THE ARBITRATION AGREEMENT, SEAT AND JURISDICTION 1. Enercon v. Wobben: The English court engages in yet more parsing of how an arbitration clause works. Government of India v. Cairn: The Malaysian Federal court engages in the same exercise of trying to dissect the parties choice of lex fori, lex arbitri and substantive law. It s all very intellectually interesting, but are we really giving meaning to the parties' actual intentions? 2. Law of the seat v. governing law of the matrix contract: Where there is a dispute as to the proper law of an arbitration agreement, what is the solution? Is the law with the closest connection to the arbitration agreement always going to be the same (i.e. always the law of the seat, alternatively always the law of the matrix contract) or does this need to be determined on a case by case, fact specific basis? 3. How does an arbitration clause expressly providing for a procedural law which is different from the law of the seat play out in practice?" E.g. the clause provides for a London seat and that French law shall apply to the procedure of the arbitration. 4. Language of the arbitration: Is this an essential element for arbitration clauses, given the increasing number of transactions and, consequently, disputes that arise between parties from different countries/cultures who do not necessarily share a common language, and where the parties' respective counsel and members of the Tribunal may also lack a common language? Or is this merely a practical consideration that can be tackled at the outset of arbitral proceedings, rather than having to be decided at the drafting stage of the agreement? 5. What if a respondent in arbitral proceedings has very limited assets/shell company? Should one try and join a parent company before commencement of the arbitral proceedings? It will then be up to the Tribunal to decide whether it has jurisdiction over the parent under which law? It seems an accepted view that the substantive law governing the agreement will not necessarily apply to an arbitration clause. Should the law of the seat be applied in such circumstances? Is it always reasonable, given that the law of the seat of arbitration may not have any connection to the dispute? In several awards references have been made to the principles of "international law" and "lex mercatoria" when deciding as to whether a subsidiary/parent company can be joined (see for example ICC 8385 where it was suggested that whether the substantive law, the law of the seat or the principles of international law are applied the result would be the same) to what extent these principles can be relied upon? Let's assume that the parent company was joined into the proceedings and the award is rendered against the parent. Given that there is no agreement to arbitrate between the parent and the claimant the enforcement may well be difficult and the award is likely to be challenged in the place of enforcement. Was it worth of joining the parent at the first place? Are there alternative ways of dealing with the respondent, which happens to be a shell company? 1
6. In light of the recent revisions of the ICC Rules in order to deal with multi party scenarios, and the increasing preference for arbitration as a dispute resolution mechanism in the context of complex multi party and multiagreement transactions (particularly in the financial and projects sectors), is the "joinder by the back door" provision in Article 22.1(h) of the LCIA Rules enough, or does the LCIA need to consider amending its Rules to cater more specifically for multi party and multi agreement disputes? 7. The "negative effect" of the competence competence principle: do commercial realities require the purist approach of deference to the Tribunal to determine its own jurisdiction to be tempered by a willingness of the court to make a prima facie determination as to jurisdiction, in order to avoid the parties incurring the potentially unnecessary cost of commencing an arbitration? 8. Anti arbitration injunctions: In what circumstances would it be legitimate for an English court to issue antiarbitration injunctions, in light of the cases Nomihold Securities Inc v. Mobile Telesystems Finance SA (2012) and Excalibur v. Keystones Inc. (2011)? 9. Arbitrability of insolvency of companies and of statutory rights of minority shareholders: Should the holding in Fulham Football Club (1987) Ltd v. Richards & Anor (2011) as to the arbitrability of insolvency of companies and minority shareholders' statutory rights be of concern to us? 10. Does PRIME Finance mark the start of the finance sector's conversion to arbitration? 11. Should arbitral rules of institutions such as the LCIA be able to cater for investment arbitrations or are they illplaced to do so? 12. LCIA India, DIFC LCIA...where should the next outpost of the LCIA be? THE ARBITRAL TRIBUNAL 13. Independence of arbitrators. 2
