13,500. proceedings to pay its share of the The Defendant refused to pay its share advance on costs of the arbitration could of the advance unless the Claimant amount to a breach of the arbitration posted security for the costs of the agreement entitling the non-defaulting arbitration. Before the tribunal could party to prosecute its claims in the hear the parties on the preliminary courts instead of in arbitration. issue relating to the posting of security In BDMS Limited v. Rafael Advanced for costs, the ICC invited the Claimant Defence Systems (February 26, 2014) to cover the Defendant’s share of [2014] EWHC 451 (Comm), Mr. Justice the advance on costs. The ICC set a Hamblen held that the refusal by final deadline of March 9, 2012 for Rafael Advanced Defence Systems (the the payment by the Claimant of the “Defendant”) to pay its share of the Defendant’s share. advance on the costs of the arbitration The deadline passed without payment. did amount to a breach of the arbitration On March 14, 2012, the ICC gave formal agreement, but not a breach that entitled notice that, pursuant to Article 30(4) of
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Refusing to Pay the the ICC Rules, the claims were considered Inc. [2008] ABCA 104 and concluded that Advance on Costs: withdrawn as of March 9, 2012. The ICC the failure to pay the advance on costs Repudiatory Breach confirmed that the Claimant retained the did constitute a breach of contract. of Contract? right to prosecute its claims again in a Continued from page 34 Was the breach repudiatory / new set of arbitral proceedings. fundamental, and did it render the Commencement of proceedings in the arbitration agreement inoperative? English Commercial Court Mr. Justice Hamblen found that if Responding to the Defendant’s refusal to the refusal to pay the share of the pay its share of the advance on the costs advance on costs renders the arbitration of the arbitration, the Claimant served agreement “unworkable,” as found by the English High Court proceedings on the Court of Appeal of Alberta in Resin, then Defendant. The Claimant purported to that breach could well go to the root of accept the Defendant’s refusal to pay the contract and therefore amount to
“If the refusal to pay the share of the advance on costs renders the arbitration agreement “unworkable”. . . then that breach could well go to the root of the contract and therefore amount to a repudiatory breach of the arbitration agreement.”
its share of the advance on costs as a a repudiatory breach of the arbitration repudiatory breach of the arbitration agreement. Mr. Justice Hamblen agreement, entitling the Claimant to considered that this question was fact and discard the agreement and to pursue its case specific. claim in the Commercial Court. The In this specific case, Mr. Justice Defendant sought a permanent stay Hamblen held that the Defendant’s of the proceedings on the basis of the breach was not a repudiatory / arbitration agreement. fundamental one and based his decision, The Decision of the Commercial Court amongst other things, on the following: i) This was not a case in which Was there a breach? the Defendant was refusing to The Commercial Court sided with the participate in the arbitration more majority of commentators and tribunals, generally, nor was the refusal and the only known common law absolute, as the costs would have decision on this point – the decision of been covered if the Claimant had the Alberta Court of Appeal in Resin provided security for costs. Systems Inc. v. Industrial Service & Machine
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Refusing to Pay the ii) The breach did not deprive the In light of this judgment, parties to Advance on Costs: Claimant of the right to arbitrate arbitration in England faced with an Repudiatory Breach as it could at all times have decided opposing party that refuses to pay its of Contract? Continued from page 35 to proceed with the arbitration by share of the costs of the arbitration paying the Defendant’s share of the should not be quick to abandon the advance and then sought an interim arbitration. In almost all cases, the safest award or interim measure order course of action will be for the non- that the advance should be paid by defaulting party to pay the defaulting the Defendant. party’s share of the costs, and then to seek an interim award or an interim iii) The Claimant could have objected measures order from the arbitral tribunal to the withdrawal of its claim by for reimbursement of the payment by the ICC, but it chose not to. Had it the defaulting party. For respondents, done so, perhaps the ICC would have unless advancing a counterclaim, there waited until after the hearing of the remains little obvious downside in preliminary issues before deciding refusing to pay half of the costs where whether to withdraw the claims. doing so might prove strategically iv) The Claimant had not proved that advantageous. the arbitration agreement had been For now, therefore, claimants in repudiated, only that this particular England-seated arbitrations will likely reference to arbitration could not continue to face respondents who refuse continue. The Claimant could to pay their share of the advance on advance the claims again in a new costs. However, the decision of Mr. set of proceedings. Justice Hamblen has not shut the door For the same reasons, Mr. Justice on the possibility of this being viewed Hamblen concluded that the arbitration differently in extreme cases. agreement had not been rendered For further information, please contact: inoperative. Mr. Justice Hamblen Patrick Taylor therefore granted the stay of the [email protected] proceedings, pointing the claimant London, +44 20 7786 9033 back towards arbitration.
Debevoise & Plimpton named the U.S. Benchmark Litigation 2014 International Arbitration Firm of the Year and a finalist for the 2015 award, to be announced in January 2015. www.debevoise.com Arbitration Quarterly 37 January 2015 Issue Number 6
Indian Supreme Court Continues Pro-Arbitration Trend
The Indian Supreme Court (the statutory authority to supervise the “Supreme Court”) has provided further arbitration’s conduct and review the clarity in respect of the jurisdiction award on the merits. If Part I does of the Indian courts to review arbitral not apply then the Indian court’s awards. In its May 2014 judgment in supervisory authority is limited. In Bhatia Reliance Industries & Anr v. Union of International the Supreme Court held India, the Supreme Court held that that Part I of the Indian Arbitration Indian courts have no jurisdiction to set Act applied to all arbitrations, including aside an arbitral award where the parties those with a foreign seat, unless the agreed that the seat of the arbitration parties explicitly or impliedly excluded was to be London and the arbitration the application of Part 1 of the Indian agreement was governed by English law. Arbitration Act. The Reliance case is the latest in a In Bharat Aluminum the Supreme series of pro-arbitration judgments Court overturned the decision in Bhatia from the Supreme Court which began International and those cases that with the landmark decision in Bharat followed it.1 Bharat Aluminum clarified Aluminum Co v. Kaiser Aluminium that Part 1 of the Indian Arbitration Technical Service Co. (2012) 9 SCC 552, Act did not apply to foreign seated which partly overturned the judgment arbitrations and only applied to domestic in Bhatia International v. Bulk Trading Indian arbitrations. Significantly, S.A. & Anr., (2002) 4 SCC 105, which however, although the Bharat Aluminum was perceived as being hostile to judgment brought an end to future international arbitration. Reliance is of interventionist approaches of the Indian particular importance because it further courts, the decision only had prospective clarifies the scope of India’s domestic effect such that it only applied to arbitration legislation. arbitration agreements concluded The key issue, which was first tackled after the date of the judgment, in Bhatia International, is the extent to September 6, 2012. Bhatia International’s which Part I of the Indian Arbitration interventionist principles continue to and Conciliation Act 1996 (the “Indian apply to any arbitration agreements Arbitration Act”) applies to arbitrations entered into before September 6, 2012. with an Indian counterparty. If Part In Reliance the arbitration agreement at I applies then the Indian courts enjoy issue was entered into in 1994, placing it
Continued on page 38
1. Discussed in more detail in Indian Supreme Court Decision Signals Pro-Arbitration Turn, Issue 1, Arbitration Quarterly. www.debevoise.com Arbitration Quarterly 38 January 2015 Issue Number 6
Indian Supreme Court firmly within the remit of the Supreme counter-argument, that Part I of the Continues Pro-Arbitration Court’s decision in Bhatia International. Indian Arbitration Act did not apply, Trend Here the dispute between the parties failed and the Delhi High Court found Continued from page 37 arose from two production sharing for India, setting aside the partial award. contracts (the “PSCs”) which related Reliance Industries appealed to the to the exploration and production of Supreme Court. petroleum in fields off the coast of India. At the outset the Supreme Court The PSCs were governed by Indian law. made clear that it was bound by the However, they also contained dispute judgment in Bhatia International and, resolution clauses which provided for all as a result, for Reliance Industries disputes to be settled by arbitration under to succeed in its appeal, it needed to the UNCITRAL rules with English law demonstrate that the parties had agreed, governing the arbitration agreement and either impliedly or expressly, to exclude with London as the seat of the arbitration. any or all of the provisions of Part I of A dispute arose between the parties the Indian Arbitration Act. in respect of the amount of taxes and After considering the arguments, the
“The decision should be seen as a positive development for arbitration law in India and should be welcomed by those who wish to do business in India.”
