Arbitration Practice Research Articles

There is no impending crisis: a look beyond the Sixth Circuit’s decision to permit Section 1782 discovery for use in international commercial arbitration

Abstract There are few topics in international arbitration that engender more intense sentiments amongst practitioners than discovery. While debate endures over the applicability, suitability and extent of discovery within this autonomous system of justice, it is impossible to escape the reality that national laws and courts will and do have a role—often a significant one—to play in international arbitration proceedings, most notably to assist in the arbitral process. One US federal law in particular, 28 USC § 1782, has become increasingly relevant in recent years, as more parties attempt to harness its potency in facilitating discovery of evidence in aid of foreign arbitration. The application of the statute to foreign or international arbitral tribunals, however, is a murky question, and not one on which all US federal courts agree. Most recently, the US Court of Appeals for the Sixth Circuit broke with some of its sister circuits in finding that discovery under section 1782 is permissible for use in foreign or international commercial arbitrations. While many have denounced the decision as contrary to, or arguably likely to render less effective, principles or aspects of international arbitration deemed sacrosanct by arbitration enthusiasts, the effect of the Sixth Circuit’s decision on the broader practice of arbitration must not be overstated. Practitioners, tribunals, and the US federal district courts in particular already have ample means at their disposal to thwart section 1782’s potentially broad reach and effectiveness in creating inequities or turmoil in arbitration proceedings. Channeled effectively, these tools and proper considerations of discretion can ensure an appropriate balance between the need for critical evidence and the prevention of drawn-out, inequitable, and inefficient arbitral proceedings.

CLASSIFICATIONS OF LEGAL COMMUNICATION IN RUSSIAN CIVIL LAW

Business communication is an essential condition for successful functioning of the civil turnover. In 2013, for assigning a legal effect to business communication, the legislator introduced a new norm - Article 165.1 of the Russian Federation Civil Code that covers legal communication. Despite the fact that this legislative innovation has been existing for almost seven years, despite the accumulated volume of judicial and arbitration practice of applying this rule, and despite the scientific research interest in this problem, the civil law science does not have a full-fledged theory of legal communication, including its concept, features, place in the system of legal facts, and other aspects. The purpose is to classify by various criteria the legal communication whose legal status is provisioned by the rule of Article 165.1 of the Russian Federation Civil Code, for solving a task meaningful for the Russian civil law development - i.e. the task of constructing the civil theory of legal communication. Methods: the basis of the research is the dialectical materialistic method of obtaining awareness of public phenomena and processes that conditions the study of legal communication in dynamics and in conjunction with other legal phenomena. Other universal methods including analysis, synthesis, induction and deduction, comparison, grouping are applied. Results: the author proposes innovative classifications of legal communication; with the classification criteria including the form, the conduct of the addressee of the message, the number of the addressees, the nature of legal implications, the source, and the sphere of application.

The Contribution of Investment Arbitration to Issues of Evidence and Procedure Before Other International Courts and Tribunals

This chapter examines the contribution of investment arbitration to international law more generally in relation to matters of evidence and procedure. Part 1 examines the practice of a number of inter-State dispute settlement fora in an attempt to gauge the contribution of the considerable body of practice of investment arbitration which has been built up over the course of the last few decades. It is shown that, at least at this point in time, this contribution is difficult to discern and appears to vary from one context to another. Part 2 takes a step back and considers the broader implications of the current practice and potential future developments. The argument is made that investment arbitration is in practice an important point of reference for the resolution of ‘cross-cutting’ issues of evidence and procedure, with significant potential to influence the handling of similar issues before other courts and tribunals. For instance, certain issues such as the challenge and disqualification of decision-makers, abuse of process, or admissibility of illegally-obtained evidence have received extensive consideration in investment arbitration. The manner in which such issues have been dealt with by investment arbitrators, it is argued, forms part of an increasingly rich corpus of practice from which other courts and tribunals can potentially draw inspiration. Accordingly, the strict position taken by some inter-State tribunals to date, which circumscribes reference to investment arbitration practice on account of it not being a relevant source of law, is undesirable. For international courts and tribunals to wilfully deprive themselves of this potentially fruitful source of inspiration and guidance on issues of evidence and procedure is unnecessarily isolationist and potentially harmful to international law as a discipline more generally.

