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![KIAC 2014 CONFERENCE
REPORT
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Past President of the Asia Pacific Regional Arbitration Group
(APRAG) [2011-2013], a federation of nearly 40 arbitral institutions
in the region. Professor Datuk Sundra is a Chartered Arbitrator
and an Advocate & Solicitor of the High Court of Malaysia (non-
practising). He is also a Professional Architect and Registered Town
Planner. He has had numerous appointments as chairman, co-
arbitrator of three-man panels and sole arbitrator in international
and domestic arbitrations.
This panel is very important and unique, so I would say that it is
made up of imminent people. Professionals are going to learn
much through them on this morning’s topic which is entitled
“EMERGENCY ARBITRATION: THEORY AND PRACTICE.”](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-21-2048.jpg)
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KIGALI INTERNATIONAL ARBITRATION CENTRE
In exceptional urgency, on or after the commencement of the
arbitration, any party may apply to the LCIA court for the expedited
formation of the Arbitral Tribunal.25
This procedure allows the LCIA
court to fix any time limit under the LCIA Rules for the formation of
the arbitral tribunal in its complete discretion.
In practice, applications under Article 9 are most commonly
accompanied by an application for interim relief.26
The arbitrator or
tribunal may be appointed within 48 hours.27
4. Practice and Procedure:
In both emergency arbitration and expedited procedure, there are
a number of generally followed principles that can be highlighted to
further illustrate the procedural aspects of emergency arbitration.
Interaction with the courts
The first characteristic is that an emergency arbitration can be
considered “compatible with court proceedings.” Generally the
emergency arbitral rules clarify that the emergency arbitration
provisions are not intended to prevent any party from seeking
urgent interim measures from domestic courts; emergency
arbitration provisions are compatible with the request for interim
relief from the courts.28
Next can be considered “other express or implied principles.” This
is where arbitration institutions share other principles regarding
emergency arbitrator proceedings, which are either specifically
laid out in the rules, implied or followed in practice.
Requirements for commencing emergency arbitration
First generally it is required that a party seeking emergency relief
must show that the matter truly cannot wait for the constitution of
the arbitral tribunal.29
This has been highlighted in the examples of
the SIAC and SCC rules.
26 Raja Bose and Ian Meredith, ‘Emergency Arbitration Procedures: A Comparative Analysis’
[2012] In ‘International Arbitration Law Review’ 5, Accessed Online at http://www.
klgates.com/files/Publication/33e561cb-b459-47f5-bab1-856c51d8459b/Presentation/
PublicationAttachment/f5e1a648-049e-4f63-afcf-f8d4dc91bae2/Emergency-
Arbitration-Procedures_A-Comparative-Analysis.pdf.
27 Ibid.
28 SIAC Rules (2013), Rule 26.3; SCC Rules (2010), Article 32(5).](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-28-2048.jpg)
![KIAC 2014 CONFERENCE
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Traditionally many courts only enforce final awards, although many
countries have adopted the UNICTRAL Model Law where both
interim measures and final awards rendered arbitral tribunals are
binding and enforceable.54
Under Article 5 of the New York Convention, in order for an award
to be binding it must be final, which is referred to as the “Final
award doctrine.” With the fact that an emergency arbitration award
may be modified or varied, questions whether an award is final and
enforceable.
This paradox is addressed by Gary Born who states, “provisional
measures should be and are enforceable as arbitral awards
under generally applicable provisions for the recognition and
enforcement of awards.”55
In this regard an interim award or
emergency arbitration award is an award on its own and has finality
in the sense that it provisionally determines the rights of parties.56
That being on a limited issue, separate from the main issue to be
decided in an arbitration.
This above analysis conforms to the view expressed by Southern
District Court of New York where the court stated in Southern Seas
Navigation,
“Such an award is not “interim” in the sense of being an
“intermediate”steptowardsafurtherend.Ratheritisanendinitself,
for its very purpose is to clarity the parties’ right in the “interim”
period pending a final decision on the merits... [I]f an arbitral award
of equitable relief based upon a finding of irreparable harm is to
have any meaning at all, the parties must be capable of enforcing
or vacating it at the time it is made”57
From these authorities, there is a very strong argument in favour of
emergency arbitration awards being enforceable.
53 Chester Brown, ‘The Enforcement of Interim Measures Ordered by Tribunal and
Emergency Arbitrator’ In International Arbitration in Albert Jan Van Den Berg (ed),
International Arbitration: The Coming of a New Age?. ICCA Congress Series, Volume 17
(Kluwer Law International) (2013) at 286 Citing Resort Condominiums International, Inc v
Bolwell [1995] 1 Qd R 406.
54 UNCITRAL Model Law 2006, Articles 17(h)&(i).
55 GARY B. BORN, ‘International Commercial Arbitration’ (2009) at 2023.
56 Michael Dunmore Supra n. 13 at 226.](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-33-2048.jpg)
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KIGALI INTERNATIONAL ARBITRATION CENTRE
Characterisation of emergency relief – Order or Award?
Another area of uncertainty has to do with the designation of
the decision by Emergency Arbitrators as “order” or “Award”, as
only “awards” are enforceable under the New York Convention or
legislation implementing the New York Convention.58
Interestingly, the ICC rules have specially prescribed that the
Emergency Arbitrator’s decision is rendered in the form of an
order59
while other institutions have allowed the decision to take the
form of either an award or an order.60
Nevertheless commentators
have pointed out the substance rather than the form of a decision
should be the determinative factor regarding the decision’s
enforceability.61
In conducting a substance over form analysis, an enforcing court
will look to the substance of what is decided and not the term used
to describe a decision (being an order or an award).62
Illustrating
this is PT Pukafuafu Indah63
where there was an application to set
aside an interim award. The High Court of Singapore stated that it
can review awards, but their power is limited to substance of the
award. The court highlighted that when determining if a decision is
an order or an award the substance over form test is used.
In this regard the substance of a decision is decisive, not the form
of the award. The order (in this case an anti-suit injunction) was
substantive relief with only an interim effect. The court stated that
an order is specifically excluded from the definition of an award.
The court mentioned that orders must be enforced by the Court
but stopped short of saying that they could be denied enforcement.
Classifying emergency relief through statute
A creative approach to deal with the issue of enforceability of
emergency arbitration awards that should be mentioned has been
taken by the Singapore Parliament. In this regard, the Singapore
Parliament passed an amendment to the International Arbitration
Act on April 9 2012; which amongst other issues, clarified the
enforceability paradox.
57 Southern Seas Navigation Ltd v Petroleos Mexicanos of Mexico City, 606 F. Supp. 692
(SDNY, 1985). 58 Chester Brown, Supra n. 54 at 286.
59 ICC Rules (2012), Appendix V Articles 29(2), 6(1).
60 SIAC Rules (2013) Schedule 1 Article 6; ICDR Rules (2009) Article 37(e).
61 Amir Ghaffari and Emmylou Walters, Supra n.1 at 162.
62 Id. at 225.
63 And others v Newmont Indonesia Ltd and another [2012] SLR 1157.](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-34-2048.jpg)
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KIGALI INTERNATIONAL ARBITRATION CENTRE
subsidiary of the U.S. DOW CHEMICAL COMPANY (Claimant no.
2).
In 1968, a second distribution agreement was entered into by
DOW CHEMICAL EUROPE (Claimant no. 4), a subsidiary of DOW
CHEMICAL A.G., with three other companies (including the French
company) whose rights and obligations were later assigned
to ISOVER SAINT GOBAIN (Defendant) for the distribution of
essentially the same products in France.
Both the 1965 and the 1968 agreements contained ICC arbitration
clauses.
On the basis of these arbitration clauses contained in the contracts
with the Swiss DOW CHEMICAL A.G. and DOW CHEMICAL
EUROPE (Claimants no. 3 and 4), the four Claimants instituted
arbitral proceedings against Isover, alleging that Isover alone was
liable for damages resulting from the use of Roofmate in France.
Considerations by the arbitral tribunal: “That it thus appears, as
was the case with respect to the conclusion and performance
of the distribution agreements, that DOW CHEMICAL FRANCE
[Claimant 1, which was not party to the arbitration agreement]
played an essential role in the termination of the 1968 contract …;
… all of these factors permit the conclusion that DOW CHEMICAL
FRANCE was a party to each of these contracts and, consequently,
to the arbitration clauses they contained.
That the same conclusion should be reached with respect to
DOW CHEMICAL COMPANY (USA) [Claimant 2, again not party
to the arbitration agreements] by reason of its ownership of the
trademarks under which the products were marketed and its
absolute control over those of its subsidiaries that were directly
involved, or could have become involved under the contracts, in the
conclusion, performance, or termination of the litigious distribution
agreements”.
Conclusions of the arbitral tribunal (on the doctrine of “Group of
Companies”): “Considering that it is indisputable — and in fact](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-58-2048.jpg)
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KIGALI INTERNATIONAL ARBITRATION CENTRE
annual payments. To satisfy this judgment, the judge ordered the
companies to transfer title to the marital home and seven other
properties.
Although upon appeal the Supreme Court rendered its ruling on
the basis of the Matrimonial Causes Act, which cannot serve as a
basis in commercial arbitration, the court discussed the corporate
veil doctrine at length, which is of great interest also in international
arbitration.
General principle of the “Piercing the Corporate Veil” doctrine: “[T]
he separate personality and property of a company is sometimes
described as a fiction…the fiction is the whole foundation of
English company and insolvency law”, which eventually means
that piercing the corporate veil is possible only under very limited
circumstances. Such exceptional circumstances are described as
follows: “The corporate veil may be pierced only to prevent the
abuse of corporate legal personality” or to prevent attempts to
“evade the law or to frustrate its enforcement through use of the
corporate personality”.
The UK Supreme Court continues: “The Court may disregard the
separate legal personality of a company if there is a legal right
against the person in control of the company and the company is
deliberately interposed in order that the separate legal personality
of the company should defeat the enforcement of that right against
the controlling party. The Court may then pierce the corporate veil,
but only for the purpose of depriving the company or its controller
of the advantage they would have obtained by reason of the
company’s separate legal personality”.
This means that the UK Supreme Court approves the piercing of
the corporate veil in cases where a party would obtain a right that
it could not have obtained otherwise.
Resultofthecase:Havingdefinedtherelevanttest,theUKSupreme
Court unanimously agreed with the judge of the High Court that
it was not permissible to pierce the corporate veil on the facts of
this case. The judge at first instance had not found any relevant](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-60-2048.jpg)
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Stopping:
The Arbitral Tribunal should always take a balanced and neutral
approach to disciplining counsel. If mild and then sterner warnings
do not serve to stop the objectionable behaviour, it can prove
effective for the chairperson or sole arbitrator to call a recess,
meet privately with counsel for both sides, and ‘read the riot act’
to both sides – making it clear that, if there is no improvement,
he/she will repeat the warnings in front of the offender’s clients
and on the record and, if necessary, ultimately assess costs for the
related disruption. Most counsel and parties appreciate this type
of graduated discipline. Indeed, it is not uncommon for counsel to
desire such directions to convince their clients that they need not
be consistently aggressive.
Another possible tool – which could be called ‘indicative sanctions’
would be for the arbitrator, provided he/she has previously
announced the intention to award costs for misconduct, to begin
running a balance sheet of anticipated cost assessments against
one or both sides, subject to adjustment and inclusion in the final
award. That such cost amounts would be merely indicative and not
binding is helpful: the primary purpose at this stage is not to punish
but to deter ongoing abusive tactics.
If none of the above work an effective tool is an interim measure
for security for costs, for example to cover the extra time and effort
required for the opposing side to deal with that late document,
last minute witness or further extension of time. Interim measures
for costs can also cover the impact of a party’s refusal to follow a
tribunal order.
In some common law countries, courts have wide discretion in
framing the appropriate sanctions for attorney misconduct. These
are known in particular in the US as “Bench slaps”. Sanctions can
include, among others, a reprimand, striking of motions or papers
with inappropriate language, for instance in the US an attorney
was suspended for three months and publicly censured for telling
a federal judge on a teleconference, ‘[y]ou are corrupt and you
stink. That’s my honest opinion, and I will tell you to your face.’ (See,](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-79-2048.jpg)
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KIGALI INTERNATIONAL ARBITRATION CENTRE
maybe 30 or 40 drafts over the last three years, has been much
influenced by the Davishan Model] Steven’s document which was
presented during the ICA RIO Congress in 2010, by Prof Sans
document of the IBA, it has partially been influenced by the CCB
document that was presented to the European Commission.
It preceded the IBA guideline but its consistent with the IBA
guidelines of last year-it that causes a much more ambitious
document covering a much broader range of relationships
between counsel and the client, counsel and co-counsel, counsel
and opposing counsel—it is not limited to the arbitration tribunal.
While we have done this, most of us do not like codes of conduct,
additional rules of conduct or addition rules of regulation which
favour increasing the risk. What we have done is that we have
come to understand over the last four years is that if we don’t self-
regulate amongst ourselves as international practitioners in front
of arbitration tribunals, somebody will do it for us. It will be the
regulator employed by the state or the European Commission and
that will be 10 times worse than anything we try to do ourselves.
So when you read this document, please understand the context,
I feel like I have been cut a thousand times over the last three
years but I think we can justify the quality in the annex. Anybody
can seriously defend counsel who deliberately lied to the tribunal
but then I don’t think you can defend counsel who deliberately
forged a document or destroyed a document, a relevant document
that would be reviewed by the tribunal. I understand we are not
comparing witnesses but I tell you, you can defend counsel who
tells a witness to pressure him or herself in front of the tribunal. I
take it differently from the counsel who deliberately invents bad
faith—tactical challenge to an arbitrator in a order to derail the
arbitration proceedings.
I think the annex explains itself but the difficulty is the fact that it
has ‘teeth’ and this is the first time any tribunal, any institution is
trying to do this. It is an annex, we will see what happens, I hope
it works, if it does, I predict many other institutions very quickly
would have to do the same, otherwise states like Singapore will
start regulating for us and that would not be a good thing for
international arbitration. Thank You.](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-104-2048.jpg)
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KIGALI INTERNATIONAL ARBITRATION CENTRE
In France the objective of damages under French Law is full
compensation, which is “reparation integrale du prejudice” in
respect of loss. Compensation is said to be in accordance with the
loss suffered (tout le principle mais rien que le prejudice).
At International Law, the Permanent Court of International Justice
(“PCIJ”) held in Factory at Chorzow4
that “the essential principle
contained in the actual notion of an illegal act – a principle which
seems to be established by international practice and in particular
by decisions of arbitral arbitrators is that reparation must as far as
possible wipe out all the consequences of the illegal act and re-
establish the situation which would in all probability have existed if
that act had not been committed”.
Furthermore in BAKER MARINE v CHEVRON (NIGERIA)5
, the
court held that a party is “only entitled to recover such part of the
loss actually resulting as was at the time of the contract reasonably
foreseeable as liable to result from the breach. What was at that
time reasonably so foreseeable depends on the knowledge then
possessed by the parties or at all events, by the party who later
commits the breach. For this purpose, knowledge possessed is of
two kinds; one imputed; the other actual…”
Additionally in Uganda, in the case of NIRMA INTERNATIONAL LTD
v JARIBU CREDIT (U) TRADERS LTD (UGANDA) (2014), adopting
the decision of the East African court of Appeal in DHARAMSHI
v KARSAN [1974] 1 EA 41, the general principle for the guidance
of court in the award of damages “ is a fundamental common law
doctrine of restitutio in integrum. It means that the Plaintiff is to be
restored as nearly as possible to a position he would have been had
the injury complained of not occurred, that is, as if he had received
his money in time.”
Common to all jurisdictions is the notion of a past or future ‘wrong’
or ‘breach’ or ‘illegal act’. Without a finding of a past or future
wrong in favour of the claiming party the tribunal ought not to
4 1928 PCIJ
5 [2000] NWLR (pt 681) 393](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-112-2048.jpg)
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KIGALI INTERNATIONAL ARBITRATION CENTRE
contractor invests at the other party’s contractual agreement – in
all design and feasibility costs only to be replaced by a different
Engineering Procurement Construction [EPC] contractor. The
contractor could be entitled to all his provable costs including third
party professional fees. Restoration appeals to a natural sense of
justice for loss occasioned by the respondent.
Compensatory justice: where the loss is met by a sum to
compensate but not necessarily a total indemnity. Again a would-
be EPC contractor could be entitled to an award of damages in
respect of profit had he been allowed to perform the contract on a
compensatory basis.
Comfort justice: in similar circumstances the arbitral tribunal may
award damages with the intention to ameliorate the claimant’s
condition from the harsh effects of the respondent’s breach. This
would readily occur in tort claims arising from contractual breaches
in the construction environment possibly personal injury, kidnap or
grievous bodily harm or death attributable to the respondent
Punitive justice: the respondent’s conduct contains some
aggravatingelementforwhichthetribunalfeelsjustifiedinpunishing
with an exemplary award of damages. Where the project owner in
a construction contract is liable under a willful misconduct clause
in a construction contract that leads to loss of life or harm owing
to gross negligence while the contractor performs the contract the
arbitral tribunal may award damages with a punitive element.
Deterrence: where the respondent’s behaviour is so cynical
and obtuse that the tribunal seeks to deter development of the
reprehensible conduct. Where for instance a state party to a
construction contract declares to a contractor without reason
- ‘the contract is cancelled’. This cynical breach is now widely
unacceptable under international commercial law.
However the fact that commercial arbitral awards are not
binding as precedent makes deterrence difficult to sustain. But in
international commercial arbitration and more so in international
investment arbitration under bi-lateral investment treaty arbitration](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-114-2048.jpg)
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and International Centre for Settlement of Investment Disputes
(ICSID) awards, tribunal decisions contribute to a general body of
commonly accessed legal thinking in the law of obligations such
that the reasoning influences future conduct. With this in mind
arbitrators do give deterring awards of damages.
Nominal justice: in some circumstances the arbitral award finds
it necessary to recognize a disputed right inuring to the claimant
under a contract. Having established the right it might be difficult
to ascribe loss arising from the dispute at hand. For instance in
a road construction Build own operate and transfer [BOOT]
where the rights to a defined concession area or advertising is in
dispute, upon determining the exact area and the nature of rights
the tribunal could award nominal damages without seeking to
compensate or restitute any monetary loss.
Arbitration in Infrastructure Construction Disputes
Infrastructure construction will occupy national economies in
Africa for the foreseeable future, international and multinational
construction companies will inevitably be involved, making the
likely disputes potentially complex and international. Arbitration
in construction disputes is the most decisive in the basket of
Alternative Dispute Resolution (“ADR”) options because it meets
the two objectives of construction disputes which are:
third party determination; and regulating and allocating loss
Loss compensation through the award of damages plays a crucial
role in construction dispute resolution as it provides legal certainty
to protect the legitimate expectations of the injured party. In
seeking to return a party to the financial position before the breach
– a mishandling of a claim for damages could determine the future
of a construction project and infrastructure delivery.
But what role will African arbitrations play? Given the central nature
of damages should African parties not develop a clear approach to
the award of damages in construction arbitration?](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-115-2048.jpg)
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relationship commenced7
. Bearing in mind the first principle of
restoring the claimant to his position had the breach not occurred,
the assessment of loss for a late construction project delivery
would be the general cost overrun associated with delay.
Limitations such as foreseeability; remoteness; -
The time honored dictum in HADLEY V BAXENDALE8
is still a most
useful guide to arbitrators:
“where two parties have made a contract which one of them has
broken, the damages which the other party ought to receive in
respect of such a breach of contract should be such as may fairly
and reasonably be considered as either arising naturally ….or such
as may reasonably be supposed to have been in contemplation of
both parties”
To ascertain whether the party is liable at all in damages is to
determine whether the matters are closely enough connected – if
there is a natural flow of consequences from the breach to the loss.
This is often easier said than done. This is because the entire area of
relativity and foreseeability reasonableness and special knowledge
of the respondent is called into issue. If the loss was not reasonably
foreseeable the respondent will not be held liable.
The quantum of damage claimed:
As a general rule, the parties will only be entitled to a maximum
of what they have claimed. It may amount to misconduct on the
part of the arbitrator to exceed that sum wherever his sentiments
are. Fortunately construction contracts now have enough detail
to make the inability to estimate quantum increasingly difficult. In
quantifying the amount of damages to be awarded, the arbitrators
are required to select the proper valuation methods and adequately
determine matters such as discount or depreciation rate. The
arbitrators should also determine the pre-award interest and
7 This is not without exception.
8 [1843-60] All ER 383.](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-117-2048.jpg)
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KIGALI INTERNATIONAL ARBITRATION CENTRE
match proof of loss against the claims. The consequences of the
non-acceptance of an offer to settle should be considered and a
clear and sequential award given. It is not unusual for construction
contracts to have currency clauses where the rate of exchange is
fixed to prevent the adverse effect of exchange fluctuation on the
events following the breach.
For example and to illustrate the relationship between the breach
and the loss; where the contractor to a significant infrastructure
construction project with work in progress, entersan agreement
with the owner on the contract specifications and performance. The
project owner comes to the conclusion that the departure from the
contract is so significant that the project is in jeopardy. The owner
issues a Stop work order. The ensuing disagreement may result in a
delay during which the original contractor unilaterally demobilizes
from site claiming his stage payments. The project owner without a
contractor anticipates that the original project delivery date is now
in jeopardy along with the possibility of additional bank charges on
the interest and loans from the bank. He appoints a new contractor
at additional cost to finish the work leading to a new opening
date for the project. The owner could claim damages for breach
under – cost of new contractor; interest cost; loss of profit. If the
contractor is found to be in breach these would pass the tests (i)
arising naturally (ii) reasonably in the contemplation of the parties9
.
Liquidated Damages & Penalties in Construction Contracts
Following from the general common law principles arbitral tribunals
will recognize and apply liquidated damages claims in construction
contracts but not penalties. A clause that contemplates an event
of breach by the parties and that pre-estimates the cost for
remediation will be allowed distinct from a sanction payment
constituted as a threat against non-performance.
The essence of liquidated damages was described by Lord Dunedin
in DUNLOP PNUEMATIC TYRE CO. V NEW GARAGE & MOTOR
CO. LTD10
:
9 Hadley (n.
10 [1915] AC 79.](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-118-2048.jpg)
![KIAC 2014 CONFERENCE
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“The essence of a penalty clause is a payment of money stipulated
as in torrorem of the offending party; the essence of liquidated
damages is a genuine covenanted pre-estimate of damage”11
Therefore the tribunal’s work is one of construction of the clause to
discern whether it is allowable or not.
Liquidated damage clauses are a common feature in Turnkey
construction contracts or Public Private Partnership [PPP]
contracts.
Howeverapartymaybeexemptfromanobligationtopaydamages
where the claimant fails to take reasonable steps to mitigate loss in
order to avoid the loss or to avoid increasing the loss; but we shall
return to mitigation later.
It is sufficient at this stage to draw attention to a liquidated damage
sample clause that has been successfully applied in a construction
contract:
LIQUIDATED DAMAGES
If the contractor fails to complete the project on or before the
time-limits set by the time limit schedule (subject to extensions
of time in accordance with the contract) the contractor’s only
liability to the owner for such failure shall be (without prejudice)
to pay 0.0375% of the contract sum for each day of delay up to a
maximum of 5% of the sum
The duty to Mitigate problem versus the “But for” principle
Law and commercial practice has contrived to create a duty on
the victim of a breach of contract to avoid the ill effects of the
breach visited on him by the defaulting party. In other words, in a
construction contract the owner-sponsor of a multi-million dollar
airport construction project has to be vigilant in taking timely
steps to asses and/or stop a contractor from applying the wrong
11 See also I.E. Sagay, Nigerian Law of Contract (2nd Edn, Spectrum Books Ltd 2007)](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-119-2048.jpg)
![KIAC 2014 CONFERENCE
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Section 4 (2)
(2) Where the qualifying debt is one to which the Initiative applies,
the relevant proportion is—
A over B
where —
A is the amount the debt would be if it were reduced in
accordance with the Initiative ... and
B is the amount of the debt without it having been so
reduced.
Section 5(1)
(1) This section applies to—
(a) a judgment on a relevant claim given by a court in the
United Kingdom before commencement,
(b) a foreign judgment given (whether before or after
commencement) on a relevant claim, and
(c) an award made (whether before or after
commencement)
Section 7
(1) Nothing in this Act applies to a foreign judgment or an
arbitration award of a kind required by European Union law, or by
an international obligation of the United Kingdom, to be enforced
in full even in cases where such enforcement is contrary to the
public policy of the United Kingdom.
(2) Accordingly, this Act does not apply to — ...
(c) an award to which section 1 of the Arbitration
(International Investment Disputes) Act 1966 applies
(awards made under the Convention on the settlement
of investment disputes between States and nationals of
other States) [1965 ICSID Convention]...”](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-137-2048.jpg)
![KIAC 2014 CONFERENCE
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“Each party shall nominate an arbitrator, and the third and presiding
arbitrator shall be selected by [the parties / the parties’ nominees
/ the LCIA]”.
With this wording, and by operation of Articles 1 and 2 of the LCIA
Rules, the claimant and the Respondent would have to make their
nominations in the Request for Arbitration and the Response
respectively.
The appointment process under the current (1998) LCIA rules
a. Distinction between the ‘selection’ and ‘appointment’ of
arbitrators
The LCIA Rules entertain a distinction between the selection of
arbitrators (which may be made by way of party nominations, by
the LCIA directly, or even by a third party), and their appointment,
which is the sole prerogative of the LCIA Court. This distinction
appears at Article 5.5 of the Rules which provides that the LCIA
Court alone may ‘appoint’ arbitrators, and that where a contract
provides for party ‘appointment’, this is deemed a provision for
party ‘nomination’.
The difference between the two concepts of selection and
appointment, which is reflected under the Rules of other
institutions3
, is straightforward. The selection of the arbitrators
means the identification of the individuals (sometimes referred to
by the LCIA as the ‘candidate arbitrators’) who will ultimately sit on
the tribunal. The appointment, on the other hand, is the process by
which these individuals are given the authority, by the LCIA Court,
to conduct the arbitration4
.
Inthenormalcourse,theLCIACourtwill‘appoint’allthreearbitrators
at the same time, rather than appointing them sequentially as and
when they are nominated or selected. It is however open to the
parties to agree otherwise, for instance in their arbitration clause,
but the benefits of doing so are, at best, unclear. In fact this adds
to the formalities to be completed by the institution, and therefore
tends to slow down the constitution of the tribunal and increase
the costs.
3 Articles 12 and 13 of the ICC Rules (2012), for example, draw a distinction between the
‘nomination’ of arbitrators by the parties on the one hand, and the ‘appointment’ or
‘confirmation’ by the Court on the other.
4 Arguably the authority comes from the parties, in the first place, who have agreed to arbitrate
under the LCIA Rules, and therefore that the arbitrators will first need to be appointed by the
LCIA Court before being able to adjudicate the dispute.](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-155-2048.jpg)
![KIAC 2014 CONFERENCE
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Speakers’Biography
OLASUPO SHASORE, Nigeria, is a partner in the law firm of
Ajumogobia & Okeke, a leading commercial law firm in Nigeria.
He was until May 2011 the Attorney-General and Commissioner for
JusticeofLagosState.Hisareasofspecialisationincludearbitration,
commercial litigation, maritime and shipping and commercial and
business crime.
An experienced practitioner and strategic litigator, Shasore became
a member of the inner bar and Senior Advocate of Nigeria in 2006;
and is a member of the Body of Benchers.
His interest for the development of commercial law and practice
resulted in the commencement of Commercial Law Reports Nigeria
where he is Publisher and Editor in chief. He has written several
articles, and delivered papers on various aspects of commercial
law and legal practice globally.
He authored the book titled “Jurisdiction and Sovereign Immunity
in Nigeria Commercial Law”, he co-authored the most recent
Nigerian text on arbitration, “Commercial Arbitration Law and
International Practice in Nigeria “Johnson & Shasore” (LexisNexis),
published in 2012.
In his time as Attorney General of Lagos State, he developed
the Limited Liability Partnership Law of Lagos State, the Lagos
Arbitration Law, Public Procurement Law; Mortgage & Property
Law; the Administration of Criminal Justice Law [re-enactment]
2009; the Criminal Law and Magistrates Courts Law, amongst
others. Shasore serves presently as chair of the Law Reform
Commission.](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-215-2048.jpg)
![218 |
KIGALI INTERNATIONAL ARBITRATION CENTRE
Bachelor of Arts (1985-1987), UCT, South Africa (English and
African literature)
PUBLICATIONS AND OTHER PROFESSIONAL ACTIVITIES
Fellow and Arbitrator: Southern African Association of Arbitrators
General Editor and Contributing Author: “Arbitration in Africa: a
Practitioner’s Guide” (Kluwer, 2013) Series Editor: PCA Award
Series (2010 onwards)
Author: articles in ICC Bulletin, Hague Yearbook of International
Law, Stellenbosch Law Journal
Member: Advisory Board of Africa International Legal Awareness;
Member, Board of Reporters, Institute for Transnational Arbitration
Founder of young practitioner’s group, Young ICCA.
PROF. DATUK SUNDRA RAJOO, Malaysia, is the Director of the
Kuala Lumpur Regional Centre for Arbitration (KLRCA). He was the
Immediate Past President of the Asia Pacific Regional Arbitration
Group (APRAG) [2011-2013], a federation of nearly 40 arbitral
institutions in the region.
Professor Datuk Sundra is a Chartered Arbitrator and an Advocate
& Solicitor of the High Court of Malaya (non-practising). He is
also a Professional Architect and Registered Town Planner. He
has had numerous appointments as chairman, co-arbitrator of
three-man panels and sole arbitrator in international and domestic
arbitrations. He serves on the panel of numerous international
arbitral institutions and organisations. He is also a Visiting Professor
at The National University of Malaysia (UKM).
Professor Datuk Sundra has authored and co-authored several
books on arbitration and contract law, including, “Law, Practice and
Procedure of Arbitration” (2003); “The Malaysian Standard Form
of Building Contract (The PAM 1998 Form)” (1999); the Arbitration
title for Halsbury’s Laws of Malaysia (2002); “Arbitration Act 2005](https://image.slidesharecdn.com/41063e97-b648-41ee-a882-4bc9de375bba-151028132728-lva1-app6892/75/KIAC_Conference-Report_Print-228-2048.jpg)
KIAC_Conference Report_Print
- 1. KIAC 2014 International ArbitrationConference Emerging issues in international arbitration: WHAT A NEW ARBITRAL SEAT CAN ANTICIPATE REPORT
- 3. KIAC 2014 International ArbitrationConference Emerging issues in international arbitration: WHAT A NEW ARBITRAL SEAT CAN ANTICIPATE REPORT
- 4. Edited by KigaliInternational Arbitration Centre This document is comprised of papers and events of the KIAC 2014 conference as they unfolded, which was held in Kigali - Rwanda, 25th - 27th May, 2014
- 5. The Kigali InternationalArbitration Conference 2014 was hosted by Kigali International Arbitration Centre, with support from the following organisations:
- 7. KIAC 2014 CONFERENCE REPORT |i Foreword iii KIAC International Arbitration Conference Program 1 Welcome & networking reception 2 Introductory speech: 4 Opening & Key note 7 PANEL ONE 10 Emergency arbitration: 10 PANEL TWO 41 Multi-party arbitration in practice 41 PANEL THREE 59 Dealing with guerilla tactics in international arbitration 59 PANEL FOUR 98 How arbitral tribunal award damages in construction disputes 98 Deliberations 113 PANEL FIVE 116 Third-party funding in arbitration: 116 Deliberations 129 PANEL SIX 133 Appointing the arbitrator in practice 133 Discussions 151 Tableof contents
- 8. ii | KIGALI INTERNATIONALARBITRATION CENTRE PANEL SEVEN 157 The Arbitral Award and the Dissenting Opinion 157 Discussion 184 PANEL EIGHT 186 Influence of Legal Systems in International Arbitration: 186 CLOSING CEREMONY 202 CLOSING SPEECH 204 THE CHAIRMAN KIAC BOARD OF DIRECTORS 204 SPEAKERS’ BIOGRAPHY 205
- 9. KIAC 2014 CONFERENCE REPORT |iii Foreword From May 25th to 27th, 2014, over 150 arbitration professionals from 18 countries around the world convened in Kigali, Rwanda to discuss emerging issues in international arbitration and what a new arbitral seat like KIAC can anticipate The three-day conference was organised by Kigali International Arbitration Centre (KIAC) as part of Rwanda’s efforts to promote and contribute to international arbitration. The conference brought together senior government officials, arbitrators, members of the private sector and other major stakeholders . During the conference, officials highlighted the importance of arbitration and other ADR Solutions like mediation and adjudication. The conference was part of KIAC’s continuous efforts to institutionalize knowledge sharing, exchange of experiences and building partnership and cooperation in International among professionals. It is part of KIAC’s journey towards becoming a regional choice for commercial dispute resolution. During the conference, participants explored, among other things; Issues around emergency arbitrator: theory and practice; multi-party arbitration in practice; Dealing with guerrilla tactics in international arbitration: which tools for counsels and arbitrators; Influence of legal systems in international arbitration: practical issues; Third party funding in arbitration: ethics and regulatory issues; Appointing the arbitrator in practice: the arbitral awards and the dissenting opinion; and How arbitral tribunal awards damages in construction disputes. The conference also provided an opportunity for participants to network with fellow practitioners worldwide as a way to foster integration and inclusion for new entrants in international arbitration.
- 10. iv | KIGALI INTERNATIONALARBITRATION CENTRE KIAC takes this opportunity to thank all participants who travelled from different parts of the world to be part of the conference. Our sincere gratitude to the entire KIAC team that was involved in planning and preparation of the conference, without whom, it would not have made this conference a massive success. Special thanks to the Chief Justice of Rwanda, Prof. Sam Rugege who was our guest of honour. His great advice contributed a lot to in building institutional arbitration in Rwanda. We would also like to thank all speakers for their contribution. Finally a note of thanks to our funders Investment Climate Facility for Africa (ICF), Government of Rwanda (GoR), Private Sector Federation (PSF) and our sponsors; The Law Society of England and Wales, International Council for Commercial Arbitration (ICCA), Fountain Advocates, Swiss Arbitration Academy, Trust Law Chambers, K-Solutions & Partners and ALN.
