Arbitration Practitioners Research Articles

Depositions: An Apologia

Depositions (pre-hearing oral interrogations of opposing witnesses) are characteristic of American litigation. They are being imported into some international commercial arbitrations, by contract and by US statute, over the principled objections of civil lawyers and the practical objections of most international arbitration practitioners. American-style ‘discovery’ should certainly not be imported whole into international arbitration. Depositions, though, under proper circumstances and control, can be effective and cost-effective.

Past, Present, and Future Perspectives of Arbitration

This publication of the Patron’s Address at the CIArb’s Kuala Lumpur Conference presents selective thoughts on the development and role of arbitration in the past, today and its future perspective, primarily from the view of an arbitrator and from the background of experience the author has and has had in various functions in national and international legal and arbitration institutions. It starts by looking at past developments that were the basis for the present situation. Regarding the situation today, it deals in separate chapters with dispute settlement in general, commercial arbitration, politically sensitive disputes, investment arbitration, globalisation of arbitration, relevance of international law in commercial arbitration, arbitral procedure, promotion of amicable settlements, and the use of electronic media in arbitration. In a last chapter, it presents future perspectives particularly regarding a continuing expansion of arbitration, its subject matters and participating parties, its use for politically sensitive disputes, and the growing harmonisation between national arbitration laws and practices. Finally, it addresses the role of arbitrators in the process and the specific rising role and organisation of young arbitration practitioners.

What Weight Should be given to the Annulment of an Award under the Lex Arbitri?The Austrian and German Perspectives

Over the past two decades various national courts have repeatedly been asked to enforce arbitral awards that have previously been set aside in their country of origin. However, even today judgments in case law and opinions among arbitration practitioners continue to differ remarkably on the question of the (il)legitimacy of enforcement orders for such awards. As was demonstrated in the article by Christopher Koch, French courts have manifested their readiness to enforce annulled awards in principle, whereas others, like the U.S. courts, have shifted from an enforcement–friendly attitude to a rather more reluctant approach. The following article explores the constraints that confine enforcing courts’ discretion on enforcement and discusses the approaches taken by Austrian and German courts.

Arbitraje comercial y de las inversiones by Fernando Cantuarias Salaverry

Arbitraje comercial y de las inversiones by Fernando Cantuarias Salaverry. Published by Universidad Peruana de Ciencias Aplicadas (2007, 974 pp.). A couple of years ago a group of prominent Spanish lawyers and arbitration practitioners embarked on a tour of Latin America. The stated purpose of the trip was to present and explain Spain’s new arbitration law and the UNCITRAL Model Law from which it was largely adapted. The subtext was to vaunt Spain as an ideal venue for Latin American disputes—a genre of arbitral reconquista of the old colonies. The Spanish delegation was slightly perturbed when Dr Fernando Cantuarias Salaverry rose to inform them that Peru’s arbitration law, incorporating most of the Model Law, had (at that time) already been in place for more than eight years and was functioning well, and that it was the Peruvian experience that might merit attention from these Europeans. Dr Cantuarias ought to know. He was a member of the Comision sobre Sistemas Alternatives de Administration de Justicia: Mediation, Conciliation y Arbitraje, formed by the Peruvian Ministry of Justice in 1994, whose work led to Peru’s well-adapted Ley General de Arbitraje (LGA) in 1996;9 he is also one of the principal commentators on the LGA. Nor is Peruvian arbitration a theoretical concept: the statistics reported by Dr Cantuarias reveal that Peru’s most important arbitral institution, the Camara de Comercio de Lima, has, from the 1996 promulgation of the LGA to 2005, administered more than 1,000 arbitrations, with the total amount in dispute being some US$ 1 billion. Peru has a number of other arbitral institutions in addition to the Camara of Lima, and Peruvian parties and the Peruvian state have also been active in numerous international arbitrations. Dr Fernando Cantuarias, the author of this large volume, is Dean of the law faculty at the Universidad Pueruana de Ciencias Aplicadas, which published the book. Dr Cantuarias is also a frequent arbitrator in both domestic …

Confidentiality and Privileges in Cross–Border Legal Practice: The Need for a Global Standard?