14. Independence of arbitrators: We are the experts for the Defendants in an arbitration where two of the arbitrators spoke at a conference sponsored by my firm. The Claimants are making an application to the Court to have the arbitrators removed because they claim they cannot be independent because of this. The Claimants claim the arbitrators should have disclosed this fact once they knew of our involvement and that they would have objected to the arbitrators. If this is a genuine claim would this not have very far reaching implications for experts, law firms and arbitrators. 15. An old one, but a good one: No not the question, the arbitrator. When might age and stature not be the right answer when it comes to making appointments? 16. In international arbitration is the nationality of the Tribunal one of the most important factors in terms of the conduct of proceedings? 17. Where the parties have agreed that each party is to nominate one Arbitrator on a three man panel, with the two party nominated appointees agreeing on the Chair, should the party nominated co Arbitrators engage in any discussion with the party who appointed them in relation to the selection of the Chair? For example, should the co Arbitrators agree a list of candidates and then separately solicit the views of the party who nominated them on those candidates? Or should the selection of the chair by party nominated co arbitrators be a process entirely insulated from party involvement or input, for ethical reasons? 18. The Chairman of a three member arbitral Tribunal stepped down two years after the filing of the claim. Hearings have already taken place and the case is basically ready to be decided on. The two remaining arbitrators were prompted to nominate a new Chairman and did so. Under DIS Arbitration Rules the arbitrators receive a flat fee based on the amount in dispute. Who should decide how much the former Chairman will be paid the arbitral Tribunal with the new Chairman, the parties? When is the arbitrator s fee due and is he entitled to the full amount? The DIS Rules are silent on the matter. PRACTICE AND PROCEDURE THE CONDUCT OF THE PROCEEDINGS 19. Is a provision in a procedural order that the Tribunal has discretion to refuse to permit a party's legal representative to appear in order to "ensure the integrity of the proceedings" valid and enforceable? 3
20. Disqualification of counsel: Does the arbitral Tribunal have a right to disqualify counsel and if yes, in what circumstances? 21. Should parties be made to agree on a common list of issues as a matter of course? If so, when makes the best sense? 22. The IBA Rules on the Taking of Evidence provide in Article 2(3) that the arbitral Tribunal is encouraged to identify to the Parties, as soon as it considers it to be appropriate, any issues that it may regard as relevant to the case and material to its outcome and/or for which preliminary determination may be appropriate. While this would appear to be a welcome tool for controlling time and cost in arbitration, Tribunal's seem to be very reluctant in applying this or similar rules. Do we as counsel push enough for such rules to be applied? Or are we too afraid of missing an opportunity to present our client's case? 23. Clients are increasingly asking for "front loaded" proceedings. But is this really the best way to conduct the proceedings? 24. In cases where there are no counterclaims brought by the Respondent, the default procedure under Article 15 of the LCIA Rules envisages an unequal number of sequential written submissions by the parties, i.e. the Claimant's Statement of Case, followed by the Respondent's Statement of Defence, followed by the Claimant's Statement of Reply (similar to the number and sequence of written pleadings in English court proceedings). In practice, is it more usually the case that the parties and the Tribunal will agree that the Respondent will have the right to submit a Statement of Rejoinder following the Claimant's Statement of Reply? If so, should the default procedure be revised to include this fourth set of submissions, or is there any compelling reason why the status quo should remain? 25. Oral closings or post hearing briefs; which would you rather? 26. Interim relief granted by arbitral Tribunals with a London seat: Arbitral Rules such as the LCIA Rules do not set down a test which should be applied to applications for interim relief. Commentators suggest that a test along the lines of Article 17A of the UNCITRAL Model Law is most appropriate (i.e. (i) harm not adequately reparable by an award of damages; (ii) such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted; and (iii) reasonable possibility of success on the merits). Is this the test most commonly seen by parties to arbitrations seated in London? Or is reference to the test which would be applied by the Courts to an application for interim relief of the same kind commonly seen? Is the latter considered appropriate by the YIAG participants? 4