- 11. KIAC 2014 CONFERENCE REPORT |1 KIAC International Arbitration Conference Program SUNDAY 25TH MAY 2014 Welcome & Networking Reception MONDAY 26TH MAY 2014 • Registration • Opening & key note speech • Coffee break • Emergency arbitration: theory and practice • Discussion • Multi-party arbitration in practice • Discussion • Lunch • Dealing with guerilla tactics in international arbitration: which tools for counsels and arbitrators? • Discussion • How arbitral tribunal award damages in construction disputes? • Discussion • End of the first day • Dinner TUESDAY 27TH MAY 2014 • Third-party funding in arbitration: ethics and regulatory issues • Discussion • Appointing the arbitrator in practice: • Discussion • Coffee break • The arbitral award and the dissenting opinion • Discussion • Influence of legal systems in international arbitration: practical issues • Discussion • Conclusion • Lunch END OF THE CONFERENCE
- 12. 2 | KIGALI INTERNATIONALARBITRATION CENTRE WELCOME & NETWORKING RECEPTION MR BENJAMIN GASAMAGERA, CHAIRMAN, BOARD OF DIRECTORS, PRIVATE SECTOR FEDERATION Chairman Kigali International Arbitration Centre, Secretary General KIAC, PSF Board members present, KIAC team; Dear delegates, ladies and gentlemen; On behalf of the Private Sector Federation of Rwanda, I feel honoured to welcome you to Rwanda and in particular to the Kigali International Arbitration Conference 2014. I know most of you have travelled from far and beyond great waters, but I am happy that you have finally arrived safely. And so, we are very happy to receive you tonight. The current globalization of our economies presupposes the free movement of goods, services and persons which leads to increase in cross -border transactions; inevitably whether we like it or not, cross-border disputes are likely to be some of the challenges on the increase. It is for this reason that the Rwanda Private Sector opted to invest in establishing Kigali International Arbitration Centre to preside over commercial disputes Resolution. Kigali International Arbitration Centre is still a young Institution but a dynamic one, in a sense that it has managed to bring all of us together here in Rwanda from across different Continents of this World. Ladies and gentlemen, you are professionals in your own field of International Arbitration but nevertheless, members of the Worldwide Community of professionals which means that we are in the same family.
- 13. KIAC 2014 CONFERENCE REPORT |3 It is now the time to know each other and feel free to interact and network. Feel at home. In Kinyarwanda we say, Murakaza Neza! I now request you all to raise up your glasses so that we can toast to our health. Thank you very much, and I wish you fruitful deliberations during the conference.
- 14. 4 | KIGALI INTERNATIONALARBITRATION CENTRE INTRODUCTORY SPEECH: BERNADETTE UWICYEZA, SECRETARY GENERAL, KIAC, RWANDA Our Guest of Honour, The Chief Justice of the Republic of Rwanda; Your Lordship Prof. Sam Rugege; The Chairman Board of Directors, Kigali International Arbitration Centre; Mr. Faustin Mbundu, Distinguished delegates, Ladies and Gentlemen: It is my honour to welcome you all to the KIAC International Arbitration Conference 2014. Allow me to thank you more sincerely for having honoured our invitation. I am particularly grateful to the Chief Justice of Rwanda for having accepted to grace this occasion as our Guest of Honour; henceforth, I take this opportunity to recognize and appreciate the overall support of Rwanda’s Judiciary towards the process of promoting Arbitration practice in Rwanda. To this end, I thank you very much. Ladies and gentleman, Kigali International Arbitration Centre was established in 2011, as part of Rwanda’s continuous efforts to improve Business environment and investment Climate. This is a joint project between the government of Rwanda and the Private Sector Federation, an association federating all professionals in different fields of private sector’s business activities in Rwanda. Nevertheless KIAC is an independent Body whose purpose is to provide infrastructure for quality services in arbitration and to create an enabling environment for the promotion of the use of arbitration practice and other friendly ways of disputes resolution in Rwanda. From its inception, KIAC management focused on setting basic standardsofqualityservicesforarbitration.Theseincludeamodern
- 15. KIAC 2014 CONFERENCE REPORT |5 set of arbitration Rules matching with international standards and accreditation of local professionals at the minimum requirements level. Since then, over 300 professionals from different fields have so far attended arbitration courses run by the Chartered institute of Arbitrators and leading to various level of accreditation. With the cooperation of the Judiciary, judges were enrolled in the same program to ensure that all legal professionals have a common understanding of the concept and practice of arbitration. The second focus was on educating the public and potential users in matters related to arbitration. This was done through awareness campaigns, engaging various professional associations in different workshop sessions on the concept and practice of arbitration. Here our aim is to promote a culture of arbitration in addition to our home grown solutions in matters of alternative justice; such as Gacaca court system, and our local Mediation committees. Our third focus was on creating platforms for knowledge sharing, exchanging experiences and building partnership and cooperation. It is from this understanding that in May Last year at a time like this one, KIAC held a workshop to assess the practice and to share experiences from the EAC region, bearing in mind that the lessons learnt from that workshop would guide the preparation of today’s conference. From the foregoing; therefore, we are convinced that in so doing we are addressing the issue of integration and inclusion of new entrants in the World wide practice of international arbitration. This issue of integration and inclusion was central during ICCA congress 2014 held in Miami where it was raised as a potential threat to the legitimacy of international arbitration. Today’s conference however; is part of KIAC efforts to institutionalize knowledge sharing and exchange of experiences in arbitration practice. During our deliberations, it is my hope that we should focus our attention more on technical issues of international Arbitration practice, and examine challenges associated with its development the World over.
- 16. 6 | KIGALI INTERNATIONALARBITRATION CENTRE I hope you will use this occasion to exploit opportunities for partnerships with fellow practitioners worldwide which is crucial for integration and inclusion of new entrants in international arbitration. Dear Delegates, on our journey towards becoming a regional choice for commercial disputes resolution, we have also drawn lessons from crisis management. We received our first Emergency arbitration case that was a learning experience for us. Such lessons should be exploited further in our discussions in this conference. Furthermore, I notice that there are some areas which we need to put more emphasis in our work. We need to come up with creative solutions to mitigate the challenging issues before us. I therefore look forward to the conclusions on the emerging issues in international Arbitration to guide our practice. Before concluding, I wish to recognize the following partners, our funders; GoR, PSF, ICF and our Key stakeholders, such as the Judiciary, they all have been supportive to the centre. Special recognition goes to our sponsors of this conference. Notably; Swiss Arbitration Academy which trains and awards a nine months diploma program in international arbitration, International Council for Commercial Arbitration-ICCA, The Law Society of England, Trust Law Chambers-Rwanda, Fountain Advocates- Rwanda, K-Solutions and Partners ALN-Rwanda. Without further delay, I now invite His Lordship Prof. Sam Rugege, The Chief Justice of Rwanda to come and give his opening address. I thank you all for your kind attention; and wish you all fruitful deliberations and a memorable stay in Rwanda. Thank you very much.
- 17. KIAC 2014 CONFERENCE REPORT |7 OPENING & KEY NOTE HIS LORDSHIP PROF. SAM RUGEGE, CHIEF JUSTICE OF RWANDA Board Members of KIAC, The Secretary General and Team, Eminent facilitators who have accepted to come and facilitate this conference, distinguished participants, Ladies and Gentlemen: I am very pleased to be here this morning to start this conference with you, this very important conference for our country. We are honoured that such world class experts in the area of arbitration have accepted to come and participate in this conference. I hope that while you are here, you enjoy the hospitality of Rwanda— the modest hospitality we can offer and also to get to know the country. This meeting is important to us as a country mainly because we are a country that as you know is emerging from very difficult times where the society, the economy, the institutions were virtually destroyed during the 1994 Genocide against the Tutsi but since then, everything is being done to rebuild the country and the economy, to uplift the standards of living of our citizens and therefore, everything that can be done it terms of re-establishing institutions, in terms of finding mechanisms that can improve the environment for investment and for economic development have been done and I see this conference and this emphasis on arbitration as part of this whole process of economic development and uplifting of standards of live in this country. In particular, being from the judiciary, we are keen to promote arbitration and other forms of dispute resolution, both in terms of reducing the workload of the courts and also in terms of affording the privacy and speed of resolution of disputes that international investors and our domestic investors need for their businesses to flourish and to continue.
- 18. 8 | KIGALI INTERNATIONALARBITRATION CENTRE In this context, traditionally we have promoted alternative dispute resolution. We as you know heard our traditional Gacaca courts where members of the community came together to resolve their disputes and to ensure that it is done in an amicable environment, to ensure that once disputes are resolved, then people go back to live together and continue their businesses together. We also have the system of traditional mediation or Abunzi, which is a system that we have all over the country to resolve all minor disputes or disputes that can be resolved by citizens themselves without having to go to court and that is what has been happening. In fact we have made it a prerequisite that potential litigants first attempt to resolve their disputes at the local level without involving lawyers and only if they fail to resolve their courts should they go to court. So arbitration, mediation and other forms of dispute resolution are very much encouraged and we want to extend those processes beyond the local level to the highest possible level so that even complicated international disputes can be resolved without recourse to the courts. It is in that context that the judiciary of Rwanda together with other institutions of government always encouraged KIAC so that it can grow and reach a standard that is respectable around the world, so that it can become a regional and international arbitration centre. KIAC however is a young institution. As you know it started just over two years ago but it is doing its best to reach international standards and that is it organises conferences like this, with eminent experts from around the world to be able to share experiences and guide them as to how they can improve. We from the judiciary and from government can promise to continue supporting KIAC, to continue supporting arbitration and other processes aimed at resolving disputes and continuously improving the investment in this country so that we can continue to move forward. In particular, I think you notice that we have quite a good number of judges here especially from the commercial courts, who have
- 19. KIAC 2014 CONFERENCE REPORT |9 come to learn more about arbitration and to be able to apply it in their supervisory capacity, supervising the arbitration processes especially at the level of appointment of arbitrators where there is a failure to agree on arbitrators, but also to ensure that if there problems arising during the arbitration processes, they can be resolved and arbitration proceeds as it should. There is also the issue of enforcement of arbitral awards which we also want our judges to be comfortable in the knowledge of how to go about it and the best way to go about it. I also see the President of the BAR Association here and am sure quite a number of lawyers here. They are also encouraged to take on arbitration as a serious part of their vocation. Inthismeetingwealsohaveotherprofessionsfromotherdisciplines, architects and so on, so that they are also aware of what is possible in the arbitral processes. So I think the other thing I would like to do is to congratulating KIAC for organising these conferences taking place in Rwanda and for the work they have done so far in establishing the centre on a professional basis and for capacity building through training of professionals in skills of arbitration. This is very important if our centre is to be internationally respected, we need to have skilled people and encourage KIAC to continue this capacity building programmes. We can never be through with learning at whatever age, so we continue to learn and improve. I see some International arbitrators here, I am sure they learn something new each time they go out there and teach others, so for us this is a very important thing. I note that there are various topics that you are going to discuss—very important topics, including guerrilla tactics. I wish I could stay to learn about those guerrilla tactics but unfortunately I was not invited to stay as a participant. At this point I would like to thank you all, especially our international visitors and all the participants and wish you very fruitful deliberations in this conference and I think what remains is for me to declare the conference officially open. Thank you very much.
- 20. 10 | KIGALI INTERNATIONALARBITRATION CENTRE PanelOne EMERGENCY ARBITRATION: THEORY AND PRACTICE Many institutional arbitration rules including Kigali International Arbitration rules 2012, ICC, SIAC, and AAA (ICDR) included a new provision on Emergency arbitrator. These recent developments beg the question of the utility of such mechanism, whether demonstrated in the course or at the end of international arbitration proceedings. The panel discussed each step and how such relief is effective in practice since procedure is in operation. PANELISTS: Mr. Mark E. Appel, Senior Vice president, ICDR, USA; Prof. Datuk Sundra Rajoo, Director, KLRCA, Malaysia; CHAIR: Mr. Athanase Rutabingwa, Partner, MRB Attorneys & President of Rwanda Bar Association Athanase Rutabingwa: Mark Appel is Senior Vice President of the International Centre for Dispute Resolution (ICDR). ICDR is the international division of the American Arbitration Association (AAA), the world’s largest provider of private dispute prevention, conflict management and dispute resolution services, education, and training since 1926. Mr Appel is charged with primary responsibility for ICDR operations in Europe, the Middle East and Africa. He has got a vast experience of over 30+ years of global dispute resolution as an arbitrator. Professor Datuk Sundra Rajoo is the Director of the Kuala Lumpur Regional Centre for Arbitration (KLRCA). He was the Immediate
- 21. KIAC 2014 CONFERENCE REPORT |11 Past President of the Asia Pacific Regional Arbitration Group (APRAG) [2011-2013], a federation of nearly 40 arbitral institutions in the region. Professor Datuk Sundra is a Chartered Arbitrator and an Advocate & Solicitor of the High Court of Malaysia (non- practising). He is also a Professional Architect and Registered Town Planner. He has had numerous appointments as chairman, co- arbitrator of three-man panels and sole arbitrator in international and domestic arbitrations. This panel is very important and unique, so I would say that it is made up of imminent people. Professionals are going to learn much through them on this morning’s topic which is entitled “EMERGENCY ARBITRATION: THEORY AND PRACTICE.”
- 22. 12 | KIGALI INTERNATIONALARBITRATION CENTRE By Prof. Datuk Sundra Rajoo Director, Kuala Lumpur Regional Centre for Arbitration, Malaysia The Global Emergence of Emergency Arbitrator Provisions 1. Why emergency arbitration: The need for interim measures In arbitration, as with all disputes, circumstances arise necessitating the preservation of the status quo in relation to evidence, assets or other key items, pending the final resolution of the dispute. For this purpose, parties may seek to apply for “interim” or “conservatory” measures. Article 26 of the UNCITRAL Rules for example provides that the arbitral tribunal may, at the request of a party, grant interim measures.1 Interim measures can take different forms as specified under the UNCITRAL Rules. The tribunal may order parties to take action that would prevent, or refrain from taking action that is likely to cause (i) current or imminent harm or (ii) prejudice to the arbitral process itself; it can also order the parties to provide a means of preserving assets out of which a subsequent award may be satisfied; or it could order them to preserve evidence that may be relevant and material to the resolution of the dispute.2 “Emergency” interim measures “Emergency” or urgent relief is interim relief required on an urgent basis, namely before the formation of the arbitral tribunal. It is not uncommon for weeks or months to elapse before the constitution 1 UNCITRAL Rules (2010). Article 26 (1). 2 UNICTRAL Rules (2010), Article 26 (2). PRESENTATION ON EMERGENCY ARBITRATION: THEORY AND PRACTICE Institutional Experiences of Emergency Arbitration in Malaysia
- 23. KIAC 2014 CONFERENCE REPORT |13 of the arbitral tribunal, during which time it may become necessary to obtain an order preventing the other party(s) from taking action or ordering the other party(s) to take action in order to preserve evidence or assets.3 In instances where this need arises it is not logistically possible under arbitral rules to form an arbitral panel and have a decision rendered that would be able to provide the relief required. The time and cost involved in the appointment of a full arbitral tribunal would likely neuter the effectiveness of such relief. As a result, parties have two options: 1. Go to court and make a request for this interim relief or 2. Request emergency arbitration. Emergency arbitration vs Court ordered relief For a number of reasons, emergency arbitration is preferable. While the parties are free to apply to the courts to obtain conservatory measures in such situations, this method is less preferred by the parties, who chose to arbitrate instead of going to the domestic courts in the first place. This may be because of a negative perception with the courts in some instances or simply because they wish to keep the dispute confidential.4 If parties are forced to wait until the formation of a tribunal to obtain relief, damage may already occur before the tribunal is formed.5 Of course a party may be able to claim this damage in an arbitration, however it is practical that this damage suffered should be prevented if possible. According to some practitioners, if interim measures can be obtained, some disputes have the potential to settle earlier if damages are preventable by orders from emergency arbitrators.6 Origins and implementation of emergency arbitration Theneedofinterimreliefhasbeenrecognizedbyvariousinstitutions and has been implemented into the rules of most leading arbitration centres. These rules all follow the same underpinning principals, which can be traced to provisions in the Model Law and UNCITRAL 3 Amir Ghaffari and Emmylou Walters, ‘The Emergency Arbitrator: The Dawn of A New Age’ In Arbitration International (2014) 30(1) at 155. 4 Ibid. 5 ALI YESILIRMAK, ‘International Commercial Arbitration’ (Kluwer Law International) (2005) at 114. 6 Id, at 115.
- 24. 14 | KIGALI INTERNATIONALARBITRATION CENTRE Rules. Article 17 of the Model Law and UNCITRAL Rule 26 are a starting point behind emergency arbitration provisions which allow a tribunal to order interim measures. However, an emergency arbitration is a creature of its own and not an interim measure in the same sense as the above mentioned provisions. An emergency arbitration tribunal is composed to deal with an urgent issue(s). Once the emergency arbitration award is rendered, it is not interim, although under various sets of rules, an award may be varied. If an award can be varied then arguably an emergency arbitration award does not meet the final award doctrine under the New York Convention and is unenforceable; which is a controversial issue in this topic that will be further investigated. However, this is not the case, and in fact emergency arbitration awards are enforceable, which will be explored further in this paper. Emergency relief comes typically in two major forms: either through the appointment of an emergency arbitrator or through an expedited formation of the tribunal. Some institutions provide both methods, such as the Singapore International Arbitration Centre (hereafter “SIAC”) Rules7 , the Stockholm Chamber of Commerce (hereafter ‘SCC’) Rules8 , Kuala Lumpur Regional Centre for Arbitration (hereafter ‘KLRCA’) Rules9 and the Swiss Chamber Arbitration Institution (hereafter ‘SCAI’)10 . Some institutions adopt only one of the methods. For example, under the London Court of International Arbitration (hereafter ‘LCIA’) Rules11 only expedited proceedings are available. In most cases the Emergency Arbitration Rules are included in an appendix to a set of Rules. 2. The Evolution of Emergency Arbitration Taking a historical and comparative look at the evolution of emergency arbitration provisions is a good starting point to understanding how an emergency arbitration functions. 7 SIAC Rules (2013) Art. 26(2) and Schedule 1. 8 SCC Rules (2010), Appendix II. 9 KLRCA Rules (2013), Schedule 2; KLRCA Fast Track Arbitration Rules (2013). 10 Swiss Rules (2012), Articles 42-43. 11 LCIA Rules (1998), Article 9(1).
- 25. KIAC 2014 CONFERENCE REPORT |15 The International Chamber of Commerce (hereafter “ICC”) Pre- Arbitral Referee procedure can be seen as a starting point in the evolution to where modern day emergency arbitration stands today.12 The ICC Pre-Arbitral referee procedure was a standalone set of Rules from the ICC Rules that provided for urgent relief to be given by a “referee” before the composition of an arbitral tribunal. Since the Pre-arbitral referee procedure, the SCC implemented Emergency Arbitrator Provisions that came into force on 1 January 2010.13 The SCC Rules are quite significant as the Emergency Arbitration Procedures were included in the SCC Rules themselves as an appendix. Emergency arbitration provisions as an addendum Shortly after the SCC Rules were implemented the SIAC adopted the identical rules as the SCC which came into force 1st July 2010.14 Following these institutions various other institutions such as the Hong Kong International Arbitration Centre (hereafter “HKIAC”), ICC, International Centre for Dispute Resolution (hereafter “ICDR”) and KLRCA have all followed suit in adopting emergency arbitrator provisions into their rules as an appendix or schedule. This adoption of emergency arbitration procedures by other various institutions is a clear adaption of arbitral rules to meet the needs of parties. The inclusion of emergency arbitrator provisions as an appendix to the rules has considerable importance. This being that there exists the implied consent of parties to take part in emergency arbitration proceedings, where the dispute resolution clause in the contract refers to that set of rules.15 This consent to the emergency arbitration provisions exists though a party adopting a set of arbitral rules in a contract which impliedly include emergency arbitration. In contrast, the ICC pre-arbitral referee procedure needed a specific agreement to refer disputes to the pre-arbitral referee procedure. 12 Michael Dunmore, ‘Interim Measures by Arbitral Tribunals: The Enforceability Conundrum’ In Asian International Arbitration Journal (2012) 8(2) at 222. 13 SCC Rules (2010), Appendix 2. 14 SIAC Rules (2010), Schedule 1. 15 Michael Dunmore Supra n. 13 at 227.
- 26. 16 | KIGALI INTERNATIONALARBITRATION CENTRE Prevalence of cases involving emergency arbitration From the above, the true pioneer of the modern day emergency arbitration procedure can be said to be the SCC. The SCC and the SIAC have each recently published reports of the cases that they have dealt with since there implementation of emergency arbitrator provisions and a number of these will be highlighted. The SCC in their report which was released at the end of 2013 covers the three years of emergency arbitration decisions and includes summaries of all emergency arbitrator decisions.16 During this time there were nine applications for emergency arbitration, out of these applications, there were two decisions in favour of the claimant. The SIAC released a similar report stating that thirty-four applications have been filed with SIAC for emergency arbitration,17 however the SIAC has not provided the same detailed summary of the cases as has the SCC. 3. General Powers Across the various sets of EA rules there are a number of commonalities. The tribunal may order a party to take measures to maintain or restore the status quo pending determination of the dispute. A tribunal may order parties to take action that would prevent, or refrain from taking action that is likely to cause current or imminent harm or prejudice to the arbitral process itself. It can also order the parties to provide a means of preserving assets out of which a subsequent award may be satisfied, or it could order them to preserve evidence that may be relevant and material to the resolution of the dispute.18 The threshold for emergency relief In order to succeed in obtaining such interim orders or awards, generally arbitration rules provide that the parties will have to show first that such measures are necessary because of irreparable 16 Johan Lundstedt, ‘SCC Practice: Emergency Arbitrator Decisions’ Accessed online at: http://www.sccinstitute.com/filearchive/4/46698/SCC%20practice%202010%20-%20 2013%20emerge ncy%20arbitrator_FINAL.pdf. 17 Vivekananda N. ‘The SIAC Emergency Arbitration Experience’ Accessed Online at http:// www.siac.org.sg/2013-09-18-01-57-20/2013-09-22-00-27-02/articles/338-the-siac- emergency- arbitrator-experience. 18 UNICTRAL Rules (2010), Article 26 (2).
- 27. KIAC 2014 CONFERENCE REPORT |17 harms if the conservatory measures are not taken and that they are likely to succeed on the merits of the case.19 For example, the SCC Rules provide that the tribunal may issue any interim measure it deems proper.20 A tribunal may do so only after the Claimant has first satisfied to the tribunal that prima facie, there is a reasonable probability that the Claimant may succeed on the merits of its claim. Out of the nine applications made for emergency arbitration the two that were successful had clearly met the above threshold, as well as four of the seven applications that were ultimately unsuccessful had met this initial threshold. Secondly, where an interim measure is requested, the Claimant must, “as a general principle, also establish that the harm which is to be prevented by the interim measure is irreparable and of an urgent or imminent nature.”21 Similarly, the SIAC and KLRCA each have a similar threshold in place, the satisfaction of which falls to the director of the KLRCA or Chairman of the SIAC to determine.22 The test, similar to that of the SCC, is a test of “real probability” of success as well as whether irreparable harm is likely to be caused if interim relief is not granted.23 These thresholds to meet are essential and noteworthy to prevent vexatious claims being made. In addition to the threshold are the fees charged by centres for emergency arbitration, which are considerably expensive.24 Emergency relief through expedited procedure In addition to emergency arbitration, there is a comparable process which is expedited procedure. A brief introduction on the expedited arbitration is illustrated in the LCIA Rules. 19 UNCITRAL Rules (2010), Article 26 (3). 20 SCC Rules (2010), Article 32 (1). 21 Johan Lundsted Supra n. 17 at 5 22 SIAC Rules (2013) Schedule 1 Article 2; KLRCA Rules (2013) Schedule 2 Rule 2. 23 Vivekananda N. Supra n. 18. 24 Pursuant to SCC Rules the fee of the Emergency Arbitrator is EUR 12,000, and the administrative fee of the SCC amounts to EUR 3,000. See SCC Rules (2010) Art 10(2); The KLRCA Emergency Arbitration (2013) fees for international cases are USD 10,000 for arbitrator fees and USD 2,000 in administrative costs.
- 28. 18 | KIGALI INTERNATIONALARBITRATION CENTRE In exceptional urgency, on or after the commencement of the arbitration, any party may apply to the LCIA court for the expedited formation of the Arbitral Tribunal.25 This procedure allows the LCIA court to fix any time limit under the LCIA Rules for the formation of the arbitral tribunal in its complete discretion. In practice, applications under Article 9 are most commonly accompanied by an application for interim relief.26 The arbitrator or tribunal may be appointed within 48 hours.27 4. Practice and Procedure: In both emergency arbitration and expedited procedure, there are a number of generally followed principles that can be highlighted to further illustrate the procedural aspects of emergency arbitration. Interaction with the courts The first characteristic is that an emergency arbitration can be considered “compatible with court proceedings.” Generally the emergency arbitral rules clarify that the emergency arbitration provisions are not intended to prevent any party from seeking urgent interim measures from domestic courts; emergency arbitration provisions are compatible with the request for interim relief from the courts.28 Next can be considered “other express or implied principles.” This is where arbitration institutions share other principles regarding emergency arbitrator proceedings, which are either specifically laid out in the rules, implied or followed in practice. Requirements for commencing emergency arbitration First generally it is required that a party seeking emergency relief must show that the matter truly cannot wait for the constitution of the arbitral tribunal.29 This has been highlighted in the examples of the SIAC and SCC rules. 26 Raja Bose and Ian Meredith, ‘Emergency Arbitration Procedures: A Comparative Analysis’ [2012] In ‘International Arbitration Law Review’ 5, Accessed Online at http://www. klgates.com/files/Publication/33e561cb-b459-47f5-bab1-856c51d8459b/Presentation/ PublicationAttachment/f5e1a648-049e-4f63-afcf-f8d4dc91bae2/Emergency- Arbitration-Procedures_A-Comparative-Analysis.pdf. 27 Ibid. 28 SIAC Rules (2013), Rule 26.3; SCC Rules (2010), Article 32(5).
- 29. KIAC 2014 CONFERENCE REPORT |19 It is also common practice that Emergency Arbitrator Proceeding are limited to signatories to the arbitration agreement or their successors to the exclusion of third parties.30 This has been demonstrated in SCC Emergency Arbitration (064/2010),31 where the claimants request to have an injunction granted against a third party that was not a signatory to the agreement was denied. Moreover, the protection of Respondents is reflected as a principle in different rules as well. For example, typically the applicant will bear the initial burden to pay the fee for the Emergency Arbitrator procedure under different rules.32 However the costs may be apportioned at the request of the parties,33 or under the KLRCA Rules at the discretion of the arbitrator.34 Timelines under emergency arbitration While under all rules, the emergency proceedings are required to be conducted in a speedy manner, different institutions have different timeframes for this proceeding. Under the SIAC Rules, an emergency arbitrator must be appointed within one business day of receipt of the application and any challenge regarding the appointment must be submitted within one business day. Once appointed, within two business days the arbitrator must provide a schedule to dispose of the application.35 The ICC Rules requires the emergency arbitrator to be appointed within 2 days from the Secretariat’s receipt of the Application and the parties have three days to submit a challenge regarding the appointment. Within 2 days, a procedural timetable for the emergency arbitrator proceedings must be established by the arbitrators; the final decision must be made no later than 15 days from the date since the file was transmitted to the emergency arbitrator. Under the KLRCA Rules the Director of the KLRCA appoints an arbitrator within 2 business days,36 and within 2 business days of being appointed the emergency arbitrator shall establish a 30 ICC Rules (2012), Article 29(5). 31 Johan Lundstedt, Supra n. 17 at 4. 32 SIAC Rules (2013), Schedule 1 Article 1; SCC Rules (2010), Appendix II Article 2(vi); ICC Rules (2012), Appendix V Article 1(3)(h). 33 SCC Rules (2010), Appendix II Art 10 (5). 34 KLRCA Rules (2013), Schedule 2 Rule 18. 35 SIAC Rules (2013), Schedule 1 Articles 2, 3, 5.
- 30. 20 | KIGALI INTERNATIONALARBITRATION CENTRE schedule of the proceeding.37 An award must then be rendered within 15 days from the date of appointment.38 Costs In terms of costs, most sets of institutional rules have a separate scheme of costs relating to emergency arbitration proceeding,39 as distinguished from the costs of the regular arbitral proceedings. The SIAC Rules simply leave the setting of the costs to the Registrar while the ICDR Rules also does not provide a separate payment scheme for the emergency arbitrator proceeding.40 Under the KLRCA Rules the costs are set out in a separate schedule, however the arbitrator has the power to determine apportionment of the payments between the parties.41 Although typically the party who applies for emergency relief bears the burden initially to pay the costs of the emergency arbitrator proceeding at the time of filing the application, under different institutional rules how this costs can be proportioned between the parties later on differs. The SCC Rules provide that the arbitral tribunal may later redistribute these costs upon a party’s request in its final award.42 Although it has been highlighted that pursuant to Article 32(1) of the SCC Rules which provides that the emergency arbitrator may grant any interim measures it deems appropriate, this may include the power to allocate the costs of the emergency arbitrator proceeding.43 In contrast, ICC Rules specifically state that the emergency arbitrator’s order shall fix the costs of the emergency arbitrator proceeding and decide which of the parties shall bear them or in what proportion they shall be borne by the parties.44 Under the KLRCA Rules the Claimant must pay the non-refundable registration fee, like the SCC Rules the KLRCA Rules provide that 36 KLRCA Rules (2013), Schedule 2 Rule 2. 37 KLRCA Rules (2013), Schedule 2 Rule 9. 38 KLRCA Rules (2013), Schedule 2 Rule 11. 39 SCC Rules (2010), Appendix II Article 10; ICC Arbitration Rules (2012), Appendix V Article 7. 40 SIAC Rules (2013), Schedule 1, Article 1; ICDR Rules (2009), Article 37. 41 KLRCA Rules (2013), Schedule 2 Rule 18. 42 SCC Rules (2010), Appendix II Article 10(5). 43 Patricia Shaughnessy, ‘Pre-arbitral Urgent Relief: The New SCC Emergency Arbitrator Rules’ In Journal of International Arbitration, (2010) 27(4) 348 at 349.
- 31. KIAC 2014 CONFERENCE REPORT |21 an arbitrator may order or award interim relief that the emergency arbitrator deems necessary.45 Duties of the emergency arbitral tribunal There are various duties and powers that emergency arbitrators have, many of which are the same under an institutions standard rules. To commence a discussion of the duties and powers of an emergency arbitrator a good starting point is with an emergency arbitrators duties of impartiality and independence. Prior to the appointment, the emergency arbitrator must sign a statement of impartially and independence.46 Under the rules of most institutions, emergency arbitrators have the power to conduct the proceeding in a manner that she or he deems to be appropriate, provided that the emergency arbitrator shall act fairly and impartially and ensure that each party has a reasonable opportunity to present its case. 47 Regarding the making of the decision, generally the emergency arbitrator has the power to grant any interim measure as it deems appropriate.48 It is a requirement under most rules that the decision should be in writing with reasoning provided.49 The duties of the emergency arbitrator differ in respect of an arbitrator, in a number of subtle ways. Under most rules an emergencyarbitratorisprohibitedfromactingasanarbitratorinany arbitration relating to the dispute that gave rise to the application.50 Of course however, if parties agree, the same arbitrator may sit in the underlying arbitration. This may be an advantage in some instances for parties to allow the same arbitrator to hear the case as they will already possess background knowledge of the dispute. 44 ICC Rules (2012), Appendix V Article 7(3). 45 KLRCA Rules (2013), Schedule 2 Rule 10. 46 ICC Rules (2012), Appendix V Article 2(5); SIAC Rules (2013), Schedule 1 Article 3; ICDR Rules (2009), Article 37(3). 47 ICC Rules (2012), Appendix V Article 5(2); SCC Rule (2010), Appendix II Article 7. 48 ICDR Rules (2009), Article 32(1); SIAC Rules (2013), Appendix 1 Article 6; KLRCA Rules (2013) Schedule 2 Article 10. 49 SCC Rule (2010), Appendix II Article 8(2); SIAC Rules (2013), Schedule 2 Article 6; ICC Rules (2012), Appendix V Article 6(3); KLRCA Rules (2013), Schedule 2 Article 10. 50 ICC Rules (2012), Appendix V Article 2(6); SIAC Rules (2013), Schedule 1 Article 4; KLRCA Rules (2013), Schedule 2 Article 4; SCC Rules (2010), Appendix II Article 4(4).
- 32. 22 | KIGALI INTERNATIONALARBITRATION CENTRE Finality of an award or order for emergency relief Furthermore, the emergency award or order may be modified, terminated or annulled by the emergency arbitration upon a reasoned request by any party.51 As to the binding effects of emergency arbitrator’s decision, generally an emergency arbitrator’s decision is binding on the parties, but not a tribunal hearing a subsequent arbitration between the parties. Following this the duty to render a final award is not the same in emergency arbitration as that in an arbitration. Adding to this diversion, some rules expressly prescribe that once the tribunal is formed, the arbitral tribunal can also reconsider, modify or vacate the interim order or award made by an emergency arbitrator. 52 This final point leads to a considerably academic question of how emergency arbitrator rules are enforceable if they may be modified. 5. Enforceability: One issue that may undermine the benefits afforded to a party by emergency arbitrator provisions is the uncertainty existing regarding the enforcement of orders or awards rendered by emergency arbitrators. This is notwithstanding that various institutional rules have prescribed that parties must comply with the binding decision of the emergency arbitrator. In the case that parties do not comply voluntarily there are various approaches that can be used to illustrate that an emergency arbitrator award is enforceable, such as under contract and potentially under the New York Convention. Enforcing emergency relief under the New York Convention The uncertainty of enforceability is posed by several issues. First of all, some argue that an interim order or award rendered by Emergency Arbitrators like other interim measures due to their temporary nature may not be considered as “final.” Thus they may be considered unenforceable under the applicable national regime, or New York Convention.53 51 ICC Rules (2012), Appendix V Article 6(8); SIAC Rules (2013), Schedule 1 Article 6; SCC Rules (2010), Appendix 2 Article 9(2). 52 SIAC Rules (2013), Schedule1 Article 7; SCC Rules (2010), Appendix II Article 9(4); KLRCA Rules (2013), Schedule 2 Rule 14(b).
- 33. KIAC 2014 CONFERENCE REPORT |23 Traditionally many courts only enforce final awards, although many countries have adopted the UNICTRAL Model Law where both interim measures and final awards rendered arbitral tribunals are binding and enforceable.54 Under Article 5 of the New York Convention, in order for an award to be binding it must be final, which is referred to as the “Final award doctrine.” With the fact that an emergency arbitration award may be modified or varied, questions whether an award is final and enforceable. This paradox is addressed by Gary Born who states, “provisional measures should be and are enforceable as arbitral awards under generally applicable provisions for the recognition and enforcement of awards.”55 In this regard an interim award or emergency arbitration award is an award on its own and has finality in the sense that it provisionally determines the rights of parties.56 That being on a limited issue, separate from the main issue to be decided in an arbitration. This above analysis conforms to the view expressed by Southern District Court of New York where the court stated in Southern Seas Navigation, “Such an award is not “interim” in the sense of being an “intermediate”steptowardsafurtherend.Ratheritisanendinitself, for its very purpose is to clarity the parties’ right in the “interim” period pending a final decision on the merits... [I]f an arbitral award of equitable relief based upon a finding of irreparable harm is to have any meaning at all, the parties must be capable of enforcing or vacating it at the time it is made”57 From these authorities, there is a very strong argument in favour of emergency arbitration awards being enforceable. 53 Chester Brown, ‘The Enforcement of Interim Measures Ordered by Tribunal and Emergency Arbitrator’ In International Arbitration in Albert Jan Van Den Berg (ed), International Arbitration: The Coming of a New Age?. ICCA Congress Series, Volume 17 (Kluwer Law International) (2013) at 286 Citing Resort Condominiums International, Inc v Bolwell [1995] 1 Qd R 406. 54 UNCITRAL Model Law 2006, Articles 17(h)&(i). 55 GARY B. BORN, ‘International Commercial Arbitration’ (2009) at 2023. 56 Michael Dunmore Supra n. 13 at 226.