royalties that had to be paid by Reliance Supreme Court set aside the decision Industries to the Government of India of the Delhi High Court and held that (“India”) pursuant to the PSCs. In July Part I of the Indian Arbitration Act did 2011, the parties constituted the arbitral not apply. The Supreme Court stated tribunal. India argued that Reliance that because the parties had agreed Industries’ claims were not arbitrable that the seat of the arbitration would but, in 2012, the tribunal handed down be London, and because the arbitration a ‘Partial Consent Award’ in which the agreement specified English law, the tribunal ruled that Reliance Industries’ “provisions of Part I of the Arbitration claims were arbitrable. Using section 34 Act 1996 (Indian) are necessarily of the Indian Arbitration Act (dealing excluded.” In reaching this conclusion, with setting aside applications), which the Supreme Court relied on its earlier is found in Part I of the legislation, decision in Videocon Industries Limited v. India challenged the partial award in the Union of India & Anr. (2011) 6 SCC 161, Delhi High Court. Reliance Industries’ which it said was factually and legally
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Indian Supreme Court similar to the issues presented in the to satisfy the pre-condition that the Continues Pro-Arbitration Reliance dispute and which also held Arbitration Act 1996 is applicable to the Trend that where the parties had agreed that the arbitration agreement” which, it stated, Continued from page 38 arbitration agreement in question was was not the case in this instance as, “the to be governed by the laws of England arbitration law of England would be and Wales, this “necessarily implie[d] applicable to the arbitration agreement.” that the parties had agreed to exclude The Reliance decision is important for the provisions of Part I of the Act.” anyone who entered into an arbitration Moreover, the Supreme Court considered agreement with an Indian counterparty that the provision within the dispute prior to September 6, 2012. More broadly resolution clause for the Permanent however, the pro-arbitration nature of Court of Arbitration at The Hague to be the decision should be seen as a positive the appointing authority in the event of development for arbitration law in India a dispute, rather than the Chief Justice and should be welcomed by those who of India, was a “strong indication” that wish to do business in India and to resolve the parties had agreed to exclude Part I any ensuing disputes by international of the Indian Arbitration Act. arbitration without the interference of The Supreme Court also dismissed the Indian courts. India’s argument that, regardless of any For further information, please contact: agreement of the parties, Part I of the Jane Rahman Indian Arbitration Act applied as the [email protected] issues in dispute related to violations London, +44 20 7786 5463
of Indian public policy. Instead, the Rachael Scourfield Supreme Court held that “[w]hether [email protected] London, +44 20 7786 5464 or not the award is challenged on the ground of public policy, it would have
Appointment: Partner Natalie L. Reid has been named to the Board of Editors of The American Journal of International Law the pre-eminent publication of The American Society of International Law. www.debevoise.com Arbitration Quarterly 40 January 2015 Issue Number 6
J&P Avax v. Tecnimont SPA: French Court Considers Whether It is Bound to Respect Arbitral Institutional Rules in Annulment Proceedings
The French Cour de Cassation has, in J&P A further decision is expected from the Avax v. Tecnimont SPA, Civ. 1ère, June 25, Paris Court of Appeal in 2015. 2014, n°11-26.529 (“Avax v. Tecnimont”), Avax has sought the annulment of the confirmed that when considering an tribunal’s partial award on the ground application for the annulment of an that the arbitral tribunal was irregularly arbitral award, judges must apply any constituted. relevant institutional rules that applied Avax’s challenge, first raised before the to the underlying arbitration. International Court of Arbitration of
“The Cour de Cassation overturned the decision of the Reims Court holding that it had erred in deciding that it was not bound to consider the parties’ compliance with the 1998 ICC Rules. The Cour de Cassation held that when a party knowingly abstains from asking for a recusal request within the time period provided by the applicable arbitral rules, here 30 days from when the party knew of the facts giving rise to the recusal application, it is deemed to have waived the right to challenge an arbitrator’s independence and impartiality before the courts.”
The Cour de Cassation’s June 2014 the ICC (the “ICC Court”), focuses on decision in Avax v. Tecnimont comes the independence and impartiality of the seven years after the tribunal in the Chairman of the tribunal. In September underlying arbitration, seated in Paris 2007, the ICC Court dismissed Avax’s and subject to the 1998 International request for a recusal of the Chairman Chamber of Commerce Rules (“1998 pursuant to Article 11 of the 1998 ICC ICC Rules”), handed down its December Rules (the equivalent of Article 14 of the 2007 partial award. The Court’s decision 2012 ICC Rules) which allows for recusal is the fourth judgment of the French “for an alleged lack of independence.” courts in relation to Avax’s attempts Following the dismissal of Avax’s to have the partial award annulled. request, the tribunal went on to issue
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J&P Avax v. Tecnimont SPA: its partial award in December 2007. several relevant representations by other French Court Considers Thereafter, Avax again raised the issue members of his firm. Whether It is Bound of the Chairman’s independence and to Respect Arbitral The Paris Court of Appeal found for Institutional Rules in impartiality, this time in an annulment Avax and ordered the annulment of the Annulment Proceedings action that it brought in the Paris Court partial award. Tecnimont challenged the Continued from page 40 of Appeal on the grounds that the Paris Court of Appeal’s decision and the tribunal was irregularly constituted. matter has since been heard by the Cour Specifically, Avax argued that, because de Cassation (twice) as well as the Reims the Chairman of the tribunal was “of Court of Appeal (the “Reims Court”). counsel” at a law firm in which some of The most recent decision in the his colleagues acted either as counsel dispute, the Cour de Cassation’s June
or as arbitrator in matters involving 2014 decision, considered the judgment either Tecnimont’s parent company of the Reims Court. The Reims Court and/or its subsidiaries, he was unable to had held that Avax’s application for be independent and impartial and thus annulment could proceed irrespective ought to be recused. Moreover, Avax of whether Avax had complied with the argued that not only did the Chairman 1998 ICC Rules. Moreover, the Reims lack independence and impartiality Court had said that the ICC Court’s but, following an initial inadequate decision to reject Avax’s recusal request declaration, he had also failed to make was administrative in nature and did not continuing declarations in relation to prevent a French court from hearing the
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J&P Avax v. Tecnimont SPA: same request. It further held that an circumstance that provided a basis for French Court Considers arbitrator’s duty of disclosure was broad the recusal application. Whether It is Bound in scope and ongoing. The Reims Court As a result, the Cour de Cassation has to Respect Arbitral Institutional Rules in went as far as to hold that an arbitrator now remitted the case to be considered, Annulment Proceedings is required to disclose anything that in full, by a different panel of the Paris Continued from page 41 could affect their judgment or cause Court of Appeal, which will likely hear reasonable doubt to the parties regarding the case in 2015. If the Paris Court of their impartiality and independence. Appeal allows the annulment application The Cour de Cassation overturned the to go ahead, and considers the substance decision of the Reims Court holding of that application, any eventual that it had erred in deciding that it recourse by either party to the Cour de was not bound to consider the parties’ Cassation will be important. It is hoped compliance with the 1998 ICC Rules. that this case will lead to guidance from The Cour de Cassation held that when a that court on the scope of an arbitrator’s party knowingly abstains from asking duty to disclose information relating for a recusal request within the time to their independence. Such a decision period provided by the applicable would provide practitioners with greater arbitral rules, here 30 days from when certainty in respect of what arbitrators the party knew of the facts giving rise must disclose, and when, to ensure to the recusal application, it is deemed compliance with their obligation of to have waived the right to challenge independence and impartiality. an arbitrator’s independence and For further information, please contact: impartiality before the courts. The Cour Amanda Lee Wetzel de Cassation noted that, to decide this [email protected] case, a judge must consider whether Paris, +33 1 40 73 1274 the 30-day period was complied with in relation to each relevant fact and
www.debevoise.com Arbitration Quarterly 43 January 2015 Issue Number 6
Update on the Ongoing Russian Arbitration Reform
As we reported in the last issue of the the numerous, often contradictory, Arbitration Quarterly (Russia Publishes comments it has received from Draft of New Arbitration Law, Issue 5, the judiciary, practitioners, arbitral Arbitration Quarterly), an important institutions, the business community, arbitration reform is currently under and others in the government. way in the Russian Federation. By way Notwithstanding the size and of background, in January 2014, the complexity of the task, some notable Russian Ministry of Justice published a modifications to the April Draft have series of draft amendments to various already been introduced (the “Further laws and regulations governing the Amendments”) and the most important arbitration and enforcement processes of these are described below. (the “January Draft”). The second wave First, the Further Amendments of comprehensive draft amendments grant first-tier courts (district courts was published in April 2014 (the “April of general jurisdiction or arbitrazh/