The Coming of Age of Institutional Arbitration Rules in Iran: An Analytic Overview of the ACIC Rules

The Arbitration Center of Iran Chamber of Commerce (hereafter “ACIC”) was established in 2002, following approval by the parliament of Iran as an affiliate to the Iran Chamber of Commerce. However, it has a distinctive and independent legal character. The ACIC is the first institution to incorporate institutional arbitration into the legal system of Iran for the resolution of both domestic and international disputes. The last five years have been pivotal for the ACIC and included significant developments. In addition to Rules of Arbitration which were developed during the formation of the ACIC (the “ACIC Rules”), the ACIC launched its own arbitration rules designed for cost and regulations on organization. The ACIC Rules now consist of Rules of Arbitration, Rules of Arbitration Costs and Regulations on Organization. The ACIC has also published three volumes of selected arbitration awards issued under the auspice of ACIC, both in domestic and international arbitrations. More recently, the ACIC has published “Iranian Yearbook of Arbitration” designed to address the varying nuances of Iran’s arbitration practice.

The Current Framework of Consolidation in Arbitration in Bosnia and Herzegovina: No Sustainability Without Reform

Consolidation of arbitral proceedings is commonly regarded as a procedural device designed to deal with the challenges associated with complex cases. It is a method that combines multiple proceedings and harmonizes the final outcome of the disputes that bear significant resemblance, thus eradicating the risk of having contradictory awards rendered on a closely related set of facts. As such, it contributes to consistency as well as procedural and cost efficiency. However, this post does not build upon the “intuition” that consolidation is inherently advantageous procedure and is cognizant of some of the apparent shortcomings presented by such practice. The post recognizes that the urge to aggregate proceedings must not amount to an abuse of discretion, and nor should it undermine the viability of individual-specific conditions to each case. That said, the ambiguity surrounding the proceeding of consolidation under the legal framework of Bosnia and Herzegovina (‘BiH’) prevents such practice to strike a proper balance between the party autonomy and the necessity of harmonization of arbitration awards. This blog post first highlights some of the shortcomings associated with the current legal framework of BiH with respect to the consolidation proceedings. Then, it proceeds to elaborate upon the possible adverse implications of such open-textured and abstract regulations on the practice of arbitration. Finally, it proposes some factors to be considered in a much-needed reform.

Pravo na kamatu prema odredbama Konvencije UN o ugovorima o međunarodnoj prodaji robe

This paper is devoted to the analysis of Article 78 of the UN Convention on Contracts for the International Sale of Goods which, due to its insufficient determination, creates numerous discussions in both theory and practice that inevitably leads to a violation of uniformity in the application of the Convention. The paper presents dominant theoretical attitudes in solving interest issues, as well as court and arbitration practice in this matter. In order to ensure predictability and legal certainty in international trade, this paper is devoted to finding uniform and commercially realistic solution for calculating interest based on the Convention itself.

International investment arbitration: decisions 2017–2018 on the merits of the dispute

In the previous article, the author reviewed the decisions of international investment arbitration 2017–2018 on the jurisdiction and admissibility of claims. This article reviews the decisions of these arbitrations for the same period on the merits of the disputes. A special place among these decisions is taken by decisions on claims of foreign investors on violation by the host state of the regime (or standard) of fair and equitable treatment. This is quite natural: violation of this standard is the most common claim. In 2017–2018 in particular, many lawsuits in which such claims were made were related to the generation of electricity from renewable sources, mainly from solar energy. These claims were based on the 1994 Energy Charter Treaty. The article examines, in particular, cases of claims in which investors demanded compensation for damage caused by changes in the legislation of the host countries. The question before the arbitrators was: how strongly does the standard of fair and equitable treatment protect against legislative changes? The article also considers such aspects as: violation by the state of the national regime, the most favored nation regime and the standard of full protection and security of foreign investments; direct and indirect expropriation. The solutions in which the question arose about; the power of the arbitral tribunal to review its own preliminary decisions; the impact of environmental aspects on the behavior of the investor and the state; attempts by a party dissatisfied with the arbitration decision to have the decision annulled or overturned either by an ad hoc committee of ICSID or by national state courts. An analysis of the above decisions will reveal some trends in international investment law, which is important in the context of the fact that there cannot be truly uniform practice in investment arbitration due to the lack of a single source of law and a single dispute resolution body. Thus, only a careful analysis of the practice can tell which practice is well established and which is not.