- 34. 24 | KIGALI INTERNATIONALARBITRATION CENTRE Characterisation of emergency relief – Order or Award? Another area of uncertainty has to do with the designation of the decision by Emergency Arbitrators as “order” or “Award”, as only “awards” are enforceable under the New York Convention or legislation implementing the New York Convention.58 Interestingly, the ICC rules have specially prescribed that the Emergency Arbitrator’s decision is rendered in the form of an order59 while other institutions have allowed the decision to take the form of either an award or an order.60 Nevertheless commentators have pointed out the substance rather than the form of a decision should be the determinative factor regarding the decision’s enforceability.61 In conducting a substance over form analysis, an enforcing court will look to the substance of what is decided and not the term used to describe a decision (being an order or an award).62 Illustrating this is PT Pukafuafu Indah63 where there was an application to set aside an interim award. The High Court of Singapore stated that it can review awards, but their power is limited to substance of the award. The court highlighted that when determining if a decision is an order or an award the substance over form test is used. In this regard the substance of a decision is decisive, not the form of the award. The order (in this case an anti-suit injunction) was substantive relief with only an interim effect. The court stated that an order is specifically excluded from the definition of an award. The court mentioned that orders must be enforced by the Court but stopped short of saying that they could be denied enforcement. Classifying emergency relief through statute A creative approach to deal with the issue of enforceability of emergency arbitration awards that should be mentioned has been taken by the Singapore Parliament. In this regard, the Singapore Parliament passed an amendment to the International Arbitration Act on April 9 2012; which amongst other issues, clarified the enforceability paradox. 57 Southern Seas Navigation Ltd v Petroleos Mexicanos of Mexico City, 606 F. Supp. 692 (SDNY, 1985). 58 Chester Brown, Supra n. 54 at 286. 59 ICC Rules (2012), Appendix V Articles 29(2), 6(1). 60 SIAC Rules (2013) Schedule 1 Article 6; ICDR Rules (2009) Article 37(e). 61 Amir Ghaffari and Emmylou Walters, Supra n.1 at 162. 62 Id. at 225. 63 And others v Newmont Indonesia Ltd and another [2012] SLR 1157.
- 35. KIAC 2014 CONFERENCE REPORT |25 The new amendment specifically accorded the Emergency Arbitrations the same legal status as that of an arbitral tribunal64 and thus decisions of Emergency Arbitrators can be enforced through Singapore Courts with certainty. Thus far Singapore is the only jurisdiction to enact such provision. Enforcing emergency relief through contract One final approach taken, which may be the simplest approach to enforcing emergency arbitration awards is through a contractual approach. This has been touched on above, being that parties contractually agree to have a certain set of arbitration rules apply to determine their disputes. In this agreement there is an implication that emergency arbitration may apply and that agreeing to use these awards, parties contractually agree to carry out any award rendered.65 Thus through the acceptance of the rules by parties, they implicitly agree on any award rendered stemming from the rules. 6. Concluding remarks As the above analysis has outlined, emergency arbitration is a relatively new player in the sphere of international commercial arbitration. There have been widespread adoptions of emergency arbitration procedures in all leading arbitration rules, unfortunately there has so far been only minimal reports on the use of the provisions and even smaller reports of the outcomes. With such extensive adoption of emergency arbitrator provisions across the world, it would be interesting and useful to obtain more information of the procedures in practice. Despite the widespread acceptance and modification of arbitration institution rules to allow for emergency arbitration, there are as outlined generally consistent procedures and practices in how emergency arbitration is conducted. This consistency adopted by various sets of rules is an essential starting block for emergency arbitration internationally. 64 Article 2(1), Singapore International Arbitration Act 2012: In this Part, unless the context otherwise requires —“arbitral tribunal” “means a sole arbitrator or a panel of arbitrators or a permanent arbitral institution, and includes an emergency arbitrator appointed pursuant to the rules of arbitration agreed to or adopted by the parties including the rules of arbitration of an institution or organisation.” 65 Michael Dunmore Supra n. 13 at 227.
- 36. 26 | KIGALI INTERNATIONALARBITRATION CENTRE One noteworthy element of emergency arbitration provisions in practice is the threshold that must be met for a case to be determined, which conceivably considering the need for urgent relief, is not a low one to meet. Once the first threshold has been satisfied in addition to successfully arguing a claim, the Claimant must demonstrate in a very short time frame that they will suffer irreparable harm if relief is not granted. Following the above, bringing a successful emergency arbitration claim is not a simple task. If a party is successful in receiving an emergency arbitration award in their favour, potential further uncertainty exists. First is that the award may be varied or modified by a subsequent tribunal. Secondly is that there exists some uncertainty as to the enforceability of the awards. However, regarding enforceability, from the above it appears that an emergency arbitration award can be considered enforceable through various approaches. Notwithstanding, there is a scarcity of cases to date dealing with the enforcement of emergency arbitration awards, especially relating to the final award doctrine of Article 5 of the New York Convention. As only a small summary of emergency arbitration awards have recently been published, we can only start to have a small comprehension of how emergency arbitration functions in practice. Only as the use of emergency arbitration continues will these uncertainties become clear and this facet of international commercial arbitration further develop.
- 37. KIAC 2014 CONFERENCE REPORT |27 Sometimes one simply has to have it—emergency relief, that is— particularly when the proverbial ship is leaving the dock. Arbitral tribunals have long had the authority to grant interim relief under the rules of the major arbitral institutions2 . But what if one desperately needs interim relief before the tribunal is constituted? Situations that cry out for instant relief might include the following: A current strategic partner has announced that it is leaving a long- running commercial relationship for a competitor and one partner is concerned about the use of proprietary information obtained by the departing partner. A company has refused to make a critical contract progress payment, putting a “fast- track” project at risk. A state or state-controlled entity has taken steps that require either abandonment or forfeiture of a private investor’s holdings. The inability to obtain emergency relief before the arbitrators in an international arbitration can be appointed has troubled practitioners and arbitral institutions for some time. To remedy this, in 1990, the International Chamber of Commerce Court of Arbitration (ICC) published its Rules for a Pre-arbitral Referee Procedure3 , the highlights of which included the appointment of a referee within eight days and provision for an order within thirty days of receipt of the file by the referee. PRESENTATION ON INSTANT RELIEF WHEN YOU NEED IT Mark E. Appel1 1. Senior Vice President, International Centre for Dispute Resolution. Call +353 (0)86 820 1054, e-mail AppelM@adr.org or see www.icdr.org for more information regarding the International Centre for Dispute Resolution. This paper appeared in the 23 April 2007 issue of Cahiers de l’arbitrage. The author would welcome any comments. 2. E.g., ICDR International Arbitration Rules, art. 21; ICC Rules of Arbitration, art. 25; London Court of International Arbitration (LCIA) Rules, art. 25. 3. ICC Court of Arbitration, Pre-arbitral referee procedure and commentary available at www.iccwbo.org.
- 38. 28 | KIGALI INTERNATIONALARBITRATION CENTRE More recently, in 1999, the American Arbitration Association (AAA) responded to the expressed need for interim relief before appointment of the tribunal by creating rules for “emergency measures of protection”4 . These rules were optional (which is why they were called Optional Rules for Emergency Measures of Protection) and were initially published only with the AAA Commercial Arbitration Rules. These rules provided for an emergency arbitrator to be appointed within one business day, and interim relief could be awarded if ”irreparable loss or damage” could be shown. The continuing discussions of an UNCITRAL Model Arbitration Law Working Group on the availability of ex-parte interim relief, which has generated sustained, lively debate,5 emphasizes the importance of interim relief to parties to international arbitration. The difficulty with AAA Optional Rules for emergency relief and the ICC pre-arbitral referee procedure is that they must be agreed to, separate and apart from the agreement to use the institution’s arbitration rules. In other words, incorporating the International Centre for Dispute Resolution (ICDR) or ICC model dispute resolution clause6 in the contract documents did not allow emergency relief procedures to be invoked. It was necessary to include language in the dispute resolution clause expressly electing to use one of these sets of pre-appointment, emergency relief rules. But contract managers and counsel have been appropriately concerned about introducing new language into their contracts, fearing that the other party might think future difficulties are anticipated. So couldn’t the separate election requirement be eliminated? The fact that neither the AAA Optional Rules nor the ICC pre- arbitral referee procedure has received much use7 seemed to indicate that the separate election requirement could be dispensed with. 4. American Arbitration Association Commercial Dispute Resolution Procedures (Including Mediation and Arbitration), Optional Rules for Emergency Measures of Protection, As Amended and Effective September 1, 2000, available at www.adr.org. 5. See Reports of UNCITRAL Working Group II (Arbitration and Conciliation) from Session 37 (Oct. 2002) through Session 44 (Jan. 2006) at www.uncitral.org. 6. The ICDR is the International Division of the AAA. The ICDR model arbitration clause reads as follows: “Any controversy or claim arising out of or relating to this contract shall be determined by arbitration in accordance with the International Arbitration Rules of the International Centre for Dispute Resolution.” The parties should consider adding: “The number of arbitrators shall be (one or three).” “The place of arbitration shall be (city and/or country).” “The language(s) of the arbitration shall be ______.” The ICC model arbitration clause can be found at www.iccwbo.org.
- 39. KIAC 2014 CONFERENCE REPORT |29 The ICDR took that important step—removing the separate election requirement—whenitdecidedin2006tocreateanewRule37ofthe ICDR International Arbitration Rules. New Rule 378 created access to emergency relief prior to formation of the tribunal, without the need for additional contract language. Stated differently, in cases of demonstrated need, emergency relief became available as a matter of right under the ICDR Rules in arbitration proceedings conducted under arbitration clauses or agreements entered into on or after 1 May 20069 . How does Rule 37 deal with ex-parte applications for relief? The drafters10 resolved this issue by requiring that the application for emergency relief include a statement certifying that all parties have been notified in writing, or explaining the steps that were taken to notify all parties of the application for emergency relief. Regarding steps to prove notice, technology can help (e.g. facsimile confirmation result report with date and time of delivery). Rule 37 requires notice of: • the nature of the emergency relief sought, • the reasons why relief is required on an emergency basis, and the reasons the applicant believes it is entitled to emergency relief. In recognition of the need for a speedy resolution, an application for emergency relief may be served by email, facsimile, or “other reliable means”11 . The ICDR is charged with appointing the emergency arbitrator within one business day12 , which is no small challenge for the administrator. Not only must the institution consider the usual factors for appointment (e.g., the nationality of the parties, the subject matter of the dispute, any probable conflicts of interest), but also the need for an arbitrator who can decisively address 7. The ICC Pre-arbitral referee procedure has been invoked seven times since 1990. The AAA Optional Measures have been used several times. 8 ICDR International Arbitration Rules, art. 37; full text of ICDR International Arbitration Rules available at www.icdr.org. 9. In recognition of this substantial new right, the Rule was applied prospectively only. 10. For the drafters’ own views, see Sheppard, Ben H., and Townsend, John M., Holding the Fort Until the Arbitrators Are Appointed: The New ICDR International Emergency Rule, Dispute Resolution Journal, vol.61, no. 2 (May-July 2006). 11. ICDR International Arbitration Rules, art. 37.2.
- 40. 30 | KIGALI INTERNATIONALARBITRATION CENTRE difficult issues in a severely truncated time frame. To facilitate the appointment process, Rule 37 provides that the emergency arbitrator will be appointed from a special roster created for this unique caseload. As for potential conflicts of interest, emergency arbitrators are not treated any differently than other arbitrators in ICDR proceedings. The rule provides that a prospective emergency arbitrator “shall disclose...any circumstances likely to give rise to justifiable doubts to the arbitrator’s impartiality or independence”. The procedure for challenging the appointment of an emergency arbitrator is an expedited one, with parties having only one business day to file their objections with the ICDR13 . Onceappointed,theemergencyarbitratorisobligatedbyRule37to establish a schedule for the taking of evidence within two business days. Consistent with due process expectations, parties are to be given a reasonable opportunity to be heard. That opportunity can be provided by telephone or on the basis of written submissions14 . Article 37 mirrors the ICDR international rule regarding the scope of arbitral authority. So, for example, the emergency arbitrator has the authority to rule on his or her own jurisdiction and may order or award any interim or conservancy measure deemed necessary15. The authority to issue an award or order, as opposed to an order only, makes the ICDR emergency procedure distinguishable from the ICC pre-arbitral referee procedure. A Rule 37 order or award of emergency relief is required to be reasoned16 . Returning to the “leaving the dock” imagery above, one need not think too hard to imagine the potentially disastrous impact of an emergency order or award (think of all that nasty spoilage!). The drafters of Article 37 appear to have taken that into consideration in several ways. First, the emergency arbitrator may condition the award or order of emergency relief on the posting of appropriate security17 (e.g., a bond). Second, in an acknowledgement that 12. ICDR International Arbitration Rules, art. 37.3. 13. ICDR International Arbitration Rules, art. 37.3. 14. ICDR International Arbitration Rules, art. 37.4. 15. ICDR International Arbitration Rules, art. 37.5. 16. ICDR International Arbitration Rules, art. 37.5.
- 41. KIAC 2014 CONFERENCE REPORT |31 circumstances may change, or that new facts may emerge, or that an order or award may not have its intended effect, the emergency arbitrator is empowered to vacate the order or award “for good cause shown”18 . The authority of the emergency arbitrator ends once the arbitral tribunal is constituted19 . Article 37 allows the emergency arbitrator to be appointed as a member of the tribunal, but only if the parties agree20 . The likelihood of that happening seems remote. A party against whom emergency relief is ordered is unlikely to have an appetite for more decisions by the same arbitrator. Once constituted, the tribunal may reconsider, modify or vacate all emergency awards and orders21 . Given the prospective application of Rule 37, effective 1 May 2006, it could be some time before the full impact of the provision is felt (although, remarkably enough, it has already been used). What is certain, however, is that transnational commerce has available to it a simple yet powerful tool for the rapid resolution of emergency matters. 17. ICDR International Arbitration Rules, art. 37.7. 18. ICDR International Arbitration Rules, art. 37.5. 19. ICDR International Arbitration Rules, art. 37.6. 20. ICDR International Arbitration Rules, art. 37.6. 21. ICDR International Arbitration Rules, art. 37.6.
- 42. 32 | KIGALI INTERNATIONALARBITRATION CENTRE Discussions ATHANASE RUTABINGWA (RWANDA): Once again I want to thank the presenters for their wonderful presentations, they have been on time. The next course is now to request the audience to give in your comments, your contributions, but I just want to say that under the KIAC rules under article 34 and its annex II, emergency arbitration is also provided for. This has its roots from the Rwandan law on arbitration especially in article 11, article 15 and article 23, from the Rwandan Arbitration Act. It states emergency interim measures that can be sought by parties into arbitration. I am referring to these articles because both of them have presented about the institutional arbitration, but also you remember that in arbitration you have even ad hoc arbitration where these articles come in and guide parties that want to seek arbitration. Without taking much of your time, I just want to ask any of you who may have a contribution, who may want to ask something. A colleague outside there asked me, what’s the difference between emergency arbitration and interim measures? My answer was that they are similar, or they are the same. I think the answer has been received now. When my colleague here was presenting, he talked about the appointment of an emergency arbitrator, I think it’s the assistant that appoints that person, but who issues the interim measures? Is it the arbitrator or the arbitral tribunal? Or it’s an ordinary court? I need this clarification and then we can take other questions from the audience.
- 43. KIAC 2014 CONFERENCE REPORT |33 MARK E. APPEL (USA): Well, so let me say something quickly, there is an issue regarding, first, the threshold issue by the person spoken to by my colleague as to whether it is inappropriate filing. Institutions have personalities just like companies have cultures. At ICDR that issue is determined by the arbitrator, by the emergency arbitrator. So you have access to the process by virtue of your access to the rules. By your reference, the rules in your contract give you access to the procedure. Once you have got access, any party can ask for emergency measures. It is up to the arbitrator to determine in the first instance, whether the matter is appropriate, whether there is rise to the lever of an emergency, if he will; ah, in terms of taking jurisdiction and deciding on the matter. Also, the difference with the institution is, we talked about costs, our approach, and you know again, its culture is that we believe the case should be resolved quickly , we do not charge , may be that is reflected in the recorded cases. We do not charge for a request of emergency measures. It is part of the charge when you are filing the case. It is all included in the initial charge until we get the matter resolved. Ultimately, again, reflecting on the way we approach things, it is the arbitrator not the institution that issues the award, or an order, it comes through the institution but it is sent down to the party, so an emergency arbitrator makes the decision and the decision is either in the form of an order, or an award which is transmitted to the parties by the institution. DR. URS WEBER STRECHER (SWITZERLAND): I would like to add three short remarks from the Swiss perspective and Swiss rules. As Sundra said it’s not just in Asia, but it’s also in all Europe; Austria and Germany are exceptions. Most of Danish institutions have felt the need to introduce emergency arbitrator scheme, so we have done the same and we also have the possibility to have a decision in the award but I think it’s probably difficult to have it enforced, I see it because it’s not a final decision, but what I could imagine is that if you have a problem that parties have to abide by the order what usually happens in the most of the cases is that they do.
- 44. 34 | KIGALI INTERNATIONALARBITRATION CENTRE But if they don’t you would probably go to the state court and ask them to issue an identical order, like the arbitral tribunal, then you do not have the enforcement in the technical sense but you could have an order by the state court, that is identical, but it is the identical order that can be enforced. So that is the first thought. Second is we have in addition to the emergency or also the emergency arbitrator has the possibility to issue an expert decision, and I think that is a very special, specific feature in international arbitration, and most of the colleagues from foreign jurisdiction I havetalkedtohavebeensurprisedtoseethis,becauseitisadecision before the other party can have a say on the interim measure, and this is something very strange in international arbitration where we always have to learn to be heard. But it takes care of it that at the time the order is issued you have the possibility to immediately comment or it’s really immediately at that time. I mean, there are cases like the one you mentioned, if you have to preserve assets, for instance this may be not solved requesting party any more if the other is deposing by or it’s informed prior to its decision. But this can only be issued in an order and not in interim award. Then I would like to make a shorter third comment with regard to, Sundra’s remark that it may be right not to have such an emergency scheme because you have good courts system. I think we have good court system too in Switzerland and I do not see that we use this emergency scheme for arbitration it’s very hard to enforce the interim award against a company or a party in Switzerland. But we have cases, most of the cases actually we have in Switzerland we have to enforce them somewhere else, and may be quite often in states where the court system is not so reliable with regards to interim measures; you know, in this case it makes very much sense to have such emergency scheme. ATHANASE RUTABINGWA (RWANDA): Thank you so much for sharing your contribution. DAVID GREENE (UNITED KINGDOM): Very often its freezing, at such junction what we used to call it bravery; it requires to see them tactically; very often they are so tactical, that advantage you
- 45. KIAC 2014 CONFERENCE REPORT |35 try to get is effervescent that follows from the injunctive relief, and I wonder if the expert proceedings you have contemplate that the arbitrator will be able to make an award or an order. JUDGE KARIUKI MUIGUA (KENYA): Mark, am aware that under the ICDR rules this is an order; this is an award as opposed to an order, but conceptually, is the debate closed? What should it be? Is it an award or an order? And can we reopen that debate as in; so that we debate the concept today? Secondly, what safety can be put in place to ensure that this emergency procedure is not abused by litigants who want to just punish respondents. MARK E. APPEL (USA): Under the ICDR procedure it’s up to the parties to choose. I will tell you a story I got in the IBA in Dublin, some of you might have heard. A couple of years ago, one of our English colleague David, talked about proceedings under the emergency measures proceedings. And he said that at the end, we scheduled the matter quickly, we received arguments in writing, convened them thorough the telephone conference call to seek their arguments, and then say, eh, telephone is much better that, like you know, a judge who seats on the bench, “ I have made my mind up and am going to give the other party what they are seeking in this case. Let me ask you council, what would you prefer, is it an order or an award?”. And he said council came back and said, eh, all things considered, Mr arbitrator, I would like an award. And he issued an award. And he asked out loud in the conference what they think should happen. But I know about twenty rows in front of me, i know a council, of he would like to get up and say something, I would only say he had the opportunity. Indeed, he got up and said let me tell you what happened, I took that award, I presented that award to my counterparty and asked for satisfaction. It was denied and I took that award into two separate state courts and got more ever damages from two separate state courts based on that award. So what he said, I sort of wondered out, which would you rather have, would you rather have an award or an order?
- 46. 36 | KIGALI INTERNATIONALARBITRATION CENTRE I now would, I just take a little bit of issue with my colleague and is saying in terms of, I don’t think it was settled as to whether an emergency award can be enforced or not, and the law, is a wonderful thing that just keeps developing. It just would not be appropriate to leave that decision to the advocates or arbitrators alone. PHILIP ALIKER (KENYA): A concern to those particularly looking for emergency relief in the United States, now, if circumstances where there are sanctions imposed that are regulated by the office of foreigners control creates an extra cargo in terms of obtaining an emergency relief. This is something that has concerned me in the context of Libya during the Libyan problems; particularly given the prevalence of Libyan investments across this part of the region. But it is also something that also rises in the context of both Sudan and south Sudan. Now I just wonder, given the peculiar position of AAA or the ICDR, and I will put this as a question, is there anything that AAA do to help parties, particularly parties from this part of the world that are looking for relief, that have to go through this very time consuming, this difficult process getting permission from the office before they get relief? Often, and this is something I have used when I was involved in AAA application and I actually got an arbitrator in New York to make an order, at the effect of which was to make very tranquil schedule that was sent that precipitated the granting of licenses to deal with cases. But I am sure colleagues, should be concerned if they don’t turn up at an airport in America and get arrested for dealing with cases from South Sudan or Sudan or Libya in that matter. Thank you. MARK E. APPEL (USA): Under arbitration proceedings, whether it is money laundering, or whether it’s, flying issues like this that you referred to in your remarks I don’t know if any of us was sure of where all of this is going; except to say that we have to pay attention; you know.
- 47. KIAC 2014 CONFERENCE REPORT |37 I want to congratulate you on your very creative approach, in your particular arbitration. And, frankly I think, you know, well, I think we all have a responsibility as an industry to work with government, and in particular to work with the judiciary, I think our colleagues in ICDR have done particularly a good job in that regard and we need to do more. There are ways we should complement each other, having said that I want to tell you another quick story. Now twenty plus years meeting with the general counsel of a company, and he said yes you have done a very good job with on our contracts, but what do you know about the regulator? My response was nothing. It is difficult and I am sorry to say that there is probably no immediate answer to your question. ATHANASE RUTABINGWA (RWANDA): Thank you so much, I think Philip you understand what the answer is. We only have eight minutes to go and I want to keep time, so I just want to get to two other people. GÜNTHER J HORVATH (AUSTRIA): The discussion, Professor Sundra that you were referred to last night with respect to alternative to the emergency arbitrator would focus on practical experience. I think if you chose a jurisdiction which is very liberal towards establishing jurisdiction for a claim registered with a court prior to arbitration. Then it is important to really discuss whether you need the emergency arbitrator. That’s the case in Austria. I will give you an example which was published in newspapers Wewereabletoblockthetransportofelectronicmaterialovernight, based on an arbitration agreement between an American company and actuary a recipient company. The court issued this measure in about ten hours; the judge himself showed up in court to accept the application at 4 O’clock in the morning. And went personally to the airport and did not allow the cargo plane to continue further on. It was a very important measure in the interest of the US government because the material was very sensitive. These instances may only possibly be reported because the Austrian courts procedure is very liberal in establishing a venue, in establishing the jurisdiction for the court; and the only link in this case was the fact that this plane had been landing in Vienna, and base on the property which
- 48. 38 | KIGALI INTERNATIONALARBITRATION CENTRE was in that moment on its soil, it was sufficient for the court to have jurisdiction. That led us to the conclusion that combination of fast like proceedings and this very efficient court proceeding might let us live without an emergency arbitrator. Imagine actually leading companies around Europe to participate in the process of establishing the new rules and there were about thirty councils, general councils of industrial companies and financial institutions, and there wasn’t a vote taken about the issue of establishing an emergency arbitrator, and there was probably much in favour of not having an emergency arbitrator. Based on that consideration in conjunction with the applicable procedural possibilities given by the law we have decided not to introduce an emergency arbitrator scheme. Obviously it needs to have some connection with the countries, some connection with the Austrian jurisdiction, in order to get such an order enforced latter on. And I think also, that the European situation of enforcement of Austrian interim measures is quite remarkable and helpful in establishing powers with the court prior to an arbitral process. What you usually get is an award by the court to establish or to start an arbitration process, within two weeks, four weeks, or maybe six weeks. So this is a typical measure which is going before the arbitration, as an efficient means to preserve evidence or to preserve assets which otherwise would be gone. ATHANASE RUTABINGWA (RWANDA): Thank you so much, yes! For gender balance, let’s now take a question from Chief Tinuade. Chief Tinuade Oyekunle from Nigeria: I have been listening to Mark Appel and the whole team of presenters.I think speed is of essence that is what we always say in arbitration. And that is probably why we have these procedures of emergency arbitrators. And particularly in some jurisdiction like mine where the courts are not quick enough to grant interim measures. But then I am thinking of the cost. ICDR vice president said that nothing is paid, at the beginning it’s part of the fees from the parties. There are people who said
- 49. KIAC 2014 CONFERENCE REPORT |39 something is paid. I would like Mark to respond to the effect of the payment of emergency arbitrator. Because it’s found to be part of the fees, and the criticism we are getting in practice, in the arbitration practice nowadays is that the cost is getting higher; and when you put together the payment of the emergency arbitrator as well as the arbitral tribunal when it is set up, how does it stand? MARK E. APPEL (USA): The issue of cost is very important, yes, because if you represent a client that is the first thing they ask you, how much? How much time? I think I talked about results of the cases listed on those forty five cases, for what its worth, my guess is that many of those cases that ended, considered an emergency order or award was rendered, so under particular circumstance, i think that not only is cost negative but it can also be positive; because anything that get a matter resolved quickly and efficiently is probably good for the process and for the parties. I think that is why there is an increase use of inter-step clauses, or concurrent negotiation; whether mediation or arbitration or concurrently mediation and arbitration clauses. The idea is to get the matter resolved, and so it is a tool, does not work in all cases, necessarily, the cost allocated could be by the tribunal once it is constituted, first by the emergency arbitrator and adopted by the fully constituted tribunal. Most of the proceedings are decided by the arbitrators. As our colleague said, time will tell whether these procedures are appreciated and used and I would say, based on the ICDR experience, they are not on alert but they seem to be used and accepted and I think this is probably reflected in the increasing number of institutions that have adopted these proceedings. ATHANASE RUTABINGWA (RWANDA): Thank you very much, I think I would request us to, in the interest of time to stop from here, but I just want to ask my colleague professor to explain more about the expert proceedings, who bears the costs. Because I am looking at a scenario where parties have been notified to appear and then bear the cost. At what level do we have the costs?
- 50. 40 | KIGALI INTERNATIONALARBITRATION CENTRE PROF. DATUK SUNDRA RAJOO (MALAYSIA): I think Mark has explained that an emergency arbitrator rules on the cost, and after that again, the cost would actually be put back on the cost of arbitration eventually in the overall, when the tribunal is constituted. So, at one point there is actually a cost if it stops there, but if it continues it will actually be incorporated in the overall cost, what we have to bear in mind is that an emergency arbitration is part of the arbitration proceedings. It is part of the normal court proceedings. It’s just natural that it will be incorporated-i think that the way its done. So I think it’s a good technique, it is a useful mechanism and of course I support that, but I think you need to have a good judicial environment to support it, and that is more important. Sometimes i keep on saying that it’s just a gimmick; we must look at the real intent, and the court system and that is what is more important. ATHANASE RUTABINGWA (RWANDA): Thank you so much, so this is not the end of the session but rather we will keep interacting with them outside here to make sure that what you have not heard here you can always get more knowledge on it, so thank you so much.
- 51. KIAC 2014 CONFERENCE REPORT |41 PanelTwo MULTI-PARTY ARBITRATION IN PRACTICE This panel addressed issues such as who are the proper parties to arbitration; consent to arbitrate; joinder of parties and consolidation of arbitral proceedings; arbitral procedures where multiple parties are involved. A Mock case on multiparty or multi contract Arbitration followed aiming to meet the practical needs of practitioners. The counsels pleaded a situation of jurisdictional issues in multiparty case under institutional arbitration rules. PANELISTS: Egwuagu N. Emmanuel; Obla&co, Abuja-Nigeria; Michael Burkart; Director of studies, Swiss-Arbitration Academy, Switzerland; Dr. Urs Weber Stretcher; Attorney-at-law, partner, Wenger & Vieli AG, Switzerland; CHAIR: Dr. Eun Young Park*; Arbitrator from South Korea, is a partner with Kim & Chang; * Dr Young also serves as the co-chair of the international arbitration & cross border Litigation Group. He is onthe board of directors of CIAC and he is also the vice chair of IBA arbitration committee and he teaches law at a law school in Korea.
- 52. 42 | KIGALI INTERNATIONALARBITRATION CENTRE Dr. Urs Weber-Stecher, Wenger & Vieli Ltd., Zurich, Switzerland I. Introduction The following text is the – slightly amended1 – speech I made at the KIAC International Arbitration Conference 2014 on 26 May 2014.2 It was intended to prepare the ground for a mock case presented by two participants from the Swiss Arbitration Academy3 and initiate the subsequent discussion with Conference participants. It is therefore not intended to be a contribution to the scientific discussion on the topic of multi-party arbitration. Instead, it is merely a summary of some practical aspects of arbitration cases with multi-parties, in particular the joinder of third parties and the consolidation of two or more arbitration proceedings involving more than two parties. The procedural features of joinder and consolidation are foreseen in most institutional arbitration rules, but usually not in the national lex arbitri; for example, the 12th Chapter of the Swiss Private International Law as well as the Rwanda Law on Arbitration and Conciliation in Commercial Matters of 2008 are silent on these issues. The following considerations will mainly be based on the Swiss Rules of International Arbitration4 (hereinafter the “Swiss Rules”) as 1 The wording of the relevant provisions of the referenced Arbitration Rules as well as some citations from court decisions have been added to the text of the speech. 2 See http://www.kiac.org.rw/spip.php?article60. 3 The Swiss Arbitration Academy (SAA) as well as the Universities of Lucerne and Neuchâtel are jointly offering a post-graduate course in arbitration (CAS in Arbitration). This program is a unique combination of an academic education and practical hands-on training with renowned international practitioners. Read more: www.swiss-arbitration-academy.ch 4 The Swiss Rules of International Arbitration of the Swiss Chambers’ Arbitration Institution (SCAI): https://www.swissarbitration.org/sa/en/rules.php. PRESENTATION ON MULTI-PARTY ARBITRATION IN PRACTICE
- 53. KIAC 2014 CONFERENCE REPORT |43 well as the Arbitration Rules of the Kigali International Arbitration Centre (KIAC)5 (hereinafter the “KIAC Rules”). II. Joinder of Third Parties Joinder of third parties means the situation where a third person is permitted to intervene (intervention) or ordered to participate in the proceedings through the request of one of the parties to pending arbitral proceedings (extension). 1. The Basic Problem with the Joinder of Third Parties The extension of arbitration proceedings to third parties who did not sign the arbitration agreements may clash with some fundamental principles relevant to arbitration. First, they clash with the principle “privity of contract”: According to this principle, a person cannot acquire rights or be subject to liabilities under a contract to which he or she is not a party. In connection with procedural rights, this means in particular that a person cannot be deprived of his or her right to resort to state court litigation. Second, arbitration is consensual in nature because the arbitral tribunal derives its jurisdictional power from the parties’ consent. In connection with the intervention by a third party, this is less problematic because the consent of the third party to join the arbitral proceedings is given. Consequently, in this respect, the threshold to extend the arbitration clause to this third party may be lower than in cases of extension, where the consent of the third party is usually not given. Therefore, it may only be forced to join the arbitration in exceptional circumstances. Third, the form of the arbitration agreement is an important aspect, which becomes evident in the term “extension to non-signatories”. The conservative approach, which requires an exchange of written letters to adhere to the binding formal requirements of an arbitration clause, originates in the wording of Article II of the 5 The Kigali International Arbitration Centre: http://www.kiac.org.rw/spip.php?rubrique22.
- 54. 44 | KIGALI INTERNATIONALARBITRATION CENTRE New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. A more liberal approach takes the technical developments into consideration. A good example of this is Article 9 of the Rwanda Law on Arbitration and Conciliation in Commercial Matters of 2008 (paragraph 3): “An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, in a written form basing on the conduct of the parties themselves, or based on any other means. The requirement that an arbitration agreement be in writing is met by an electronic communication if the information contained therein is accessible so as to be used for subsequent reference”; In my view, it should be sufficient if it meets the requirements of the applicable lex arbitri. Also, the Swiss Federal Court supports a liberal approach since it held that once the existence of an arbitration clause can be approved, it is admissible to consider the extension to a non-signatory.6 In other words, the fact that the clause had not been signed by the third party was not considered a formal obstacle to the extension of the arbitration clause. 2. Procedural Framework in the Swiss Rules and the KIAC Rules Article 4(2) of the Swiss Rules on joinder reads as follows: “Where one or more third persons request to participate in arbitral proceedings already pending under these Rules or where a party to pending arbitral proceedings under these Rules requests that one or more third persons participate in the arbitration, the arbitral tribunal shall decide on such request, after consulting with all of the parties, including the person or persons to be joined, taking into account all relevant circumstances”. Article 8 of the KIAC Rules on “Joinder of Additional Parties” reads as follows: 6 Decision 4P.115/2003 of 16 October 2003, DFT 129 III 727.
- 55. KIAC 2014 CONFERENCE REPORT |45 “A party wishing to join an additional party to the arbitration shall submit its request for arbitration against the additional party (the “Request for Joinder”) to the Secretariat. The date on which the Request for Joinder is received by the Secretariat shall, for all purposes, be deemed to be the date of the commencement of arbitration against the additional party. Any such joinder shall be subject to the provisions of Article 7 para 3-6 and 8. No additional party may be joined after the confirmation or appointment of any arbitrator, unless all parties including the additional party otherwise agree. The Secretariat may fix a time limit for the submission of a Request for Joinder. The Request for Joinder shall contain the following information: 1 The case reference of the existing arbitration; 2 The name in full, description, address and other contact details of each of the parties, including the additional party; and 3 The information specified in Article 5 para 2, sub paragraphs (3), (4), (5), (6). The party filing the Request for Joinder may submit therewith such other documents or information as it considers appropriate or as may contribute to the efficient resolution of the dispute. The provisions of Article 5 para 4, 5 and 7 shall apply, mutatis mutandis, to the Request for Joinder. The additional party shall submit an Answer in accordance, mutatis mutandis, with the provisions of Articles 6 para 1 to 4”.7 It is important to note that these provisions do not create a jurisdictional basis over the third person or persons to be joined; they only set the procedural framework for doing so. 7 This provision is very similar to the one of Article 7 of the Arbitration and ADR Rules of the International Chamber of Commerce (ICC) of 2012; www.iccwbo.org.