“Given the significance of the arbitration reform being undertaken, it is expected that the drafting process will continue to be subject to meticulous attention and further alterations”
Draft”). The April Draft retained most of commercial courts, as the case may be) the key features of the January Draft, such original jurisdiction, i.e., the jurisdiction as amalgamation of Russia’s domestic to hear cases for the first time, in respect and international arbitration regimes, of cases that deal with the recognition establishment of clearer arbitrability and enforcement of domestic arbitration criteria, and setting rigorous requirements awards. However, second-tier (arbitrazh/ for domestic-based arbitral institutions. commercial and general jurisdiction) During the past few months, the courts would, as proposed in the April April Draft has been subject to public Draft, retain their original jurisdiction review and comment, and Debevoise & over foreign arbitral awards. Plimpton LLP has taken an active role Second, the Further Amendments in this process. The revision process remove the April Draft’s proposed three- has proven slow, with the Ministry month limitation period for challenging of Justice paying careful attention to arbitral awards on the grounds that
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Update on the Ongoing the underlying contract at issue was progress. Given the significance of the Russian Arbitration Reform a “contract of adhesion,” i.e., a party arbitration reform being undertaken, Continued from page 43 challenging an award on the grounds it is expected that the drafting process that they were coerced into the contract will continue to be subject to meticulous that the dispute related to. As a result, attention and further alterations. The there is no proposed time limit on next draft is likely to be finalized by making such a claim. the end of this year and will then be Third, the Further Amendments submitted to the State Duma, the lower propose modifications in respect of the chamber of the Russian parliament, for choice of rules in arbitral proceedings. parliamentary review and deliberations. It Specifically, it is proposed that, unless is unclear whether the current geopolitical the parties agreed otherwise, in situation, as well as the recent significant circumstances where an arbitration arbitral awards involving Russian parties agreement is silent as to the choice of (specifically, the “Yukos” awards discussed rules for the proceedings (but not silent in Yukos v. Russian Federation: Largest as to the arbitral institution that will Arbitration Award to Date in this issue of administer the arbitration), the arbitral Arbitration Quarterly) might impact the tribunal would have the authority to trajectory and/or substance of Russian choose the most appropriate set of rules arbitration reform. Therefore, it remains and, until the appointment of the arbitral a challenging task to predict the exact tribunal, the applicable rules will be timeline and the final language of the chosen by the relevant arbitral institution. new arbitration laws. Debevoise will Fourth, a new provision is introduced continue to actively partake in, closely stating that the rules of an arbitral monitor and promptly report on any institution, which are in effect at the future critical developments in the time of the conclusion of an arbitration Russian arbitration reform. agreement, would prevail over newly For further information, please contact: adopted rules, unless the arbitration Alexey I. Yadykin agreement or the new rules (explicitly or [email protected] implicitly) prescribe otherwise. Moscow, +7 495 956 3858
Fifth, provisions criminalizing bribery Alexander Dmitrenko and some other offences in arbitrations [email protected] New York, +1 212 909 6838 have been removed. It should be reiterated that these recent changes remain a work in
www.debevoise.com Arbitration Quarterly 45 January 2015 Issue Number 6
Russia’s Supreme Arbitrazh Court’s Legacy
Landmark Judicial Reform in Russia News of the proposed dissolution and Its Impact on the Arbitration and of the SCC raised serious concerns Enforcement Regimes about the continued validity of its This summer marked a momentous decisions (primarily “resolutions” and change in the Russian judicial landscape. “clarifications”). The SCC decisions, For decades, there were two independent and its resolutions in particular, while judicial branches in Russia – the not legally binding in a civil law so-called “arbitrazh” (or commercial) jurisdiction like Russia, served as guiding courts, which dealt with, amongst other benchmarks for lower commercial things, arbitration-related litigation, courts, practitioners and commercial and the courts of general jurisdiction. entities. Over the past decade, the SCC The Supreme Arbitrazh (Commercial) had actively issued many resolutions Court of the Russian Federation (the on various commercial legal issues,
“There remains – at least temporarily – a certain predictability in the application of Russian commercial laws, including those relating to arbitration.”
“SCC”) was the highest court among including in the areas of commercial the commercial courts and the Supreme arbitration and enforcement. Court of the Russian Federation (the To an extent, this uncertainty was “SC”) was the highest court of general resolved by new legislation. According jurisdiction. On August 6, 2014, both to the Federal Constitutional Law the SCC and SC were dissolved and No. 8-FKZ dated June 4, 2014, SCC their powers and responsibilities resolutions will remain in force until were transferred to one new court, and unless the New SC, which is not also called the Supreme Court of the bound by SCC decisions, overrules Russian Federation (the “New SC”), them. Moreover, the corresponding which became the single highest court amendments to the Commercial in Russia. The reform did not affect Procedural Code, which applies to all lower courts, which remain divided into commercial litigation in Russia, also commercial courts and the courts of expressly permits the lower commercial general jurisdiction. courts to continue to rely on SCC
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Russia’s Supreme Arbitrazh resolutions to the extent that such measures – where and to the extent Court’s Legacy decisions do not conflict with the such court deemed it fit – in support of Continued from page 45 pronouncements of the New SC. a foreign commercial arbitration. This As a result, notwithstanding the resolution is of particular importance significant overhaul that Russia’s because the Commercial Procedure judicial system has been through, there Code of the Russian Federation does not remains – at least temporarily – a certain currently empower state commercial predictability in the application of courts to adopt such interim measures. Russian commercial laws, including those (ii) Describing Prerequisite Impartiality relating to arbitration. Debevoise will Components of Arbitrations continue monitoring and reporting on The issue of impartiality of arbitration the noteworthy decisions of the New SC. proceedings was addressed in a number SCC Resolutions Related to of SCC resolutions (No. 8445/13 dated Arbitration and Enforcement October 29, 2013, No. 1567/13 dated The SCC resolutions were of particular July 16, 2013, No. 16541/11 dated importance in establishing the May 22, 2012, No. 17020/10 dated arbitration and enforcement frameworks May 24, 2011, No. 1308/11 dated in Russia. The SCC provided critical June 28, 2011, and No. 18412/12 dated guidance by (i) allowing interim July 9, 2013). In these resolutions, the measures in support of arbitration, SCC stated that the impartiality of (ii) describing prerequisite impartiality arbitration proceedings consisted of two components of arbitrations, components: the objective impartiality (iii) declaring land-related disputes of the arbitration institution and the against governmental entities non- subjective impartiality of the arbitrators. arbitrable, (iv) declaring disputes This decision came at a time when against insolvent or bankrupt parties Russian companies began creating non-arbitrable, (v) dealing with and financially supporting their own various enforceability issues, and “pocket” arbitration centers. The SCC (vi) disregarding “asymmetrical” held that the objective impartiality arbitration agreements. All of these cannot be attained if one of the parties are described below. to the dispute establishes and finances (i) Allowing Interim Measures in the activities of an arbitration institution Support of a Foreign Arbitration handling the dispute. A violation of impartiality gives the state court grounds In Edimax Limited v. Chiriginsky to nullify an arbitration agreement, even (SCC Resolution No. 17095/09 dated if no objections were filed by the parties April 20, 2010), the SCC permitted a to the arbitration. lower commercial court to adopt interim
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Russia’s Supreme Arbitrazh (iii) Declaring Land-Related For nearly identical reasons, in Court’s Legacy Disputes Against Governmental ArbatStroy v. The City of Moscow Continued from page 46 Entities Non-Arbitrable (SCC Resolution No. 11535/13 dated In a series of resolutions, the SCC January 28, 2014), the SCC deemed ruled that the arbitral process was not non-arbitrable any disputes arising adequate for purposes of resolving from contracts concluded in accordance land-related disputes against municipal with, and in pursuance of, the state or and state entities. In Republic of Karelia municipal legislation governing the v. Forest Group (SCC Resolution No. supply of goods, performance of work 11059/13 dated February 11, 2014), the or provision of services for the state or SCC held that disputes arising from municipal needs. Similarly, in Aldega lease agreements of state or municipal v. Krasnozavodsk (SCC Resolution No. forestry plots were non-arbitrable and, 17043/11 dated April 3, 2012), the SCC
“The SCC leaves behind a valuable legacy of resolutions on key arbitration and enforcement matters. These resolutions will continue to provide guidance to lower commercial courts, practitioners and commercial parties.”