Summary: More and more often, arbitration practitioners are confronted with the issue of whether a document is covered by legal privilege or whether it can be used as evidence even if it was exchanged in the course of settlement discussions. Because of the significant differences between domestic rules governing the issues of privilege/professional secrecy and confidentiality,parties and their counsel have different expectations about what information or documents should be considered privileged or confidential. To which ethical rules or law the Arbitral Tribunal should refer in order to decide such issues? The rules potentially applicable in cross–border transactions,especially when multinational companies have been represented by attorneys practicing in different jurisdictions, may lead to different results. Should the Tribunal consider the law of the place of the arbitration, even if there are no other connections with that law? Should the same law apply to both parties to arbitration proceedings to avoid unfair results even though the parties are located in different jurisdictions? If allegations of conflicts of interests arise following access to information deemed privileged, should such counsel be disqualified, and if this question arises, should the Arbitral Tribunal adjudicate such a dispute and on what basis? It may be unrealistic to promote “transnational rules” governing issues of legal privilege and confidentiality. Indeed, there are significant differences between countries and it is difficult,in any event, to adopt and enforce binding transnational rules. Arbitration practitioners may nevertheless be guided by general principles governing issues of privilege and confidentiality. This article presents the guiding principles identified to date in this area of law with concrete examples of their application to cross–border disputes.

Fixing a Hole Where the Rain Gets In: New Legal Framework in Cuba for Interim Measures of Protection in Support of Arbitration

Interim measures are frequently requested by international commercial arbitration practitioners, though they raise issues as to how to protect legitimate expectations of the parties involved. In 2007, the Cuban Council of State approved two statutes referring, among others, to the proceeding by which interim measures of protection can be granted in support of arbitration. This contribution considers the key developments, as well as the shortcomings, of these statutes. The developments to consider are the express permission to request and powers to grant these measures, the introduction of a legal principle of court assistance to arbitration, and the legal adoption of the UNCITRAL principles in this regard, the extension of interim protection to the proceedings as well as to the evidence, and the option to request and grant interim measures inaudita altera parte. On the other hand, the most important gaps in Cuban law are linked to the omission of any provision on the right of the arbitral parties to modify the entire interim measures legal framework, the exclusion of ad hoc proceedings, the lack of an accurate test for legal competence criteria, etc. For Cuba, improvement to this legal setting is vital to increase legal certainty and the strength of economic transactions between Cuban and foreign enterprises.

Arbitration in the Arab World: An Interview with Professor Ahmed Sadek El–Kosheri

In this article, the Journal’s Guest Editor interviews Professor El–Kosheri. In his remarks, Professor El–Kosheri discusses the common features and differences of arbitration in the various countries that constitute the Arab World. He also addresses the ways to increase the participation of Arab arbitrators and comments on the emergence of a new generation of Arab arbitration practitioners.

International Financial Services Conference: Has London Met the Challenge?: Introduction

THE BRITISH Parliament only reforms English arbitration legislation at intervals exceeding one hundred years; and the intermediate landscape since the late seventeenth century is littered with the rubble of good intentions. It seems therefore untimely that, within ten years, attempts are already being made to amend the Arbitration Act 1996. It also seems surprising, given that the 1996 Act was drafted (and redrafted) after unprecedented consultations with arbitration users and practitioners from 1985 to 1996, extending far beyond the UK Government's Departmental Advisory Committee on Arbitration (DAC). This was the broad consensus reached by many participants at the IFSL's Conference last December, organised by the LCIA, to mark the 1996 Act's tenth birthday, from which two thoughtful papers are reproduced in this issue from arbitrators from abroad well acquainted with London arbitration. Moreover, with much relief and no little acclaim, the House of Lords had only recently confirmed the 1996 Act as a fresh spirit in the law and practice of English arbitration, re-striking a new balance in the relations between parties, legal representatives, arbitrators and the English Court – with the latter's role significantly reduced [ Lesotho v Impregilo [2006] 1 AC 221). All this is to be contrasted, however, with the reaction from certain quarters to the Harris Report, also reproduced in this issue with a critique from another well-known commentator from abroad. There are two principal causes. The first is section 67 of the 1996 Act, about which all that can be said has been said (and more). The second and more significant is section 69 of the 1996 Act permitting parties, under strict conditions, to appeal from an award on a question of English substantive law. It is, of course, an old issue of great historical significance in the history of English arbitration. Section 69, in …