27. Does a Tribunal have the power to dispose of a case summarily (i) if such power has not been given to the Tribunal in the arbitration agreement or the applicable arbitration rules; and (ii) even if such power has been included in the arbitration agreement/rules? Would an award rendered using this power face challenge and/or enforceability problems? 28. Should the rules of the major arbitral institutions be amended to provide for summary determination? 29. Are there circumstances in which you would go for an emergency arbitrator (where available) over the English court when interim relief is sought at the outset of proceedings? 30. Two related arbitrations on back to back contracts ( Head Reference and Sub Reference ) have been ordered by the Tribunal to run concurrently. The party at one end ( Party 1 ) wishes to withhold from the party at the other end ( Party 3 ) disclosure of highly prejudicial documents. These two parties are not party to the same reference. The party in the middle ( Party 2 ) has simply been copying and pasting correspondence and submissions up and down the chain. In a cynical attempt to avoid disclosure, Party 1 reaches settlement with Party 2 in relation to the issues to which the prejudicial documents relate, though this does not finally determine the Head Reference as other issues remain live. Now that there is no issue in the Head Reference to which the highly prejudicial documents relate, would / should the Tribunal have the power nevertheless to order Party 1 to disclose them to Party 2 and (in reality) Party 3 in the context of concurrent but not consolidated references where they remain highly relevant in the Sub Reference between Party 2 and Party 3? 31. Party A, upon request of party B, submits a document in blackened form, alleging that the blackened parts were blackened to protect business secrets. One of the arbitrators, upon his own initiative, removes the black and notifies the parties during a hearing. Party A calls for a break, removes the black as well and finds out that the document contains decisive information not qualifying as business secrets. Did the arbitrator act ultra vires? If so, may the document still be used? 32. The scope and depth of the document production/disclosure in international arbitration (English and European perspective). How to resist the extensive disclosure? 33. Deciding when (and what type of) expert evidence is required. 5
34. Party A initiates arbitration alleging that Party B failed to properly construct a building and listing 20 defects, yet without a detailed factual or legal argument or a specific monetary request. Instead it proposes that the Tribunal should appoint an independent expert who should verify whether the named defects exist and how much it will cost to cure them. Party B denies that any defect exists, but agrees to the proposal to appoint an expert. In a telephone conference, the Tribunal suggests that the parties first will submit full briefs including factual and legal submissions and a specific request, e.g. a claim for damages. However, the parties uphold their joint request for the Tribunal to first appoint the expert arguing that only once the expert has rendered his opinion, they will be able to specify and quantify their requests. Is the Tribunal entitled, obliged or prohibited from meeting with the parties' joint request? 35. Issues relating to the participation of experts/witnesses in arbitral proceedings (independence, confidentiality etc). 36. Is there a code of ethics in international arbitration with respect to the preparation of factual witnesses? If not, should there be one? 37. Should Tribunals attach different weight to the evidence of witnesses who have been coached, and those who have not? 38. Should cross examination have a place in international arbitration hearings? 39. What is the best procedure when dealing with expert evidence, e.g. simultaneous or consecutive exchange, 1 or 2 (or more) reports, meetings of experts etc? 40. Are expert meetings and joint reports a waste of time and money? In practice, neither party's expert makes concessions not already made in their reply reports and the key areas of difference should be highlighted in the reply reports, in pre or post hearing written submissions and/or cross examination. Should Tribunal's wait until after the expert reports are prepared before deciding whether expert meetings and joint reports may be useful rather than including them including them as part of a "standard timetable" in the first procedural hearing? 41. Is the preference for expert meetings and joint statements increasing in international arbitration. Is there a dynamic between a possible perceived lack of control over the process and the potential assistance it can provide to the Tribunal in narrowing the issues on which they have to decide 6
42. Is 'hot tubbing' an effective way for Tribunals to hear expert evidence? ORDERS, AWARDS AND ENFORCEMENT 43. Should parties have to pay for long dissenting awards in commercial arbitrations? A dissenting award is not binding or enforceable, may lead to delays in the majority award being issued and, in some cases, may undermine the enforceability of the majority award. Should limits be placed on the scope and content of dissenting awards in commercial arbitrations, in order to avoid unnecessary costs? 44. The timeliness of awards is a big issue in international arbitration. Wouldn't allowing secretaries to prepare drafts of awards upon detailed instructions (e.g. decision trees) by the Tribunal as it is done in many jurisdictions in state courts by clerks solve the problem? Or is this entirely unacceptable in international arbitration? What are the parties' expectations in this regard? And finally, if the users had to choose: would they opt for a timely award or an award drafted word by word by the Chairman? 