论在上海自贸区推行航空临时仲裁——以横琴自由贸易试验区临时仲裁制度为借鉴

论在上海自贸区推行航空临时仲裁——以横琴自由贸易试验区临时仲裁制度为借鉴

Making Arbitral Award More Transparent: The need for adequate reasoning

Disputes are inevitable- it is part and parcel of human life. Especially with the growing need for trade and businesses, parties tend to enter into cross-border transactions which ultimately leads to a conflict. The nature of the disputes that arise from such dealings are for the most part commercial. Ultimately, one of the preferred modes to resolve commercial disputes, between parties across national borders, is by way of International Commercial Arbitration. Party autonomy being the bedrock of arbitral practice allows the parties to agree upon their own set of terms, varying from choosing the applicable law, to the type of final award to be rendered on the disputed matter. Generally, final award is categorised into—(i) standard, and (ii) reasoned. While the standard award essentially elucidates the facts, issues and laws, the reasoned award involves a detailed analysis as to why the arbitrator(s) reached that opinion. In International Arbitration regime, parties largely opt for reasoned award to avoid future potential disputes. However, the procedural responsibility of an arbitrator to provide for reasons and the extent of reasoning in an award, has been a long-term controversy. Thus, the essence of this paper targets at development of international arbitration in terms of arbitrator competence and by setting out a format in rendering reasoned awards. This practice ultimately results in transparency of arbitral proceedings which is a pressing priority of most of the parties.

L’État dans le contentieux de l’investissement : identification, représentation, transformation

In international investment arbitration practice highlights the complex factual situation of states beyond their legal personality. This kind of arbitration was encouraged as a mean to avoid the heaviness of diplomatic protection in a view to depoliticising economic disputes. However, it can be observed in the recent evolution of this kind of arbitration that through different aspects the political implication of states is not absent and appears with the enhanced attention paid to the drafting and interpretation of treaties as well as with the impact on investment disputes of political evolutions and events affecting the legal situation of the defending state.

The Evolving Role of the Human Rights Factor within the State of Necessity Test in Investment Arbitration

The discussion on increasing the legitimacy of international investment law largely overlooks the potential of the state of necessity, as a circumstance precluding wrongfulness of States’ conduct under general international law, for the protection of human rights. The present article deals with the practice of international investment arbitration in cases involving Argentina in connection with its economic crisis of 1998–2001, in which it raised the necessity defense and appealed, inter alia, to human rights. The article concludes that, as a rule, the human rights factor did not play a noticeable role for resolving the relevant disputes. The human rights discourse either had no adequate place within the merits of the disputes, or the tribunals did not take the relevant arguments seriously. The human rights argumentation tried itself within different parts of the Argentina’s defense, including various elements of the necessity test, but without meaningful effect. The Award in the case of Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic has demonstrated the perspective of recognizing the significance of the human rights factor in the context of “the only way” element of the necessity test: this element can unleash the potential of human rights in the disputes involving the necessity-based defense and provide the tribunals with tools capable of taking human rights more seriously in the context of investment disputes concerning emergencies. The Urbaser Tribunal position is an evidence of the evolving and expanding role of the human rights factor within the necessity test but substantial clarification of this test at the doctrinal, practical and political level is still needed to increase the legitimacy of international investment dispute resolution system.

Peculiarities of responsibility to arbitrators of international commercial arbitration

The article explores the problems of arraignment of arbitrators, while analyzing both the legal framework for international commercial arbitration of foreign countries and the existing arbitration practice. In particular, it is emphasized that the arraignment of arbitrators is quite problematic, as there are significant omissions and gaps in the domestic arbitration laws of several states, which avoids the liability of unfair arbitrators. However, given that international commercial arbitration is a non-governmental institution, built on the principle of autonomy of the will of the parties, which allows the parties to influence positively the arbitration (by determining the right on the basis of which the dispute, languages and places of arbitration will be settled and the quantitative composition of arbitration, etc.), in this case, the role of ethical rules is growing significantly. Accordingly, unscrupulous arbitrators cannot further claim to be involved in arbitration proceedings, as they fall into the so-called «black list of arbitrators» and the parties refuse to provide their services. This «public disclosure» method can be viewed to some extent as a means of preventing arbitrators. From a practical point of view, we consider it justified to include in the regulations of international commercial arbitration tribunals the provisions on the application of sanctions for violation of the parties' consideration of their obligations. If the arbitrator makes a deliberately wrong decision, it is advisable to provide for the following sanctions: withdrawal (in particular, the grounds for dismissal should be: financial dependence, subordination and other professional relations of the arbitrator with one party; the same nationality of the arbitrator and one or both parties; or opinion; court precedents); suspension of activity, prohibition on occupation of certain positions, liability for damages, administrative and criminal liability. Key words: arbitration, international commercial arbitration, arbitrator, responsibility of arbitrators, sanctions in international commercial arbitration.