Introduction to the Sixteenth Annual Workshop of the Institute for Transnational Arbitration

Welcome to the Sixteenth Annual Workshop1 for the Institute for Transnational Arbitration. Those of you who were here last year will recall that we focused then on the craft of arbitral advocacy.2 We looked then at all aspects of arbitral advocacy – oral, written, and what we might call strategic advocacy – and during the mock arbitration we saw leading arbitration practitioners put their craft on display. This year, we propose to examine the craft on the other side of the bench or table – that is, the art of arbitrating. As it happens, some clichés prove to be true, and one of those is the recognition among international arbitration practitioners that the most important choice one makes in an arbitration, at least when given the opportunity, is the appointment of arbitrators. That recognition simply reflects the critical role that arbitrators play in the process. It is they...

The Osler Guide to Commercial Arbitration in Canada: A Practical Introduction to Domestic and International Commercial Arbitration by Babak Barin, Andrew D. Little, and Randy A. Pepper.

The Osler Guide to Commercial Arbitration in Canada: A Practical Introduction to Domestic and International Commercial Arbitration, by BABAK BARIN, ANDREW D. LITTLE and RANDY A. PEPPER. Published byKluwer Law International, The Hague (2006, xii + 184 pp.). ISBN 90-411-2428-4; softback, $51/€40. Babak Barin, Andrew D. Little and Randy A. Pepper are all active arbitration practitioners in Canada. They are well placed to chart the topography of arbitration practice there since the pro-arbitration legislative reforms in the 1980s. This book shows it. It is a lean descriptive introduction to arbitration in Canada, one that is particularly valuable for Arbitration International's international readership, who may be approaching the subject for the first time. The book is also (‘très subsidiairement’, in the well-worn words of advocates in Switzerland) an even-handed assessment of what arbitration in Canada offers. In truth, it hardly advocates arbitration over court litigation at all. What is more, it chastely utters not a word to entice arbitrations to Canada, nor to attract the roving international eye to the favours of Canadian law, as sophisticated common law systems and a sophisticated (and recently modernised) civil law system under a neutral state. The approach is resolutely ‘if you build it they will come’. In fact, the only advocacy in the book of any ardour is for Canadian legislators to amplify confidentiality protections in arbitration.

Arbitration and Human Rights

The impact of Human Rights, more particularly the European Convention on Human Rights, on arbitral proceedings is increasingly important. Thus, Article 6 (1) of the European Convention on Human Rights is applicable in the context of compulsory arbitration (arbitration imposed on the parties by law) and in court proceedings related to arbitration, notably setting aside proceedings. A more difficult question is whether this provision applies in the proceedings before the arbitrators themselves. This article concludes that it does. A distinct ? and also controversial ? issue is whether the States that have adhered to the Convention should enact specific rules in order to ensure that the arbitration process will respect the guarantees of Article 6 (1). In particular, should States provide for judicial review of the award in order to effectively ensure Convention rights? This question has a direct impact on the possibility to waive in advance any application to set aside the arbitral award (Art. 192 PIL Act). The author concludes that a clearcut answer is not possible and that the test is whether the exclusion of any application to set aside the award is ?arbitrary or unreasonable?. The author also addresses the question of the grounds (reasons) for the award (§ 21) and the alleged disqualification of an arbitral tribunal based on article 6 (1) of the European Convention on the ground that the arbitrators examined issues disputed on the merits in the context of a request for interim measures and would hence be biased (§ 29). In the conclusion, the article stresses that the scope of Article 6 (1) may be very broad and that this provision can no longer be ignored by arbitration practitioners.