therefore, that arbitration agreements declared non-arbitrable any disputes requiring arbitration of such disputes related to the alleged violations by a were invalid. The SCC also held that the municipality of investment contracts and “public interest” in ensuring a rational other similar obligations, particularly and sustainable use of forestry resources with respect to the construction of prevails over any private interest of buildings on real estate on municipally- tenants in extracting profits from such owned land plots. resources. The SCC further declared (iv) Declaring Disputes Against that the public interest cannot be duly Insolvent or Bankrupt Parties served and ensured in a confidential Non-Arbitrable arbitration process with its simplified In a number of resolutions, the SCC procedure for the collection and also declared non-arbitrable any submission of evidence and a limited disputes with a debtor against whom appeal process. The SCC thus concluded a bankruptcy proceeding had been that such arbitral resolution of disputes commenced or who had already been would violate the underlying principles declared bankrupt (SCC resolutions of Russian law.
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Russia’s Supreme Arbitrazh No. 14355/12 dated March 19, 2013, SCC held that in such circumstance, Court’s Legacy No. 12751/12 dated February 12, 2013, it was immaterial whether the general Continued from page 47 No. 8141/12 dated November 13, 2012, counsel possessed a power of attorney and No. 7917/11 dated December 6, or other authority to act on the 2011). According to the SCC, a state respondent’s behalf. court handling a bankruptcy proceeding Enforcement challenges were more was the only proper forum to consider successful in other cases. In Karat-L v. all monetary claims against the debtor, Russian Academy of Agricultural Sciences which would eliminate the possibility (SCC Resolution No. 15554/13 dated of satisfying the claims of one of the February 11, 2014), the SCC declared that creditors of an insolvent debtor without an arbitral award can only be enforced regard to and to the detriment of the against persons who were parties to the rights and legal interests of other arbitration agreement and participated creditors. The SCC reasoned that an in the corresponding arbitration arbitration court loses competence to proceedings. Additionally, the SCC stated consider such a dispute from the date that domestic commercial courts should of commencement of the receivership not give weight to any facts established proceedings against the respondent. in an arbitral award detrimental to the However, if an award was issued prior interests of third parties. to the commencement of a receivership In FNC Engineering v. FGC UES (SCC proceeding, its enforcement should be Resolution No. 16497/12 dated April 23, conducted by the bankruptcy court. 2013), the SCC deemed unenforceable (v) Dealing with Various an arbitral award in excess of the cost of Enforceability Issues the actual work because such award was clearly disproportionate to the inflicted The SCC considered a number of damage. The SCC thus reiterated that enforcement challenges, allowing ‘proportionality’ between damages some and rejecting others. For instance, suffered and liabilities imposed was one of in Autorobot-Strefa v. Sollers-Elabuga the fundamental principles of Russian law. (SCC Resolution No. 1332/14 dated In Vergillios LSM v. Second Printing June 25, 2014), the SCC dismissed a Office (SCC Resolution No. 16882/11 challenge to an arbitral award on the dated March 29, 2012), the SCC ruled ground that the notice of arbitration and that the Russian state enterprises are not all correspondence with the LCIA was legally empowered to offer commercial not conducted by the respondent, but guarantees and, thus, any arbitral awards rather by a general counsel of its parent against such state enterprises acting as company (entitled to issue binding guarantors would be unenforceable. instructions to the subsidiary). The
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Russia’s Supreme Arbitrazh (vi) Disregarding “Asymmetrical” However, the SCC’s legacy might be Court’s Legacy Arbitration Agreements short-lived. Not only is the New SC Continued from page 48 RTK v. Sony Ericsson (SCC Resolution not bound by prior SCC decisions, but, No. 1831/12 dated June 19, 2012) is one separately, Russia is also conducting an of the most notable SCC resolutions. ongoing reform of its arbitration law In this case, the SCC found that a (discussed in Update on the Ongoing so-called “asymmetric” arbitration Russian Arbitration Reform in this issue agreement allowing only one party of Arbitration Quarterly), which might to choose between arbitration and render some of the SCC resolutions litigation violated the fundamental invalid. Arbitration law is changing in Russian legal principle of equal access Russia and will continue to be in a state to justice. Consequently, the SCC of flux for some time. Debevoise will permitted the party that only had continue to monitor and report on any the option to arbitrate to continue its critical future developments. proceeding in Russian courts. For further information, please contact:
Conclusion Evgeny Samoylov [email protected] The SCC leaves behind a valuable legacy Moscow, +7 495 956 3858
of resolutions on key arbitration and Alexander Dmitrenko enforcement matters. These resolutions [email protected] will continue to provide guidance to New York, +1 212 909 6838 lower commercial courts, practitioners and commercial parties.
Lord Goldsmith QC was awarded the Lifetime Award for Extraordinary Contribution to the Development of Pro Bono Culture in Europe at the 2014 PILnet European Pro Bono Forum. The award recognizes a member of the legal community who is a leading figure of pro bono development in Europe and who has helped PILnet advance its pro bono efforts in Europe. Lord Goldsmith is currently leading a team of Debevoise lawyers representing the International Commission of Jurists (ICJ), the Commonwealth Lawyers Association (CLA) and the Human Dignity Trusty (HDT) who are interested parties in a ground-breaking challenge in the Supreme Court of Belize. The case challenges the constitutionality of s.53 of the Criminal Code of Belize, which effectively criminalizes homosexuality. www.debevoise.com Arbitration Quarterly 50 January 2015 Issue Number 6
New LCIA Arbitration Rules Published
Sixteen years after the previous version discussion in the arbitration community, was introduced, the London Court of particularly following the International International Arbitration (the “LCIA”) Centre for Dispute Resolution (the has published the final text of its new “ICDR”) indicating that it may institute Arbitration Rules (the “2014 Rules”), conduct rules of its own in future which came into force on 1 October (International Arbitration Rules, Article 2014. These Rules apply to any LCIA 16). However, the 2014 Rules are the arbitration commenced after that date, first rules of any arbitral institution to irrespective of when the arbitration make such guidelines both mandatory agreement was concluded. and directly enforceable.
