Arbitration & Litigation Tutorial. Assistant Professor Monika Prusinowska Winter term 2015/2016

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1 Arbitration & Litigation Tutorial Assistant Professor Monika Prusinowska Winter term 2015/2016

2 Drafting Arbitration Clause

3 Why is arbitration clause called sometimes the midnight clause? What does the term severability of arbitration clause mean? What is the meaning of the seat of arbitration?

4 The seat of arbitration is the jurisdiction where the international arbitration has its home. It provides the national arbitration legislation applicable to arbitration for some procedural issues, such as: Rules of involvement of courts (f.e.: evidence taking), Rules for ANNULEMENT of the award, Application of the New York Convention award etc. Enforcement: Parties want money not a piece of paper

5 Signatories of the NYC (in blue)

6 What are the critical elements of arbitration clause?

7 Agreement to arbitrate Scope of disputes submitted to arbitration Arbitration seat Institutional arbitration rules Arbitrators number, qualification and selection Language of arbitration Choice of law clauses

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9 Sample clauses "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. *The law of this arbitration clause shall be... (Hong Kong law). The seat of arbitration shall be...(hong Kong). **The number of arbitrators shall be... (one or three). The arbitration proceedings shall be conducted in...(language). *Optional. **Optional

10 What are the common mistakes made when drafting arbitration clauses?

11 What are the problems with the following clauses/fragments of clauses? Any dispute of whatever nature arising out of or in any way relating to the Agreement or to its construction or fulfillments may be referred to arbitration.

12 Parties shall appoint a Chinese speaking Arbitrator with a French law degree and a familiarity with Mid-East construction contracts.

13 Disputes shall be submitted to arbitration according to the Rules of Conciliation and Arbitration of the ICC; disputes which may be resolved by conciliation shall be submitted first to conciliation.

14 All disputes arising out of the bankruptcy proceedings connected to the Magnum JV will be resolved by the CIETAC Arbitration Commission in accordance with CIETAC 2015 Rules. The law applicable to the substance of the dispute will be US and Chinese law.

15 CASE: Company A is a big steel producer from China, Company B is a big car manufacturer from France. Companies A and B conclude the contract of purchase of 200 metric tons of steel. As for the dispute resolution method, arbitration was chosen. Being divided into 2 groups of lawyers, on behalf of Companies A and B, negotiate the arbitration clause to be put into the purchase contract. What are the essential elements you need to take into consideration? Negotiate and draft the arbitration clause for this contract.

16 ADR methods

17 What kind of ADR mechanisms do you know? What are the motivations to use ADR? What are the benefits and drawbacks of ADR as compared to litigation? What are the advantages and disadvantages of particular methods? What are the differences between arbitration and mediation? What is the binding power of the decisions made within specific ADR methods?

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19 Arbitration (+ Final-Offer Arbitration) Neutral evaluation Mediation/ Conciliation/ Negotiation Expert Determination Mini-trials

20 CASE: See the various dispute scenarios below and think about the most efficient way of solving particular disputes. What does the selection of particular ADR method depend on?

21 Dispute between the tenant and landlord over the flat rented (leaking water machine pipe destroyed the parquet).

22 Dispute over the efficiency of two technical solutions proposed for the machine produced by the JV company (two parties to the JV have various views on what technical solution will be the most efficient for improving the quality of airbag gluing in a newly produced car).

23 Dispute between the member of the residual community over the use of funds collected for the construction of the playground.

24 Dispute over IP law rights related to the technology transfer agreement.

25 Dispute within the JV company involving the trade secrets.

26 Dispute between the brothers over inheritance of the family jewelry.

27 Med-arb usually refers to a process where mediation and arbitration are combined. For example, the parties may start arbitrating a dispute and then agree to attempt mediation. Or they may commence mediation and then when they are unable to reach agreement they can agree to arbitrate (i.e. arbmed). What is unusual about this is that the same person may act as both mediator and arbitrator. In China this practice is relatively common, however, in western jurisdictions this practice is often viewed with concern. What advantages and disadvantages of such a method can you think of?

28 Additional question 1) What do you think is the most efficient way of solving the disputes between investors and hosting states? Why? 2) Why do you think TPP dispute resolution mechanism proposals are controversial and involve numerous discussions?

29 THANK YOU!