Performance Requirements: Is there a Real Reason for their Prohibition?

Recent international economic agreements between the EU and other non-EU states have included prohibitions on performance requirements (PRs). Although the provisions prohibiting such requirements typically specify the types of prohibited practices, the essence of PRs, and the reasons for their prohibition remain unclear. The recent concept of PRs has crept into the international legal framework seemingly without a firm theoretical foundation and without any roots in customary international law. It had initially been used in bilateral treaties as the broad term for designating certain policy tools which States were prepared to relinquish so as to promote a better investment regime. Noting the lack of a generally recognised definition of PRs, this article provides an overview of scholars’ opinions and adjudicators’ reasoning on this subject, highlighting certain significant differences in approach. Guided by various examples from arbitral practice and national legislation of selected countries, this article seeks to distil the inherent features of PRs and to rationalise the internationally-prevailing views on this subject. In summary, the article gives an assessment of the prohibition of PRs and considers the reasons for which States may seek to eliminate these types of measures.

Russia’s International Investment Treaties: Recent Development.

The past 15 years have seen dramatic changes in Russia's investment treaty and arbitration practice. As a major player in international investment activities and a prominent constituent of the group of 5 BRICS countries which is considered to be a new power hub in international relations in the twenty first century, Russia's divergent approaches to investment treaties and arbitration practice have attracted wide attention and debates. What adds to that curiosity is that Russia is a significant participant in the United Nations Commission on International Trade Law (UNCITRAL) discussions to reform the investor-state dispute settlement (ISDS) mechanism, and the world has been watching any slight shifts in its approach closely. Hence, it is necessary to gain insight into the underlying consideration of Russia's legal practice.

FULL PROTECTION AND SECURITY STANDARD IN INTERNATIONAL INVESTMENT LAW

The subject of the study is the analysis of the application of the Standard of Full Protection and Security of Foreign Investments in international arbitral practice. It is an absolute standard that is contained in almost all international investment agreements and that has been established through arbitration practice, regardless of the variety of language expressions referred to in investment agreements. The objects of protection under this Standard can be both investors and investments and it establishes a dual obligation for the states. On the one hand, there is the obligation of active action to prevent and remedy a violation or to punish perpetrators, and on the other hand, there is the obligation to refrain from any activities that may hurt foreign investment. This paper deals in particular with the three issues that are decisive for the application of the Standard in practice. The first is the issue of the relationship between this Standard and other standards of protection of foreign investments, in particular the Standard of Fair and Equitable Treatment, as well as to the minimum standard of protection enjoyed by foreign investors and their investment under international customary law. The second is the issue of standard content, whether it applies only to physical protection and security, or includes wider, legal protection and regulatory protection, security and stability. The third question relates to the degree of protection and security, i.e. whether this Standard implies the objective liability of the host country or whether it has to deal with due diligence, depending on the circumstances of each case. The paper analyses all publicly available decisions of international arbitration tribunals as well as scientific literature dealing with this Standard and points out the prevailing attitudes about these three key issues as well as their implications for the protection of foreign investments.