- 56. 46 | KIGALI INTERNATIONALARBITRATION CENTRE Under Article 8 in conjunction with Article 7(4) KIAC Rules, it is sufficient for the Centre to continue the arbitration if an arbitration agreement exists that “prima facie” binds all parties. However, the provision does not specify what aspects are to be taken into consideration when determining whether all parties (i.e. also non- signatories) are bound by the arbitration agreement. According to Article 4(2) Swiss Rules, the arbitral tribunal shall take “all relevant circumstances” into account and shall “consult with all of the parties”. However, this does not mean that the consent of all parties is required. 3. Competence to decide on Joinder Under the KIAC Rules, the request for joinder must be sent to the Secretariat. It is then up to the Secretariat to decide whether it wants to refer the matter either to the Centre or directly to the arbitral tribunal. The general rule is that a matter will be referred to the Centre for a “prima facie” decision on jurisdiction and, in cases involving non-signatories or multiple parties or multiple arbitration agreements, the complexity of the issues to be decided usually also requires the involvement of the Centre.8 According to the Swiss Rules, the competence to decide on the joinder lies with the arbitral tribunal9 and not with the Arbitration Court of the SCAI. So, we see that two approaches are applied, either the institution or the arbitral tribunal itself may decide on the extension of an arbitration clause to non-signatories. 4. Principles on which a Joinder may be based We have seen that neither the national laws (lex arbitri) nor the arbitration rules of the arbitration institutions provide criteria for the decision on joinder. This leaves the competent body with the 8 Cf. Article 7(4) KIAC Rules. 9 Cf. Article 4(2) Swiss Rules.
- 57. KIAC 2014 CONFERENCE REPORT |47 principles developed by case law and commentators. Some of the most important principles on which arbitration institutions, arbitral tribunals and state courts have decided to extend the scope of the arbitration agreement to third parties are the following: • Group of companies • Piercing the corporate veil • Alter ego • Estoppel • Agency • Assignment of rights • Assumption of debts • Third-party beneficiary The starting point for the analysis of the decision on joinder is the law applicable to the arbitration agreement,10 or for those doctrines elaborated in connection with the corporate personality, the law at the place of incorporation. The principles will be analysed below as examples based on landmark cases. 5. Two Examples in Case Law (a) Dow Chemical versus Isover Saint Gobain11 Facts: In 1965, DOW CHEMICAL (Venezuela) entered into a contract with a French Company, whose rights and obligations were subsequently assigned to ISOVER SAINT GOBAIN for the distribution of the thermal isolation equipment “Roofmate” in France. DOW CHEMICAL (Venezuela) itself subsequently assigned the contract to the Swiss DOW CHEMICAL A.G. (Claimant no. 3), a 10 CF. Art. 178(2) Swiss Private International Law Act. 11 ICC Case No. 4131: 1. Dow Chemical France; 2. The Dow Chemical Company (USA); 3. Dow Chemical AG (Switzerland); 4. Dow Chemical Europe (Switzerland) versus Isover Saint Gobain (France), Interim Award of 23 September 1982; 110 Journal du Droit International, 1983, pp. 899-905.
- 58. 48 | KIGALI INTERNATIONALARBITRATION CENTRE subsidiary of the U.S. DOW CHEMICAL COMPANY (Claimant no. 2). In 1968, a second distribution agreement was entered into by DOW CHEMICAL EUROPE (Claimant no. 4), a subsidiary of DOW CHEMICAL A.G., with three other companies (including the French company) whose rights and obligations were later assigned to ISOVER SAINT GOBAIN (Defendant) for the distribution of essentially the same products in France. Both the 1965 and the 1968 agreements contained ICC arbitration clauses. On the basis of these arbitration clauses contained in the contracts with the Swiss DOW CHEMICAL A.G. and DOW CHEMICAL EUROPE (Claimants no. 3 and 4), the four Claimants instituted arbitral proceedings against Isover, alleging that Isover alone was liable for damages resulting from the use of Roofmate in France. Considerations by the arbitral tribunal: “That it thus appears, as was the case with respect to the conclusion and performance of the distribution agreements, that DOW CHEMICAL FRANCE [Claimant 1, which was not party to the arbitration agreement] played an essential role in the termination of the 1968 contract …; … all of these factors permit the conclusion that DOW CHEMICAL FRANCE was a party to each of these contracts and, consequently, to the arbitration clauses they contained. That the same conclusion should be reached with respect to DOW CHEMICAL COMPANY (USA) [Claimant 2, again not party to the arbitration agreements] by reason of its ownership of the trademarks under which the products were marketed and its absolute control over those of its subsidiaries that were directly involved, or could have become involved under the contracts, in the conclusion, performance, or termination of the litigious distribution agreements”. Conclusions of the arbitral tribunal (on the doctrine of “Group of Companies”): “Considering that it is indisputable — and in fact
- 59. KIAC 2014 CONFERENCE REPORT |49 not disputed — that DOW CHEMICAL COMPANY (USA) has and exercises absolute control over its subsidiaries having either signed the relevant contracts or, like DOW CHEMICAL FRANCE, effectively and individually participated in their conclusion, their performance, and their termination. Considering that irrespective of the distinct juridical identity of each of its members, a group of companies constitutes one and the same economic reality (une realité économique unique) of which the arbitral tribunal should take account when it rules on its own jurisdiction (subject to Article 13 (1955 version) or Article 8 (1975 version) of the ICC Rules)”. Accordingly, Isover, was not successful in resisting the joinder of claimants1and2.Sinceithasgivenitsbasicagreementtoarbitration by signing the arbitration agreements, the open question was only whether it could be forced to accept two additional parties as claimants, which have not signed the arbitration agreement. For the reasons stated previously, the arbitral tribunal decided that this was the case. The interim award of the arbitral tribunal was upheld by the Paris Court of Appeals. While some state courts apply the doctrine of “Group of Companies” (e.g. in France, Brazil, Spain), the courts of other states are reluctant or even against the application of the doctrine (e.g. US, UK, Switzerland). In Switzerland, most legal commentators have also been sceptical or negative. (b) Prest versus Petrodel Resources Ltd12 Background Facts: Michael and Yasmin Prest married in 1993, but the marriage ended in 2008. Mr. Prest was a wealthy oil trader who operated a number of companies over which he had complete control. The companies had legal title to real estate within the UK, including the couple’s matrimonial home. In the divorce proceedings, Mrs. Prest obtained an order from the courts requiring her husband to pay her a lump sum of £7.5 million plus 12 UK Supreme Court, Prest vs. Petrodel Resources Ltd. (2013), UKSC 34.
- 60. 50 | KIGALI INTERNATIONALARBITRATION CENTRE annual payments. To satisfy this judgment, the judge ordered the companies to transfer title to the marital home and seven other properties. Although upon appeal the Supreme Court rendered its ruling on the basis of the Matrimonial Causes Act, which cannot serve as a basis in commercial arbitration, the court discussed the corporate veil doctrine at length, which is of great interest also in international arbitration. General principle of the “Piercing the Corporate Veil” doctrine: “[T] he separate personality and property of a company is sometimes described as a fiction…the fiction is the whole foundation of English company and insolvency law”, which eventually means that piercing the corporate veil is possible only under very limited circumstances. Such exceptional circumstances are described as follows: “The corporate veil may be pierced only to prevent the abuse of corporate legal personality” or to prevent attempts to “evade the law or to frustrate its enforcement through use of the corporate personality”. The UK Supreme Court continues: “The Court may disregard the separate legal personality of a company if there is a legal right against the person in control of the company and the company is deliberately interposed in order that the separate legal personality of the company should defeat the enforcement of that right against the controlling party. The Court may then pierce the corporate veil, but only for the purpose of depriving the company or its controller of the advantage they would have obtained by reason of the company’s separate legal personality”. This means that the UK Supreme Court approves the piercing of the corporate veil in cases where a party would obtain a right that it could not have obtained otherwise. Resultofthecase:Havingdefinedtherelevanttest,theUKSupreme Court unanimously agreed with the judge of the High Court that it was not permissible to pierce the corporate veil on the facts of this case. The judge at first instance had not found any relevant
- 61. KIAC 2014 CONFERENCE REPORT |51 impropriety on the part of Mr. Prest. Mr. Prest was not concealing or evading any legal obligation owed to his wife. The particularly relevant factor was that the legal title to the properties was vested in the companies before the marriage broke up. It could not be said that Mr. Prest was using the companies to evade his obligation to pay the divorce settlement to his wife. 6. Conclusion regarding the Application of Exceptions The decision on whether an exception shall apply is based on principles developed in practice and further elaborated and refined by commentators. The exceptions may be divided into two main categories: On the one side, those based on “implied consent” (e.g. group of companies, third party beneficiaries, assumption of debts, assignment of rights) and, on the other side, those which “disregard the corporate personality” (e.g. piercing the corporate veil, alter ego). Based on these exceptions, the competent arbitration institution or arbitral tribunal decides whether it has jurisdiction to decide on a joinder. However, they do not provide the basis for the decision whether a joinder shall be granted or not. 7. Factors for the Decision on Joinder For the decision on the joinder, the following factors may be taken into consideration (this list is merely illustrative, not conclusive)13 : The connection, if any, between the claims at issue in the pending arbitration and the claim against the third person; Whether there exist common issues of fact and/or law; Whether there would be a risk of conflicting results if the third person is not joined (this is particularly relevant in regards to claims of recourse by the respondent against a third person); 13 Baertsch, Commentary on the Swiss Rules, Art. 4 no. 50.
- 62. 52 | KIGALI INTERNATIONALARBITRATION CENTRE The type of procedure and the substantive law applicable to the different claims; Whether there will be a loss of efficiency in the pending arbitration due to a possible joinder; The timing of the request for joinder and the progress already made in the ongoing proceedings. III. Consolidation of two or more Proceedings “Consolidation” means the act or process of uniting several (pending or initiated) arbitration proceedings into one proceeding before the same arbitral tribunal. 1. Procedural Framework in the Swiss Rules and the KIAC Rules Article 11 of the KIAC Rules on “Consolidation of arbitrations” reads as follows: “The centre may, at the request of a party, consolidate two or more arbitrations pending under the Rules into a single arbitration, where: 1. The parties have agreed to consolidation; or 2. All of the claims in the arbitrations are made under the same arbitration agreement; or 3. Where the claims in the arbitrations are made under more than one arbitration agreement, the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Centre finds the arbitration agreements to be compatible”. In deciding whether to consolidate, the Centre may take into account any circumstances it considers to be relevant, including whether one or more arbitrators have been confirmed or appointed in more than one of the arbitrations and, if so, whether the same or different persons have been confirmed or appointed.
- 63. KIAC 2014 CONFERENCE REPORT |53 When arbitrations are consolidated, they shall be consolidated into the arbitration that commenced first, unless otherwise agreed by all parties”. Article 4(1) of the Swiss Rules on consolidation reads as follows: “Where a Notice of Arbitration is submitted between parties already involved in other arbitral proceedings pending under these Rules, the Court may decide, after consulting with the parties and any confirmed arbitrator in all proceedings, that the new case shall be consolidated with the pending arbitral proceedings. The Court may proceed in the same way where a Notice of Arbitration is submitted between parties that are not identical to the parties in the pending arbitral proceedings. When rendering its decision, the Court shall take into account all relevant circumstances, including the links between the cases and the progress already made in the pending arbitral proceedings. Where the Court decides to consolidate the new case with the pending arbitral proceedings, the parties to all proceedings shall be deemed to have waived their right to designate an arbitrator, and the Court may revoke the appointment and confirmation of arbitrators and apply the provisions of Section II (Composition of the Arbitral Tribunal)”. Article 11 KIAC Rules distinguishes three scenarios of consolidation: (1) In the first scenario, all parties agree to the consolidation; hence this is not problematic. (2) In the second scenario, two or more claims are subject to the same arbitration agreement. This is probably the most common scenarioforconsolidationsofproceedings:Ifseveralclaimsariseout of one contract, they are often so closely linked that a consolidation into one arbitration proceeding makes sense. This applies for instance to framework agreements, which contain the arbitration agreement that applies not only to the framework agreement but also to the related implementation or execution agreements. Having various claims in separate arbitration proceedings could lead to contradictory results and would most likely result in more expensive proceedings.
- 64. 54 | KIGALI INTERNATIONALARBITRATION CENTRE (3) Two or more claims being subject to more than one arbitration agreement (but still between the same parties): For a consolidation of these claims, a “connection with the same legal relationship” is required. This may include a legal or factual connection, which may be seen as the “same economic transaction”. Furthermore, the compatibility (not identity) of the arbitration agreements is required: They must not differ with respect to certain core features, such as applicable rules, place of arbitration, number of arbitrators, language and expertise, and all parties must have agreed to the same arbitration institution. By allowing consolidation also in cases with parties which are not identical (e.g. in chain contracts), the Swiss Rules go even beyond the third scenario described in the previous paragraph; the scope of Article 4(1) Swiss Rules is broader than the scope of most other institutional arbitration rules. 2. Competence to Decide on Consolidation Pursuant to Article 11 KIAC Rules, the Centre is responsible for the decision on consolidation, and pursuant to Article 4(1) Swiss Rules, it is the Arbitration Court. This is the usual approach, whereby the arbitration institution decides on the consolidation of proceedings, which makes particular sense in those cases where the proceedings to be consolidated are not between the same parties. The institutions bear a great deal of responsibility when deciding on the consolidation because their decision may have far- reaching consequences, especially in cases where the arbitrators of one or more proceedings have already been appointed by the parties, and their appointment may be revoked by the institution in order to consolidate the proceedings in front of one arbitral tribunal. These competences must therefore be applied with due diligence and reluctance.14 14 To date, the Swiss Chambers’ Arbitration Institution has applied due diligence and reluctance in deciding on the consolidation of arbitration proceedings; it has never consolidated proceedings against the will of one of the involved parties.
- 65. KIAC 2014 CONFERENCE REPORT |55 3. Criteria for the Decision on Consolidation Besides the compatibility of the arbitration agreements (cf. above section III.1), the arbitration institution shall take into consideration “any circumstances it considers to be relevant” (Article 11 KIAC Rules) or “all relevant circumstances” (Article 4(1) Swiss Rules), such as the agreements between the parties, the nature of claims, the links between the cases, and the progress already made in the pending arbitration proceedings. IV. Questions If you have questions about the above statements, feel free to contact me at u.weber@wengervieli.ch.
- 66. 56 | KIGALI INTERNATIONALARBITRATION CENTRE MOCK CASE ON MULTI-PARTY AND MULTI CONTRACT ARBITRATION Micheal Burkart, Director of studies, Swiss Arbitration Academy, Switzerland and Egwuagu N. Emmanuel, Obla & Co., Nigeria Thermal projects limited v. Kigali power company limited ElectroCorporation(“Electrocorp”)isapowergenerationcompany established under the laws of Texas, United States of America, with its domicile in Houston. Electrocorp specializes in building thermal power generation Plants Thermal Projects (BVI) Limited (“Thermal”) is a company incorporated pursuant to the laws of the British Virgin Island. Thermal is a special purpose vehicle (SPV) company fully owned by ElectroCorp. Kigali Power Company Limited (“Kigali Power”) is a company incorporated under the laws of the Republic of Rwanda recently licensed by the relevant state authority as one of the companies to generate electricity in Rwanda) Kigali Holdings Limited (“Kigali Holdings”) is a Holding Company incorporated under the laws of Republic of Rwanda which own several subsidiaries with interests in Real Estate, Oil and Gas and Energy. Kigali Holdings is the parent company of Kigali Power. FACTS: Rwanda’s status as one of Africa’s top emerging economies has attracted the attention of Electrocorp’s board of directors who are seeking an opportunity to explore and invest in Africa. Electrocorp pursuant to its field survey analysis and business plan decide to incorporate an SPV, Thermal Projects (BVI) Limited
- 67. KIAC 2014 CONFERENCE REPORT |57 (“Thermal”) under the laws of the British Virgin Island for this purpose. Electrocorp after preliminary research made contact with Kigali Power, an operational subsidiary company formed by Kigali Holdings to operate the license from the Rwandan Government to generate electricity to be uploaded to the national grid for transmission and distribution in Rwanda. After extensive consultations and negotiations between representatives of Electrocorp, Kigali Power and Kigali Holdings, Thermal and Kigali Power on 4 May 2006 entered into a contract to build a 500 megawatts thermal power station in Kigali, Rwanda at the cost of $280 Million. On the modalities of building the thermal station, the parties agree that the Kigali Holdings will part-finance the building of the Kigali Thermal Power Station by providing $140 Mil- lion and Electrocorp was to provide $140 Million as its equity. Parties also agreed that the Plant was to be constructed in accordance with the highest standards and best practices worldwide. It was also agreed that the thermal station was to be constructed on a “build, operate and transfer basis” for 6 years to allow Electrocorp amortize its equity of $140 Million, realize profit and train and transfer technical expertise to Kigali Power to operate and manage the plant upon disengagement from the power station. The parties also agreed that any dispute arising out of or in connection with this contract, including any question regarding its validity or termination shall be referred to and finally resolved by arbitration under the Rules of Kigali International Arbitration Centre (KIAC) by 3 arbitrators. The Seat of the Arbitration is Kigali. The proceedings shall be conducted in English. The contract shall be construed in accordance with Rwandan law. The parties fell into dispute arising out of the performance and construction of the contract. Kigali Power issued notice to Thermal the date of transfer of the Kigali Power Station to Kigali Power is 4th May 2012. Thermal insists that the effective date of transfer is 8th June 2013 as the 6 years period commences from the 8th June 2007 which is the date of completion of the Kigali Power Plant. Thermal has commenced arbitration against Kigali Power and
- 68. 58 | KIGALI INTERNATIONALARBITRATION CENTRE Kigali Holdings as Respondents by filing its Request for Arbitration (“the Request”) before KIAC under the KIAC Rules seeking reliefs of declaration and specific performance. The parties have nominated their arbitrators and the presiding arbitrator has been appointed and the arbitral tribunal is now constituted under the KIAC Rules 1st Case Counsel to Kigali Power and Kigali Holdings (Respondent 1 and Respondents 2 has filed its Statement of Defence and there to raised a preliminary objection on behalf of Respondent 2 to the jurisdiction of the arbitral tribunal over Kigali Holdings who is a non-signatory to the contract. Counsel to Claimant and Respondents will plead for their respective parties for and against the merits of the jurisdictional objection. 2nd Case Respondent 1 (Kigali Power) has filed its statement of defence and counter- claim against Thermal. The Counterclaim seeks an order for Claimant/Respondent Thermal to render an account and reimbursement all monies received in respect of electricity generated and sold by Thermal after 4 May 2012. Arising from the counterclaim, the Respondents have now brought an application before the Tribunal for the joinder of Electrocorp as a Co-Claimant and Co-Re- spondent to the Counterclaim in the arbitration. The grounds of the application are that (a) Thermal is an SPV and a shell company with no known assets in the world for the Respondents to realize any damages awarded in respect of their counterclaim; (b) Electrocorp and Thermal enjoy a principal/agent relationship (c) Electrocorp is the principal beneficiary of the contract-i.e. all earnings by Thermal from the Kigali Power Station is remitted to Electrocorp. Counsel to Claimant and Respondents will plead for their respective parties for and against the merits of the joinder.
- 69. KIAC 2014 CONFERENCE REPORT |59 PanelThree Dealing with Guerilla Tactics in International Arbitration: WHICH TOOLS FOR COUNSELS AND ARBITRATORS? Internationalarbitralproceedingsarepronetointerferencefromthe obstructive behaviour which constitutes a threat to international arbitration. The panel will discuss the meaning of Guerrilla tactics and what tools are available to counsel and the arbitral tribunal to deal with such tactics. In particular the following issues will be covered: Where does poor behaviour end and guerrilla tactics start? How do arbitral institutions view the issue of Guerilla Tactics? How may arbitral institutions and state courts support fighting Guerilla Practices or how much support is desirable? PANELISTS: Dr. Fabian Ajogwu; Kenna Partners, Nigeria; Günther J Horvath; Freshfields Bruckhaus Deringer, Austria; CHAIR: Ngoga Gakuba Thierry; KIAC Registrar, Rwanda
- 70. 60 | KIGALI INTERNATIONALARBITRATION CENTRE PRESENTATION ON DEALING WITH GUERRILLA TACTICS IN INTERNATIONAL ARBITRATION: WHICH TOOLS FOR COUNSELS AND ARBITRATORS? Günther J. Horvath, 25 May 2014 Ihavebeenaskedonnumerousoccasions–whatdoguerrillatactics have to do with international arbitration? As my grey hair might indicate, I have been working as arbitrator and counsel for some time now and over the years I have been more and more startled by the increasing tactics employed by parties to disrupt the smooth running of an arbitration. A survey on this topic provided that 55 out of 81 international arbitration practitioners had witnessed the use of guerrilla tactics in cases in which they were involved. Back in 2010 I first addressed this topic at the Vienna Arbitration Days. In the so-called graveyard slot on Friday afternoon, my colleague Stephan Wilske from Gleiss Lutz, Stuttgart, and I held a presentation on the topic to an astoundingly receptive audience. Stephan and I then decided to embark on a book project and motivate a collection of seasoned arbitration practitioners as well as leading academics to provide contributions. One of these esteemed colleagues, my dear friend Sundra Rajoo is here today. The result of our hard work is the book entitled “Guerrilla Tactics in International Arbitration”. The book has just been published by Kluwer in October last year. The book describes real life experience from all major legal systems worldwide and will hopefully become an indispensable handbook for use in difficult factual situations where time and means of recourse are limited. In my presentation today I will touch on numerous topics addressed in the book – this should however not stop you from getting to your nearest bookstore and purchasing a copy!
- 71. KIAC 2014 CONFERENCE REPORT |61 HOW DOES THE PREMISE OF GUERRILLA WARFARE RELATE TO INTERNATIONAL ARBITRATION? What is guerrilla warfare exactly? The premise of guerrilla warfare is a means for the conventionally weak to succeed. What defines guerrillas is not why they fight, but how. They survive or even prevail in spite of their inferior conventional military power. So what is the common denominator of guerrilla warfare and a bunch of tactics in international arbitration? While the major battle of arbitration is to be carried out on the merits of the case, guerrilleros attempt to avoid or delay this upfront legal confrontation, resorting to tactics of the “little war” to gradually, deceitfully and viciously wear down the other party, opposing counsel or the Arbitral Tribunal. This unconventional approach to winning a case has come to be known as the use of guerrilla tactics in international arbitration (Regarding the above see Robert Pfeiffer and Stephan Wilske, Chapter 1, §1.01: An Etymological and Historical Overview in Günther J. Horvath and Stephan Wilske (eds), Guerrilla Tactics in International Arbitration, International Arbitration Law Library, Volume 28 (© Kluwer Law International; Kluwer Law International 2013) pp. 1 - 3). And then the next question is, how can guerrilla tactics be defined? DEFINITION OF GUERRILLA TACTICS A definition of the term “guerrilla tactics” is fundamental to its understanding. However, in the quest for such a definition, it becomes apparent that a single definition of the term does not exist. Rather, the term is comprised of several distinct types of behavior. The types of behaviour appear in manifold variations. “Guerrillatactics”arestrategiesemployedbypartiestoproceedings that are ethical violations, involve criminal acts, or are ethically borderline practices. They range from the completely illegal and inappropriate, such as witness intimidation and wiretapping, to the merely sly, such as abusive delays and unjustified challenges. Although guerrilla tactics may not always be unethical and/or
- 72. 62 | KIGALI INTERNATIONALARBITRATION CENTRE procedural violations, they are almost always a hindrance to the arbitral process. Since it does not appear feasible to capture all of these types of guerrilla behaviour in a comprehensive, yet concise definition, it is easier to categorize several types of strategies as guerrilla tactics. In the next three slides I have categorized guerrilla tactics into three main categories. The first category being (i) the most “common” forms of guerrilla tactics experienced in arbitration, the second category is (ii) “extreme” forms of guerrilla tactics and the third and final category is (iii)so-called “rough riding” (Regarding the above see Günther J. Horvath, Stephan Wilske, et al., Chapter 1, §1.02: Categories of Guerrilla Tactics in Günther J. Horvath and Stephan Wilske (eds), Guerrilla Tactics in International Arbitration, International Arbitration Law Library, Volume 28 (© Kluwer Law International; Kluwer Law International 2013) pp. 3 - 16). MOST “COMMON” FORMS OF GUERRILLA TACTICS Some of the most “common” forms of guerrilla tactics include bribery, intimidation and harassment. Intimidation plays an important role in investment arbitration due to the inherent imbalance of power between the parties. Generally it is easier and more effective to invoke all forms of bribery and blackmail as a state official. Witnesses or arbitrators may be reluctant to testify against their own government or their employer for fear of losing their job or their pension or worse again for fear of their or their family’s safety. One very clear ex- ample was in the Ruby Roz Agricol LLP v. The Republic of Kazakhstan, ICSID Case No. ARB/05116, in an UNCITRAL arbitration where three principal fact witnesses of claimant were accused of murder shortly before a hearing during which they were to testify. Upon the production of clear evidence of such intimidation or harassment an Arbitral Tribunal can react accordingly, however blatant cases are the exception, it is uncommon for a state employer to threaten a witness with dismissal in writing if the witness testifies against the government.
- 73. KIAC 2014 CONFERENCE REPORT |63 This intimidation and harassment can extend to experts, in particular university professors who often feel obliged to modify their opinions in favour of the government of their home state or the appointing party from their home state to avoid negative consequences upon return. An example of a bribery case was reported in the GAR in July 2013 where in an ad hoc arbitration a sole arbitrator appointed by the KLRCA was accused of soliciting a payment of USD 2 million from claimant as an inducement to rule in its favour (UK arbitrator charged with bribery in Malaysia, Sebastian Perry; Friday, 28 June 2013). Other not uncommon forms include, wiretapping and other surveillance methods: arbitrators being followed, their house being put under surveillance by private detectives and/or even their rubbish being searched. Many of you will be aware of the wiretapping allegations in the Libananco Holdings Co. v. Turkey where wiretapping was supposedly conducted by a governmental body. While there was no evidence of such activity by the Republic of Turkey, the ICSID tribunal made clear that it would have had some powers if counsel had been instructed to improperly obtain privileged or confidential information. There are many different forms of delay tactics that are invoked by parties in an arbitration in order to delay the actual assessment of the case on the merits and ultimately the rendering of the final award. Serious delay tactics amount to the refusal of a party to proceed with an arbitration despite a clear contractual obligation to do so (e.g. Liberian Eastern Timber Corporation v. Republic of Liberia, ICSID Case No. ARB/83/2). Less serious delay tactics include the late filing of submissions, reports and exhibits or the last minute cancellation of hearings and meetings. Indeed the selection of a highly regarded arbitrator may even constitute a (well-concealed) guerrilla tactic. This would be the case when the appointing party is well aware that this arbitrator has an extremely busy schedule, and that accordingly, the appointment would result in a delay of the proceedings by a full year.
- 74. 64 | KIGALI INTERNATIONALARBITRATION CENTRE From the parties’ perspective one of the prevalent tactics to delay arbitration is to invoke frivolous challenges against an arbitrator. Although it is an essential right of all parties, challenges are sometimes used to derail proceedings or reverse unfavourable decisions. Although the most attractive qualities in arbitrators continue to be fair- mindedness and intelligence, cases of biased arbitrators do exist. Such arbitrators have been known to employ guerrilla tactics. These tactics tend to benefit the party who appointed them. Worth mentioning is the example of ex parte communications: After appointment of an arbitrator, communication with the appointing-party, which was initially necessary, is likely to be improper. Furthermore, a partisan arbitrator may attempt to assist the appointing-party by: cross-examining witnesses, failing to cooperate with co-arbitrators, being ill-prepared to participate in deliberations, resigning from the tribunal. As a very severe, last-minute guerrilla tactic within the Arbitral Tribunal, an arbitrator could resign. In the worst case, the arbitrator does so after the hearing, in order to prevent an award against the partythatappointedhim.Thisleavestheremainingco-arbitratorsin the difficult position to decide whether they have to repeat certain steps of the arbitral proceedings anew, at great expense and to the likely advantage of the arbitration guerrilla who orchestrated this sudden resignation (Regarding the above see Günther J. Horvath, Stephan Wilske, et al., Chapter 1, §1.02: Categories of Guerrilla Tactics in Günther J. Horvath and Stephan Wilske (eds), Guerrilla Tactics in International Arbitration, International Arbitration Law Library, Volume 28 (© Kluwer Law International; Kluwer Law International 2013) pp. 3 - 16). EXTREME GUERRILLA TACTICS Although not very common, most of extreme guerrilla tactics are likely criminal in nature: There have also been examples of blatant abuse of state authority, for example the seizure of computers from opposing counsel’s
- 75. KIAC 2014 CONFERENCE REPORT |65 law office by a law enforcement agency under the pretence of a criminal investigation. This type of action was explicitly forbidden under the applicable Russian law since the information in the computers was protected by attorney/client privilege. In other instances, arbitrators, counsel, and witnesses have – on occasion – been threatened with physical violence. According to the Russian press after an Austrian company East Petroleum had launched arbitration proceedings under the VIAC Rules against the Russian company Tomskneft, a subsidiary of YUKOS, several attempt were made on the life of Yevgeni Rybin, the manager of the Claimant company. Unknown persons opened fire on his car from a grenade launcher and submachine gun, killing the driver and heaving injuring two militiamen who were guarding the businessmen. Another dispute involving Russian and Canadian companies (Znamenksy Selekcionno-Gibridny Centre LLC v. Donaldson International Livestock). The Russian company Znamensky initiated arbitration under the MKAS Rules. The Canadian company, Donaldson sought an injunction in Ontario, prohibiting Znamensky from seeking any remedy against it by way of arbitration proceedings in Russia. Donaldson claimed that Znamesky representatives made death threats during telephone conversations. As a result Donaldson representatives were afraid to appear in Russia and refused to participate as witnesses in arbitration under MKAS Rules in Moscow. In international arbitration, there have also been cases of intentional destruction or forgery of evidence. It is in itself difficult to detect whether a party will undertake such measures, unless, of course a party already has a reputation for doing so. An infamous example of such a case was the “Qatar v. Bahrain” case in which Qatar submitted 82 forged historical documents to the court (ICJ) (Regarding the above see Günther J. Horvath, Stephan Wilske, et al., Chapter 1, §1.02: Categories of Guerrilla Tactics in Günther J. Horvath and Stephan Wilske (eds), Guerrilla Tactics in International Arbitration, International Arbitration Law Library, Volume 28 (© Kluwer Law International; Kluwer Law International 2013) pp. 3 - 16).
- 76. 66 | KIGALI INTERNATIONALARBITRATION CENTRE ROUGH RIDING This kind of behaviour is technically still legal, if it is not taken too far. Lacking one or more of the characteristic elements of a guerrilla tactic, it cannot feasibly be categorized as one. These methods, however, still adversely affect the tone of the arbitral proceedings and, at least, could potentially damage the proceedings. Often such ‘rough riding’ violates basic rules of professional courtesy and even ‘fair play’. It is a common tactic for parties to withhold evidence either in an attempt to surprise the opposing party with a ‘smoking gun’ late in the proceedings or to hide damaging evidence. In such cases, opposing counsel will not have sufficient time to review the evidence and prepare an appropriate defence. Some parties attempt to avoid cut-off dates by introducing evidence through a witness at the hearing, for instance, a witness may be asked to read from his personal diary. In doing this, counsel manages to ‘ambush’ the opposing party with evidence it has not yet heard and is most likely unprepared for. At the same time, it makes the tribunal aware of the evidence, even if it is later excluded as inadmissible (or stricken from the record). Another tactic is for counsel to question a witness during the hearing about a document that has not and potentially may not be submitted as evidence in the proceeding and, thus, prevent the opposing party from thoroughly testing it. Further examples of rough riding include in general: deliberate unavailability, excessive document requests and taking advantage of a lack of confidentiality commitments by publicly speculating on the opponent’s case (Regarding the above see Günther J. Horvath, Stephan Wilske, et al., Chapter 1, §1.02: Categories of Guerrilla Tactics in Günther J. Horvath and Stephan Wilske (eds), Guerrilla Tactics in International Arbitration, International Arbitration Law Library, Volume 28 (© Kluwer Law International; Kluwer Law International 2013) pp. 3 - 16).
- 77. KIAC 2014 CONFERENCE REPORT |67 TOOLS AND SANCTIONS AVAILABLE TO COMBAT GUERRILLA TACTICS And now that we have established what categories of guerrilla tactics exist, we come to the most important question of who is best equipped to effectively combat Guerrilla Tactics in an international arbitration. Three players come to mind in this context: the main player being the Arbitral Tribunal. Counsel also play an important role. Arbitral Institutions provide an appropriate framework to counter Guerrilla Tactics. I will now deal with the role of all three. THE ROLE OF ARBITRAL TRIBUNALS In a way, arbitrators are the “first line” of ethical regulation in international arbitration and an experienced tribunal is the most effective weapon against arbitration guerrillas. Arbitrators also have an incentive to ensure that the parties operate ethically because arbitrators develop a reputation based on their ability to run proceedings in a smooth, fair and efficient manner. The tools available to an Arbitral Tribunal are not well defined. For ex- ample, arbitrators do not have the authority to coerce party compliance by holding a party in contempt of court, as is the case in state courts. Arbitral Tribunals exist only through the agreement of the parties, and the only sanctions available to the arbitrators are those expressly provided by the parties or by the rules of the arbitral institution which the parties have agreed to comply with, in combination with the arbitral law at the place of arbitration. Anticipation / Prevention: Arbitration practice has proven that the agreement on a code of conduct for the proceedings upfront is recommendable. An Arbitral Tribunal should encourage the parties to complete a checklist or survey of what they understand to be their duties. By doing so
- 78. 68 | KIGALI INTERNATIONALARBITRATION CENTRE the arbitration will automatically have a set of “ground rules”. Such survey or checklist would include, for instance, clear instructions and guidelines as to the submission of evidence, acceptable styles of advocacy, penalties for missed deadlines and the extent to which time extensions will be allowed. A review of the par- ties’ answers to the survey by the arbitrator(s) will reveal clashes between parties’ understanding of ethical behaviour. Where conflicts arise, the arbitrator(s) should determine the necessary provisions that may be ideally discussed in a case management conference (ICC Rules, Article 24). The resulting rules (individualized code of conducted) could then be incorporated in the Terms of Reference or a (first) Procedural Order. Essentially, this approach generates an equality of arms as both parties have disclosed the behaviour they deem appropriate and inappropriate. Counsel can no longer claim that they were not bound by some sort of ethical code. As a result, guerrilla tactics would be detected at the outset of the proceedings, when they are easier to tackle. In addition, setting up a procedural timetable serves as an effective case management tool to minimize delay tactics. It is important that arbitrators distinguish between parties who genuinely require additional time, and those who deliberately want to delay the procedure. For example, if a party generally refuses to participate in the arbitration the Arbitral Tribunal may nevertheless continue: pleadings can be submitted, hearings can be held and the award can be rendered in the party’s absence. This is not a breach of due process under Art V (I) (b) of the New York Convention. If the delay is less serious, such as late filing of submissions, reports and exhibits or the cancellation of hearings and meetings it would be useful to have an agreement with the parties on a rule how to proceed when faced with such delays (Regarding the above see Lucy Reed, Chapter 2, §2.04: Sanctions Available for Arbitrators to Curtail Guerrilla Tactics in Günther J. Horvath and Stephan Wilske (eds), Guerrilla Tactics in International Arbitration, International Arbitration Law Library, Volume 28 (© Kluwer Law International; Kluwer Law International 2013) pp. 93 - 102).
