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International Arbitration Notes

BPTC Law Notes > Alternative Dispute Resolution Notes

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A more recent version of these International Arbitration notes – written by City Law School students – is available here.

The following is a more accessble plain text extract of the PDF sample above, taken from our Alternative Dispute Resolution Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

ADR: INTERNATIONAL ARBITRATION "INTERNATIONAL" UNCITRAL Model Law, Art.1(3) - Arbitration is "international" if:
? Parties to arbitration agreement have their places of business in difference states at the conclusion of that agreement, or
* if more than one "place of business" - relevant one if one with closes relationship to arbitration agreement
* if no "place of business" - place of residence
? One of the following places is situated outside state in which parties have their places of business:
* Place of arbitration if determined in (or pursuant to) arbitration agreement,
* Any place where a substantial part of the obligations of the commercial relationship is to be performed, or the place with which the subject-matter of the dispute is most closely connected, or
? Parties have expressly agreed that the subject-matter of the arbitration related to more than one country. SEAT OF ARBITRATION?"Seat" and "place" are interchangeable terms - means system of law that governs the arbitration (ie. provides framework for procedure)
* But place where arbitration takes place need not be the seat Agreement between parties that a particular country will be the seat of the arbitration operates as an agreement that the law of that country is the procedural law ("curial law") o the arbitration. Where seat is England, the procedural/"curial" law is the AA (s2(1) AA)s3 AA - The seat of arbitration means the juridicial seat of the arbitration designated: (a) by the parties to the arbitration agreement, (b) by any tribunal/other institution/person vested by the parties with the powers, or (c) by the arbitral tribunal if so authorised by the parties.Shashoua - Arbitration clause which provided for arbitration to be conducted in accordance with rules of ICC in Paris and included a provision that the venue was to be London
* Held, designation of London as juridicial seat. Where no express provision for designation of seat, important factors:
* Whether parties agreed to arbitration administered by institution located in a particular country,
* Whether a particular system of law has been agreed as proper law of substantive contract, or procedural law of the arbitrationPlace of Award
? s53 - Unless otherwise agreed, seat of arbitration is also treated as place award was made.
? Important as certain grounds for refusing enforcement under the New York Convention relate to where the arbitration was made. Supervisory Jurisdiction
? Courts of Seat have supervisory jurisdiction over arbitration - any challenge to an interim or final award may only be made there, most applications in support also brought there (eg. application for appointment of an arbitrator.Courts of the seat will not always have effective jurisdiction so application must be brought

?in courts of country where it will be effective, eg. in:
* applications to secure attendance of a witness, or
* application for an injunction English courts will grant a stay, under s9, whether or not seat is England. Applications to enforce the award made in country where enforcement is needed.

Privilege
? Procedural law should govern scope of disclosure (and privilege) for all parties as disclosure traditionally regarded to be a procedural issue
? Contrary argument: privilege has become established as a substantive right therefore scope of privilege should be decided in accordance with laws of place where documents were created. Security for Costs
? s38 - Unless otherwise agreed, tribunal has power to order the claimant to provide security for costs (general discretion)
? s38(3) - Prohibits tribunal from ordering security for costs where claimant is incorporated or ordinarily resident outside the UK
* Aim: avoid security for costs provision being a disincentive for foreign parties to conduct the arbitration in England LAW GOVERNING ARBITRATION??

The substantive contract, arbitration clause, contracts with arbitrators and each part of the arbitration potentially have separate applicable systems of law. s46(1) -Tribunal shall decide the dispute:
* in accordance with the law chosen by the parties as applicable to the substance of the dispute, or
* if the parties so agree, in accordance with such other considerations as are agreed by them or determined by the tribunal. Choice of the laws of a country by the parties - understood to refer to the substantive laws of that country. If there is no such choice or agreement, tribunal must apply the law determined by the conflict of law rules it considers applicable (s46(3)) - usually those of the seat.

Amiable Compositeur / Ex Aequo et Bono ("eaeb")
? Where tribunal acts as "amiable compositeur", it decides the dispute in accordance with the principles the tribunal considers to be just rather than what the law would technically apply.
? Deciding the dispute ex aequo et bono - in justice and good faith.
? Equity clause (eaeb) intends to give tribunal flexibility to decide dispute in accordance with justice and equity
? Principle: by appointing sensible and practical commercial people as arbitrators, parties trust them to decide fairly and in accordance with expectations and business ethics of relevant trade.
? Excludes appeals - no possibility of "question of law"
? Where legislation allows account to be taken of trade-usage has same effect, where it does not, the clause overrides the law.
? UNCITRAL Model Law - where clause is used, arbitrators must still decide the dispute in accordance with the terms of the contract and take into account applicable trade usages.

LAW GOVERNING SUBSTANTIVE CONTRACT

?