Obtaining Documents From the Opponent in International Commercial Arbitration

This dissertation provides an analysis of the scope and procedure of obtaining documents from the opponent in international commercial arbitration. The goal of this research is to provide an in-depth study of the myriad of detailed questions regarding the procedure and scope of obtaining document production which goes beyond analyzing the differences between common law and civil law practices and takes an international commercial arbitration perspective. The primary aim, however, is not to supply definite answers, but rather to present possible best practices by, for example, discussing various approaches and problematic areas of the topic and also providing the reader with awareness of different aspects that should be taken into account when dealing with document production. To reach this aim, the method of legal dogmatics is predominantly employed. The core of this research is in the interpretation and systematization of international arbitration sources, especially soft law, which provide detailed guidance regarding document production, against the background of legal principles of arbitral procedure. The challenge of conducting research regarding document production is that procedural timetables, document requests, objections and procedural orders are confidential. However, the author of this dissertation had the rare opportunity to research files of ICC cases and anonymized examples from the chosen cases serve as valuable source regarding international arbitration practice. The research is divided into five substantive chapters. In Chapter 2, the framework for document production is discussed. In Chapter 3, the procedure and requirements of the request for documents is analyzed. Here im-portant questions are considered, such as what is the basis of a party’s right to obtain documents, how to delimit a narrow category of documents, what is meant by relevance and materiality, can a party request documents relating to issues it does not have the burden of proving and also when are the documents considered as being in a party’s control. In Chapter 4, the attention turns to the possible bases for an objection to a document request, such as privilege, confidentiality, data protection, unreasonable burden of production etc. Chapter 5 contains analysis of the questions connected to the actual production, including the tribunal’s order to produce or dismiss a production request, the form of production and the consequences of non-compliance, i.e. adverse inferences and financial consequences. In Chapter 6, the issue of national courts’ assistance in obtaining documents from the opponent is addressed. The detailed results of the analysis are presented throughout this dissertation and the significance of this research is in the discussion of the specific questions. Nonetheless, on the basis of the conducted study certain key find-ings are also drawn. First, the research shows that many issues can be resolved on the basis of balancing principles of international commercial arbitration. Consequently, there is no need for more regulation. Arbitration needs to remain flexible. Predictability should not be achieved on the level of arbitration rules and soft law, but in specific arbitration proceedings. Second, there are important legal implications relating to production of electronic documents and participants of the arbitral process need to be aware of them. Third, arbitrators are very cautious when making decisions as to not violate possible due process or public policy requirements. In fact, only one arbitral award has been set aside due to a reason connected to a document production question. Finally, with respect to many questions regarding the scope and procedure of document production, one can refer to an international commercial arbitration approach.

Актуальные проблемы процедуры рассмотрения заявлений об обеспечении иска в арбитражном процессе

The topic of this article is devoted to the analysis of controversial, problematic aspects affecting the procedural order of the courts reviewing applications for interim measures, or, as expressly stated in the law, statements about securing a claim. The author of this article has studied the different views of process scientists, as well as the law enforcement practice of arbitration courts to consider these issues.

Costs Follow the Event in Arbitration: Its Paradigm and Relevance

This article examines cost from arbitration perspective. Upon determination of issues in arbitral proceedings a decision is reached which is known as an ‘award’ generally containing damages awarded in favor of the claimant as well as legal and arbitration cost. This article reveals that the arbitral tribunal fixes cost but the general practice and principle in arbitration is that cost follows the event meaning the unsuccessful party shall pay the successful party the arbitration and legal cost. This article through decided cases shows the presence of this general principle in different jurisdiction. However, irrespective of this celebrated principle of cost following the event, situation arises when an arbitrator will invoke his discretion in departing from the rule. Relevant factors and circumstance of the case before the arbitral tribunal must be put into consideration before departing from the general rule on cost.

A review of the legislative reform of customary arbitration in Ghana

Due to the phenomenon of legal pluralism that colonial rule left in its wake, customary arbitration is still a method of dispute resolution in Ghana despite the formal judicial system. But until 2010, customary arbitration practice was regulated only by case law. To put it on a firmer legal foundation and streamline its practice and procedures, the Alternative Dispute Resolution Act 2010 codified customary arbitration as an ADR method. In this article, we examine the legislative reform of customary arbitration in Ghana and assess the extent to which the ADR Act has improved it.

Árbitro de emergência: conceito, desenvolvimento e adequação

Emergency arbitrator provisions have assumed increasing importance in the arbitration practice, being now foreseen in basically all institutional rules. In addition to the reasons that led to the emergence and development of such institute, this essay intends to describe, from the analysis of its typical characteristics, the practical circumstances that make, or not, the emergency arbitrator a better alternative to the Judiciary.