- 79. KIAC 2014 CONFERENCE REPORT |69 Stopping: The Arbitral Tribunal should always take a balanced and neutral approach to disciplining counsel. If mild and then sterner warnings do not serve to stop the objectionable behaviour, it can prove effective for the chairperson or sole arbitrator to call a recess, meet privately with counsel for both sides, and ‘read the riot act’ to both sides – making it clear that, if there is no improvement, he/she will repeat the warnings in front of the offender’s clients and on the record and, if necessary, ultimately assess costs for the related disruption. Most counsel and parties appreciate this type of graduated discipline. Indeed, it is not uncommon for counsel to desire such directions to convince their clients that they need not be consistently aggressive. Another possible tool – which could be called ‘indicative sanctions’ would be for the arbitrator, provided he/she has previously announced the intention to award costs for misconduct, to begin running a balance sheet of anticipated cost assessments against one or both sides, subject to adjustment and inclusion in the final award. That such cost amounts would be merely indicative and not binding is helpful: the primary purpose at this stage is not to punish but to deter ongoing abusive tactics. If none of the above work an effective tool is an interim measure for security for costs, for example to cover the extra time and effort required for the opposing side to deal with that late document, last minute witness or further extension of time. Interim measures for costs can also cover the impact of a party’s refusal to follow a tribunal order. In some common law countries, courts have wide discretion in framing the appropriate sanctions for attorney misconduct. These are known in particular in the US as “Bench slaps”. Sanctions can include, among others, a reprimand, striking of motions or papers with inappropriate language, for instance in the US an attorney was suspended for three months and publicly censured for telling a federal judge on a teleconference, ‘[y]ou are corrupt and you stink. That’s my honest opinion, and I will tell you to your face.’ (See,
- 80. 70 | KIGALI INTERNATIONALARBITRATION CENTRE e.g., In re Dinhofer, 257 A.D.2d 326, 328 (1st Dep’t 1999). In another US case a court disqualified an entire law firm where one of its lawyers engaged in ex parte communications with the officer of defendant corporation. (See, e.g., Bedoya v. Aventura Limousine & Trans. Serv., Inc., 861 F.Supp.2d 1346 (S.D.Fla. 2012). Whether such “bench slaps” would also work in international arbitration remains to be seen. It is worth noting that arbitrators have the authority to suspend the proceedings in extreme cases, they may even have the power to dismiss an arbitration with prejudice as a sanction for the willful misconduct of a party or of its counsel (Regarding the above see Lucy Reed, Chapter 2, §2.04: Sanctions Available for Arbitrators to Curtail Guerrilla Tactics in Günther J. Horvath and Stephan Wilske (eds), Guerrilla Tactics in Inter- national Arbitration, International Arbitration Law Library, Volume 28 (© Kluwer Law International; Kluwer Law International 2013) pp. 93 - 102). Sanctioning: Another effective and widely accepted tool available to arbitrators is the possibility of drawing negative inferences from a party’s failure to comply with the Arbitral Tribunal’s requests. For example, if a party refuses to produce documents the tribunal can assume that the documents contained information negative to the party’s position. Probably the Arbitral Tribunal’s most effective tool for regulating party’s misconduct is the award of costs in the final award. In this respect, the Arbitral Tribunal again has a wide discretion in deciding how the parties will bear the costs of the arbitration and need to follow the maxim that “costs follow the event”. In doing so, arbitrators shall consider the parties’ behaviour in particular with regard to delay of the proceedings, frustration of hearings, and use of experts, regardless of how successful the parties were on their own claims. Such a decision can be made even if it means overruling an agreement by the parties to bear their own costs. Alt- hough cost sanctions seem an efficient tool to deal with guerrilla tactics they might come “a day late and a dollar short”.
- 81. KIAC 2014 CONFERENCE REPORT |71 THE ROLE OF COUNSEL In the current arbitration climate, counsel taking on any form of international arbitration must be aware of the increasing tendencies of parties and opposing counsel to exert and deploy guerrilla tactics in order to achieve their goals. It is in the interest of the perspective client for counsel to be well informed of this risk or to at least be in a position to recognize the most subtle forms of so-called rough riding. At the outset of the arbitral proceedings: Arbitration clauses often also referred to as ‘midnight clauses’ tend, in practice to be granted minimal attention during contract negotiations as they are often inserted at midnight after a long day of contract negotiations. Contract drafters are generally more concerned with agreement on substantive provisions rather than on securing a proper dispute resolution mechanism. It is, however, worthwhile for parties and their counsel to in- vest the requisite time and energy into the choice of an arbitration clause in order to avoid pathological arbitration clauses. Ambiguous and imprecise arbitration clauses could provide arbitration guerrillas with bait to misinterpret clauses to their own advantage, there- by abusing the original will of the parties. By choosing, for instance, the recommended arbitration clause of a renowned institution such as the ICC, VIAC, DIS, LCIA, etc., parties and their counsel can avoid situations for arbitration guerrillas to exploit already at the very early stages of the dispute. As already mentioned if the Arbitral Tribunal do not request that parties come to an agreement on a Code of Conduct, counsel should consider insisting on such a measure in order to regulate adherence to the procedural timetable, the acceptable style of advocacy (common vs. civil law), the treatment of witnesses, discovery and admissibility of evidence.
- 82. 72 | KIGALI INTERNATIONALARBITRATION CENTRE Throughout the arbitral proceedings: Counsel have the option of requesting the Arbitral Tribunal to under- take some action – sanctions or otherwise – against parties participating in guerrilla tactics. However when counsel finds itself between a rock and a hard place, it may also turn to national courts for a remedy. Unfortunately, national laws rarely deal with enforcement of interim measures, focusing mainly on the enforcement of final awards. The possibility of enforcement of interim measures through national courts should be considered by counsel when choosing its seat of arbitration i.e., when drafting the arbitration clause. In cases where the parties do not wish to call on state authorities, the 2012 ICC Rules also provide the option of calling on an emergency arbitrator if an urgent interim measure is needed before the constitution of the Arbitral Tribunal. If an attorney were to engage in unethical guerrilla tactics, opposing counsel is free or, in some jurisdictions, even obligated to report this attorney to the applicable bar association. Domestic regulations governing attorneys’ conduct may in some jurisdictions apply in international arbitration; the classic example is found in the United States where attorneys licensed in one of the US states are bound by their applicable bar rules irrespective of whether they appear before a court or arbitral tribunal in the jurisdiction in which they are licensed or elsewhere. Other jurisdictions are less clear cut. It depends on the individual jurisdiction whether the home bar association would in fact give consideration to an alleged ethical violation that has arisen in an international arbitration, even in a foreign jurisdiction. Practice shows that there has only been a very small number of cases in which counsel have experienced disciplinary sanctions from their own bar associations. For instance, there is one reported case in South Africa refer- ring to a Bar Council’s recommendation to have a counsel acting for South Africa in an ICSID case be struck off the roll for attempting to secure a bribe from claimants in return for persuading his client to settle on favourable terms. Noteworthy, in African countries a framework exists to deter guerrilla tactics in
- 83. KIAC 2014 CONFERENCE REPORT |73 litigation. The constitutions of many African countries require bar associations to regulate the conduct of its lawyers. Regardless of whether reporting is voluntary or mandatory, counsel must be mindful of their duty of confidentiality when reporting as detailed facts and evidence may be confidential. Conclusion of the arbitral proceedings: Counsel should consider the ‘antics’ of opposing counsel when filing his/her submission on costs. Arbitration guerrillas may use the practice of requesting the final award to be set aside as an absolute final resort in a desperate attempt to evade a decision of an arbitral tribunal. While the New York Convention provides a limited list of grounds on which arbitral awards can be challenged with respect to their recognition or enforcement, it was left to discussion whether annulment of arbitral awards is limited to such grounds. Grounds for annulment can be found both in legislation as well as case law dealing with a broad spectrum of issues, e.g., failure to comply with agreed procedures by the tribunal, public policy (ordre public), procedural public policy, fraud (perjured testimony or fabricated evidence). A recent example of such a decision is the Ontario Court of Appeal, which decided that alleged death threats against witnesses could be raised as a defence to enforcement proceedings in Canada for an arbitral award rendered (by default) in Russia. THE ROLE OF ARBITRAL INSTITUTIONS Arbitral institutions are limited to the boundaries of their rules. Further- more, they must remain impartial to protect the integrity of the arbitration process. They also must consider the potential risk to any award that may be rendered as a result of such Guerrilla Tactics. Many of the institutional rules have already foreseen procedures to avoid undue delays and excessive costs, for instance case management, Appendix IV of the ICC Rules. These measures
- 84. 74 | KIGALI INTERNATIONALARBITRATION CENTRE provide arbitral tribunals with support in the effective running of their arbitration proceedings. Arbitral institutions may not only play a supportive but also an active role. Arbitral institutions could participate in the coordination with state authorities to provide arbitrators with the necessary resources to deal with the protection of witnesses, for instance the provision of additional security. This could be executed by drawing up a highly confidential “black list” of counsel renowned for invoking guerrilla tactics (“name and shame”), accessible to all arbitral institutions. Arbitrators would therefore be sensitized to these so-called “Hannibal Lectors of the law” before embarking on an arbitration. A similar “black list” could be kept for parties who tend to dabble in less than ethical conduct. However, the benefit of such a list is somewhat limited, as the chances of the same parties initiating arbitration on a regular basis are lower than the participation of the same counsel in an arbitration. Another issues is whether arbitration institutions should notify bar associations of counsel’s misconduct, however as already mentioned an arbitral institution will only really feel obligated to report in cases of real criminal misconduct. CONCLUSION AND Q&A For guerrilla tactics to flourish on the playing field of litigation, there must be two phenomena present: There must be both guerrilla tacticians ready to use their dark arts and umpires willing to allow them to operate without sanction. Thus, to stem the tide of guerrilla tactics in international arbitration, education is the key. To facilitate these ends, cases of guerrilla tactics should be made public. Not only will publication act as a deterrent and heighten peer pressure, but it will also further education on the matter by providing valuable insight into the identification of guerrilla tactics and steps which were previously taken to address their use.
- 85. KIAC 2014 CONFERENCE REPORT |75 Furthermore, it is a task for us to consider ways to regulate conduct and behaviour in commercial arbitrations. We should not allow uncertainty and ambiguity to drag on until some governmental body takes the initiative to regulate international arbitration. It is for us to actively tackle these issues an define the appropriate ways and the rules by which parties shall play. It is not another Code of Conduct to be drawn up by a committee of an international association obeyed or not agreed or not on a case by case basis. We will need more then this. A binding character of basic rules, obligatory and respected is needed to live up to a level as the New York Convention will be the fundament to carry international arbitration forward as the premier means of dispute resolutions in trade and commerce of this world. Some parties might believe that deploying guerrilla tactics and delaying the proceedings will pay off. However, in the long run, any delay produces more costs that eventually will have to be borne by one of the parties. Counsels should consider their reputation in the arbitration world and note that a reputation as a “guerrilla” is not so easy to shake and may do more damage than good. “The guerrilla needs to be put back where it belongs, in the wilderness, far away from the hearing rooms of international arbitration.” Thank you for your attention.
- 86. 76 | KIGALI INTERNATIONALARBITRATION CENTRE PRESENTATION ON DEALING WITH GUERRILLA TACTICS IN INTERNATIONAL ARBITRATION: Dr Fabian Ajogwu, Kenna Partners, Nigeria Which Tools for Counsels and Arbitrators?1 It is a privilege to be invited to speak at the KIAC International Arbitration Centre’s 2014 Conference on the theme ‘Emerging Issus in International Arbitration: What a New Arbitral Seat Can Anticipate,’. I would like to share with you my thoughts on a subject, whose importance in recent times, has been brought to the front burner as it rightfully should. It is the subject of unconventional and disruptive behaviour in international arbitration popularly referred to as ‘guerrilla tactics’. Introduction With globalization and advances in commerce and technology, the need for legal systems to adapt to mechanisms for enhancing alternative dispute resolution (ADR) methods continues to grow. The rising popularity of ADR can be explained by the increasing number of cases being handled by the traditional courts and the attendant delays, the perception that ADR imposes lower costs than litigation, a preference for confidentiality and the desire of some parties to have greater control over the selection of the individuals who will settle their dispute on the basis of competence, experience and absence of bias.2 1 Dr Fabian Ajogwu is from the law firm Kenna Partners, and is the Author of ‘Commercial Arbitration in Nigeria: Law & Practice’, 2nd Edition, Centre for Commercial Law Development, 2013, Lagos. ISBN: 9789789199570 2 FI, Ajogwu, Commercial Arbitration in Nigeria: Law & Practice, 2nd edition, P 3.
- 87. KIAC 2014 CONFERENCE REPORT |77 In dealing with guerrilla tactics in International Arbitration, it is paramount to first and foremost understand the consequence of the phrase “international arbitration” in relation to the subject of discourse, especially as terms in common use often elude definition.3 It is sometimes said that every arbitration is a national arbitration in the sense that it must be held at a given place and is accordingly, subject to the national law of that place. Whilst this may be an interesting topic for debate, in practice, it is customary to distinguish between arbitrations which are purely “domestic” and those which are “international”. International arbitration is a process used by parties from different states to determine their disputes before an impartial tribunal appointedbyacommonlyagreedmethod.4 Internationalarbitration therefore, would simply suggest that parties to the arbitration are in different states or countries. Under the UNCITRAL Model Law, arbitration is international if: the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States; or one of the following places is situated outside the State in which the parties have their places of business: (i) the place of arbitration if determined in, or pursuant to, the arbitration agreement; (ii) any place where a substantial part of the obligation of the commercial relationship is to be performed or the place with which the subject-matter of the dispute is most closely connected; or the parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country.”5 3 Discussed at the Kigali International Arbitration Conference (KIAC) 2014 International Arbitration Conference with the theme ‘Emerging Issus in International Arbitration: What a New Arbitral Seat Can Anticipate, by FI Ajogwu and Günther J. Horvath. 4 Clayton Utz, A guide to International Arbitration p. 2 5 Art. 1.(3).
- 88. 78 | KIGALI INTERNATIONALARBITRATION CENTRE Experience has confirmed the long-standing advantages of arbitration as compared to dispute resolution before domestic courts, some of which are: - Neutrality of the dispute resolution forum; - Legal and/or technical/commercial/cultural expertise of the arbitrators; - Flexibility and confidentiality of the proceedings; - Finality of the award; and - Worldwide (International) enforceability of the award under the New York Convention. What Constitutes Guerilla Tactics in International Arbitration? Parties to international business transactions are often driven by a desire to preserve their business relationship and prefer the friendly atmosphere of arbitral proceedings.6 However, subscribers to international arbitration increasingly complain about the length and cost and more recently, the tactics adopted by lawyers in the course of arbitral proceedings. These complaints reveal that arbitration has fallen victim of its own success.7 It has now become glaring that the lee-ways and advantages synonymous with arbitration also give room for disadvantages and procedures that are too notorious to be considered merely as bad behaviour. Adverse conduct by parties/attorneys/lawyers in the course of arbitration proceedings may otherwise be regarded as bad behaviour. However, the term guerrilla tactic is often used to describe those actions which are perceived as more hostile practices displayed by parties in arbitration in an attempt to gain a better advantage over the opposing party. Till date, there is lack of clear definition of Guerilla Tactics in International Arbitration. This accounts for why conduct identified by some attorneys as ‘guerilla tactics’ would be defended by others as legitimate strategy, or even as part of an attorney’s obligation to diligently represent the client’s interest.8 6 Klaus Peter Berger, Private Dispute Resolution in International Business. P 308 7 Rivkin, Arb. Int’l (2008), 375, 377. 8 Catherine A. Rogers, ‘Guerrilla Tactics in International Arbitration: Ethics, Practice,
- 89. KIAC 2014 CONFERENCE REPORT |79 The list of what constitutes Guerilla Tactics in international arbitration is long and sometimes can hardly be distinguished from bad behaviour on the part of parties or counsel representing parties in an international arbitration. The following have been identified as Guerilla Tactics in international arbitration:9 • Convincing an arbitrator to go home rather than attend deliberations; • Death threats; • Changing counsel mid-proceedings to create a conflict with an arbitrator; • Wire-tapping opposing counsel’s meeting rooms; • Hiding damaging documents that were ordered to be disclosed; • Raising many challenges to a single arbitral tribunal; • Physically assaulting the opposing party; • Raising excessive frivolous objections to ‘run the clock’ at an evidentiary hearing; • Threatening a witness to dissuade him from testifying; and • Absurdly excessive requests for document disclosure. The diversity of commercial disputes results in a complex combination of different legal, regulatory and ethical background amongst the arbitrators and legal practitioners. There is no universal standard or body of rules or regulations to guide the ethics and procedures of parties in arbitration proceedings. There are however, different international bodies and institutions that have made available rules and principles of ethics to bind the conduct of parties in arbitration proceedings but the parties will have to agree to be bound by those rules and principles in the first place. An example is the International Bar Association Rules of Ethics for International Arbitrators. Remedies’ Legal Studies Research Paper No. 23-2013. 9 Günther J. Horvath, Stephan Wilske, Guerrilla Tactics in International Arbitration, International Arbitration Law Library, 2013, ISBN 13: 9789041140029. Stephan Wilske, ‘Arbitration Guerrillas at the Gate: Preserving the Civility of Arbitral Proceedings when the Going Gets (Extremely) Tough’, in Austrian Yearbook on International Arbitration, ed. Christian Klausegger et al. (Manz’sche Verlags-und Universitätsbuchhandlung, 2011), 315-319.
- 90. 80 | KIGALI INTERNATIONALARBITRATION CENTRE FACTORS RESPONSIBLE FOR THE RISE IN THE USE OF GUERILLA TACTICS IN INTERNATIONAL ARBITRATION First, there is the absence of a uniform legal framework regulating ethical conduct of counsel in international arbitration. Ethical issues that are prevalent in international arbitration are numerous and range from conflict of interest, incompetence, lack of candor, dishonesty,andimpropercommunicationswithopposingparties,to improper arrangements for remuneration for legal representation.10 These ethical issues often metamorphose into “guerilla tactics” in international arbitration. For instance, where a counsel who is incompetent in an international arbitration resorts to death threats to intimidate a fellow counsel; or where a counsel raises many challenges against a single tribunal arising from dishonesty. Counsel representing parties in international arbitration usually come from different regulatory backgrounds with respect to laws that govern their professional conduct. As Mosk rightly pointed out, different regimes have a variety of rules or laws applicable to these ethical issues enumerated above. It is also relevant to point out that the extent to which choice of legal principles can govern professional conduct issues cannot be determined easily.11 Secondly, erring counsel in international arbitration proceedings cannot be subjected to any forum-state disciplinary system or mechanism as is the case with the judicial system. As there is no uniform code of conduct that binds counsel in international arbitration, there is also no chance of prosecuting or sanctioning any erring counsel or counsel adopting Guerrilla tactics in international arbitration. For instance every state has prescribed punishment or sanctions for counsel that violates the code or rules of the legal profession unlike in international arbitration. There is 10 Richard M. Mosk, ‘Attorney Ethics in International Arbitration’ (2010) 5 Berkley Journal of International Law Publicist 32, p. 33. 11 Richard Mosk & Tom Ginsburg, ‘Evidentiary Privileges in International Arbitration’ (2001) 50 International and Comparative Law Quaterly 345.
- 91. KIAC 2014 CONFERENCE REPORT |81 no oath in international arbitration which the violation can result in prosecution. In situations like this, counsel resort to all sorts of tactics including Guerrilla tactics which serve to favour their clients or their selfish interests. Thirdly, international arbitral tribunals have very little or limited powers to discipline counsel or parties that engage in conduct that is unacceptable and may be termed Guerrilla tactics. Because counsel appearing before an international arbitral tribunal are not licensed or regulated by that particular tribunal, they can afford to hide damaging evidence or treat a witness unfairly and with impunity. Another issue or factor responsible for counsel engaging in acts which may be described as guerrilla tactics is that arbitrators are usually paid by parties and appointed by the counsel representing parties. Therefore, this creates a likelihood of bias on the part of arbitrators, and they are more likely to indulge counsel or parties that adopt guerrilla tactics. This raises the issue of arbitrators’ independence and resoluteness. It has been argued that the concept of the “impartiality of party-appointed arbitrators” is mere pretence.12 Tackling Guerilla Tactics in International Arbitration Consequently, where parties from two different countries decide to settle their dispute by arbitration, there is bound to be a clash of ethics. A common example is the practice of Ex parte communication which is common in some countries like China and even Nigeria but may be abhorred in other jurisdictions. The act of an arbitrator acting as a mediator and speaking to one party in the absence of another will be a ground to challenge the impartiality and independence of an arbitrator. The principles of arbitration are the same as those for natural justice - Audi alteram partem which means that both parties should be heard and Nemo judex in causa sua which means no man should 12 See Mosk, (n 13) at p. 36.
- 92. 82 | KIGALI INTERNATIONALARBITRATION CENTRE be a judge in his own case. The principles in administrative law, are to ensure that the decisions of tribunals and governmental agencies are reached in a proper manner ensuring that all the parties are heard fairly and the decision is reached fairly too. Article 18 UNICITRAL Model Law safeguards the parties’ basic procedural right of equal treatment and their right to be heard as the essential principles of arbitral due process. These basic procedural rights constitute the ‘magna carta’ of any arbitration. ‘Unfortunately, the cardinal principles of natural justice and fair play that govern the resolution of disputes through arbitration, give the unscrupulous party and his wily lawyers a lot of scope. They will put the claimant to proof of each and every fact that has to be proved. They will find particulars and further and better discovery, the further the better discovery wears down the claimant’s patience, eats into his pocket, and delays the dreadful hour of having to part with money. Attempts to fix an early date for hearing will be met with gloomy forecasts of its duration, and pleas for sympathy on behalf of counsel with no dates free until late next year’.13 The above quote gives a general but succinct description of the guerrilla tactics being used to delay and frustrate the claimant in an arbitration proceeding. The attempt will generally be to wear the claimant out until he has no will to push the case any further. Of course there is usually a lot of money hanging as the subject matter in arbitration disputes so a complete back down will just be wishful thinking. The fact that the adversarial system of litigation where the aim to hear both parties and decide fairly is also the downfall of arbitration. Arbitration tribunals however, do not have the judicial powers to dismiss poorly arbitrated proceedings for lack of diligent prosecution or award cost for delays like in litigation. As arbitration is based on contract, some of these powers of the judges in litigation which are taken for granted are a necessity. In arbitration, the concept of the independence and partiality of the arbitrators are familiar and concept principles that are strictly applied. In fact, the rules guiding arbitration proceedings in most if 13 Thomas, Arbitration (1991), 9, 11
- 93. KIAC 2014 CONFERENCE REPORT |83 not all countries provide that parties can challenge the arbitrators seating in a tribunal where it is suspected or there is justifiable doubt that there may be conflict of interest or impartiality. It is also generally accepted that lack of independence and impartiality by an arbitrator is a ground to challenge an award. It is unfortunate that these issues of cost and delay which were a few of the advantages of arbitration over litigation have become part and parcel of the cons of arbitration. The users of international arbitration are mostly corporate parties and, ‘like speed, are impatient with delay, and abhor unnecessary costs’. The solution to the problems caused by the informal nature and practice historically (loosely used) associated with arbitration, is now the “the ‘judicialization’ of arbitration”. This simply means that arbitration will have to be submerged into the judicial system and under the control and protection of judges for it to survive the attacks by practitioners of guerrilla tactics. SUGGESTIONS & RECOMMENDATIONS The International Chamber of Commerce (ICC) Commission on Arbitration and ADR submitted a Report titled Techniques for Controlling Time and Costs in Arbitration to assist the Parties and the Tribunal in Arbitration Proceedings. The Reports suggest that: 1. Fast-track procedures should be included to shorten the time spent arbitrating. Article 38(1) of the ICC Rules enables the parties to shorten the time limits provided for in the Rules. It is however difficult to draft this fast track clause because it is impossible to determine how long it will take to settle a dispute. The Report also advises against setting time limits for rendering the final award because it can create jurisdictional and enforcement problems if it turns out that the time limit set is unrealistic or not clearly defined. 2. A more detailed arbitration agreement setting out specific details of the arbitration procedure should be created after the dispute has arisen. This is because ‘the effects of a loose drafting approach are not felt at
- 94. 84 | KIGALI INTERNATIONALARBITRATION CENTRE the drafting stage’. Rather it is when the dispute has arisen from an inelegant draft that blames abound, such as, ‘had I known’. An international arbitration agreement is a contract and so requires the existence of those ingredients for the validity of a contract. The Challenge to international arbitration is that many national laws have different requirements. These additional requirements range from separate execution of arbitration agreements to special prints for the arbitration clause.14 Parties are often encouraged to use the exact words of the arbitration clauses suggested by the arbitral institution that they choose. 3. The post dispute agreement should be very detailed to cover the different ethical clashes that are common in international arbitration. A very succinct and familiar example is the differing opinions counsel have on pre- testimonial communication with witnesses. A scholar recounted that: ‘An Australian lawyer felt that from his perspective it would be unethical to prepare a witness; a Canadian lawyer said it would be illegal; and an American lawyer’s view was that not to prepare a witness would be malpractice.’ It should be noted that in some jurisdictions, it is common practice to prepare a witness. This of course shows the differing opinions and how a clash of this seemingly minor opinion might be used by a ‘guerrilla’ to delay or frustrate proceedings by constantly challenging and disputing ethical differences. 4. On the selection of arbitrators, it will be better to have a sole arbitrator, selected and appointed by the ICC to ensure faster decision making and prevent the constant and unnecessary challenges faced by the arbitrator which may delay proceedings. 5. With regard to experience, the counsel and arbitrators to be appointed should have no time constraint and vast experience in case management. 14 Commercial Arbitration in Nigeria: Law & practice (Second Edition) P 192.
- 95. KIAC 2014 CONFERENCE REPORT |85 Understandably, and as a result of the semblance between arbitration and litigation, it is advised that some of the judicial powers and privileges (as a Judge is a King in his own Court) granted to judges should be accorded arbitration panels. Due to the contractual nature of arbitration, even the laws that parties may subscribe themselves to willingly, may result in the parties autonomy by using expressions such as ‘the parties are free to…’ or unless otherwise agreed by the parties…’. This freedom appears be too wide in some instances because if one party is recalcitrant, the freedom which was intended to ease the proceedings may be employed as a tool to frustrate the proceedings. However, it is suggested that this freedom is a compensation for the lack of a right to appeal the substance of arbitral awards. With respect to Attorneys/Lawyers, it would be preferable if the “gladiator” acts of brazen showmanship displayed in the Courtroom often to earn professional fees should not be entertained in arbitration proceedings. The International Bar Association also provides Rules of Ethics for International Arbitrators. Although the provisions are not generally binding to all international arbitration or conciliation proceedings, parties may include a certain clause to be bound by the provisions of the Rules. The Rules cover, Acceptance of Appointment as Arbitrator, elements of bias, duty of disclosure, communication with parties, fees, duty of diligence, involvement in settlement proposals, confidentiality of deliberations, and the Fundamental Rule instructing Arbitrators to proceed diligently and efficiently to provide the parties with a just and effective resolution. The binding clause provides the consequence(s), which are removal from position as arbitrator on the panel and forfeiting remuneration. SUGGESTIONS FOR COUNSEL AND ARBITRATORS Interim Measures ‘An interim measure is any temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party to:
- 96. 86 | KIGALI INTERNATIONALARBITRATION CENTRE maintain or restore the status quo pending determination of the dispute; take action that would prevent, or refrain from taking action that is less likely to cause current or imminent harm or prejudice to the arbitral process itself; provide a means of preserving assets out of which a subsequent award may be satisfied; or preserve evidence that may be relevant and material to the resolution of the dispute.’15 Not all Arbitral Tribunals have the power or authority to order interim measures. However, it is generally a matter of practice and most arbitration laws confer the power to order interim measures on the arbitral tribunals. In line with the autonomy principle associated with arbitration, parties can also confer the power to order interim reliefs on the tribunal via the arbitration agreement. The parties will need to agree on how exactly the powers should be carried out. The arbitration agreement should provide that the arbitral panel must consider substantial prejudice, proportionality or balance of convenience, reasonable chance of success on the merits, urgency and that the appropriate security to be provided by the arbitral tribunal.16 The arbitral panel must however be careful in issuing interim measures. Consideration has to be given to the relevant laws of the State court (because it is only a court that can enforce the measure), and the measure that will be appropriate for the relevant contract. For example, in Switzerland, the tribunal is permitted to order measures not provided by the Swiss Private International Law Act (PILA). The problem with this being applied to other countries is that, since a state court may only issue measures that are admissible under its own rules of civil procedure applicable at the 15 Art 17(2) of the revised UNICITRAL Model Law 16 Interim Relief in International Arbitration, Dispute Resolution International Vol. 1 No. 2 December 2007 pp 176-178
- 97. KIAC 2014 CONFERENCE REPORT |87 place and time where it is located, it may hinder the enforceability of such interim orders issued by an arbitral tribunal.17 It is however pertinent to note that these measures are only interim in nature and unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute.18 Counsel must ensure that the International Rules and Guidelines are included and set as the standard in an arbitration proceeding. This is because in the event that issues arise during the arbitration proceedings,includingchallengingtheindependenceorimpartiality of the arbitrator, the state in deciding, will have to give cognizance to the International Rule or Guideline because the agreement provides so. However, Courts are not eager to accept International Rules. A suggested reason is the belief that domestic law provides a comprehensive regime governing arbitrators’ independence and impartiality.19 Avoiding Doubt To combat guerrilla tactics in international arbitration, arbitrators must do their absolute best to avoid giving room to recalcitrant parties whose objectives are to abuse or frustrate the arbitration process. A common saying in our jurisdiction is; “prevention is better than cure” and this is a principle that parties to international arbitration proceedings should live by. Some of the common issues that parties encounter, will be distilled to serve as a caution sign. They include, challenging the arbitrators, the jurisdiction, governing laws and most importantly, the validity of the arbitration agreement. 17 Interim Relief in International Arbitration, Dispute Resolution International Vol. 1 No. 2 December 2007 pp 179. 18 Redfern and Hunter, Law and Practice of International Commercial Arbitration p 338, notes 7-22. 19 Dispute Resolution International, IBA Guidelines on Conflict of Interest in International Arbitration p 6
- 98. 88 | KIGALI INTERNATIONALARBITRATION CENTRE Challenging Appointed Arbitrators This is a window provided for by most countries and international institutions to ensure fair hearing in international arbitration. If a party reasonably suspects that an arbitrator is not independent and/or impartial, he has the right to challenge the arbitrator claiming that arbitrator is compromised and therefore will give an unfair and biased award. The dictum ‘nemo debet esse judex in propria causa’ is a principle of natural justice and it means that a party cannot be an arbitrator in his own case. It is also backed up by the IBA Guideline which provides that “no one is allowed to be his or her own judge” (i.e, there can be no identity between an arbitrator and a party). Although in Gary B. Born’s International Commercial Arbitration20 , the author separates the features in disputes over an arbitrator’s independence and impartiality into different sub headings, I will classify them as different aspects of the principle that no man shall be a judge in his own cause. Therefore, it is advised that parties should refrain from appointing arbitrators who have a pecuniary interest or otherwise in the disputes no matter how remote, arbitrators who are in the employment of a party to the dispute, or had prior involvement in the dispute, business, personal or family relationship with a party and prior representation of a party amongst others. It translates to the point that only experienced arbitrators should be involved in international arbitration. The arbitrators should practice full disclosure of conflict of interest, refrain from making comments or expressions of opinion during the arbitral proceedings, and, avoid ex parte contacts during arbitration as some institutional rules and international rules forbids it.21 Challenging Jurisdiction DuringPostarbitrationproceedings,somepartiesusethelegitimate grounds for annulment of International Arbitral Awards, in order to frustrate the enforcement of the awards. Some of the grounds for annulment are: non-existent or invalid arbitration agreement, lack 20 International Commercial Arbitration; Selection, Challenge and Replacement of Arbitrators pp 1517 – 1528. 21 International Commercial Arbitration; Selection, Challenge and Replacement of Arbitrators pp 15.