“The 2014 Rules are intended to modernize the procedures used in LCIA arbitration, promoting efficiency, aiming to reduce cost and providing novel procedures to meet user demand.”
The 2014 Rules are intended to The Guidelines set a minimum modernize the procedures used in LCIA standard of conduct, requiring that legal arbitration, promoting efficiency, aiming representatives: do not knowingly make to reduce cost and providing novel any false statement to the tribunal or procedures to meet user demand. Many LCIA Court; do not knowingly procure of the changes are evolutionary, but or assist in the preparation of false some are entirely new developments, evidence; do not knowingly conceal particularly the introduction of or assist in the concealment of any mandatory guidelines on conduct for document which the tribunal orders to parties’ legal representatives, and a new be produced; do not engage in activities emergency arbitrator procedure allowing intended unfairly to obstruct proceedings parties to seek urgent interim relief. or jeopardize the finality of an award; and do not deliberately initiate unilateral Conduct of the Parties’ Legal Representatives communication with any arbitrator (all communications between any party and The most controversial and innovative one or more arbitrators must be sent to change in the 2014 Rules is the all parties, under Article 13.4). introduction of mandatory conduct The 2014 Rules require each party to rules (the “Guidelines”). The concept ensure that its legal representatives have of general guidelines or rules on agreed to observe the Guidelines. Parties conduct has been the subject of much
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New LCIA Arbitration should consider including such express Importantly, the application of this Rules Published agreement in engagement letters with emergency arbitrator regime is not Continued from page 50 outside counsel. The tribunal has power automatic. For all arbitration agreements to sanction the parties’ representatives concluded prior to October 1, 2014 the for any breach of the Guidelines by emergency arbitrator procedure will written reprimand, a written caution only apply if the parties expressly agree as to future conduct, and “any other in writing to “opt-in.” For agreements measure necessary” to fulfil the general concluded after October 1, 2014, the duties of the tribunal. parties can expressly “opt-out” of the emergency arbitrator procedure at any Appointment of an Emergency Arbitrator time, by agreement in writing. Following the example set in recent Consolidation of Disputes revisions to other institutional rules The 2014 Rules have expanded the (such as the 2012 ICC Rules, the 2013 existing powers of LCIA Tribunals to HKIAC Rules, and the 2010 SCC Rules, manage complex disputes, adding new among others), the 2014 Rules include a powers to consolidate arbitrations in new “emergency arbitrator” procedure. addition to the existing powers to allow It allows one or more parties, in a case of joinder of parties. “emergency,” to apply to the LCIA Court The tribunal may order, with the for the appointment of a temporary approval of the LCIA, the consolidation sole arbitrator, before the formation of of an arbitration with one or more other the tribunal, to conduct proceedings to arbitrations. Importantly, this new power determine a claim for emergency relief. appears to permit the tribunal to order This is a welcome development given consolidation if the relevant conditions that it expands the range of options are met, even if one of the parties in one open to parties to protect and enforce of the arbitrations objects. their rights. A new Article 22.6 gives the LCIA The emergency arbitrator can make a similar power to consolidate two any award or order permissible under or more arbitrations where they are the terms of the arbitration agreement, between the same parties, under the or, alternatively, may adjourn all or any same arbitration agreement and no part of the application to be considered Tribunal has yet been appointed in any by the tribunal once appointed. Unless of the arbitrations to be consolidated. challenged by the parties or the tribunal The LCIA must give the parties an (which it may do so out of its own opportunity to state their views on discretion), the order or award of the consolidation, but again the LCIA emergency arbitrator will remain in effect. appears to be entitled to proceed with
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New LCIA Arbitration consolidation if it considers it appropriate in any event, irrespective of outcome. Rules Published to do so, even if a party objects. Following section 60 of the Arbitration Continued from page 51 These new provisions are likely to Act, Article 28.5 provides that for such assist in ensuring that multiple related agreements to be effective, the parties arbitrations are dealt with efficiently. must confirm the agreements in writing However, the range of conditions that after the date of the Request. must be satisfied before a tribunal There is some concern that this new or the LCIA is entitled to exercise provision may give undue leverage these default powers means that it is to any party liable to pay under such likely that parties involved in complex agreements, but who subsequently contractual arrangements will still wish refuses to confirm the agreement. to draft their own bespoke consolidation Pending clarification of how tribunals provisions into their arbitration interpret Article 28.5, any parties agreements, to widen the range of wishing to enter into such agreements disputes that can be consolidated. should take Article 28.5 into account.
“The emergency arbitrator can make any award or order permissible under the terms of the arbitration agreement.”
Costs Law of the Arbitration Agreement Article 28 contains new provisions A significant development under the enhancing the tribunal’s power to order 2014 Rules is the inclusion of provisions that a party should pay all or part of the that determine the law of the arbitration legal costs of another party or the costs of agreement. Article 16.2 adds to the the arbitration “on such reasonable basis previous rule that, in the absence of as it thinks appropriate,” including with agreement of the parties or order of the consideration to the conduct of the parties tribunal (previously the LCIA Court), and their legal representatives. Article 28.3 or unless the parties expressly agree now states that the tribunal “shall not be otherwise, the law of the arbitration required to apply the rates or procedures agreement will be the same as the law for assessing such costs practiced by any of the seat (and therefore by default, state court or legal authority.” English law). The impact of this new The new rules have also imported a provision should be borne in mind in the concept under English law which applies drafting of any arbitration agreement where one or more parties agree to bear that will be subject to the 2014 Rules. all or part of the costs of proceedings
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New LCIA Arbitration Conclusion: • Previously, if parties did not wish to Rules Published allow for consolidation of multiple Continued from page 52 The 2014 Rules are a welcome development and modernization of the arbitrations, it was sufficient for their previous LCIA Rules, particularly as they LCIA arbitration clause to remain clarify the powers of the tribunal, and silent. With the changes to Article 22 the introduction of the Guidelines for in the 2014 Rules, if the parties do not legal representatives. As a result of the want consolidation to be available, or changes introduced, there are four key want to have consolidation available changes in the 2014 Rules that parties on a different basis from the new should now bear in mind when drafting default position, the parties will need their arbitration clauses: a specific alternative. • In all arbitration agreements • It is typical to see parties agree the concluded prior to October 1, 2014, law that governs any arbitration the parties must specifically “opt-in” agreement. However, given the to Article 9B if they wish to make changes the 2014 Rules have use of the emergency arbitrator introduced, the parties should ensure provisions. Therefore, parties with that they express any choice of law in existing arbitration agreements may respect of the arbitration agreement wish to consider agreeing such an clearly, to avoid any unintentional opt-in, whether by amending their operation of Article 16.2 deeming the arbitration agreement or signing a law of the arbitration agreement to be separate side letter. Conversely, for that of the seat, or English law. arbitration agreements concluded on For further information, please contact: or after October 1, 2014, if the parties Aimee-Jane Lee do not want the emergency arbitrator [email protected] provisions to apply they should London, +44 20 7786 9168 expressly opt-out. Gavin Chesney [email protected] • If the parties wish to agree that a party London, +44 20 7786 5494
should pay costs in any event (for Jonny McQuitty - Trainee Attorney arbitrations seated outside of England [email protected] and Wales), they must take into London, +44 20 7786 5405 account the effect of Article 28.5. An express statement that Article 28.5 is not to apply may be necessary.