The Myth of the ’Manifest Disregard of the Law’ Doctrine: Is this Challenge to the Finality of Arbitral Awards Confined to U.S. Domestic Arbitrations or Should International Ar

The Doctrine of ?manifest disregard of the law? arose out of dictum in a U.S. Supreme Court decision dating back to the 1950s, which mysteriously seems to have developed into a possible challenge to arbitral awards. Many international arbitration practitioners are aware of the Doctrine, but many seem to have difficulties in fully assessing the scope of its application and its possible impact on international arbitration. This article considers whether the Doctrine is, in fact, a myth, which, as far as it exists at all, affects only domestic arbitrations within the U.S. or whether international arbitration practitioners should be concerned about its potential to be used to resist recognition and enforcement of an international arbitral award. In considering the Doctrine, the article first examines the meaning of ?manifest disregard of the law? and the extent of its usage within the sphere of U.S. domestic arbitrations. It then explores whether the Doctrine can be applied to international arbitral awards, where the place of arbitration was within the U.S. and then, those where the place of arbitration was elsewhere. It also analyses the interrelation between the Doctrine and the New York Convention, in particular, the public policy exception to recognition and enforcement. In its conclusion, the article suggests that, to a certain extent, the Doctrine is a myth, in that it is so rarely successfully invoked, even in the domestic arena, and also that it is not compatible with the grounds for resisting recognition and enforcement under the New York Convention. However, given that it appears to be often used, despite its low chances of success and, given that U.S. Courts have extended its reach to international arbitration awards rendered within the U.S., it is not something that international arbitration practitioners can ignore completely and practitioners should be aware of this when considering the U.S. as the place of arbitration.

A Personal Editorial

This year marks the 20th anniversary of Arbitration International . It was founded in 1984, with its first issue appearing in 1985. The journal has since witnessed great changes, with enormous strides forward in the better practice and greater understanding of international arbitration everywhere. As global trade has increased exponentially over the last two decades, there are many more arbitrations, with many more distinguished arbitrators and innovative arbitration practitioners. Around the world (north, south, east and west), modern arbitration laws have emerged newly sympathetic to international arbitration; and in unprecedented numbers, universities are teaching arbitration as an essential subject for lawyers engaged in transnational trade. The journal has seen all these developments in the splendid materials arriving on the editors' desks. It has increasingly published the works of younger specialists, both academic and professional; its writers …

Loewen v. United States: The Burial of an Investor-State Arbitration Claim

THE ARBITRATION award rendered in the North American Free Trade Agreement (NAFTA) arbitration Loewen Group International v. United States is remarkable in the contrasting reception it has received in the small community of arbitration practitioners and the American public at large. While the case was going on, non-governmental organizations, the media and political figures appeared acutely aware of the proceedings, mostly ranting that the case represented an ‘end run around the Constitution’ and a betrayal of American sovereignty to foreign corporate interests. Now that the award has been rendered and the case dismissed, such attention is conspicuously absent. There appears to be little jubilation, expressions of satisfaction, not even a short notice in the New York Times or other national press. Within the community of arbitration practitioners around the world, however, many quickly expressed disappointment and disagreement with the Laewen tribunal’s decision. Many wondered how a complaint that the arbitrators themselves recognized was substantively well founded, arising out of government measures that were clearly egregious, could be wholly dismissed. Prima facie , it seemed to some unlikely that the outcome of the case would have been the same had Mexico or Congo been the respondent rather than the United States. From this perception arose the question: if the United States managed to escape liability under an applicable investment treaty even in so extreme a case as Laewen , do arbitral tribunals hold capital exporting states to the same standards of investment protection as they do developing countries? In light of growing dissatisfaction in some quarters about the reasoning and consistency of international arbitral awards, the Laewen decision added a new note of cynicism into the debate. It would be ludicrous to suggest that such eminent arbitrators as Sir Anthony Mason and Lord Mustill are somehow dependent on the United States; …

Non-Signatories and International Arbitration in the United States: the Quest for Consent