- 99. KIAC 2014 CONFERENCE REPORT |89 of fair hearing, failure to comply with agreed rules and procedures, ultra vires acts, lack of independence and impartiality of the arbitrators, fraud and public policy amongst others. It is therefore imperative that arbitrators ensure awards written in international arbitration are not tainted with such irregularities that may lead to the challenge of the jurisdiction of the tribunal or the award. Dealing with Guerrilla Tactics that are Unethical This quote “International arbitration dwells in an ethical no-man’s land”22 , is an apt description of the peculiar nature of international arbitration and consequently the avenue that allows for guerrilla tactics. This is because proceedings are not regulated by the national laws that regulate arbitration on a local platform and therefore ethics and professionalism are sometimes sacrificed on the altar of freedom. The core substantial and procedural standards that a counsel should abide by are often abandoned and what is supposed to be a civilized dispute settlement becomes white- collar guerrilla warfare. The core principles of a lawyer’s professional conduct include “the lawyer’s obligation zealously to protect and pursue a client’s legitimate interests, within the bounds of the law, while maintaining a professional, courteous and civil attitude toward all persons involved in the legal system”.23 The understanding of some lawyers practicing guerrilla tactics may be hinged on the desire to earn their fees. They believe that the tactics are mere necessities to ensure they are zealously protecting and pursuing a client’s legitimate interest. As a general rule, arbitral tribunals may order whatever measures they deem necessary to protect the rights of the requesting party from harm that cannot later be remedied by the final award; or they may regulate the relationship between the parties during the arbitral proceedings.24 22 Rogers, Fit and Function in Legal Ethics: Developing A Code of Conduct for International Arbitration, 23 Mich. J. Int’l. 341, 342 (2002). 23 ABA, ABA Model Rules of Professional Conduct, Preamble. 24 Wirth, Interim or Preventive Measures, p 32; Blessing, Introduction, to arbitration, pp 278-9, note 857, Interim Relief in International Arbitration, Dispute Resolution International Vol. 1 No. 2 December 2007 pp 178
- 100. 90 | KIGALI INTERNATIONALARBITRATION CENTRE Unreasonable Request for Documents: Where a counsel representing a party in an international arbitration suspects the use of guerrilla tactics in the course of the arbitral proceedings, it is suggested that he should bring it to the attention of the arbitral tribunals with immediate effect so that the tribunal can deal with it decisively once and for all. Conclusion With the forum of international arbitration being likened to an ethical no man’s land, counsel are determined to win at all costs. Scenarios are skillfully manipulated by counsel and parties like opponents in a game of chess. This has given rise to the need to checkmate the use of unethical strategies by counsel. Aristotle’s belief that nature abhors a vacuum is justified by the range of guerrilla tactics employed by counsel in international arbitration. Their creativity is fuelled by the impunity enjoyed by the parties to an international arbitration. Riding on the waves of globalization is the urgent need for the inclusion of international standards of ethical conduct to fill the current vacuum. Clearly, a balance has to be struck in order to ensure that the virtues for which arbitration is favoured are not turned into a vice. The intendment and spirit of arbitration must be upheld to ensure its continued relevance. This paper is therefore an appeal for the enactment of binding regulations on codes of conduct to be adopted by parties and counsel to an international arbitration. Arbitral tribunals may also, without fear or favour, harness the full potential of their arbitral powers and ensure that neither party nor counsel to an international arbitration is allowed to unscrupulously manipulate proceedings. The enactment and enforcement of binding regulations on codes of conduct would not only accelerate arbitration and reduce costs, but also concretize its position as a foremost alternative dispute resolution mechanism. Arbitration is after all, a means to an end which is justice, and justice must not only be done, but must also be seen to be done.
- 101. KIAC 2014 CONFERENCE REPORT |91 REFERENCES ABA, ABA Model Rules of Professional Conduct, Preamble Catherine A. Rogers, ‘Guerrilla Tactics in International Arbitration: Ethics, Practice, Remedies’ Legal Studies Research Paper No. 23- 2013. Clayton Utz, A guide to International Arbitration p. 2 Dispute Resolution International, IBA Guidelines on Conflict of Interest in International Arbitration p 6 FI, Ajogwu, ‘Commercial Arbitration in Nigeria: Law & Practice’, 2nd Edition, Centre for Commercial Law Development, 2013, Lagos. ISBN: 9789789199570 GüntherJ.Horvath,StephanWilske,GuerrillaTacticsinInternational Arbitration, International Arbitration Law Library, 2013, ISBN 13: 9789041140029 Interim Relief in International Arbitration, Dispute Resolution International Vol. 1 No. 2 December 2007 pp 176- International Commercial Arbitration; Selection, Challenge and Replacement of Arbitrators pp 1517 – 1528. International Commercial Arbitration; Selection, Challenge and Replacement of Arbitrators pp 15. Klaus Peter Berger, Private Dispute Resolution in International Business. P 308 Redfern and Hunter, Law and Practice of International Commercial Arbitration p 338, notes 7-22 Richard M. Mosk, ‘Attorney Ethics in International Arbitration’
- 102. 92 | KIGALI INTERNATIONALARBITRATION CENTRE (2010) 5 Berkley Journal of International Law Publicist 32, p. 33. Richard Mosk & Tom Ginsburg, ‘Evidentiary Privileges in International Arbitration’ (2001) 50 International and Comparative Law Quaterly 345. Rivkin, Arb. Int’l (2008), 375,377 Rogers, Fit and Function in Legal Ethics: Developing A Code of Conduct for International Arbitration, 23 Mich. J. Int’l. 341, 342 (2002) Stephan Wilske, ‘Arbitration Guerrillas at the Gate: Preserving the Civility of Arbitral Proceedings when the Going Gets (Extremely) Tough’, in Austrian Yearbook on International Arbitration, ed. Christian Klausegger et al. (Manz’sche Verlags-und Universitätsbuchhandlung, 2011), 315-319; Thomas, Arbitration (1991), 9, 11 UNICITRAL Model Law Wirth, Interim or Preventive Measures, p 32; Blessing, Introduction, to arbitration, pp 278-9, note 857, Interim Relief in International Arbitration, Dispute Resolution International Vol. 1 No. 2 December 2007 pp 178.
- 103. KIAC 2014 CONFERENCE REPORT |93 Deliberations V. V. VEDDER (UNITED KINGDOM): This initiative is indeed the annex to the rules, which is a 1-page document, several paragraphs, listing principles of conduct for council appearing before the tribunal. It is also limited in scope but it only deals with principles relevant to the relationship between the council appearing before the tribunal and the tribunal itself. Nothing in that Code of Conduct is other than the criminal offence, jurisdiction and one aspect where it isn’t a criminal offence it will be gross professional conduct by any standards. But the thing in this new initiative is in articles 18.5 and 18.6. In 18.5, Counsel appearing before the tribunal under the condition of still appearing, must agree to be bound by the annex. There is a contractual agreement by the council, not just by the guerrillas. The second thing which is extremely important is that there are sanctions. In 18.6, the tribunal, in case of a complaint from any of the parties, can investigate the council and if it finds that complaint justified and having heard from the council, we can employ monetary sanctions to the council. Also importantly, after bleach of contract within the council, a warning can also be issued and thirdly, the tribunal can order any other necessary measure to preserve the essential integrity of the arbitration itself. That is a close reference to the earlier part of the rules. These are really English rules on the mandatory role of the tribunal which is to ensure a fair procedure for all the parties concerned. This has been immensely controversial. I am the chairman of the sub-committee responsible for drafting it---it has gone through
- 104. 94 | KIGALI INTERNATIONALARBITRATION CENTRE maybe 30 or 40 drafts over the last three years, has been much influenced by the Davishan Model] Steven’s document which was presented during the ICA RIO Congress in 2010, by Prof Sans document of the IBA, it has partially been influenced by the CCB document that was presented to the European Commission. It preceded the IBA guideline but its consistent with the IBA guidelines of last year-it that causes a much more ambitious document covering a much broader range of relationships between counsel and the client, counsel and co-counsel, counsel and opposing counsel—it is not limited to the arbitration tribunal. While we have done this, most of us do not like codes of conduct, additional rules of conduct or addition rules of regulation which favour increasing the risk. What we have done is that we have come to understand over the last four years is that if we don’t self- regulate amongst ourselves as international practitioners in front of arbitration tribunals, somebody will do it for us. It will be the regulator employed by the state or the European Commission and that will be 10 times worse than anything we try to do ourselves. So when you read this document, please understand the context, I feel like I have been cut a thousand times over the last three years but I think we can justify the quality in the annex. Anybody can seriously defend counsel who deliberately lied to the tribunal but then I don’t think you can defend counsel who deliberately forged a document or destroyed a document, a relevant document that would be reviewed by the tribunal. I understand we are not comparing witnesses but I tell you, you can defend counsel who tells a witness to pressure him or herself in front of the tribunal. I take it differently from the counsel who deliberately invents bad faith—tactical challenge to an arbitrator in a order to derail the arbitration proceedings. I think the annex explains itself but the difficulty is the fact that it has ‘teeth’ and this is the first time any tribunal, any institution is trying to do this. It is an annex, we will see what happens, I hope it works, if it does, I predict many other institutions very quickly would have to do the same, otherwise states like Singapore will start regulating for us and that would not be a good thing for international arbitration. Thank You.
- 105. KIAC 2014 CONFERENCE REPORT |95 FABIAN AJOGWU (NIGERIA): Thank you for reminding us the guidelines and bringing them to all. Secondly it would help and I agree with what Veeder said that if we do not regulate proceedings ourselves, someone else would over time and possibly he said it would detrimental. But the point I want to make is where however you exercise these functions you would at best just deal with council and there is a traditional age old common law principal of not visiting the scenes of councils on the parties. So at best you would enable them change the council, at best. I am not sure if you will visit bad behaviour from the council or the parties. The other point was about liability of arbitrators in the first question. To the extent that it is a point of advice that would be fine, to the extent that it is a threat to intimidate the arbitrator it doesn’t differ much from the Guerrilla tactics. But on that note on liability of arbitrators there is just something that I want to leave us here like a fruitful thought. It was Teresa Jeovanial Larval partners or Herary Herbal Pussi in 2002 at the ICTR forum in Dublin, a mac apple officer who spoke on confidences and confidentiality for arbitrators. Personally I witness a lot of diverging of outcome of the arbitration and that in itself will create liability for arbitrators where parties say, we handled this matter and that was the outcome, unless the parties agree or explicit approval to do so diverge them the presumption is that the arbitral proceeding are confidential. KIHARA MURUTHI (KENYA): Chattered Institute of Arbiters, Kenya. We have discussed guerrilla tactics involving parties including criminal acts and ethical violations, ethical borderline tactics but I don’t think we have discussed guerrilla tactics by the tribunal itself and sometimes we are faced with a tribunal that is actually guerrilla. It does all these things behind your back and it is a threat to international arbitration. I don’t know whether it is in the book, I will buy the book by the way, I will be one of your customers but it is something you should reflect on as well, because these are also professionals and they do half of the things we have discussed this afternoon, so for me it is something we should reflect on. Thank you.
- 106. 96 | KIGALI INTERNATIONALARBITRATION CENTRE DR EUN YOUNG PARK (SOUTH KOREA): On regional arbitration-- Article 26 provides major rules the tribunal can invoke in the face of the misconduct of the counsel. The first one is the admonishment of the malicious party representatives, the second is drawing others’ influence, the 3rd is assessing the cost, the fourth is any other appropriate measure in order to preserve the fairness and integrity of the proceedings—the fourth one is very broad, so there is an issue as to what specific measures the tribunal can put? It might include removing the counsel. This is not a rule of a specific institution but by adopting it, it usurps the law. Dr. Fabian mentioned that the tribunal may not have strong power to be able to use guerrilla tactics but it is used by the arbitration tribunal, then it would address serious misconduct but the counsel. Thank you. DR GUNTHER J HORVATH (AUSTRIA): well I think indeed the behaviour of the arbitral tribunal itself or the arbitrators are also a wider area where guerrilla tactics can be seen as they occur. As I had said, this goes as classic explanation that the patterning mandate of the arbitrator, all of a sudden, is the best council in the world because he really drives the witness to the very end. And the most civil way of guerrilla tactics of the arbitrator is simply if he or she decides to refund the tribunal in the midst of deliberation after the whole arbitration has been done. That’s a real threat and at the end of the day I think it is for the institutions, the community to take notice of such behaviour and to consider the future appointment. The other side of the coin is as I have said before, if we would have a state which is compulsory in nature, I think the LCIA is on the right way to go, because there is all of a sudden a sanctioned behaviour which eased the rules; not just a recommendation which you must follow or not. I really do hope that we might see a development like with emergency arbitrator that one institution starts and all of a sudden becomes the governing drive for the institutions. But there also need to have an emerging arbitrator, they also need to have application of rules which go beyond the recommendations and make them compulsory behavior. I do not think we are already there and we can dream of a global convention which ascends to the same heights; I think that it is not just feasible over the next years to have something of that one. But to go with the rules of the
- 107. KIAC 2014 CONFERENCE REPORT |97 international arbitration institutions around the world I thing that is the right way to go. Let me add this thought. Preparing witnesses is an old story and whether we say it here or nots, it is already a subject of discussion. The cultural differences, the leading differences; what does it really mean? I mean that you might think that it is to prepare somebody; to tell him what he should say or to tell him to lie is the other side. And it is also not true that there might a poor verdict because of the leaking system. And this system was dangerous; if you look to Germany for instance you have just now an instance where the state or authority goes against a very reputable law firm because of them having allegedly prepared witnesses who appeared before the judges, and this is where I think we could be taken care of by international arbitration through proper means and proper rules of the institutions. ARTHUR IGERIA (KENYA): Bearing in mind that the tribunal is required to decide the case basing on the evidence presided by the parties and also bearing in mind that the tribunal is not supposed to be seen to be leading a party in prosecuting its case, to what extent should the tribunal go to try and discover or determine if a party is using guerrilla tactics as opposed to waiting until the other party raises the issue to the tribunal then the tribunal should take a decision as to whether is that guerrilla tactics or not? In short I am asking, can the tribunal on its own volition determine that a particular party is using guerrilla tactics if the other party has not raised the issue? DR FABIAN AJOGWU (NIGERIA): I think that is a very important question because it may not be in all instances that it is very obvious warranting the tribunal to step in it may be seen as descending into the arena of the dispute and typically they will be saying you would be blinded by the cost. I think that depending on what the guerrilla tactics in question is there may be instances where the tribunal can straight forward bring a correction to bear on it and other instances where the other parties actually represented by council could raise it and should be allowed to be seen, to be fair in addition to be in fair there two different things; perception and reality of being fair.
- 108. 98 | KIGALI INTERNATIONALARBITRATION CENTRE PanelFour How Arbitral Tribunals Award Damages in Construction Disputes How do Arbitral Tribunal Award Damages in Construction Disputes? The panel composed of arbitrators and Quantum experts shared the technical issues from theory to practice of the arbitral process such as legal standards, approaches in their evaluation and calculation of damages in construction disputes. PANELISTS: Paul Ngotho; Arbitrator, Adjudicator and Chartered Surveyor; Kenya Olasupo Shashore, SAN, Partner Ajumogobia & Okeke, Lagos - Nigeria; CHAIR: Eng. Fred Rwihunda; Managing Director, RFM Engineering, Rwanda
- 109. KIAC 2014 CONFERENCE REPORT |99 PRESENTATION ON HOW ARBITRAL TRIBUNAL AWARD DAMAGES IN CONSTRUCTION DISPUTES? Paul Ngotho, Kenya MATTERS OF GREAT INTEREST: CLAIMING, DEFENDING AND AWARDING INTEREST IN ARBITRATION An arbitrator infamously awarded a party some money “with interests” with- out specifying the rate. When he was asked to correct state the rate, he replied that he was already “functus officio” (i.e a dead official”). In other words, the arbitrator would rather die than deal with interest. The party spent over 6 years in court trying to enforce the award. The Court of Appeal has this to say, “We would like to point out an issue of concern, namely, the manner in which courts have dealt with precedent in this area of the law. It has simply been chaotic, with different and sometimes irreconciliable decisions from the same court.” Okwengu, M’Inoti and Sichale, JJA in Mumias Sugar Company Ltd Vs Nalinkumar M Shah, Civil Appeal No. 21 of 2011, Court of Appeal, Mombasa. One of the most enduring claims in construction and other types of disputes is interest. Interest is an important element in construction claims because the industry is dependent on credit, with up to 90% of the cost of construction being financed by credit in some cases. The problem is compounded by the fact that the principal sums involved are in millions of US Dollars and even billions in large infrastructural projects. Interest claims are particularly important in Africa for various reasons. Firstly, debts and other payments can be outstanding for a long period of time. Secondly, many African economies have high interest regimes, typically ranging from 20-35% p.a, compared to
- 110. 100 | KIGALI INTERNATIONALARBITRATION CENTRE 5-8%p.a.inthedevelopedeconomies.Thirdly,theinterestquantums are compouned by unfavourable foreign exchange rates. Fourthly, enforcement of awards through the courts take years, while the quantum of interest rises. Fifthly, fixed interest credit is rare – most credit is on variable interest rates. Sixthly, high inflation erodes the value of money very fast, hence the need to top it up with interest. The finality of arbitration makes it absolutely necessary for arbitrators to get it right the first time. This is part of the responsibility which accompanies the power arbitrators have to give non-appealable awards. Yet arbitrators and judges are not sorely responsible for the chaos the above judges lament about. They mould with the mud which the parties have given them. Shoddly interest claims and defences leave arbitrators and judges with little to work with. Parties who throw in the phrase “Cost and Interest” around without giving any justification cannot expect much. There is a limit on how far an arbitrator can interrogate the issue of interest without appearing to be descending into the arena or, worse, helping one party. This paper discusses the various salient issues around interest. It highlights the need for claiming interest convincingly, defending interest claims effectively and awarding interest appropriately. St Paul pleaded with his audience some 2,000 years ago that,”In the past God overlooked such ignorance, but now he commands all people everywhere to repent”. (Acts 17:30 New International Version). It is time for change.
- 111. KIAC 2014 CONFERENCE REPORT |101 AWARD OF DAMAGES IN ARBITRATION OF INFRASTRUCTURE CONSTRUCTION DISPUTES1* INTRODUCTION The doctrinal basis for damages as a remedy has been explored in sundry legal commentary2 . Developments in the law of obligations are now inextricably interwoven with the award of damages following allocation of liability between parties. Therefore modern day tort and contractual obligations owe much of their efficacy and complexity in actions to the fact that a claim for damages is the most potent and sought after remedy known in almost all adjudicatory systems. Courts, and then later arbitral tribunals, embraced the importance of damages and its radical nature from as early as the case of ROBINSON v HARMAN3 in the United Kingdom; “The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed” Comparatively other jurisdictions developed lucid statements on damages for instance under the United States 2nd Restatement of Contracts, damages are viewed as “expectation interest”, which is the economic position the injured party would be in but for the breach. 1 Olasupo Shasore, SAN, FCI Arb (delivered as a lecture at the annual regional conference of Kigali International Arbitration Centre 2014); co-author Johnson & Shasore, Commercial Arbitration International Law & Practice in Nigeria (LexisNexis 2011). 2 Tettenborn, Wilby and Bennet, The Law of Damages (2nd Indian Reprint, LexisNexis Butterworths 2010) –. 3 (1848) 13 P.D. 191 (C.A.) 200 Olasupo Shasore, Nigeria
- 112. 102 | KIGALI INTERNATIONALARBITRATION CENTRE In France the objective of damages under French Law is full compensation, which is “reparation integrale du prejudice” in respect of loss. Compensation is said to be in accordance with the loss suffered (tout le principle mais rien que le prejudice). At International Law, the Permanent Court of International Justice (“PCIJ”) held in Factory at Chorzow4 that “the essential principle contained in the actual notion of an illegal act – a principle which seems to be established by international practice and in particular by decisions of arbitral arbitrators is that reparation must as far as possible wipe out all the consequences of the illegal act and re- establish the situation which would in all probability have existed if that act had not been committed”. Furthermore in BAKER MARINE v CHEVRON (NIGERIA)5 , the court held that a party is “only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach. What was at that time reasonably so foreseeable depends on the knowledge then possessed by the parties or at all events, by the party who later commits the breach. For this purpose, knowledge possessed is of two kinds; one imputed; the other actual…” Additionally in Uganda, in the case of NIRMA INTERNATIONAL LTD v JARIBU CREDIT (U) TRADERS LTD (UGANDA) (2014), adopting the decision of the East African court of Appeal in DHARAMSHI v KARSAN [1974] 1 EA 41, the general principle for the guidance of court in the award of damages “ is a fundamental common law doctrine of restitutio in integrum. It means that the Plaintiff is to be restored as nearly as possible to a position he would have been had the injury complained of not occurred, that is, as if he had received his money in time.” Common to all jurisdictions is the notion of a past or future ‘wrong’ or ‘breach’ or ‘illegal act’. Without a finding of a past or future wrong in favour of the claiming party the tribunal ought not to 4 1928 PCIJ 5 [2000] NWLR (pt 681) 393
- 113. KIAC 2014 CONFERENCE REPORT |103 proceed to award damages. This exposes the issues that confront many tribunals – the nature of the wrong; the remoteness to loss; the causal link between the two; how to measure or assess the loss in compensation and the quantum to award. Damages and arbitral justice Arbitrators and arbitral tribunals are often but not exclusively concerned with contractual disputes. As we now know, whether or not in construction arbitration, arbitrators can – depending on the dispute clause - entertain both claims in contract and tort concurrently. See FILI SHIPPING COMPANY LIMITED v PREMIUM NAFTA PRODUCTS LIMITED (THE FIONA TRUST)6 ; “…the question of whether the contract was repudiated should be decided by arbitration but the question of whether it was induced by misrepresentation should be decided by a court? …there is no rational basis upon which businessmen would be likely to wish to have questions of the validity or enforceability of the contract decided by one tribunal and questions about its performance decided by another” Whether the construction dispute is solely contractual or related to a tort, parties claim and expect to receive awards in damages - this conforms to our common commercial sense of justice. From the outset it is safe to say that the law does not offer and indeed there can be no authoritative formula for the optimum award in damages; except to provide guiding principles from underlying aims and objectives for its award. There are several justifications that play on the minds of arbitrators when they consider claims for damages. Based on their sense of the justice of the dispute; wittingly or unwittingly these principles operate to influence their consideration. Restitution or restorative justice: in order to bring the claimant back to his position as if the wrong had not occurred, the tribunal could award the monetary claim that is proved to sustain this principle. Where in a green field design phase of a construction the 6 (2007) UKHL 40.
- 114. 104 | KIGALI INTERNATIONALARBITRATION CENTRE contractor invests at the other party’s contractual agreement – in all design and feasibility costs only to be replaced by a different Engineering Procurement Construction [EPC] contractor. The contractor could be entitled to all his provable costs including third party professional fees. Restoration appeals to a natural sense of justice for loss occasioned by the respondent. Compensatory justice: where the loss is met by a sum to compensate but not necessarily a total indemnity. Again a would- be EPC contractor could be entitled to an award of damages in respect of profit had he been allowed to perform the contract on a compensatory basis. Comfort justice: in similar circumstances the arbitral tribunal may award damages with the intention to ameliorate the claimant’s condition from the harsh effects of the respondent’s breach. This would readily occur in tort claims arising from contractual breaches in the construction environment possibly personal injury, kidnap or grievous bodily harm or death attributable to the respondent Punitive justice: the respondent’s conduct contains some aggravatingelementforwhichthetribunalfeelsjustifiedinpunishing with an exemplary award of damages. Where the project owner in a construction contract is liable under a willful misconduct clause in a construction contract that leads to loss of life or harm owing to gross negligence while the contractor performs the contract the arbitral tribunal may award damages with a punitive element. Deterrence: where the respondent’s behaviour is so cynical and obtuse that the tribunal seeks to deter development of the reprehensible conduct. Where for instance a state party to a construction contract declares to a contractor without reason - ‘the contract is cancelled’. This cynical breach is now widely unacceptable under international commercial law. However the fact that commercial arbitral awards are not binding as precedent makes deterrence difficult to sustain. But in international commercial arbitration and more so in international investment arbitration under bi-lateral investment treaty arbitration
- 115. KIAC 2014 CONFERENCE REPORT |105 and International Centre for Settlement of Investment Disputes (ICSID) awards, tribunal decisions contribute to a general body of commonly accessed legal thinking in the law of obligations such that the reasoning influences future conduct. With this in mind arbitrators do give deterring awards of damages. Nominal justice: in some circumstances the arbitral award finds it necessary to recognize a disputed right inuring to the claimant under a contract. Having established the right it might be difficult to ascribe loss arising from the dispute at hand. For instance in a road construction Build own operate and transfer [BOOT] where the rights to a defined concession area or advertising is in dispute, upon determining the exact area and the nature of rights the tribunal could award nominal damages without seeking to compensate or restitute any monetary loss. Arbitration in Infrastructure Construction Disputes Infrastructure construction will occupy national economies in Africa for the foreseeable future, international and multinational construction companies will inevitably be involved, making the likely disputes potentially complex and international. Arbitration in construction disputes is the most decisive in the basket of Alternative Dispute Resolution (“ADR”) options because it meets the two objectives of construction disputes which are: third party determination; and regulating and allocating loss Loss compensation through the award of damages plays a crucial role in construction dispute resolution as it provides legal certainty to protect the legitimate expectations of the injured party. In seeking to return a party to the financial position before the breach – a mishandling of a claim for damages could determine the future of a construction project and infrastructure delivery. But what role will African arbitrations play? Given the central nature of damages should African parties not develop a clear approach to the award of damages in construction arbitration?
- 116. 106 | KIGALI INTERNATIONALARBITRATION CENTRE Assessment of Damages The recognized approaches offer the irreducible minimums in assessing damages arbitrators may exercise their discretion in the quantification of damage whilst taking into consideration the established legal principles, public policy and the limits imposed within the arbitration clause. The arbitrators must also assess the evidence of damages suffered by the party seeking damages and the claims and rebuttals. In order to adequately compensate an injured party, the arbitrators must ensure that the arbitral process has followed the rules and the applicable law in order to avoid over-compensation or under- compensation. The relevant evidence should be assessed with minimal speculation and as few assumptions as possible. The arbitrators must also properly apply the rules of procedural equity and burden of proof, as well as the correct contractual allocation of risk. In addition, indirect damages are to be considered (foreseeability) with expectation and reliance distinguished. The arbitrators are required to agree on the breach and discuss the subject of damages. A tribunal should determine the type of loss, whether normal loss or consequential loss (profits lost or expenses incurred) and consider expert opinion. International bench marks for the evaluation of damages to be awarded are subject to the following requirements: The degree of certainty of the claim; Arbitrators have many duties but it scarcely is their duty to fish out or create claims where they do not exist or are incomprehensible. This may seem obvious but it is not unusual in complex claims to find conflicting scenario and heads of claim that make it difficult to ascertain the damages to award. A first general guide is that the time of assessment and calculation should be when the cause of action arose and not necessarily for instance - the date contractual
- 117. KIAC 2014 CONFERENCE REPORT |107 relationship commenced7 . Bearing in mind the first principle of restoring the claimant to his position had the breach not occurred, the assessment of loss for a late construction project delivery would be the general cost overrun associated with delay. Limitations such as foreseeability; remoteness; - The time honored dictum in HADLEY V BAXENDALE8 is still a most useful guide to arbitrators: “where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such a breach of contract should be such as may fairly and reasonably be considered as either arising naturally ….or such as may reasonably be supposed to have been in contemplation of both parties” To ascertain whether the party is liable at all in damages is to determine whether the matters are closely enough connected – if there is a natural flow of consequences from the breach to the loss. This is often easier said than done. This is because the entire area of relativity and foreseeability reasonableness and special knowledge of the respondent is called into issue. If the loss was not reasonably foreseeable the respondent will not be held liable. The quantum of damage claimed: As a general rule, the parties will only be entitled to a maximum of what they have claimed. It may amount to misconduct on the part of the arbitrator to exceed that sum wherever his sentiments are. Fortunately construction contracts now have enough detail to make the inability to estimate quantum increasingly difficult. In quantifying the amount of damages to be awarded, the arbitrators are required to select the proper valuation methods and adequately determine matters such as discount or depreciation rate. The arbitrators should also determine the pre-award interest and 7 This is not without exception. 8 [1843-60] All ER 383.
- 118. 108 | KIGALI INTERNATIONALARBITRATION CENTRE match proof of loss against the claims. The consequences of the non-acceptance of an offer to settle should be considered and a clear and sequential award given. It is not unusual for construction contracts to have currency clauses where the rate of exchange is fixed to prevent the adverse effect of exchange fluctuation on the events following the breach. For example and to illustrate the relationship between the breach and the loss; where the contractor to a significant infrastructure construction project with work in progress, entersan agreement with the owner on the contract specifications and performance. The project owner comes to the conclusion that the departure from the contract is so significant that the project is in jeopardy. The owner issues a Stop work order. The ensuing disagreement may result in a delay during which the original contractor unilaterally demobilizes from site claiming his stage payments. The project owner without a contractor anticipates that the original project delivery date is now in jeopardy along with the possibility of additional bank charges on the interest and loans from the bank. He appoints a new contractor at additional cost to finish the work leading to a new opening date for the project. The owner could claim damages for breach under – cost of new contractor; interest cost; loss of profit. If the contractor is found to be in breach these would pass the tests (i) arising naturally (ii) reasonably in the contemplation of the parties9 . Liquidated Damages & Penalties in Construction Contracts Following from the general common law principles arbitral tribunals will recognize and apply liquidated damages claims in construction contracts but not penalties. A clause that contemplates an event of breach by the parties and that pre-estimates the cost for remediation will be allowed distinct from a sanction payment constituted as a threat against non-performance. The essence of liquidated damages was described by Lord Dunedin in DUNLOP PNUEMATIC TYRE CO. V NEW GARAGE & MOTOR CO. LTD10 : 9 Hadley (n. 10 [1915] AC 79.
- 119. KIAC 2014 CONFERENCE REPORT |109 “The essence of a penalty clause is a payment of money stipulated as in torrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre-estimate of damage”11 Therefore the tribunal’s work is one of construction of the clause to discern whether it is allowable or not. Liquidated damage clauses are a common feature in Turnkey construction contracts or Public Private Partnership [PPP] contracts. Howeverapartymaybeexemptfromanobligationtopaydamages where the claimant fails to take reasonable steps to mitigate loss in order to avoid the loss or to avoid increasing the loss; but we shall return to mitigation later. It is sufficient at this stage to draw attention to a liquidated damage sample clause that has been successfully applied in a construction contract: LIQUIDATED DAMAGES If the contractor fails to complete the project on or before the time-limits set by the time limit schedule (subject to extensions of time in accordance with the contract) the contractor’s only liability to the owner for such failure shall be (without prejudice) to pay 0.0375% of the contract sum for each day of delay up to a maximum of 5% of the sum The duty to Mitigate problem versus the “But for” principle Law and commercial practice has contrived to create a duty on the victim of a breach of contract to avoid the ill effects of the breach visited on him by the defaulting party. In other words, in a construction contract the owner-sponsor of a multi-million dollar airport construction project has to be vigilant in taking timely steps to asses and/or stop a contractor from applying the wrong 11 See also I.E. Sagay, Nigerian Law of Contract (2nd Edn, Spectrum Books Ltd 2007)
- 120. 110 | KIGALI INTERNATIONALARBITRATION CENTRE specifications for foundation piling for instance. This is referred to as the party’s duty to mitigate. This duty derogates from the general rules of full compensation that we have referred to above essentially that – ‘but for’ the contractors conduct the owner-sponsor will be in possession of the amount claimed in damages or its value12 . Perhaps Arbitrators and/or the African arbitration community should be slow to impose the duty to mitigate too strictly not for the least reason being that its justification is sometimes onerous or and often flawed and is under increasing question13 . Firstly, it is based on construing the victims conduct as contributory to his loss - a fact that is not always true. It also therefore necessarily deems the victim’s conduct as part of causal chain, whereas we know that the victim’s possible steps of mitigation can only arise after the breach has occurred making it somewhat outside the causal chain leading to the breach. One of the hardships of ‘mitigating’ is that claimants may be financially unable to take steps or it may have other pressures on its finances making it impossible to take the steps required of him as a result of the duty to mitigate. Furthermore, although the conduct of the claimant before the breach may be contributory, the fiction that the claimant somehow caused the loss is unfortunate. The party’s conduct following the breach cannot be ‘contributory’ to that breach and should therefore not be a basis for the reduction in or avoidance of damages. By the duty to mitigate, the claimant is exposed to the possible “tyranny” of “reasonableness” and all its inexact standards. In construction contracts where there are several sub-contractors and contracts with supply contracts interwoven with engineering 12 See Woss, Rivera, Spiller & Dellepiane, Damages in International Arbitration Under Complex Long Term Contracts (1st edn, Oxford University Press 2014)./ 13 Prof Yehuda Adar, “Comparative Negligence and Mitigation of Damages: Two Sister Doctrines in Search of Reunion”
- 121. KIAC 2014 CONFERENCE REPORT |111 contracts, the number of moving parts makes mitigation a logistical mountain; for both the contractor and the owner. Some observers have – albeit referring to mitigation and contributory negligence in torts – concluded as follows “it is indeed a high sounding phrase which announces that no man shall be permitted to base his recovery upon his own fault...yet there is a growing feeling that injustice is being worked and that there are situations in which the plaintiff should not be denied a recovery merely because his own fault has to some appreciable degree contributed to his harm14 ” For that reason, a claimant should be entitled to compensation for the loss that would not have occurred but for the respondent’s conduct alone. This is not to condone wanton recklessness on the part of the claimant. However owing to the general public importance attached to infrastructure delivery in construction contracts in Africa the mitigation duty can be inimical to actual project delivery with its attendant costs and losses. State parties, or at least the public, are the ultimate beneficiaries of the project to be delivered. Public policy and a sense of justice should begin to release this duty on project owners. For instance, mitigation is not a duty in France and Franchophone legal systems including Mexico, arbitration proceedings with this legal cultural influence or applicable laws of those jurisdictions will inevitably produce awards of damages much more in keeping with commercial interests. It is likely that many international arbitrators will increasingly take this view perhaps African Arbitration can lead the charge. In conclusion infrastructure construction disputes will occupy arbitral tribunals in Africa increasingly in the short term. A clear approach to damages for parties and arbitral tribunals alike is 14 A. Chalmers Mole & Lyman P. Wilson, “A study of comparative Negligence ” 17 Cornell LQ 604, 633 (1932) and more recently and perhaps importantly the views of Prof Yehuda Adar, “Comparative negligence and Mitigation of Damages: Two Sister Doctrines in Search of Reunion”
- 122. 112 | KIGALI INTERNATIONALARBITRATION CENTRE invaluable since the award of damages remains the most sought after relief at arbitration, In the area of limitations and guides that determineawardsofdamagesinconstructiondisputes-reasonable foreseeability and the duty to mitigate are central. Given the several notions of justice that interplay, in construction dispute awards, to direct the minds of arbitrators, a fresh and liberal approach should be taken to the duty of parties to mitigate generally and particularly in African infrastructure construction disputes; the duty to mitigate should no longer be sacrosanct it could work a clog in the project delivery by limiting recovery of damages or making construction contract breaches not as unattractive as they should be. Since arbitration adjudication of disputes has a crucial role to play in African infrastructure development. The arbitration community can lead by regulating risk and allotting liability using the irreducible minimum principles but a liberal approach to the duty to mitigate loss.