Promotion: Alex Parker, based in the London office, has been promoted to International Counsel. Mr. Parker, is a member of the firm’s International Dispute Resolution Group and its White Collar and Regulatory Defense Group. www.debevoise.com Arbitration Quarterly 54 January 2015 Issue Number 6
ICDR Revised Rules Update
Effective as of June 1, 2014, the ICDR), and all other parties prior to the International Centre for Dispute appointment of an arbitrator. If joinder Resolution (the “ICDR”), the is sought after the appointment of an international division of the American arbitrator, all parties, including the party Arbitration Association (the “AAA”), to be added, must agree to be joined. has updated its International Dispute Article 8 provides for a novel Resolution Procedures (including approach to consolidation. A party Mediation and Arbitration Rules) (the seeking consolidation may request “IDR Procedure”). The significant the appointment of a “consolidation amendments are mainly focused on arbitrator” who will have the power, the International Arbitration Rules under certain circumstances, to join any within the IDR Procedure (the “Rules”). two or more arbitrations pending under This update to the Rules, the most the Rules or being administered by the substantive since 1996, aims to promote ICDR or the AAA. The consolidation efficiency and bring the Rules up-to- arbitrator has broad discretion in date with best international arbitration determining whether consolidation practices through the introduction of is appropriate, and may consider “all new procedures, amendments to old relevant circumstances” including not procedures, and the codification of only the applicable law, but also the certain ICDR practices. procedural portion of the pending The amendments to the Rules are arbitrations and general concepts of detailed and lengthy. Key developments “justice and efficiency.” Furthermore, include the introduction of provisions the consolidation arbitrator is not related to: joinder and consolidation, required to issue a statement of reasons document production and the exchange as to the ultimate decision whether to of information, privilege, and expedited grant consolidation. procedures. This article will explore the Document Production and the key details of these rule changes. Exchange of Information Joinder & Consolidation Where previously the Rules did not Articles 7 and 8 of the Rules are new substantively deal with the exchange of provisions which address joinder and information, Article 21 now addresses consolidation. Now, pursuant to the this issue in detail. The tribunal now has revised Rules, a party wishing to join a clear mandate to oversee the exchange an additional party need only submit of information to promote economical a Notice of Arbitration to the party and limited discovery procedures; while to be joined, the Administrator (the parties may provide their views on
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ICDR Revised Rules Update the appropriate level of information international users of arbitration who Continued from page 54 exchange for each case, the tribunal would perhaps worry that by choosing retains final authority. the Rules they were opening themselves Parties are now required to exchange up to U.S.-style procedures. all documents upon which they intend Privilege to rely and, in line with the International Bar Association’s (the “IBA”) Rules on The Rules’ position on privilege the Taking of Evidence in International distinguishes them from the rules of Arbitration (the “Rules on the Taking many other arbitral institutions. Where of Evidence”), provision is made for the previously the Rules simply required the tribunal to order, upon application, the tribunal to take account of applicable production of any specific documents or principles of legal privilege, Article 22
“This substantial set of changes and additions is an encouraging sign that the ICDR has recognized and is attempting to resolve challenges of wastefulness and delay that can plague international arbitrations, and should help the ICDR stand out as a strong arbitral forum for the resolution of international disputes.”
class of documents that are reasonably of the revised Rules goes much further believed to exist and to be relevant and and sets a much higher standard. Now, material to the outcome of the case. If a where parties may be subject to different party fails to comply with orders relating privilege rules, the tribunal “should” to information exchange the tribunal is where possible apply the privilege empowered to draw adverse inferences. rule that provides the “highest level of Moreover, the Rules now, and for the protection” to all parties. This stringent first time, deal with requests for, and the position on privilege goes beyond even provision of, electronic documents. that provided for in the IBA Rules on the Most significantly for a set of rules Taking of Evidence. that derive from the AAA, Article 21 Expedited Procedures provides that U.S. court procedures, such The Rules are now supplemented as depositions and interrogatories, are by the new International Expedited not appropriate procedures for obtaining Procedures that are contained in Articles information under these Rules. Such E-1 through E-10 of the IDR Procedure clarity will be welcomed by the
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ICDR Revised Rules Update (the “Expedited Procedure”). However, overseen by the ICDR. This substantial Continued from page 55 the Expedited Procedure, designed to set of changes and additions is an minimize cost and enhance efficiency, encouraging sign that the ICDR has only applies to arbitrations with a sole recognized and is attempting to resolve arbitrator and which have a value of less challenges of wastefulness and delay that than US$250,000. can plague international arbitrations, and should help the ICDR stand out Mediation as a strong arbitral forum for the The Rules now offer a unique and resolution of international disputes. practical method to facilitate the Notably, the Rules suggest that the efficient resolution of disputes. ICDR may supplement the Rules in the Pursuant to Article 5, the Administrator near future to regulate the conduct of may encourage parties to mediate parties’ representatives. So far, of the their dispute, following the filing of rules of the main arbitral institutions, the Answer in an arbitration. Any only the London Court of International such mediation would be conducted Arbitration has taken the significant step concurrently with the arbitration unless of regulating the behavior of the parties’ the parties agree otherwise. Note that representatives in arbitration. It will be the Administrator is not required to interesting to note if the ICDR follows offer the mediation, nor do the Rules suit soon. provide for any inferences to be drawn for failure to mediate when offered. For further information, please contact: Overall, the revisions and updates Matt Hartz to ICDR’s IDR Procedure provide for [email protected] New York, +1 212 909 6103 greater clarity and attempt to ensure efficiency in procedures for arbitrations
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Arbitration Round-up
New Arbitration Centers Serbia
Australia The Belgrade Arbitration Center (“BAC”) started operating in January 2014. Further to Australia’s plans to offer a The BAC was established by the grid of dispute resolution hubs across Serbian Arbitration Association, a not- the country, the Melbourne Commercial for-profit organization comprised of Arbitration and Mediation Centre industry experts, and is Serbia’s first (“MCAMC”) opened in March 2014. independent arbitration institution. The MCAMC aims to enhance Victoria’s The BAC administers domestic and reputation in commercial dispute international disputes, assists with resolution and mark Melbourne as a administration of ad hoc arbitral center for domestic and international proceedings under UNCITRAL and arbitration. conducts mediation sessions. The MCAMC compliments Sydney’s The Rules of BAC, adopted on Australian International Disputes Centre January 1, 2014, contain a specialized and another center is planned for Perth, procedure for conciliation and rules largely to serve the oil and gas industry for BAC to act as appointing authority in Western Australia. The plan is for the in ad hoc arbitral proceedings under centers to work co-operatively to offer UNCITRAL and other rules. parties more than one geographic option for resolving their disputes in Australia. Other Developments Saudi Arabia Australian Senate Committee – Saudi Arabia has formed the Saudi Center Investor-State Dispute Settlement for Commercial Arbitration (“SCCA”). (“ISDS”) Provisions to Remain The SCCA is the first commercial Australia’s Foreign Affairs, Defence and arbitration center in Saudi Arabia to Trade Legislation Committee, a Senate handle domestic and international Committee, has concluded that the Trade commercial and civil disputes. It will and Foreign Investment (Protecting the have its headquarters in Riyadh and will Public Interest) Bill 2014 (the “Trade and oversee the setting-up of other arbitration Foreign Investment Bill”), which restricts centers throughout the Kingdom and, the use of ISDS provisions in future trade potentially, internationally. agreements, should be rejected. Although The nine-member board of the SCCA the Senate Committee’s report is not will develop a set of arbitral rules, create a binding on Parliament, it will be influential list of arbitrators from which parties may in the on-going debate in Australia. choose, and will also consider costs issues.