If England is seat, proper law to be determined (except for law of arbitration agreement):
* Contracts entered before 17/12/2009 - applying rules of Contracts (Applicable Law) Act 1990 (gives effect to Rome Convention)
* Contracts entered on/after 17/12/2009 - applying rules in Rome I
* Non-contractual obligations from 11/1/2009 - applying rules in Rome II

Rome I
? Rome I - Art.3(1) - contract shall be governed by law chosen by the parties, choice must be made:
* Expressly, or
* Clearly demonstrated by the terms of the contract or circumstances of the case
? Parties can choose law applicable to whole/part of the contract No Agreement on Applicable Law
? Where no agreement, Art.4-8 apply:
* Sale of goods contracts - governed by law of country where seller habitually resident
* Provision of services contracts - governed by law of country where service provider is habitually resident
* Carriage of goods contracts - governed by law of country where carrier is habitually resident provided place or receipt/delivery/habitual residence of consignor also situated in that country.
# Otherwise governed by law of country where place of delivery agreed by parties is situated
? Where clear from circumstances that contract is manifestly more closely connected to a different country (than indicated by above provisions), law of that country applies instead. Contracts (Applicable Law) Act 1990
? Choice of a seat in the arbitration agreement meant that was applicable law.
? Likely choice of seat is a sufficiently clear demonstration of parties' choice for purposes of Art.3(1) Rome I Presumption - Applicable law same as English Law
? In arbitrations, there is a presumption that any system of law which is the applicable law is the same as that of England and Wales.
? Presumption is starting-point, then open to parties to suggest that the applicable law is different to that of England on any specific issues - expert evidence from suitably qualified lawyers in that jurisdiction will be required. LAW GOVERNING ARBITRATION AGREEMENT??

Expressly excluded from choice of law rules in Art.1(2)(e) Rome I English law - applicable law is that chosen by the parties Where no express agreement, court must consider all the circumstances including:
* proper law of substantive contract**,
* location of seat**,
* place of performance of contract,
* whether parties agreed to neutral location for the arbitration Proceedings relating to the incorporation/validity of an arbitration clause fall outside the scope of the EU 'Jurisdiction Regulation' (Art.1(2)(d)) which governs jurisdiction between Member States for court proceedings. LANGUAGE

??

Can be expressly agreed, otherwise it is for the tribunal to decide language(s) to be used in proceedings and whether translations of documents need to be supplied (s34(2)(b)) - often covered by institutional rules.
* Directions will, as a practical matter, also have to cover the translation services required for the final hearing. ICC Rules - Art.20 - Absence of agreement, tribunal determines language(s) - have due regard to all relevant circumstances including language of substantive contract. UNCITRAL Model Law - Art.22(1) - Similar, but unless otherwise agreed, language shall apply to any written statement by a party, the hearing, the award and any other communication by the tribunal. ICC RULES & UNCITRAL MODEL LAW?

ICC - International Chamber of Commerce, based in Paris - published internationally recognised set of arbitration and ADR rules (2012)
* Established International Court of Arbitration (ICA) which oversees arbitrations conducted under the ICC rules and scrutinises awards. UNCITRAL - UN Commission on International Trade Law, Vienna - Model Law (on international commercial arbitration)
* Primary purpose: provide framework for law reform - AA heavily influenced/closely followed.
* Contains comprehensive list of rules that can be adopted by parties as the rules for ad hoc arbitrations

Comparison Process

ICC

UNCITRAL

Tribunal

1 or 3 Arbitrators

3 Arbitrators unless otherwise decided

Terms of Reference

Required
- Drawn up by Tribunal on basis of docs/in presence of parties/on considering representations
- Signed by parties and tribunal

NA

Directions

Very little guidance

Detailed provisions Fit well with AA

Hearing

Can decide without a hearing Obligatory if requested by a party.

Can decide without a hearing Obligatory if requested by a party.

Award

Scrutinised by ICA

Tribunal draws up its own

Fees

Payable to ICA and arbitrators

Payable to Arbitrators

Appeals

No appeals to court on points of law Appeals available (s69 AA)

Request for Arbitration
? ICC Arbitration commenced by submission of a request for arbitration to the secretariat, must include:
* Names, descriptions and addresses of parties
* Description of nature and circumstances of the dispute
* Statement of relief sought
* Copies of all relevant contracts (including arbitration agreement)
* Number of arbitrators required and details of any nominations,
* Any comments on place of arbitration, applicable law and language
? By submitting their dispute - parties undertake to carry out any award without delay

(Art.34(6))
? After receipt of request, ICC can request claimant to pay a provisional advance to cover costs of arbitration until terms of reference have been drawn up. Response
? Within 30 days of receipt of request, respondent required to file an answer and may file a counterclaim - these will be sent to the claimant by the secretariat - Claimant must respond to counterclaim within 30 days of receipt. Arbitral Tribunals
? Either one or three arbitrators (Art.12(1))
? If three - each party nominates one (subject to ICA confirmation) and third appointed by the ICA.
? Each arbitrator must sign statement of acceptance, availability, impartiality and independence before appointment (Art.11(2)) Seat
? Seat of arbitration fixed by the ICA

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