- 123. KIAC 2014 CONFERENCE REPORT |113 Deliberations ATHANASE RUTABINGWA (RWANDA): As an arbitral tribunal and assume you are a lawyer like most of us here so as an arbitrator whereby you encounter a case that you are supposed to award damages, and one of the claimants to or the party to the conflicts or disputes has those arithmetical issues that you cannot easily crack. So as an arbitrator are u allowed to hire the services of a professional to assist you in your deliberations. I am asking this bearing in mind that most of the arbitral proceedings when you are making deliberations they are supposed to be confidential. So when you are seated in your own room as arbitral tribunal trying to determine that matter, are you allowed by any rules to appoint or hire the services of a professional to assist you to determine such difficult mathematic issues? My other concern relates to the topic itself. It is about awarding of damages. You talked of awarding damages and I just think you need to add also awarding of the costs. If it comes to the arbitration you are aware to the principal that the cost follows the event. But there some institutions where their arbitration acts indicated that if you are determining cost or damages you make sure that parties share them equally. I am saying in the experience of the Rwandan arbitration act in article 65 which clearly indicates that when you are awarding costs you have to make sure that the parties share them equally whether you lose or not. So what is your take on that? PAUL NGOTHO (KENYA): Penal codes and most acts of parliament as well as most rules need an expert to help in pointing out for a
- 124. 114 | KIGALI INTERNATIONALARBITRATION CENTRE specialist tender of engineering or to help in any field where the tribunal was challenged. So, yes the arbitration tribunal could get an expert to assist it. Having said that, the tribunal does not subcontract its responsibility to a third party, it merely does and it is an assistant to help it and the evidence it gets from that expert must be interrogated by the parties. OLASUPO SHASORE (NIGERIA): The second question on the awarding costs. The whole compensation mechanism in arbitration damagesisoneofapsycheforthatofthecompensationmechanism in arbitration and cost is also an indication as well. You recall when I spoke about what is accepted and what is not. The actual order that the arbitration could take is an indemnification of the cost for the proceedings beyond the date of the offer settled. In fact it not damaged but the loss that is compensated. So yes, cost is viewed in determination of damages. ROBERT MPAGAZE (RWANDA): Engineer specialising in geometrics, asked a question with regard to liquidated damages. Here is the principal of fairness given consideration while awarding these damages. I will give you two scenarios. A contractor is to be penalised at the end of the project. And he has performed as the contract end 80% of the project. And only the other 20% went into the delayed period for which the client seeks to be compensated. Should this contractor be penalised on 100% of the project. The second scenario is on the computation of these duplicated damages should they be awarded during the construction period because most of the contractors would prefer that the clients takes these costs at the end of the project so that he does not suffer cash flow problems. Is there fairness given due consideration because when I talk on the other side of the client if you were charging them interest on late payment, they prefer those computations to be made at the end of the project whereas the reverse is not usually given due consideration. OLASUPO SHASORE (NIGERIA): A contractor who completes 80% and whether you relate to the 100% and as related to the reputation of fairness. I cannot say that it is unfair if that is what the contract stipulates. In construction contracts a lot of these things
- 125. KIAC 2014 CONFERENCE REPORT |115 are contemplated and allocated for in terms in terms of contract reason why parties are being so specific is because they intend to be compensated for contracting that other party. So if a contractor is forgiven enough not to put interest on late payments, well. Maybe he should thank you because there is an order that insist on 100% debate that was stipulated in the contract. I wouldn’t drag fairness into it, if the contract is so specific. PAULNGOTHO(KENYA):Whentheduplicateddamagesshouldbe paid? The earlier the claim is made the better. And indeed as much we are talking about arbitration here, there is another procedure known as adjudication which is a very fast process it is made to be completed in some jurisdiction within 28 days. There is no reason why whatever damages a party is claiming cannot be raised as the project is going on. There is no reason or whatever to wait until the project is done. Indeed for the contractor the earlier he gets his money the better for him because that is the money he will use for the project. The fact that interest, his money be awarded does not justify withholding money that should be paid to the contractor.
- 126. 116 | KIGALI INTERNATIONALARBITRATION CENTRE PanelFive THIRD-PARTY FUNDING IN ARBITRATION: ETHICS AND REGULATORY ISSUES The use of third-party funding for international arbitration has been growing for several years, and its potential benefits and risks have received increasing attention from the arbitration community. The panel discussed procedures, ethics, and related policy issues relating to third-party funding in international arbitration and way forward. PANELISTS: Mr. BabatundeFagbohunlu, Partner, Aluko&Oyebode, Nigeria V VVedder, QC, Essex court chambers, United Kingdom CHAIR: John M. Ohaga, Managing Partner, TRIPLEOKLAW, Kenya JOHN M. OHAGA (KENYA): Good morning everyone, I hope you are not suffering from secondary blues, welcome to this session, I am sure you all joined in yesterday and I am sure today will be as stimulating. It is my singular honour and privilege to introduce, to my right Mr. Babatunde Fagbohunlu. He is a senior advocate of Nigeria, he practices in the firm of Aluko & Oyebode, Babatunde qualified with a degree in law in 1987, and subsequently obtained a master’s degree from the University of Lagos, In 2008 he was confirmed on the rank of senior advocate of Nigeria, which is the Nigeria’s equivalence of Queen’s Council, he specializes in the area of commercial litigation, and has litigated on an extensive range of issues including taxation and so on and
- 127. KIAC 2014 CONFERENCE REPORT |117 so forth. He has a wide range of clients in the area in oil industry, in telecoms industry, and especially in arbitration both local and international. He is a member of Nigeria’s Bar Association, International law association. On my left there is V V Veeder, an arbitrator practicing from Essex Court chambers in London. He is a member of the governing council of the ICCA, a judicial member of FIDC board and he is also a visiting professor at King’s College London, so, Ladies and gentlemen this is a very imminent panel, and I am sure it will make a very big contribution. I will start with Counsel Veeder, please the floor is yours.
- 128. 118 | KIGALI INTERNATIONALARBITRATION CENTRE PRESENTATION ON THIRD PARTY FUNDING IN ARBITRATION: IMPLICATIONS FOR AFRICA Babatunde J Fagbohunlu WHY TPF IS IMPORTANT TO AFRICA • Potential for costs to increasingly become an issue. Will availability of TPF be an important consideration for Corporate Management? • Potential for availability or otherwise of TPF to impact decisions of Corporate Management about arbitration seat? CONNECTION BETWEEN SEAT AND TPF • Enforceability of Arbitral Award where TPF has been involved • Enforceability of TPF Agreement • Efficacy of arbitral process ENFORCEABILITY OF ARBITRAL AWARD WHERE TPF HAS BEEN INVOLVED Laws on maintenance and champerty: – Abdallah v Barlatt (1931) (Sierra Leone) – Smith v Societe Commmercial (1932) (Ghana) – Oyo v Mercantile Bank (1988) (Nigeria) – Giles v Thompson (1994) (UK) – Oloko v Ube (2001) (Nigeria) – Factortame v Transport Secretary (2003) (UK)
- 129. KIAC 2014 CONFERENCE REPORT |119 ENFORCEABILITY OF ARBITRAL AWARD WHERE TPF HAS BEEN INVOLVED Scope of review – e.g. Nigeria - “award improperly procured” • Extent of control of proceedings (tendency to influence results?) • Tampering with evidence • Relationship between TPF funder and funded party (façade for funder?) • Degree of regulation • Conflicts of interest ENFORCEABILITY OF TPF AGREEMENT * Laws on maintenance and champerty * Where does TPF customer have assets? EFFICACY OF ARBITRAL PROCESS TP Funders – funding decision inspired by chances of recovery • Judicial interference? • Freedom to choose legal representation? • Finality? LEGAL/INSTITUTIONAL FRAMEWORK • Laws (UNCITRAL Model Law) * Judicial support (enforcement of arbitration agreements; support for process; enforcement of awards) * Limited judicial intervention * Arbitrator’s jurisdiction to determine jurisdiction * Finality – degree of review • Institutions
- 130. 120 | KIGALI INTERNATIONALARBITRATION CENTRE AFRICA – A DECADE AFTER NEW YORK CONVENTION AFRICA: NEW YORK CONVENTION IN 2013
- 131. KIAC 2014 CONFERENCE REPORT |121 ISSUES ARISING: COURTS AND THE ARBITRAL PROCESS • Interference in arbitration proceedings • Nigeria – injunctions against arbitral proceedings, proceedings delayed by interim challenge in court • But recent Court of Appeal decisions: – Chevron/Statoil v NNPC * Nigerian Agip v NNPC • South Africa – courts may rule on question of law by way of “case stated” ISSUES ARISING: LEGAL REPRESENTATION IN ARBITRATION * Nigeria – Ghana
- 132. 122 | KIGALI INTERNATIONALARBITRATION CENTRE PRESENTATION ON THIRD PARTY FUNDING IN ARBITRATION: ETHICS AND REGULATORY ISSUES V. V. Veeder Qc TPF Definitions A non-recourse loan for the purpose of financing a claim repayable only in the event that the claim is successful and recovered by the funded party (Catherine Rogers). Contrast: banking loans, secured loans, insurance (e.g. P+I Clubs), equitable assignments by way of security etc. TPF: Multiple funding formats and many different kinds of funder. Nothing (yet) homogeneous for international arbitration. The Third Party Funder’s two separate clients: (i) upstream (capital providers) and downstream (fundees): litigants and law firms. Common Access to Justice A common problem: the high costs of litigation, domestic arbitration, international commercial arbitration & international investment arbitration. Article 6 ECHR; access to justice – justice like the Ritz Hotel >> The Jackson Report (England and Wales) TPF as a common solution: “Permitting third party funding promotes access to justice. Without such funding, injured parties might be unable, for lack of resources, to pursue meritorious but expensive claims against stonewalling defendants.” (Mark Cantor)
- 133. KIAC 2014 CONFERENCE REPORT |123 ARBITRATION ALSO DIFFERENT • Arbitration based on Consensual Jurisdiction, with international arbitration often located at a neutral arbitral seat. • As a private law process with no imperium – not public justice by judicial officers of a Sovereign State acting with the imperium derived from that State. • Third Party Funder immune from arbitral jurisdiction, ethical rules within the arbitration and any adverse costs award - and not effectively regulated. HOSTILE PUBLIC POLICIES • “Justice for Sale as a Commodity”: Champerty, Maintenance and Barratry • Champerty: An agreement with a third person to share the proceeds of litigation by a claiming party in return for that person’s financial support in the litigation • Maintenance: Assistance to a claiming or responding party by a third person with no genuine interest in the litigation. • Barratry: A third person’s vexatious incitement to litigation by a claiming party. • Third Party Funders: ”raptors”; “vulture investors”, “loan sharks” and “gamblers” with (reportedly) 75-200% return on capital: “usurious”. “oppressive” and “unconscionable exploitation of vulnerable litigants”. COMMON LAW DIVERGENCE Criminal Law Act 1967, Sections 13 & 14 (England) Otech Pakistan v Clough Engineering (2007, Sing CA) Canonway Consultants v Kenworth (Kaplan J HKSC; 1995) Unruh v Seeberger (Ribeiro PJ, HKCFA; 2007)
- 134. 124 | KIGALI INTERNATIONALARBITRATION CENTRE TPF – THE FALLING TIDE “… Thus, the public policy rationale regarding maintenance and champerty has turned full circle. Originally their prohibition was justifiableasameanstohelpsecurethedevelopmentofaninclusive, pluralist society governed by the rule of law. Now, it might be said, the exact reverse of the prohibition is justified for the same reason. The argument … appears positively to support the development of litigation funding, as a means of securing effective access to justice.” (Lord Neuberger 2013, Pres SCt) LEGAL PRACTICE AS A BUSINESS • Success Fees, CFAs; MDPs & PLs – and law firm bankruptcies. • Legal Practice for private users: a highly competitive profit- driven commercial business. • Legal Practice for States: only USA and European Commission operate without outside lawyers for transnational disputes. • Significant problem of resources for all users of international arbitration, including States. • Third Party Funding does not usually assist respondents, including (especially) States in international investment arbitration. ISSUES: THE LAWYER • Professional standards, independence of lawyers & regulation. • Traditional duties of the lawyer to the client (overriding any commercial relationship, directly or indirectly, with a third party, such as an insurance company, P+I Club or Trade Union). • Professional duties of confidence and privacy of arbitration (Hyundai Case; Philips J, English Commercial Court). • Waiver of Privilege, Common Interest and Overriding Professional Duties. • Disputed Strategies, Quantum and Settlement.
- 135. KIAC 2014 CONFERENCE REPORT |125 ISSUES: THE ARBITRATOR • Privacy and Confidentiality of Arbitration, excluding third persons. • Applications for Security for Costs against a “straw claimant”. • Applications for Co-Insurance (if part of a TPF agreement). • Applications to join the Third Party Funder as a named party to the arbitration for the purposes of confidentiality, common interest privilege and enforcing an adverse costs award. • Conflicts of Interest involving the Third Party Funder • Disclosures by Arbitrators, Lawyers and Third Party Funder. STEPS FORWARD • Transparency, with published agreements and practices of Third Party Funders. • Academic and Professional Research: the ICCA Task Force on Third Party Funding (work-in-progress) • Self Regulation: • The IBA Guidelines on Conflict of Interest (being revised) • The ALF Code for English Litigation (2011) • Legislative Regulation: the UK Debt Act 2010 THE UK DEBT ACT 2010 • The Debt Relief (Developing Countries) Act 2010 • The HPIC – Heavily Indebted Poor Countries - Initiatives 1996- 1999 of the IMF and World Bank • Donegal v Zambia (2007, England) - $55m stale state debt bought for $3.2m but claimed in full.
- 136. 126 | KIGALI INTERNATIONALARBITRATION CENTRE 40 STATE BENEFICIARIES Afghanistan Benin Bolivia Burkina Faso Burundi Cameroon Central African Republic Republic of Congo Ethiopia The Gambia Ghana Guyana Haiti Honduras Madagascar Malawi Mali Mauritania Mozambique Nicaragua Chad Comoros Côte d’Ivoire Eritrea Niger Rwanda São Tomé Príncipe Senegal Sierra Leone Tanzania Uganda Zambia Chad Côte d’Ivoire DR Congo Guinea Guinea-Bissau Liberia Togo Comoros Eritrea Kyrgyz Republic Somalia Sudan Section 3 (1) The amount recoverable in respect of— (a) a qualifying debt, or (b) any cause of action relating to a qualifying debt, is the relevant proportion of the amount that would otherwise be recoverable in respect of the qualifying debt or cause of action. (2) For the meaning of “the relevant proportion”, see section 4.
- 137. KIAC 2014 CONFERENCE REPORT |127 Section 4 (2) (2) Where the qualifying debt is one to which the Initiative applies, the relevant proportion is— A over B where — A is the amount the debt would be if it were reduced in accordance with the Initiative ... and B is the amount of the debt without it having been so reduced. Section 5(1) (1) This section applies to— (a) a judgment on a relevant claim given by a court in the United Kingdom before commencement, (b) a foreign judgment given (whether before or after commencement) on a relevant claim, and (c) an award made (whether before or after commencement) Section 7 (1) Nothing in this Act applies to a foreign judgment or an arbitration award of a kind required by European Union law, or by an international obligation of the United Kingdom, to be enforced in full even in cases where such enforcement is contrary to the public policy of the United Kingdom. (2) Accordingly, this Act does not apply to — ... (c) an award to which section 1 of the Arbitration (International Investment Disputes) Act 1966 applies (awards made under the Convention on the settlement of investment disputes between States and nationals of other States) [1965 ICSID Convention]...”
- 138. 128 | KIGALI INTERNATIONALARBITRATION CENTRE CONCLUSIONS TPF here to stay, for litigation and arbitration. Like fire, how to tame its excesses and make it a force for good. Topromoteaccesstojustice-forallusersofinternationalarbitration, claimants and respondents, private persons and sovereign states. >> Much more research, debate and effective self-regulation. >> Excesses likely to shrink as equity markets recover in the global economy and interest rates rise.
- 139. KIAC 2014 CONFERENCE REPORT |129 Deliberations JOHN M. OHAGA (KENYA): How can that be almost guaranteed, on the other hand there is a question of our professional responsibilities and obligations owed to our clients towards the arbitral process and in between there, there are many other regulatory and ethical issues that arise, And I am sure that some of you might have experience with third-part funding, or you might be able to predict where this will go, or you have got a legislation that perhaps impedes or facilitate. So, I now welcome you to make your contributions, Thank you very much. EDWARD OKPE (NIGERIA): I thank the presenters, this is actually the beginning of third party funding approach becoming very debatable now, because I’ve listened to John and Babatunde and I would like them to clarify from experience, I am saying this from experience. Third party funding in arbitration when one of the parties as said is being funded to takeoff the case, should there be a disclosure to the other party? And when should the disclosure happen? I was involved in arbitration where it was at the stage of the end of the proceedings that one of the counsels claimed for cost, claimed a little bit more the percentage of what they were owing to the third party scheme that funded their involvement in the arbitration because claimant himself did not have money to bring this case. It was surprising because I thought there should have been disclosure either to the respondent or even to the arbitral tribunal at the beginning. You don’t wait until you are claiming cost and then you put percentage of what these third party funders have put on your own borrowing to fund the case. I would like to hear the presenters on this disclosure.
- 140. 130 | KIGALI INTERNATIONALARBITRATION CENTRE BAKER SHEMA (RWANDA): My concern is about the issue that Mr Veeder talked about; about the contradiction that is in third party funding and the main fundamental principles of arbitration of privacy and confidentiality. I find this contradiction would be a very big problem to the principle of third party funding which brings me to another concern that I have regarding the fact that you spoke about how third party funders can be of bad faith in arbitral proceedings but the when I look at the other side the protection of third party funder in good faith. For example, given a hypothetical example may be in a construction contracts where financer as the third party funder, parties collude or fraudulently, you know, sabotage his rights as far as the proceedings are concerned, is there any recourse for a third party funder? Either way we can look at it in general any third party in arbitral award considering the fact that arbitral proceedings are private to only the parties, and they can only know about the award until one of the parties or both of the parties have agreed to disclose the award to the third party. So in case those parties fraudulently and telling with malicious intentions not to inform the third party about the award, so that may be the third party would look for other recourses may be in ordinary courts to nullify the award if it is against his rights so what is you take on how a third party in good faith could be protected? I have made a bit of research and I realized that in the Italian code of civil procedure in article 404, they provided for these ways of how a third party can protect his rights by actually two ways; If the third party is not part of the arbitral proceedings, could go to the appellant court in Italy, and if he is part of the arbitral proceedings the arbitral tribunal could review the award which I would ask if you agree with me that in our Rwandan civil code and the arbitration act we don’t have this provision. Would it be a good idea to recommend that we can copy paste and then involve such clauses so that we can protect the third party who is of good faith? Thank You.
- 141. KIAC 2014 CONFERENCE REPORT |131 MR. BABATUNDE FAGBOHUNLU (NIGERIA): I would also like to add my perspective, disclosure is a very important issue that is being discussed right now and I know because I also like Jolly serve on various task force for third party funding and it’s one of the issue on the agenda everybody asks a question of disclosure of the existence of the third party funding for the arbitral tribunal, now, one question that I thought about, why would third party funders not want to disclose if there is a danger that no disclosure could in fact ultimately affect the arbitral award itself, so, if there is a danger for instance that because there was no disclosure, it comes to light at a very early stage that there is relationship between arbitrator and a third party funder and the award is likely to be set aside on that basis, the third party funder will imagine this is over a false investment. And so I would have thought it is in the interest of the third party funders themselves, and I think quite a number of them will realize as well that there should be some manner in which the question of disclosure is dealt with. Now, one of the proposals that have been made, a suggestion that has been made is that may be there could be some kind of in camera disclosure to the arbitral tribunal only. And that is because all third party funder’s agreements always have the confidentiality clause which, so you start off from the disposition that this will not be disclosed to parties or rather the funder and the fundee, they also have a confidentiality agreement in their third party funding agreement. Those could be waved and the funder could wave in a qualified manner namely some kind of in camera disclosure to a arbitral tribunal alone at least that takes care of the problem of possibility of conflict of interest between the arbitral tribunal and the third party funder which is perhaps the most dangerous potential effect of not disclosing, so those are my perspectives essentially on this point, I think John and Veeder has something to say. V V VEEDER (UNITED KINGDOM): I think on disclosure, what you said is true in English litigations, but the third party funders I met in the international arbitration, which are not necessarily English but American and European; they do not wish to disclose it, they think it
- 142. 132 | KIGALI INTERNATIONALARBITRATION CENTRE gives a tactical advantage to the other side in arbitration, they says that if a party got a bank loan to fund litigation or arbitration, that the arbitration tribunal would not be interested in the disclosure of that bank loan. And they say economically it’s the same thing, and then being unfairly targeted. Because everyone has brought new factors to the table and new issues, and the answer is always disclosure is transparency. That is just being the disclosure of the terms, the confidential commercial terms of the third-party agreement and many other aspects. JOHN M. OHAGA (KENYA): Thank you very much, we have run out of our time, so we will bring this to a close, I am sure you will continue with this stimulating discussion, Thank you.
- 143. KIAC 2014 CONFERENCE REPORT |133 PanelSix APPOINTING THE ARBITRATOR IN PRACTICE Thispaneldiscussedtheappointmentofanarbitratorinpractice-Isit by the Parties, the Institution or someone else?). Practical guidance on the steps that must be taken when appointing an arbitrator were discussed including the pressing issues of unilaterally appointed arbitrators and its effect on the decision-making process. Justice Emmanuel KAMERE, has an LLM from the University of the WITWATERSRAND (JOHANESBOURG-Republic of South Africa), and he is currently the president of the commercial High court of Rwanda. Lise Bosman works as a Senior Legal Counsel at the Permanent Court of Arbitration and is an Executive Director of the ICCA and she is involved in many other many professional activities in the field of international arbitration and during this session, she will present on the practical experience with regulatory issues. Mr Remy Garbay, he is from the UK, and he is an academic specializing in international arbitration based at the School of International Arbitration at QUEEN MARY, UNIVERSITY OF LONDON. Remy also sits as arbitrator (co-arbitrator, sole arbitrator, and Chairman) in ICC, LCIA and ad hoc arbitrations. He is the former Deputy Registrar of the London court of International arbitration and the “Registrar” of the DIFC-LCIA Arbitration Centre (Dubai). He has participated in so many professional activities in London, Paris, Dubai, Geneva and New York, we are lucky to have him among us in this conference, and during this session we expect from him a presentation of the practical experience from a former registrar of the London court of International arbitration, as an arbitrator and also as an academician specializing in international arbitration. PANELISTS: Lise Bosman, Senior Legal counsel, Permanent Court of Arbitration, Netherlands Remy Gerbay, Lecturer, school of international Arbitration, Queen Mary university of London CHAIR: Emmanuel KAMERE, President of commercial High court, Rwanda
- 144. 134 | KIGALI INTERNATIONALARBITRATION CENTRE Lise Bosman1 Introduction The appointment of the arbitrators is one of the first steps that will be taken in an arbitral proceeding. Once the correct form of notice or request for arbitration has been delivered, the next step is to appoint the arbitrator or arbitral tribunal. Inthispresentation,Iwilllookathowarbitraltribunalsareappointed in practice, in both ad hoc and institutional proceedings, and then ask some of the questions raised in recent years about the merits and demerits of unilateral party appointments and some of the alternatives to this system. Why does appointment of the arbitrator matter? Some argue that – from the perspective of the parties – appointing the arbitrator is the most important choice of the arbitration, for three main reasons. Most fundamentally (and least controversially), choosing the “right” arbitrators for the case at hand will ensure the necessary expertise in hearing that particular case. Secondly, satisfaction with the decision-maker will affect the extent to which parties will have confidence in the proceedings and their outcome. (This is a particularly important consideration for a system like the international arbitration system, which does not derive its authority from the power of the State, but from the voluntary choice of the disputing parties to arbitrate). 1 Executive Director, International Council for Commercial Arbitration (ICCA); Senior Legal Counsel, Permanent Court of Arbitration; Adjunct Professor, University of Cape Town. APPOINTING THE ARBITRATOR IN PRACTICE
- 145. KIAC 2014 CONFERENCE REPORT |135 Thirdly, it goes without saying that each member of the arbitral tribunal has influence over the proceedings. Each arbitrator, in turn, brings his or her approach to legal decision-making. In a trite example, in a dispute about the interpretation of a contract, one arbitrator may be more inclined to focus on the terms of the contract (the so-called “black letter law” approach), whereas another arbitrator may look to the surrounding circumstances of the contractual relationship. In another example, one arbitrator might bring an inclination to sympathise with the plight of a foreign investor; another might be inclined to protect the interests of the regulating authority. These differences in approach might influence or even determine the outcome of the case. For all these reasons, parties (and their attorneys) – when making a unilateral appointment – expend a great deal of time and effort in selecting the “right” arbitrator for their case and for their client. What are the parameters generally for appointing an arbitrator? Even within a system dominated by party appointment, there are significant restrictions already in place before appointment takes place. For instance: the parties may have agreed on specific requirements for the arbitrator in the arbitration agreement (e.g., membership of a profession or organisation). There may be restrictions in the applicable arbitration rules (which may, for example, include restrictions regarding nationality). The applicable arbitration law (i.e. the national arbitration statute of the place of arbitration) may envisage restrictions. (For example, certain jurisdictions still require an arbitrator to be a member of the local bar association in arbitrations at law.). Lastly – and possibly most importantly – the requirements of independence and impartiality are written into all modern arbitration rules. The notion of independence requires that the arbitrator should not have a relationship or financial connection with one of the parties, or an interest in the outcome of the case. Impartiality is taken to imply a more abstract notion of lack of partiality with regard to one of the parties, or a lack of partiality with regard to the issues in dispute.
- 146. 136 | KIGALI INTERNATIONALARBITRATION CENTRE What are the methods of appointment? Bearing these parameters in mind, a number of methods of appointment are commonly used in international arbitration. For instance, if a sole arbitrator is to be appointed, appointment of the arbitrator may be by agreement of the parties or institutional appointment. If a three-member tribunal is to be appointed, either party may appoint one arbitrator, who selects the third presiding arbitrator (i.e., the default system under the UNCITRAL Arbitration Rules), or each party appoints one arbitrator, and the third is selected by the administering institute or appointing authority (i.e., the default provision in the ICC Rules). Other methods include the list system (as administered by the administering institution or appointing authority), or some combination of these methods outlined above. Examples from the practice of arbitral institutions I now turn to examples from institutional practice, as the majority of arbitral appointments take place within an institutional framework. Arbitral institutions all have sets of arbitration rules providing for appointment of arbitrators. I will start by reviewing the practice of the Permanent Court of Arbitration (“PCA”), which has a great deal of experience in appointment matters. This is because the Secretary General of the PCA is named in both the 1976 and 2010 versions of the UNCITRAL Arbitration Rules as the default designating authority to designate an appointing authority where the parties have not appointed one. The Secretary General may – and often does – also act as appointing authority directly. The PCA’s Secretary General has acted as appointing authority or designating authority in approximately 550 cases to date. The vast majority of these cases have been conducted under the UNCITRAL arbitration rules (both the 1976 and 2010 Rules).
- 147. KIAC 2014 CONFERENCE REPORT |137 Example 1: The UNCITRAL RULES Under the 2010 UNCITRAL Rules, Articles 8-10 set out a number of default rules (which will apply unless the parties have made a contrary agreement). For a sole arbitrator (Articles 7-8), the default rule is that parties appoint a sole arbitrator by agreement (Article 7(2); if the parties do not agree within 30 days after receipt by all other parties of a proposal for the appointment of a sole arbitrator, the appointing authority will make the appointment. For a panel of three arbitrators (Article 9), each party appoints one arbitrator and then the two arbitrators appoint the third, who acts as presiding arbitrator. In two situations, the appointing authority will step in: (1) If within 30 days from the appointment by a party of the first arbitrator the other party does not appoint the second; and (2) if the two party-appointed arbitrators do not agree on the third within 30 days after the appointment of the second, the matter may be referred to the appointing authority. In what might be characterized as a deadlock-breaking function under Article 8(2) of the Rules, the appointing authority uses the list system. In practice, this works as follows. First, the appointing authority sends to each party to the dispute an identical list, with at least three names on it. Each party then returns the list, deleting any name to which it objects and numbering the remainder in order of preference. Finally, the appointing authority chooses an arbitrator from the list, in accordance with the order of preference indicated by the parties. Example 2: The new 2012 PCA Arbitration Rules The PCA’s revised Arbitration Rules 2012 replicate the terms of Articles 8-10 of the UNCITRAL Rules, with a few amendments worth noting in this context. First, the appointing authority is always the PCA’s Secretary General (Article 6). Second, the Rules foresee the appointment of five-member tribunals and apply the same procedures (Article 10(2)). This latter situation only really occurs in the context of State v State disputes, which is the original mandate of the PCA (although this mandate has in the course of the 20th Century been expanded to cover disputes involving
- 148. 138 | KIGALI INTERNATIONALARBITRATION CENTRE various combinations of States, State entities, intergovernmental organizations and private parties). In practice, the PCA’s Secretary General requires a candidate arbitrator to be independent of both parties in every case. In addition, in the circumstances of each case, the Secretary General may consider factors such as: nationality; appropriate language skills; relevant experience (e.g. industry experience); knowledge of the applicable law; availability; cost (i.e., what hourly rate is charged); and any comments provided by the parties regarding qualifications. A further consideration for all modern arbitral institutes is the need to expand the pool of experienced arbitrators by recognising emerging talent and expertise. The key criterion in this regard will be to meet the expectations of the parties, which are generally to seek appointment of the most experienced arbitrators available. However, in appropriate cases there may be more scope for seeking diversity in national background. Examples include those cases with small quantified claims, when the parties themselves have chosen to appoint less experienced arbitrators, and when the parties themselves put a premium on potentially lower cost and greater availability of less experienced practitioners. Example 3: The ICC Rules (revised in 2012): The practice under the ICC Rules is slightly different again and is set out in Articles 12 and 13. Where the parties have agreed to a sole arbitrator, the parties may nominate a sole arbitrator jointly for confirmation by the ICC Court (the ICC’s administrative body) (Article 12.3). If the parties fail to agree on the sole arbitrator within thirty days from the receipt of the Request for Arbitration, the Court shall appoint the sole arbitrator. Where the parties have agreed to three arbitrators, the default rule is that each party nominates one arbitrator for confirmation by the ICC Court, and the Court appoints the presiding arbitrator (Articles 12(4) and 12(5)).2 The Rules also provide specific guidance about how the ICC Court is to make its appointments (see Articles 13.3 and 13.4), providing that it should appoint upon the proposal of a National Committee or Group (unless, for instance, the Court does not accept the 2 Unless the parties have agreed otherwise (subject to control by the Court). If one of the parties fails to appoint the arbitrator, the appointment shall be made by the Court.
- 149. KIAC 2014 CONFERENCE REPORT |139 proposal, it is out of time, one of the parties is a State). Criteria that the Court takes into account include nationality, residence and other relationships with countries of nationality of the parties.3 In a significant new development in the revised 2012 Rules, the Court will also take into account “the prospective arbitrator’s availability and ability to conduct the arbitration in accordance with the Rules” (Article 13(2)). This is an innovation intended to avoid lengthy scheduling delays and delays in issuing awards caused by busy arbitrators, and is supported in practice by the declaration required of arbitrators when providing their standard disclosure forms to the ICC prior to appointment. I will leave it to my fellow panelist Remy Gerbay to discuss in some detail the LCIA practice later in this session. Appointment by the parties Overall, it is fair to conclude that in international commercial arbitration, whole or partial appointment of the arbitrators by the parties is still the dominant practice. There are certain obvious advantages to this system. First, the appointment by the parties reflects the principle of party autonomy that underlies much of arbitral practice.4 Second, as already noted, parties’ confidence in the proceedings partially depends on the composition of the arbitral tribunal. Third, the parties’ knowledge of the subject of the dispute arguably puts them in the best position to select competent arbitrators with regard to the particular dispute. Finally, the greater the degree of autonomy that parties exercise over the process and the greater confidence they have in the proceedings, arguably the more likely it is that the proceedings and potential outcome will meet the 3 Where the Court appoints a sole arbitrator or presiding arbitrator, the nationality must be other than those of the parties (Article 13(5)) 4 In the words of the PCA’s Founding Conventions, this ensures that the dispute may be resolved by “judges of their own choice” (see the Hague Conventions on the Pacific Settlement of International Disputes of 1899 (Art. 15) and 1907 (Art. 37)).
- 150. 140 | KIGALI INTERNATIONALARBITRATION CENTRE parties’ expectations. Arguably, again, the more the proceedings match the parties’ reasonable expectations, the fewer challenges to arbitrators, fewer challenges to awards and fewer instances of non-compliance with awards we are likely to see. The disadvantage of the system of party appointments, however, is that unilateral appointment by the parties risks appointment of arbitrators who may be more inclined to be sympathetic to the interests of the party appointing them, thus lacking impartiality and independence, which (like party autonomy) is a fundamental principle of arbitral practice. And the consequences of the lack of impartiality and independence could be that the arbitrator attempts to obstruct the proceedings (for instance, by refusing to agree on a third arbitrator in case of a three-member tribunal) or attempts to influence the outcome of the proceedings inappropriately (by tending to vote in the interests of the party that appointed him or her regardless of the merits of the case). This was the experience of the Iran-United States Claims Tribunal throughout much of its practice (with the Tribunal being plagued by essentially political appointment of certain arbitrators, resulting in arbitrator obstruction of the process, the regular issuing of dissenting opinions and strategic resignations intended to derail proceedings). Moral hazard? In recent years, there has been a vigorous debate within the international arbitration community about the advantages of so- calledunilateralappointmentsbypartiesasopposedtoinstitutional appointments. One of the earliest shots in this war of words was fired in 2010 by Professor Jan Paulsson, in his inaugural lecture at the University of Miami Law School titled “Moral Hazard in International Dispute Resolution”.5 Professor Paulsson argued that the practice of 5 Jan Paulsson, Moral Hazard in International Dispute Resolution, University of Miami Law School inaugural lecture, 29 April 2010, available online on ICCA’s website http://www. arbitration-icca.org/media/0/12773749999020/paulsson_moral_hazard.pdf
- 151. KIAC 2014 CONFERENCE REPORT |141 unilateral appointments should be forbidden or at least rigorously policed, for among the following reasons: the potential for party- appointed arbitrators to damage the arbitral process; in more than 95% of cases in which dissenting opinions are issued, the dissenting opinion is written by the arbitrator nominated by the losing party; and because the reasons why the parties are attached to the practice of unilateral appointments are “ill-conceived”. In his lecture, Prof. Paulsson proposed either that all arbitrators be chosen jointly by the parties, or that all arbitrators be chosen by a “neutral body” (i.e., an arbitral institution). Appointment by arbitral institutions Well, what about institutional appointments? The advantages of institutional appointments seem obvious. The institution is neutral with regard to the interests of both parties in the case – in appointing the arbitrators, therefore, its choices will also be more neutral, thus reducing the possibility of selecting arbitrators who lack impartiality and independence. As a result, the opposing party may be less inclined to see lack of impartiality or independence in the behaviour of the arbitrator. As a consequence, there will be less chance of challenges to the arbitrators. On the other hand, the institution may have a more superficial level of knowledge of the dispute with respect to the parties, and the parties may have more confidence in a procedure in which they have played a key role. Assault on the system? Criticism of unilateral party appointments has been strongly refuted by both academics and practitioners. One response, for instance, likened calls for institutional appointment to “an unacceptable assault on the very institution of international arbitration” and “an attack on basic, foundational elements of international arbitration”.6 Other commentators argue that banning unilateral appointments will not increase parties’ 6 These commentators noted that this would constitute a “sea change” in “our historically- proven system”, see Charles N. Brower, Michael Pulos and Charles B. Rosenberg, “So, is there anything really wrong with international arbitration as we know it?” in Contemporary Issues in International Arbitration and Mediation: The Fordham Papers (2012), pp. 1-13.