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Arbitration Round-up The Trade and Foreign Investment Bill Arbitration Rules and Internal Regulations Continued from page 57 was introduced in response to Phillip in August this year. Pursuant to these new Morris’s challenge of Australia’s Tobacco rules, parties will be able to, amongst other Plain Packaging Act 2011 and the resulting things, choose their arbitrators, select public concern that ISDS provisions were the language and law of the arbitration, restricting Australia’s ability to legislate and elect whether to have a hearing. freely on issues such as health. International Bar Association Although the previous Australian Approves Revised Guidelines government (under Prime Minister on Conflicts of Interest: Julia Gillard) had stated that it would no On October 23, 2014, the International longer include such provisions in free Bar Association (“IBA”) approved trade agreements, the policy of the new revisions to its Guidelines on Conflicts government is that Australia will consider on Interest in International Arbitration ISDS provisions on a case-by-case basis. (the “Guidelines”). This is the first time The Committee concluded that the Guidelines have been revised since legislation was not the “best mechanism they were first published in 2004. by which to address the concerns Although the revised Guidelines are raised about risks associated with ISDS not yet publicly available some of the provisions.” It remarked that the risks key changes that they introduce were were “overstated” and concluded that revealed at the IBA’s annual conference in a blanket ban on the provisions would Tokyo. The new Guidelines will deal with “impose a significant constraint on the a number of new issues including: the role ability of Australian governments to of third-party funders in the arbitration; the negotiate trade agreements that benefit use of advance waivers; the issues that arise Australian business.” The Committee’s when counsel are from the same barristers view was that the risks could be managed chambers as members of the tribunal; and by careful treaty drafting including the the duties of tribunal secretaries. development of a “well-balanced” model investment treaty. Myanmar Publishes Draft Australia currently has ISDS Arbitration Bill provisions in four free trade agreements Following Myanmar’s accession to the (Chile, Singapore, Thailand and ASEAN) UN Convention on Recognition and and in 21 bilateral investment treaties. Enforcement of Foreign Arbitral Awards Cambodia’s National Arbitration (commonly known as the New York Center Adopts New Rules Convention) in July 2013 (see Myanmar to Accede to the New York Convention, Cambodia’s National Arbitration Center Issue 2, Arbitration Quarterly), in May this (“NAC”), which opened in March 2013 year, Myanmar’s parliament published in Phnom Penh, adopted the NAC a draft Arbitration Bill (the “Bill”).
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Arbitration Round-up The Bill is based on the UNCITRAL available in Turkmen and Russian. The Continued from page 58 Model Law on International Commercial law will apply to all arbitrations seated Arbitration (1985). While revisions are in Turkmenistan and will also apply possible before it is eventually signed into to attempts to enforce foreign arbitral law, the Bill is a positive step towards awards in Turkmenistan, regardless of bringing Myanmar into the international the seat of arbitration or governing law. arbitration spectrum. Turkmenistan is not a signatory to the New York Convention. As a result, Turkmenistan Enacts Commercial this new law will be the only way of Arbitration Law enforcing a foreign award in the country. In August 2014, Turkmenistan enacted its first commercial arbitration law which For further information, please contact:
is set to come into force in 2016. The Alexander McKinnon law will apply to commercial disputes [email protected] between parties and states where at London, +44 20 7786 3038 least one of those parties has business Ayushi Sharma - Trainee Attorney [email protected] operations outside Turkmenistan. London, +44 20 7786 5440 The law is based on the UNCITRAL Model Law 2006 and is currently only
Arbitration Quarterly
Arbitration Quarterly London Edition Editors Please address inquiries regarding topics covered in this publication to is a publication of 65 Gresham Street John B. Missing the editors or to the article authors. Debevoise & Plimpton LLP London, EC2V 7NQ [email protected] +44 20 7786 9000 London, +44 20 7786 9160 All content © 2015 Debevoise & New York Plimpton LLP. All rights reserved. 919 Third Avenue Moscow The articles appearing in this New York, New York 10022 Business Center Mokhovaya David W. Rivkin publication provide summary +1 212 909 6000 Ulitsa Vozdvizhenka, 4/7 [email protected] information only and are not Stroyeniye 2 New York, +1 212 909 6671 intended as legal advice. Readers should seek specific legal advice Washington, D.C. Moscow, 125009 London, +44 20 7786 9171 before taking any action with 555 13th Street, N.W. +7 495 956 3858 respect to the matters discussed Washington, D.C. 20004 Aimee-Jane Lee herein. Any discussion of U.S. +1 202 383 8000 Hong Kong [email protected] Federal tax law contained in these 21/F AIA Central London, +44 20 7786 9168 articles was not intended or written Paris 1 Connaught Road Central to be used, and it cannot be used 4 place de l’Opéra Hong Kong by any taxpayer, for the purpose Assistant Editor 75002 Paris +852 2160 9800 of avoiding penalties that may be +33 1 40 73 12 12 Jane Rahman imposed on the taxpayer under U.S. Federal tax law. Shanghai [email protected] Frankfurt 13/F, Tower 1 London, +44 20 7786 5463 Taubenstrasse 7-9 Jing’an Kerry Centre 60313 Frankfurt am Main 1515 Nanjing Road West +49 69 2097 5000 Shanghai 200040 +86 21 5047 1800
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• Dietmar W. Prager spoke on Diverging • Christopher K. Tahbaz spoke on Standards of Review of Jurisdictional Highlight on Jurisprudence: The Latest Decisions at Columbia Arbitration Day on the Approach of U.S. Courts and Hong in New York on March 28, 2014 Kong Courts in Enforcing International Arbitration Awards at the ICC Asia-Pacific • Dietmar W. Prager spoke on As Conference in Seoul on May 21, 2014 Influencias Do Poder Judiciaro Na Arbitragem at the ICC Young • Donald Francis Donovan gave the Arbitrators’ Forum in Rio de Janeiro opening remarks on Investor State on May 5, 2014 Disputes Involving Energy Policies and Regulations at the International Energy • Dietmar W. Prager spoke on Evidence Arbitration Program in Santiago, Chile in Arbitration at the 10th Rio de Janeiro hosted by The Center for Global Energy, International Arbitration Conference in International Arbitration and the Rio de Janeiro on May 6, 2014 University of Texas School of Law on • Aimee-Jane Lee spoke on Expert June 5, 2014 Evidence: Tips on the Effective • Dietmar W. Prager spoke on Presentation of Complex Questions at the Remedies in International Energy ICC Young Arbitrators Forum in Paris Disputes at the conference on on May 6, 2014 Emerging Trends in International • Dietmar W. Prager spoke on The Arbitration in Latin America in Future of Investment Arbitration in Light Santiago, Chile on June 5, 2014 of the Latest Developments at the III • Ina C. Popova spoke on Ethics in Roundtable on Investment Arbitration International Arbitration at the NYIAC organized by the Comitê on Brasileiro de CLE Panel in New York on June 11, 2014 Arbitragem in São Paulo on May 7, 2014 • Natalie L.Reid spoke on Provisional • Dietmar W. Prager spoke on Como Measures to Secure Enforcement at Funciona el Arbitraje International? the ITA Young Arbitrators Dallas Tiemos, Costos y Eficiencia del Roundtable in Dallas on June 18, 2014 Procedimiento at the Arbitraje International: Problemas y Tendencias Lord Goldsmith QC spoke on Actuales conference in Lima, Peru L’ Obligation de Loyauté Dans L’ Arbitrage on May 21, 2014 at the Place D’ Arbitrage, Paris on June 30, 2014
