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03 balsys stephanie slides dbrf eng

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Stephanie Balsys presentation. Networking that was made jointly by DRBF and Artyushenko & Partners law firm (Kazakhstan) in Almaty (Kazakhstan) - DAB in Construction, April 25, 2018. Details are here https://a-p.legal/en/2018/05/01/report-on-our-networking-on-april-25-2018/

Stephanie Balsys presentation. Networking that was made jointly by DRBF and Artyushenko & Partners law firm (Kazakhstan) in Almaty (Kazakhstan) - DAB in Construction, April 25, 2018. Details are here https://a-p.legal/en/2018/05/01/report-on-our-networking-on-april-25-2018/

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03 balsys stephanie slides dbrf eng

  1. 1. DB Decisions: enforcement internationally London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands Stephanie Balsys April 2018
  2. 2. 2 Agenda 1. DB determinations • types • nature 2. Enforceability • Practicalities • Interim stage • Arbitral award stage • Basis for enforcement (general) 3. Treatment of DBs and DB decisions around the world 4. Lessons London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  3. 3. DB determinations 3 Types • Recommendation • Decision Nature • Binding and final • Binding and not final / “interim” or “provisionally” binding • Principle: “pay now, argue later” London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  4. 4. Practicalities: interim stage 4 DB decision in your favour but counterparty is non-compliant? What next? • Check dispute resolution clause: arbitration clause or jurisdiction of the courts? • Courts can step in and order specific performance of obligation to comply • Commonly, arbitration clause (FIDIC) • Arbitral tribunals may not have jurisdiction to order specific performance • Arbitral tribunal cannot re-open the merits of a DB decision at interim stage • At final hearing it can • Breach of contract claim and / or specific enforcement? • Irreparable harm / financial inconvenience? London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  5. 5. Practicalities: interim stage 5 Facing an arbitration claim to enforce a DB decision? How can you resist enforcement? • Lack of jurisdiction of the tribunal (procedural breach / manifest error) • Breach of natural justice? • Stay pending final hearing? - (1) a “good arguable case” that DB decision is wrong; and (2) prima facie case that paying party will be unable to repay, if tribunal’s interim award is later reversed • As an alternative: request that any payment made is paid into escrow / court London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  6. 6. Practicalities: arbitral award stage 6 Arbitral award in your favour? What next? • Seek enforcement in local courts • “New York Convention” states – 159 states incl. Kazakhstan, Russia, UK, America, France, Italy, Germany, Uzbekistan, Ukraine… • Some legal regimes will not give effect to DB decisions or to arbitral awards based on DB decisions • Awards labelled as “interim” are not enforceable in several jurisdictions London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  7. 7. General: basis for enforcement 7 Jurisdiction of the tribunal • Pursuant to contract • Arbitral terms of reference Power of the tribunal • Local / procedural law • Does tribunal have power to order the remedy sought? • Applicable law • Is the remedy sought available under the law of the contract? London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  8. 8. Historic difficulties 8 • Uncertainty in courts and tribunals re: nature of DB and DB decisions • Results broadly divided: • Refusal to enforce “binding and not-final” decisions (Romania and UAE) • Enforcement of DB decisions whether “final and binding” or “binding and not- final” (Singapore and South African courts) • Other approaches: • Referral to DB is a pre-condition of arbitrating (English court and Switzerland) • Persuasive nature of DB decisions (English court, A v B) • DB can refuse to permit a party’s referral of a DB decision to arbitration, court will not step in (Namibia) • Non-compliance with DB decision is / is not referable to arbitration (Singapore court) London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  9. 9. Around the world 9 • South Africa Tubular Holdings (Pty) Ltd v DBT Technologies (Pty) Ltd (3 May 2013) Esor Africa (Pty) v Bombela Civils Joint Venture (Pty) Ltd (12 February 2013) • United Arab Emirates Dubai Court of Cassation, Petition No. 274 of 2013, dated 19 January 2014 • ICC Case No 10619 ICC Bulletin Vol 19/No 2 2008 (2009), at 85 to 91 • Singapore Persero 2011 (SHC); July 2014 (SCA); 2015 (SCA) • Namibia Roads Authority v. Kuchling (A 188/2015) [2016] NAHCMD 32 (22 February 2016) • Romania January 2017 • England Peterborough City Council v Enterprise Managed Services Ltd [2014] EWCA 3193 (TCC); A v. B (SM Burton) London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  10. 10. FIDIC 1999: “Mind the Gap” 10 “FIDIC cl. 20.4 to 20.7: "...what has been described as 'the gap' in those sub-clauses, which arises when the DAB has made a decision and one party has given a notice of dissatisfaction - with the result that the DAB's decision, whilst binding, is not final. The problem then is that if the unsuccessful party refuses to comply with the decision of the DAB, as it is required to do by sub-clause 20.4.4, the only remedy (it is said) available to the other party is to refer the dispute occasioned by the refusal to comply to yet another adjudication. This can have the effect, [it is] submitted, that the party in default can embark on a course of persistent non-compliance with DAB decisions and thereby deprive the other of any effective remedy.“ Sir A Edwards-Stuart, Peterborough London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  11. 11. What does FIDIC say? 11 • FIDIC 1 April 2013 Guidance Memorandum: “International arbitral tribunals have been divided over whether, in the event of a failure to comply with a DAB decision …. Which is “binding” but not “final”, the failure itself may be referred to arbitration without Sub-clause 20.4 [Obtaining Dispute Adjudication Board’s Decision] and Sub-clause 20.5 [Amicable Settlement] being applicable to the reference…” The recommendation: (1) include wording making provision for security where payment due (2) include express ability to refer non-compliance directly to arbitration • FIDIC Suite 2017: avoids difficulties “The decision shall be binding on both Parties, who shall promptly comply with it whether or not a Party gives a NOD [notice of dissatisfaction] with respect to such decision under the Sub-Clause” London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  12. 12. Lessons 12 • Check which terms are incorporated: how do they provide for enforceability? Should drafting be supplemented? • Check dispute resolution clause (court / arbitration?) • Check choice of law: don’t underestimate importance of local law. • Persero (2015) gives strong guidance but note there is no coherent international body of opinion re: enforceability of DB decisions. • Under certain types of contract (pre-2017 FIDIC) there can be a highly complex legal argument (“the Gap”) re: enforceability of DB decisions – but note FIDIC 2017 suite. • Generally, in principle (and subject to local law), DB decisions can be enforceable by arbitral awards even if a NoD has been served. London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  13. 13. Questions 13 Stephanie Balsys Stephanie.balsys@withersworldwide.com +44 (0) 207 597 6370 London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  14. 14. Our firm 14 London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands
  15. 15. Withers was founded in 1896. We have been trusted advisors to successful people and businesses with complex legal needs for over a hundred years, in good times and bad. 160+1000+ Firm founded People Partners 1896 53 Languages Since 1896 we have been trusted advisors to successful people and businesses with complex legal needs, in good times and bad. We champion our clients' interests, locally and globally, from offices across the US, Europe and Asia-Pacific. We are proud to help many of our clients use their success to make the world a better place.
  16. 16. 16 London l Geneva l Milan l Padua l New Haven l New York l Greenwich l San Francisco l Los Angeles Rancho Santa Fe l San Diego l Singapore l Hong Kong l Tokyo l Sydney l British Virgin Islands Our locations 16 offices
  17. 17. Our clients include: 17

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