For many years arbitration practitioners have grappled with the problem of what to do with a ‘non-party’ – or more particularly a ‘non-signatory’1 – to the arbitration agreement that is nevertheless integral to the resolution of the dispute that has arisen. To take a simple example, what of the corporate affiliate that has been assigned certain rights and obligations under a subsequently disputed contract: can the affiliate assignee be compelled to arbitrate; can it commence arbitration itself and can it somehow intervene in an arbitration initiated between the original contracting parties? At the heart of these questions lies the widely-accepted principle that arbitration is by its nature consensual. However, in the absence of an agreement containing an arbitration clause and bearing the affiliate assignee's signature, where does one look to find evidence of such consent to arbitration? Far from being merely theoretical, the questions raised by the aforementioned scenario are in fact highly relevant to the contemporary practice of international commercial arbitration. Disputes involving non-signatories are inevitable in the context of modern international business transactions that typically involve complex webs of interwoven agreements, multilayered legal obligations and the interposition of numerous, often related, corporate and other entities. Accordingly, while the non-signatory ‘problem’ has long been associated with disputes arising out of bills of lading and construction sub-contracts, it is today to be found in such diverse contexts as arbitrations concerning reinsurance agreements, Internet-based software licences and investment treaties. Perhaps reflecting an increased awareness of this issue, there is a growing body of commentary on the topic.2 Bearing in mind the volume and breadth of these writings, this article does not attempt to produce an exhaustive analysis of all aspects of the treatment of non-signatories in international arbitration. Rather, focusing largely on the current position in the United States, …

Confidentiality—A Fundamental Principle in International Commercial Arbitration?

Confidentiality and privacy1 have been widely assumed to be fundamental principles for international commercial arbitration. According to a statistical survey of US/European users of international commercial arbitration conducted in 1992 for the LCIA by the London Business School, confidentiality was listed as the most important perceived benefit. Until the late 1980s these principles were almost sacrosanct and were not even debated. They were taken for granted. As a matter of routine over the years arbitration textbooks have contained standard statements to the effect that arbitration is confidential and private, a feature which gives arbitration an advantage as compared with court procedures.2 In the 1995 decision by the High Court of Australia in Esso/BHP v. Plowman,3 a majority of the Court rejected the then prevailing English judicial view that a general duty of confidentiality existed, albeit subject to limited exceptions and qualifications. There had been a number of cases in England during the 1980s and early 1990s where the view had been taken that arbitration is a private process of dispute resolution and that arbitral proceedings are confidential, albeit that the duty of confidentiality is not absolute, but subject to limited qualifications or exceptions.4 The Esso decision resulted in a special issue of Arbitration International totally devoted to the confidentiality theme.5 The editorial of the special issue described the decision as ‘dramatic’ and concluded that ‘for common law systems the logical strength of the High Court’s reasoning suggests that a statutory remedy may be required for England and elsewhere’ and that for arbitral institutions an express rule on confidentiality should be considered. For countries outside the common law tradition, it was suggested that ‘arbitration practitioners might need to justify the legal basis for

Book Reviews

International Commercial Arbitration – Party Autonomy and Mandatory Rules, by Giuditta Cordero Moss. Published by Tano Ascheloug, Norway (1999, 440 pp.). Hardcover. Price NOK 598. ISBN 82-518-3949-1. The question whether and to what extent party autonomy may be limited by mandatory rules of law in the context of international commercial arbitration is one of those fundamental yet elusive issues with which most arbitration practitioners will be confronted on a regular basis. The author of this comprehensive book, which has been submitted to the Faculty of Law of Oslo University in Norway for the Degree of Doctor Juris, says that one of her first encounters with the subject was when, in practice as in-house counsel in a Norwegian company, she had to consider the effects of EC competition law on a Swiss law agreement which contained an arbitration clause. Given Ms Moss’ impressive academic and professional background, which includes study in Italy, Russia and Norway, as well as practical experience in both Italy and Norway, it is with interest and expectation that one opens this book. Ms Moss’ study of the implications of mandatory rules of law – defined extensively – on party autonomy, defined as the conflict rule that permits the parties to choose the governing law of their agreement, is first and foremost an impressive exercise in comparative law. From the starting point of the Norwegian legal system, Ms Moss ranges widely, drawing parallels and observations from the laws of England, France, Italy, Sweden and Switzerland, as well as from other legal systems in passing. The book is divided into three parts, ‘Party Autonomy’, ‘International Commercial Arbitration’ and ‘International Commercial Arbitration – The Friction Between Party Autonomy …