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Recent Events • Aimee-Jane Lee acted as counsel • Lord Goldsmith QC gave the opening Continued from page 60 in the study of a mock case under remarks on The HKIAC New Rules and the ICC Rules organized by the Recent Practice at the HKIAC Road Show International Court of Arbitration in Mumbai, India on September 19, 2014 and The University of Florence in • Lord Goldsmith QC spoke on The Trend Florence on July 21-25, 2014 Towards International Arbitration and Its • Christopher K. Tahbaz spoke on Challenges at the LCIA India Western Thoughts on the Role of Corruption in India Users’ Council Symposium in Investor-State Arbitration at the KCAB Ahmedabad, India on September 20, 2014 Seminar on Investor-State Dispute • Donald Francis Donovan spoke on Settlement in Seoul on August 20, 2014 Case Management as a Tool to Optimize • Natalie L. Reid spoke at the Annual Time in Arbitrations: Organizing the ICC New York Conference in New Proceedings, Taking Evidence and York on September 8, 2014 Partial Awards at the XIII International Arbitration Congress of the Brazilian • Christopher K. Tahbaz spoke on Arbitration Committee in Porto de Depositions and Cross-Examination Galinhas, Brazil on September 22, 2014 in Civil Proceedings at the Milan Bar Association Seminar on “Taking of • Aimee-Jane Lee spoke on Investment Evidence Across the Atlantic: Legal Treaty Law and Arbitration at the Issues and Practical Hints” in Milan annual Investment Treaty Law and on September 11, 2014 Arbitration Programme organized by Africa International Legal Awareness • Christopher K. Tahbaz spoke on in London on September 26, 2014 Hot Topics in European Cross-Border Commercial Disputes: Brussels I Recast • Lord Goldsmith QC spoke on Revisiting and Recent Trends in ECJ and National the Pathology of Arbitration Clauses at Case Law at the Milan Bar Association “Asia at the Cutting Edge” in Hong Seminar (Conference Co-Chair) in Kong on October 17, 2014 Milan on September 11-12, 2014 • Lord Goldsmith QC spoke on “The • Mark W. Friedman spoke at the 10 Most Important Developments in 3rd Annual GAR Live Conference in Asian IA From the Past Year: a Collective New York on September 19, 2014 View” at the 4th Annual GAR Live Asia Conference in Hong Kong on • David W. Rivkin spoke at the 3rd October 17, 2014 Annual GAR Live Conference in New York on September 19, 2014
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Recent Events • Christopher K. Tahbaz spoke on • Christopher K. Tahbaz spoke on Continued from page 61 Investor-State Arbitration in Asian China: Dealing with Challenge at the Region – Quo Vadis? at the 4th IBA Annual Meeting in Tokyo on Annual GAR Live Asia Conference October 23, 2014 in Hong Kong on October 17, 2014 • Frederick T. Davis spoke on Levelling the • David W. Rivkin spoke at the Arab Playing Field – Defending Multinationals Arbitration Forum Luncheon at the in a World of Increased Cross-Border IBA Annual Meeting in Tokyo on Cooperation at the IBA Annual Meeting October 19, 2014 in Tokyo on October 23, 2014 • David W. Rivkin spoke at the North • David W. Rivkin spoke at the IBA American Forum Luncheon at the Council at the IBA Annual Meeting IBA Annual Meeting in Tokyo on in Tokyo on October 23, 2014 October 20, 2014 • Sophie Lamb and David W. Rivkin • Deborah Enix-Ross spoke on We are spoke on Reasons for Success and Failure all Human Rights Lawyers at the in Offshore Exploration and Production IBA Annual Meeting in Tokyo on at the IBA Annual Meeting in Tokyo on October 20, 2014 October 24, 2014 • Mark W. Friedman spoke on Hot • Donald Francis Donovan moderated Topics in Arbitration at the IBA Annual a panel on The Role of Investment Meeting in Tokyo on October 21, 2014 Arbitration in Promoting the Rule of Law at the American Branch of the • David W. Rivkin spoke at the Japanese International Law Association and the Diet Meeting on Global Legal Service at International Law Students Association’s the IBA Annual Meeting in Tokyo on International Law Weekend in October 21, 2014 New York on October 24, 2014 • David W. Rivkin spoke at the • Dietmar W. Prager spoke on Risks and Showcase Program on Climate Change Challenges in International Arbitration: at the IBA Annual Meeting in Tokyo The International Arbitrator’s Perspective on October 22, 2014 at the ICDR and CCB Joint International • Christopher K. Tahbaz spoke on Arbitration & Mediation Conference in Masterclass: Using Litigation to Support Bogotá on October 28, 2014 Arbitration in Asia at the IBA Annual Meeting in Tokyo on October 22, 2014
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Recent Events • William Taft spoke on Alternate • Nicola Leslie participated in a Continued from page 62 Dispute Resolution at the Prudential discussion on a report published by the U.S. Business Law Conference in New IBA’s Task Force on Climate Change Jersey on October 28, 2014 Justice entitled Achieving Justice and Human Rights in an Era of Climate • Donald Francis Donovan gave the Disruption at the House of Lords in 26th Annual Blaine Sloan Lecture on London on December 1, 2014 International Law on The Advocate in the Transnational Justice System at Pace • Patrick Taylor spoke on The Proposed Law School in White Plains, New York Investment Protection Standards in the on October 29, 2014 TTIP at a seminar organized by the LCIA’s Young International Arbitration • Dietmar W. Prager spoke on Group, and hosted by Debevoise & International Arbitration at the V Brazil Plimpton in London, on The Future of Infrastructure Investment Forum in European Investment Treaty Protection New York on November 5, 2014 and ISDS on December 3, 2014 • Natalie L. Reid spoke at the Association • Conway Blake spoke on The New EU of Caribbean Corporate Counsel in Regulation on Financial Responsibility Florida on November 6-7, 2014 for EU Investor-State Disputes at a • Christopher K. Tahbaz and seminar organized by the LCIA’s Young Samantha Rowe spoke on Best Practices International Arbitration Group, and – an Excuse for Avoiding Reform? at the hosted by Debevoise & Plimpton in International Arbitration Conference – London, on The Future of European Sydney Arbitration Week in Sydney on Investment Treaty Protection and ISDS November 13, 2014 on December 3, 2014 • Dietmar W. Prager spoke on Risks and • David W. Rivkin presented the 2nd Challenges in International Arbitration Annual Seoul Arbitration Lecture at the at the 8th International Arbitration and Seoul International Dispute Resolution Mediation Conference in São Paulo on Centre in Seoul, South Korea on November 18, 2014 December 9, 2014
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Debevoise International Dispute Resolution Group Partners and Counsel Donald Francis Donovan Natalie L. Reid Partner, New York Partner, New York [email protected] [email protected] +1 212 909 6233 +1 212 909 6154
Tony Dymond David W. Rivkin Partner, London Partner, New York and London [email protected] [email protected] +44 20 7786 9030 +1 212 909 6671 +44 20 7786 9171 (London) Mark W. Friedman Partner, New York Dr. Thomas Schürrle [email protected] Partner, Frankfurt +1 212 909 6034 [email protected] +49 69 2097 5000 Lord Goldsmith QC Partner, London and Hong Kong Karolos Seeger [email protected] Partner, London +44 20 7786 9088 [email protected] +852 2160 9800 (Hong Kong) +44 20 7786 9042
Antoine F. Kirry Christopher K. Tahbaz Partner, Paris Partner, New York and Hong Kong [email protected] [email protected] +33 1 40 73 12 35 +1 212 909 6543 +852 2160 9839 (Hong Kong) Alyona N. Kucher Partner, Moscow Frederick T. Davis [email protected] Of Counsel, Paris +7 495 956 3858 [email protected] +33 1 40 73 13 10 Sophie Lamb Partner, London Matthew H. Getz [email protected] International Counsel, London +44 20 7786 3040 [email protected] +44 20 7786 5518 Kevin Lloyd Partner, London Jessica Gladstone [email protected] International Counsel, London +44 20 7786 9020 [email protected] +44 20 7786 9166 John B. Missing Partner, London Richard Lawton [email protected] International Counsel, London +44 20 7786 9160 [email protected] +44 20 7786 9029 Dietmar W. Prager Partner, New York Aimee-Jane Lee [email protected] International Counsel, London +1 212 909 6243 [email protected] +44 20 7786 9168
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Continued from page 64 Debevoise International Dispute Resolution Group Partners and Counsel Carl Micarelli Andy Y. Soh Counsel, New York International Counsel, Hong Kong [email protected] [email protected] +1 212 909 6813 +852 2160 9819
Steven S. Michaels Patrick Taylor Counsel, New York International Counsel, London [email protected] [email protected] +1 212 909 7265 +44 20 7786 9033
Alex Parker Deborah Enix-Ross International Counsel, London Senior Advisor, New York [email protected] [email protected] +44 20 7786 9130 +1 212 909 6310
Philip Rohlik Counsel, Shanghai [email protected] +852 2160 9856
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