45. When seeking to enforce an award in a state other than that of the seat, is it better to enforce an award as an award or as a judgment? 46. Enforcing interim measures granted by an arbitral Tribunal (or emergency arbitrator) can be problematic in many jurisdictions. Despite not having coercive powers, what means does the arbitral Tribunal have to ensure or at least encourage compliance with its orders? In particular, can the Tribunal order penalties (astreintes) in case of non compliance? 47. Party A initiates arbitration proceedings in State X against the JV BC based on a contract and an arbitration agreement between A and the JV BC. No claims are directed against B or C individually and the award is also merely directed against the JV BC mentioning that the JV is registered in State Y. In reality, the JV BC has never been registered in Y and, thus, might not be a legal entity. Party A seeks enforcement of the award against B in State Z. Enforcement is denied since the award is not directed against B. What are the lessons to be learned? Should enforcement courts or Tribunal be able to rectify such situations by interpreting the award? Should Tribunals examine the party's standing to be sued ex officio or hint at the option to sue the right party before rendering the award? Should institutions intervene during the proceedings or at least during the scrutiny of awards? 7
48. Powers of the Indian courts to interfere in arbitrations seated outside India: from Bhatia International v. Bulk Trading SA (2002) to Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (where the Indian Supreme Court recently constituted a five judge constitutional bench to reconsider the state of arbitration law in India) Recent line of authority (including Calcutta High Court judgment in Coal India v. Canadian Commercial Corporation) which demonstrates that Indian courts are increasingly willing to exercise restraint and hold that the parties have impliedly agreed to exclude the applicability of Part I of the Act where they have chosen a foreign seat, or laws of other jurisdictions to govern the arbitration agreement. Recent addition of the PRC (including Hong Kong) to the list of notified countries for the purposes of enforcement of foreign awards in India. Setting up of more arbitration institutions in India (including LCIA India). Recent Chennai High Court decision in AK Balaji v. Government of India (which has now been appealed to the Indian Supreme Court) which confirms the rights of the foreign lawyers to participate in international arbitration proceedings in India. Do these recent developments provide reasons for a measured optimism that Indian courts would adopt a more pro arbitration stance in the future and that India might emerge as an acceptable arbitral venue? COSTS 49. Recovery of litigation costs as damages for breach of agreement to arbitrate whence the restrictive attitude. 50. Why are costs claims in arbitrations not given more coverage in the institutional rules and more consideration by Tribunals? 51. In view of the never ending endeavours to reduce time and costs in arbitration, some rules and guidelines expressly allow for cost sanctions in case a party has not conducted the proceedings "in an expeditious and cost effective manner" or has failed to conduct itself "in good faith". Are such provisions ever made use of? Are such provisions a carte blanche for the Tribunal or need there not at least be some causal link between the "misconduct" and the costs in question? 8
52. The 2012 ICC Arbitration Rules intend to improve the cost effectiveness and efficiency of arbitrations by a number of provisions designed to improve case management. Article 37(5) (which allows the arbitral Tribunal to take into account such circumstances as it considers relevant when making decisions as to costs, including the extent to which each party has conducted the arbitration in an expeditious and cost effective manner) can be seen as an incentive to parties to conduct themselves in such a manner. Comments/views as to what extent this provision will be used, the appropriateness of it and the effectiveness of it. 53. How the arbitral Tribunal should react when the claimant refuses to pay its share of the advance on costs. Of particular interest might be in this context whether the arbitral Tribunal has the power to issue a partial award for immediate reimbursement of the advance on costs substituted by the respondent on behalf of the claimant. 54. How much detail should be included in a Statement of Costs? Have delegates ever been required to provide evidence of the costs that their clients have incurred? 55. At what stage of the proceedings should a statement of costs be prepared? If the statement of costs is prepared by both parties before the award is rendered, is that not a wasted exercise for the winning party (and therefore wasted time and cost)? Are the client's in house costs (both in house legal and management costs) recoverable? If so what evidence should be provided? Are the in house legal and management costs incurred by the parent company of a client in connection of the arbitration recoverable? 9