Book Reviews

The LLP Electronic Arbitration Law Library published by LLP Professional Publishing, London (1999). CD-ROM, updated 2 times annually. Subscription price £395 (1 user), £1,185 (2–5 users), £1,422 (6–10 users) and £2,133 (11–25 users). ISBN 1-86978-624-3. This first CD-ROM in The Electronic Arbitration Law Library contains two publications: Arbitration Law (looseleaf) by PROFESSOR ROBERT M. MERKIN, and the 2nd edition of Arbitration: Practice and Procedure by D. MARK CATO. It is the start of what the publisher calls a complete service for arbitration practitioners, to which in the future other relevant titles will be added, including the Arbitration & Dispute Resolution Law Journal. Professor Merkin is also the author of Arbitration Act 1996, An Annotated Guide (1996).1 Originally a looseleaf publication, Arbitration Law is a comprehensive and practical guide to domestic and international commercial arbitration in England, working its way methodically and in great detail from the arbitration agreement to the judicial control of the award, with many references to literature, statutes, rules and other texts, most contained in the extensive Appendices. D. Mark Cato is also the author of The Sanctuary House Case: An Arbitration Work-Book .2 The book version of Arbitration: Practice and Procedure appeared first in 1992,3 and its 2nd edition, which was adapted to the Arbitration Act 1996, in 1997. Its approach is equally detailed but much less logical, explaining arbitration (slanted towards the construction industry) in 35 chapters, which at first glance seem to be in alphabetical order by title, but which are not.4 The book does contain a wealth of information but I somehow prefer phrasing …

The 1958 New York Convention as a Model for Subsequent Legislative Texts on Arbitration

THE FOLLOWING is the text of UN Secretary-General Kofi Annan's opening address delivered at the New York Convention Day on 10 June 1998:* ‘It gives me pleasure to welcome you to this special meeting of the United Nations Commission on International Trade Law (UNCITRAL) devoted to the New York Convention. On this day 40 years ago, a diplomatic conference convened by the United Nations in New York concluded the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Today's meeting marks that anniversary and offers an opportunity to review our experience with the Convention, to take stock of current issues in the field and to consider our future work. We are honoured that leading arbitration practitioners and experts are here today to share with us their views. I would like to welcome two distinguished experts who participated in the drafting of the Convention as government delegates: Professor Pieter Sanders, of the Netherlands, and Dr Ottoarndt Glossner, of the Federal Republic of Germany. I am also happy to greet Mr Fali Nariman, President of the International Council for Commercial Arbitration (ICCA), as well as his colleagues on the Council. The ICCA has championed the cause of international commercial arbitration for some 25 years, contributing greatly to the work of …

"... Pastures New":The 1997 Freshfields Lecture

IN ENGLAND, things tend to take rather a long time to come to fruition. The members of the Departmental Advisory Committee, set up under the Chairmanship of Lord Mustill in 1985 to advise Ministers on the reforms desirable in arbitration law, were guilty at times of letting the grass grow under their feet. This too follows an English tradition. The story is told of an American tourist who asked the head gardener in Trinity College, Cambridge, how he managed to get the lawn in Great Court to look so good. ‘You just mow it for 500 years,’ was his somewhat condescending reply. Arbitration practitioners in London have just moved to a new pasture which, if not yet mowed for 500 years, has taken some time to grow to a stage in which the animals can be let loose to graze upon it. For the most part, it is far too soon to tell how the new Arbitration Act will work in practice. The objectives of some aspects of the Act have obviously been achieved. It was designed to consolidate the statutory law of arbitration into one statute and it has achieved this task. As a consequence, English arbitration law is easier to identify. Coupled with this consolidation of the law, the Act was designed to re-state English arbitration law, broadly following the pattern of the UNCITRAL Model Law. But perhaps more importantly, the law has now been expressed in plain language, which can hopefully be understood by ordinary people possessing a reasonable degree of literacy and not merely by lawyers trained in the mysteries of statutory ‘legalese’. This was the important contribution of the last of the ‘head gardeners’ – Lord Saville. All this has made English arbitration law more accessible. The new Act does not purport to be comprehensive …