- 152. 142 | KIGALI INTERNATIONALARBITRATION CENTRE confidence in the arbitral proceedings. One commentator argued, for instance, that through unilateral appointments parties develop a sense of control over the proceedings (which is the main difference with court litigation, and one of the main reasons for parties to resort to arbitration). By unilaterally appointing the two arbitrators, the parties also exert some control over the appointment of the presiding arbitrator.7 A general ban on unilateral appointments could create a distance between the arbitral community and users of arbitration. A final argument notes that parties are nowadays aware that it is in their own interest to select arbitrators who will have credibility in the tribunal and can exercise independent judgment.8 Is there a third way? I conclude with more questions than answers. Does the system of unilateral appointments do more good than bad? Should modern institutional arbitration rules be amended to give more control to the institutions themselves? And should the UNCITRAL Arbitration Rules (the rules of choice in ad hoc proceedings) be amended to give more control over appointments to the appointing authority? Finally, might there be a third way to approach these questions? For instance, could the list system be more extensively used?9 Or could the LCIA Rules stand as a model? I leave it to Remy to suggest how this might be. 7 This is because a presiding arbitrator is often chosen after the arbitrators have discussed the possible appointment with the respective parties and their counsel, achieving what might be seen as a consensual decision (whereas the same cannot be said for an institutional appointment). 8 See, Alexis Mourre, “Are unilateral appointments defensible? On Jan Paulsson’s Moral Hazard in International Arbitration” in S. Kröll , International Arbitration and International Commercial Law : Synergy, Convergence and Evolution (Kluwer Law International, 2011). 9 This is already the method of appointment used by the Netherlands Arbitration Institute. It is also the method used by the Appointing Authority under the UNCITRAL Rules in appointing a presiding arbitrator (or where parties have failed to make a party appointment).
- 153. KIAC 2014 CONFERENCE REPORT |143 Appointing arbitrators at the LCIA: preliminary questions a. Number of arbitrators The LCIA model clauses allow the parties to specify the number of arbitrators1 . In the absence of an agreement on the matter, the Rules provide that a sole arbitrator shall be appointed unless the LCIA Court determines that, in view of all the circumstances of the case, a three-member tribunal is appropriate (see Article 5.4 of the LCIA Rules). The decisions of the Court on this are made on a case by case basis, but the Court would often take into consideration such factors as the amount in dispute, the complexity of the case, the plurality of the relevant legal systems. It should be mentioned, however, that in practice where a clause is silent as to the number of arbitrators, it remains open to the parties to agree on the number of arbitrators after the Request for Arbitration is filed, as the LCIA Court will accept to appoint a tribunal in respect of which the number of arbitrators was agreed by the parties after the commencement of the proceedings. Overall, a minority of cases are determined by sole arbitrators. In 2011, approximately 42.4% of cases were determined to a sole arbitrator, with 57.6% of cases being determined by a three- member tribunal2 . PRESENTATION ON THE APPOINTMENT OF ARBITRATORS AT THE LONDON COURT OF INTERNATIONAL ARBITRATION Remy Gerbay, Lecturer, UK 1 TheRulesonlycontemplatetheappointmentofasolearbitratororofathree-membertribunal (See Articles 1, 2, 5, 12, 14, 26 and 27). The rules do not expressly exclude the appointment of a tribunal comprising an even number of arbitrators, or comprising an uneven number but more than three, but it is highly unlikely that the LCIA Court would accept to appoint such a Tribunal. 2 See LCIA Director General’s Report 2011, p. 3. The report stresses that the figures change from year to year, but overall it seems to indicate a slight dominance of three-member tribunals: “So the gentle swing between the preference for sole and three member tribunals continues, influenced, of course, by the nature and size of disputes. In 2009 the ratio was two thirds three member tribunals to one third sole arbitrator; in 2010, the ratio was almost precisely 50/50; and in 2011 the ratio tips back in favour of three-member panels”.
- 154. 144 | KIGALI INTERNATIONALARBITRATION CENTRE b. Party nominations Contrary to the rules of other institutions (eg. 2012 Rules of the ICC, KIAC Rules), the LCIA Rules do not provide the parties with a ‘right’ to nominate an arbitrator. In fact, the default procedure under the Rules is for the LCIA Court to select and appoint the arbitrator(s). Therefore, if the parties, at the time of drafting the contract’s arbitration clause or the submission agreement, contemplate that they will wish to be able to make nominations, they should provide wording to this effect. Naturally, where the parties’ arbitration clause does not provide for party nominations but the parties are nonetheless able to agree, after the proceedings have started, that they shall each nominate an arbitrator, the LCIA Court will abide by the parties’ agreement. In fact, the LCIA will most likely accept any reasonable method for the selection of the arbitrators which the parties may agree (subject, of course, to the agreed procedure not causing any undue delay). Methods frequently used in practice, and which have been accepted by the LCIA Court, include: - the nomination by each side of the two co-arbitrators, with the Chair being selected by the parties, or their nominees, or by the LCIA itself; - the joint nomination by the parties of a sole arbitrator or of all three arbitrators; and - the use of UNCITRAL-type list procedures for the selection of one or all of the arbitrators. There are cases where the parties have not agreed on party nomination in their arbitration clause or submission agreement, and where they are unable to agree on party nomination once the proceedings have started. This may be the case, for instance, where the Respondent is not participating, or refuses to co-operate. In such a case, a claimant would not be able to make a nomination. It is therefore advisable always to consider whether to provide some mechanism for party nomination in the clause at the outset. Such wording may read (for a simple contract with two parties only):
- 155. KIAC 2014 CONFERENCE REPORT |145 “Each party shall nominate an arbitrator, and the third and presiding arbitrator shall be selected by [the parties / the parties’ nominees / the LCIA]”. With this wording, and by operation of Articles 1 and 2 of the LCIA Rules, the claimant and the Respondent would have to make their nominations in the Request for Arbitration and the Response respectively. The appointment process under the current (1998) LCIA rules a. Distinction between the ‘selection’ and ‘appointment’ of arbitrators The LCIA Rules entertain a distinction between the selection of arbitrators (which may be made by way of party nominations, by the LCIA directly, or even by a third party), and their appointment, which is the sole prerogative of the LCIA Court. This distinction appears at Article 5.5 of the Rules which provides that the LCIA Court alone may ‘appoint’ arbitrators, and that where a contract provides for party ‘appointment’, this is deemed a provision for party ‘nomination’. The difference between the two concepts of selection and appointment, which is reflected under the Rules of other institutions3 , is straightforward. The selection of the arbitrators means the identification of the individuals (sometimes referred to by the LCIA as the ‘candidate arbitrators’) who will ultimately sit on the tribunal. The appointment, on the other hand, is the process by which these individuals are given the authority, by the LCIA Court, to conduct the arbitration4 . Inthenormalcourse,theLCIACourtwill‘appoint’allthreearbitrators at the same time, rather than appointing them sequentially as and when they are nominated or selected. It is however open to the parties to agree otherwise, for instance in their arbitration clause, but the benefits of doing so are, at best, unclear. In fact this adds to the formalities to be completed by the institution, and therefore tends to slow down the constitution of the tribunal and increase the costs. 3 Articles 12 and 13 of the ICC Rules (2012), for example, draw a distinction between the ‘nomination’ of arbitrators by the parties on the one hand, and the ‘appointment’ or ‘confirmation’ by the Court on the other. 4 Arguably the authority comes from the parties, in the first place, who have agreed to arbitrate under the LCIA Rules, and therefore that the arbitrators will first need to be appointed by the LCIA Court before being able to adjudicate the dispute.
- 156. 146 | KIGALI INTERNATIONALARBITRATION CENTRE The distinction between ‘selection’ and ‘appointment’ is relevant for a variety of reasons, one of which is that prior to their ‘appointment’, the arbitrators do not form a ‘tribunal’ under the LCIA Rules and they, therefore, cannot adjudicate the dispute, i.e. make decisions capable of binding the parties. In some forms of arbitration5 it is possible for the case to be heard, at least initially, by ‘only’ two co-arbitrators appointed by the parties. In this case, the two arbitrators make decisions jointly, with any disagreement being referred to a third arbitrator named ‘umpire’ - such umpire being appointed as and when a disagreement arises. This is not the case under the LCIA Rules, which does not contemplate any decisions being made by an arbitrator prior to the tribunal being appointed. In fact the LCIA Rules go a step further, as they proceed on the basis that the parties’ nominees will not even contact their nominating party directly prior to the tribunal being in place. Sub-articles 13.1 and 13.2 of the Rules indeed provide: Until the Arbitral Tribunal is formed, all communications between parties and arbitrators shall be made through the Registrar”. “Thereafter, unless and until the Arbitral Tribunal directs that communications shall take place directly between the Arbitral Tribunal and the parties (with simultaneous copies to the Registrar), all written communications between the parties and the Arbitral Tribunal shall continue to be made through the Registrar”6 . b. Selection of arbitrators As indicated above, by operation of the LCIA Rules, unless the parties agree expressly that they may nominate arbitrators, the selection of arbitrators falls on the LCIA Court, which is the default appointing authority under the Rules. An internal review conducted in 2010 shows that around 18% of sole arbitrators are selected by way of a joint nomination by the parties, but in the majority of cases (approximately 82%) the sole arbitrator is selected by the LCIA. More surprisingly perhaps, ‘only’ approximately 60% of arbitrators on three-member tribunals are selected by the parties or their nominees. 5 See for example the discussions of LMAA arbitration proceedings in Jonathan Lux and Reema Shour, ‘London Maritime Arbitrators’ Association (LMAA)’ - World Arbitration Reporter (WAR) - 2nd Edition, 2010. 6 It is, naturally, open to the parties to agree that they may contact their respective nominees directly, for the limited purposes of selecting a Chair, but if one party objects to this course of action, then the parties are clearly required by the LCIA Rules to liaise with their respective nominees through the Secretariat.
- 157. KIAC 2014 CONFERENCE REPORT |147 Whilst it is, strictly speaking, the LCIA Court that makes the appointments under the Rules, the Secretariat is highly active in its role assisting the Court, which is not surprising considering that the Secretariat is the only permanent organ of the institution, and that it is in charge of the day to day administration of the cases. When it makes an appointment, the institution follows a centralized procedure, which may be summed up as follows. The process starts with the Secretariat, which reviews the parties’ initial submissions. These normally include at that stage the Request for Arbitration filed by the claimant under Article 1, the Response filed by the Respondent under Article 2, together with any relevant exchange of correspondence between the LCIA and the parties as to their preferences regarding the qualifications of the arbitrators. A summary of the case is then prepared by the relevant LCIA case handler, which will permit the identification of key ‘factors’ in the case. Such factors may include the nationalities7 and location of the parties, the governing law of the contract, the seat of the arbitration, its language, the industry sector(s) concerned, the amount in dispute, the types of claims made by the parties, and any preference expressed by the parties regarding the qualifications of the arbitrators8 . The identification of these key factors is followed by internal discussions, with the Registrar and Deputy Registrar, aiming at defining the ideal ‘profile’ for the case. When it is selecting more than one candidate (on a three- member tribunal), the Secretariat will identify a ‘combination of profiles’ that complement each other, in order to achieve a balance of qualifications on the tribunal. Based on the agreed profile, or combination of profiles, various searches are performed on the LCIA’s database of arbitrators9 , from which an initial ‘long list’ is drawn and discussed internally. These discussions will imply reviewing the experience and qualifications 7 The nationalities of the parties is always taken into consideration because Article 6.1 of the Rules requires that where the parties are of different nationalities, a sole arbitrator or chairman of the arbitral tribunal shall not have the same nationality as any party unless the parties who are not of the same nationality as the proposed appointee all agree in writing otherwise. 8 This is consistent with Article 5.5 of the Rules which provides that the “(...) LCIA Court will appoint arbitrators with due regard for any particular method or criteria of selection agreed in writing by the parties. In selecting arbitrators consideration will be given to the nature of the transaction, the nature and circumstances of the dispute, the nationality, location and languages of the parties and (if more than two) the number of parties”. 9 The database contains over two thousand profiles of neutrals (that is, arbitrators, mediators and adjudicators) from a wide range of jurisdictions, and with diverse backgrounds.
- 158. 148 | KIGALI INTERNATIONALARBITRATION CENTRE of a number of arbitrators (as they appear on their CVs). From this list, the Secretariat then prepares a ‘shortlist’. The case summary and shortlist, which together are referred to as ‘the dossier’, are then forwarded to the LCIA Court, which selects the arbitrators that the Secretariat should contact in the first place. In accordance with the Rules, and as stressed above, it is the LCIA Court which appoints the arbitrators, and the Court is therefore free to select individuals outside the shortlist presented by the Secretariat. The LCIA Court performs most of its functions through its President or a Vice President acting alone, or through a division of the LCIA Court composed of three or five members. When it comes to the selection or appointment of arbitrators, the decisions of the Court are systematically made by a Vice President or the President acting alone10 , so that it is often possible for a decision on the selection of arbitrators to be made by the Court within hours of the Court receiving the dossier from the Secretariat. c. Appointment of the tribunal Before the LCIA Court may appoint an individual on a tribunal, the individual in question is required to complete and sign a “Statement of Independence and Consent to Appointment” (Article 5.3). By this statement, the arbitrator confirms to the LCIA Court and the parties that he/she is willing to accept appointment and that he/she is independent and impartial of the parties. By signing the statement, the arbitrator also undertakes a continuing duty to disclose to the LCIA Court, after the appointment, any circumstances which may give rise to justifiable doubt as to the arbitrator’s independence or impartiality. Once all statements of independence have been completed by the arbitrators, the LCIA Secretariat asks the LCIA Court formally to appoint the tribunal11 . The actual act of appointing the tribunal is 10 Divisions of the LCIA Court are constituted principally for the purposes of deciding challenges to arbitrators (though some challenges are decided by a Vice President, an honorary Vice President, or the President alone). 11 Where a statement if accompanied by a disclosure, the LCIA Court may decide to send that disclosure to the parties for comment prior to appointing the tribunal, in order to avoid any challenge once the tribunal is appointed.
- 159. KIAC 2014 CONFERENCE REPORT |149 performed by the signing, by the LCIA Court, of a formal document referred to as a “form of appointment”. The form of appointment is a self-contained document, executed by a Vice President or the President on behalf of the LCIA Court, reciting the procedure by which the tribunal has come to be appointed. The form will normally recite any changes agreed by the parties to the arbitration clause. These could include a change in the number of arbitrators, or the use of party nominations where the clause was originally silent on this point. The parties are then notified, by the LCIA Registrar or a Deputy Registrar, of the constitution of the tribunal. The notification fax or email sent by the Secretariat will be accompanied by copies of the said form of appointment, signed by the LCIA Court, but also by the arbitrators’ signed statements of independence, and their CVs. This notification also serves as a reminder to the parties, that unless otherwise agreed between them pursuant to Article 14 of the LCIA Rules, or directed by the Tribunal, the next step in the procedure is the filing, within 30 days, of the Claimant’s Statement of Case under Article 1512 . d. Expedited formation of the tribunal The LCIA Rules contain, at Article 9, unique provisions which permit the constitution of an arbitral tribunal on an expedited basis in cases of urgency. These provisions differ from that of other institutions which permit the appointment of an ‘emergency arbitrator’ or other ‘referee’, in that Article 9 of the LCIA Rules aims at appointing, on an emergency basis, the very individual or tribunal that will ultimately be deciding the case13 . The Article 9 procedure, however, is reserved to cases of “exceptional urgency” the “specific grounds” for which the applicant has to establish to the satisfaction of the LCIA Court. It is not surprising, therefore, that Article 9 applications remain a relatively rare occurrence in practice14 . 12 It should be noted that if the Claimant has elected to treat its Request for Arbitration as its Statement of Case, then the next step is the filing within 30 days of the Respondent’s Statement of Defence. 13 Which approach is preferable is certainly debatable and will vary from case to case, but the Article 9 approach appears to be more cost effective (no duplication of work between the temporary referee and the arbitrator), and offer better guarantee regarding enforceability (as only a final, i.e. non-provisional, decision may constitute an award capable of enforcement under the NY Convention). 14 Article 9 applications by year in the past ten years: 2002, total number 5 (4 granted); 2003, 3 (0 granted); 2004, 3 (0 granted); 2005, 9 (8 granted); 2006, 4 (0 granted); 2007, 2 (1 granted); 2008, 12 (3 granted); and 2009, 13 (5 granted).
- 160. 150 | KIGALI INTERNATIONALARBITRATION CENTRE The LCIA Court will approach Article 9 applications on a case by case basis but, generally, Respondents are afforded between one and five working days to provide comments on any Article 9 application. If the application is granted, the LCIA Court would then often appoint the tribunal in two days to two weeks thereafter15 . It should be noted, however, that the LCIA Court has consistently taken the view that Article 9 does not empower it to curtail a ‘contractually agreed period’, such as a timeframe for the appointment of the tribunal agreed by the parties in their arbitration clause. The LCIA Court is of the view that it can only curtail a deadline under the Rules, like the 30-day period for the Respondent to file its Response under Article 2. e. The Draft new rules (2014) The process of appointment under the current draft of the LCIA rules has not changed dramatically. Most of the features discussed above have been retained in the current draft. One notable difference comes in the guise of the draft Article 5.9 which sets out the factors which the LCIA should take into account when selecting an arbitrator. Article 5.9 provides that: “The LCIA Court shall appoint arbitrators with due regard for any particular method or criteria of selection agreed in writing by the parties. The LCIA Court shall also take into account the transaction(s) at issue, any circumstances of the dispute, its monetary amount or value, the location and languages of the parties, the number of parties and all other factors which it may consider relevant in the circumstances”. Another small amendment contemplated by the current draft include is found at draft Article 5.10 which sets out the limits for some members of the court (vice presidents and the president) to be appointed as arbitrators in LCIA arbitrations. 15 See Adrian Winstanley, “Review of the London Court of International Arbitration” in International Commercial Arbitration Practice: 21st Century Perspectives, Grigera Naón et al. (ed), LexisNexis (2010).
- 161. KIAC 2014 CONFERENCE REPORT |151 Discussions EMMANUEL KAMERE (RWANDA): Thank you very much presenters for these clear and helpful presentations, I really have learnt so much from your presentation and the audience is still willing to learn from your experience, but they can also suggest and can also contribute. NGOGA GAKUBA THIERRY (RWANDA): the registrar of Kigali International Arbitration Centre: My question goes to both of you or specifically Remy. What is the power of institutional arbitration in confirming the parties’ nominees? My question is, apart from the reason of conflict of interest, what other reason makes arbitral institutional to reject a party nominee and how that decision is communicated to one party or to both parties considering the rules of communication under different institutional arbitration rules? Thank you REMY GERBAY (UNITED KINGDOM): At the end of your question, I thinkitisveryclear,thatinLCIA,infactwouldcometoinstitutionsto not normally have experts in communication with parties, so when it comes to specific constitution of the tribunal, the LCIA will not write just one party omitting to copy the other party on the E-mail for example. It is quite important to keep experts communication to the absolute minimum, so the only type of expert communication you could have between institutions and the parties would be before the commencement of arbitration, somebody can, so far claimant asking some very generic questions about for example the format of the request of arbitration, the cost (how you pay the registration fee) that sort of the stuff, because the institution is likely not only to maintain equality between parties but also to ensure that it is providing legal advices to all parties.
- 162. 152 | KIGALI INTERNATIONALARBITRATION CENTRE That is the second part of your question. The first one is about the situation in which arbitral institution like LCIA is going to refuse to confirm the nomination made by parties for reasons other than lack of the independence and partiality, and here, it is a very difficult question and I’ve looked in facts at this question across number of arbitral institutions, and, in theory, eh, the, because of the article 5 of the LCIA rules, the LCIA court has got the power to reject the nominations made by parties for reasons other than the impartiality and independence, may be one example could be if a nomination is made by a party with an individual that doesn’t have this express qualification that are expressly written in the arbitration agreement because of the enforcement of the agreement. But apart from that, it is very hard to think of examples in which the institutions refuse to appoint arbitrator. When I was in LCIA, I didn’t really see any case in which the LCIA court refused to confirm an arbitrator for reasons other than impartiality and independence or qualification. I understand the ICC now actually has refused to appoint an arbitrator that were nominated by the party when they knew the arbitrator did not have enough availability, which I think is really something good that the ICC is doing, as you know the ICC is now asking the candidate to file not only a statement of independence but also one that states their availability to deal with the case. And the question when they introduced a statement of availability was, what the ICC is going to do if it finds that an arbitrator is not available enough, and what is not available enough, you know, and in fact in practice, I had a confirmation from the ICC that they have on occasion refused to conform a nomination on the basis of lack of availability. Another potential reason with ICC is that if you know somebody is unfit because of the best experience to deal with arbitration, somebody who is corrupt but again this is something I have not seen in practice. So in theory there are possibilities on lack of availability, to sum up, or somebody who is unfit to sit as an arbitrator, but in practice it doesn’t really happen. It’s all about impartiality independence and agreed qualification.
- 163. KIAC 2014 CONFERENCE REPORT |153 OLIVER KHABURE (KENYA): I have two comments: First is on Appointing authority, the consideration that they should make when they are appointing an arbitrator or a tribunal, first, in my view what makes an arbitration international is when it is a cross border arbitration and to me I think it is very important that the appointing authority considers the cost to the parties, if for example, there is a dispute in the UK, for human sake, and the London chamber of the international dispute, once you want to appoint an arbitrator, I don’t think it makes sense for them for example to get a member tribunal from the US and probably another one from Australia, when they could very easily get these arbitrators from around. I am looking at another case where for example now, we have an arbitration here in Kigali, say for example one arbitrator could be from the UK, another one from South Africa, may be another one from Nigeria, where it could have been very easily have been may be one arbitrator from Kenya, Tanzania and Rwanda, because cost is a major consideration, and I think the appointing authorities should really take into account the financial status of the parties before they appoint an arbitrator or a tribunal because I find that the international arbitration is becoming very expensive and so much as parties want to go to international arbitration what about affordability and cost is supposed to be one of the advantages of the arbitration. The other point is again to the appointing authorities, if it is a very technical dispute, I think it’s only fair that the arbitrator also or the tribunal of that matter, be people who understand the subject matter, with the greatest respect to my colleagues lawyers, I know there are many lawyers who are arbitrators, but they may not be qualified in technical dispute, for example construction of building, construction dispute, and you find there is an increasing tendency for tribunals to constitute of people who are predominantly lawyers and really they have no working knowledge or understanding of construction industry, if for example I was to appoint a tribunal, say for example for a matter concerning a nuclear plant for example, probably I will be looking for someone who understands that particular industry because matters in arbitration are rarely legal
- 164. 154 | KIGALI INTERNATIONALARBITRATION CENTRE issues, all is right but may be you find a technical dispute and I have seen that I am not sure that appointing authorities keep that due consideration. Thank you. EMMANUEL KAMERE (RWANDA): Thank you for your question, but I would also like to link your question to one that I have, when it’s the matter of the cost to the parties, I think we think of the nationality of the arbitrators, but what about the number of arbitrators? I see that in PCA you can go up to five arbitrators, in LCIA they can also go up to five, but in KIAC rules in article 12 they can’t go beyond three arbitrators. LISE BOSMAN (NETHERLANDS): Thank you, I will check the cost issue first, it’s absolutely true that increasing cost in international arbitration is a critical concern to parties and practitioners, but what we see at the PCA is that the largest portion on that cost tends to be the cost that parties spent on the attorneys or their lawyers, so the cost of the arbitrators will be a much small portion of the overall cost of the arbitration. We think that portion might be as high as 80 to 90% spent by the parties on legal representation compared to 10 or 20% only on arbitrators. That being said there are ways to cut on the cost of arbitration as well. Geographical distance may be relevant but possibly it is increasingly becoming irrelevant,everydaywhenIseethatmuchcanbesentviaE-mail,itis really only when parties sit together for hearings and deliberations when they become acute. On the issue of the number of arbitrators, under PCA practice, you will only appoint up to five people tribunal in case of a State Versus State dispute. So imagine a boarder commercial dispute, you will never, I have never seen a five member tribunal in an ordinary commercial matter or even in an investor versus state arbitration. They are appointed for quite unusual situations. REMY GERBAY (UNITED KINGDOM): I think you are on point with the question, of no lawyers and technical individuals being appointed as arbitrators. I think as the general rule it has more room for no lawyers to be appointed as arbitrators. My personal experience is that statistically it’s friendlier outside the council; parties are reluctant to appoint engineers or accountant as
- 165. KIAC 2014 CONFERENCE REPORT |155 arbitrators. In my view, arbitral institutions are more likely to appoint no lawyers for arbitral tribunals and again it’s something that we don’t talk about a lot when we talk about the benefit of institutional appointments versus unilateral appointments. And the reason is that when arbitral institution is appointing more thanoneindividualforexampleallthreemembersofarbitraltribunal they can try to achieve a balance of competence in tribunal. So, it’s possible for an institution to try to appoint a no lawyer for example an engineer and perhaps a lawyer with special skills in construction arbitration and they mutual chose one to chair arbitration in the process. When the parties themselves are making the nominations it’s got to their benefits of course, when the parties themselves are making nominations, they will in my experience not often appoint non-lawyers because what they will try to do is appoint somebody who they think is not only going to dispose with the case, but will also one be neutral, independent and partial. And they are going to try to nominate somebody who will able to connect with the chairperson. This should be somebody who is going to have whatsoever influence on the chairperson in terms of conveying the interests of the parties. And often in terms of influence there is this perception, which is probably incorrect, but there is I think this perception that it is more effective to have in arbitration lawyers than appointing a technical expert, which I think is really a pity. Because I really think the quality of arbitral decisions is enhanced in a construction dispute when you have a specialist or an accountant in a dispute etc. Very often, the responsibility lies in the outside counsel and not so much the arbitrators. EMMANUEL KAMERE (RWANDA): We will have time to discuss with the panel member during the break time. APOLLO NKUNDA (RWANDA): from Trust Law Chambers here in Kigali: One of the process of appointing arbitrators is slightly more clearly institutional arbitrations, the process is little confusing by in ad hoc arbitrations. And my question to everyone here is what’s all of appetite should the courts have in intervening in appointing arbitrators where both parties have disagreement; on reaching an agreement on appointing the arbitrator or put it differently, to what extent should the courts intervene in appointing an arbitrator
- 166. 156 | KIGALI INTERNATIONALARBITRATION CENTRE in ad hoc arbitrations where the parties are unable to reach an agreements. Thank you. LISE BOSMAN (NETHERLANDS): That was anticipated under the UNICTRAL arbitration rules, which are probably used most often in ad hoc proceedings. So, when parties draft arbitration clause that refers to use of UNICTRAL rules, what they should do is name an appointing authority in that clause. But if they don’t, it is not a disaster, because the rules name the PCA secretary general as the designating authority, which can step in that process and designate an appointing authority, who can then fill that gap. Now, outside of the UNICTRAL arbitration rules, they may well be other rules that actually don’t include this deadlock breaking mechanism, at that point you will have to talk to the laws of the place on arbitration and see whether the law has assigned to the court to step in. REMY GERBAY (UNITED KINGDOM): Yes, I remember one case when I was in LCIA, in Nigeria, we were confronted with an international arbitration which was an ad hoc and the parties were facing a deadlock for the appointment of an arbitrator and the court selected the LCIA in London as the appointing authority, so we received basically I think a council of the claimant and took the decisions at the order of the courts and we acted as the appointing authorities for the parties. EMMANUEL KAMERE (RWANDA): I thank the panel members, the audience for your wonderful contributions.
- 167. KIAC 2014 CONFERENCE REPORT |157 PanelSeven THE ARBITRAL AWARD AND THE DISSENTING OPINION Whenever an arbitral tribunal is composed of more than one arbitrator, the solving of a difficult and complex case may be preceded by the difficult task of harmonizing the opinions of the members of the tribunal. Sometimes when the arbitrator fails to do so, the arbitral award will be accompanied by a dissenting opinion. The panel addressed from their experience the issue of whether dissenting opinions are useful and what sort of effect they present. STEVEN MUSISI (UGANDA): I welcome you all to this session and I would like to introduce the imminent members of the panel. On the panel today we have Lise Boseman, the very experienced Chief Tinuade Oyekunle and Veeder; you can find the biographies of our honourable speakers in the books at your disposal and without further ado I would like to request Lise Bosman to begin. PANELISTS: Lise Bosman, Senior Legal counsel, Permanent Court of Arbitration, Netherlands V V Veeder: QC, Essex Court Chambers, UK Chief Tinuade Oyekunle, Arbitrator & KIAC Board of Directors Member, Nigeria CHAIR: Steven Musisi, Managing Partner, Mubiru Musoke & Co Advocates, Uganda
- 168. 158 | KIGALI INTERNATIONALARBITRATION CENTRE Lise Bosman1 Whenever an arbitral tribunal is composed of more than one arbitrator, the solving of a difficult and complex case will be preceded by the task of harmonizing the opinions of all members of the arbitral tribunal. When the arbitrators fail to do so, the arbitral award may be accompanied by a dissenting opinion. I will look at some of the legal aspects of such a dissenting opinion (including what the effects and procedural aspects may be and whether it has any inherent value). The award At the end of the arbitration, the arbitrators are required to render a final award, setting out their decision on the dispute and the reasons on which it is based. The underlying arbitration law of the place of arbitration and the arbitration rules will set out any legal requirements that the award should meet – and these are generally that: the award must result from an agreement to arbitrate; the award must comply with certain minimal formal requirements (such as finality and being in writing); and the award must resolve a substantive issue, not a procedural matter. The decision-making process But the question today is rather how is a valid award arrived at? It cannot be emphasized enough that – unlike the practice among common law panels of (appellate) judges – the decision-making process in international arbitration is a collegial process. The norm 1 Executive Director, International Council for Commercial Arbitration (ICCA); Senior Legal Counsel, Permanent Court of Arbitration; Adjunct Professor, University of Cape Town. PRESENTATION ON THE ARBITRAL AWARD AND THE DISSENTING OPINION
- 169. KIAC 2014 CONFERENCE REPORT |159 in international arbitration is for a three-member tribunal to reach a unanimous decision, and to issue a joint final award. It is one of the challenges of the presiding arbitrator in a panel of three arbitrators to harmonize the opinions of all three arbitrators so that consensus can be reached on the decision in question. Arguably, there is also an implied obligation on the part of all members of an arbitral tribunal to attempt to reach a consensual decision in good faith. And in my experience, the process of achieving unanimity is successful more often than not. The decision-making process is not only a collegial process, but a highly confidential process – arbitrators are strongly constrained from revealing any details of their deliberations.2 Even the tribunal secretary assisting the arbitrators may only be present during the deliberations with the knowledge of both parties. There are good reasons for this obligation of confidentiality – it enables tribunal members to express their views openly and fully without any risk that a particular view is disclosed or taken out of context. It also enables an open and free debate to take place among tribunal members, thereby leading to a better joint decision. The majority rule Arbitral proceedings are, however, not divorced from the real world, and in practice it is not always possible to reach consensus on all the issues before a tribunal. National arbitration legislation and arbitration rules therefore commonly foresee the possibility of reaching a final decision through a majority award (the “majority rule”). This is the position under the UNCITRAL Model Law, Article 29 of which provides that “In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made, unless otherwise agreed by the parties, by a majority of all its members”.3 It is echoed in the UNCITRAL Arbitration Rules. Indeed, one of the principal drafters of the 1976 UNCITRAL Rules, 2 See, e.g, reactions to the Separate Opinion of Professor JH Dalhuisen in the annulment decision in Vivendi v Argentina, ICSID Case No. ARB/97/3 (20 August 2007). 3 See also Article 33(1) UNCITRAL Rules 2010 (“Where there is more than one arbitrator, any award or other decision of the arbitral tribunal shall be made by a majority of the arbitrators”), retaining almost exactly the words of Article 31(1) UNCITRAL Arbitration Rules 1976; Article 31(1) ICC Arbitration Rules; Article 26(3) LCIA Rules. See also, among arbitration legislation, the English Arbitration Act (Section 20(4)), the Swiss Law on Private International Law (Article 189(2)), the Finnish Arbitration Act (Section 32(1)) and Article 41 of the Rwandan Arbitration Act (2008).
- 170. 160 | KIGALI INTERNATIONALARBITRATION CENTRE Professor Pieter Sanders, noted that under Article 31(1) of those Rules arbitrators are “forced to continue their deliberations until a majority, and probably a compromise solution, has been reached.”4 Thismajorityawardcanbeformedbyanycombinationoftwoofthe three arbitrators (including the two party-appointed arbitrators). It may also be formed through a combination of concurring opinions.5 Where there is no majority, some national arbitration laws and institutional rules provide further that the view of the presiding arbitrator may prevail. While it is perhaps more common that the presiding arbitrator be granted this power to issue procedural decisions, certain arbitration rules and legislation go beyond this to enable the presiding arbitrator also to decide on questions of substance (See, e.g., Article 31(1) of the ICC Arbitration Rules, which provides that “If there is no majority, the award shall be made by the president of the arbitral tribunal alone.”6 ) The dissenting opinion regulated Where an arbitrator disagrees with the content of the award, the practice in international arbitration is that he or she will sign the award anyway and will then be free to write a dissenting opinion.7 4 Pieter Sanders, “Commentary on UNCITRAL Arbitration Rules”, Yearbook Commercial Arbitration 1977 Vol. II (1977), pp. 172, 208. 5 There are numerous examples of this in the practice of the Iran-United States Claims Tribunal (see, e.g., Iran v United States, Case A1 (Issues I, II and IV), Decision 12-A1-FT (3 August 1982), Separate Opinion of Members Aldrich, Holzmann and Mosk, reprinted in 1 Iran-US CTR 200, 200 (1981-1982)). See further ICJ decision in the Case concerning the Arbitral Award of 31 July 1989 (Guinea-Bissau v. Senegal), ICJ Rep. 1991 at p. 40, in David D. Caron & Lee M. Kaplan, The UNCITRAL Arbitration Rules, A Commentary (2012), 2nd ed, p. 702; see also Stephen M. Schwebel, “May the Majority Vote of an International Arbitral Tribunal be Impeached?” in Julian D.M. Lew and Loukas A. Mistelis, Arbitration Insights (2007), p. 211. Note also instances where diverging opinions are noted in the body of the majority award, e.g., in the Abyei Arbitration, the five-member tribunal rendered a majority award with a dissenting opinion (by Judge Al-Khasawneh) and also noted at various points within the majority award the diverging opinions of one of the arbitrators forming the majority (Professor Hafner). 6 See in this regard Article 33(2) UNCITRAL Rules 2010; Article 26(3) LCIA Rules; see also English Arbitration Act at Section 20(4), Swiss Private International Law Act at Art. 189(2), and Finnish Arbitration Act at Section 32(2)(permitting decisions by the presiding arbitrator alone); compare Article 41(1) Rwandan Law on Arbitration and Conciliation in Commercial Matters (providing for the majority rule and that “questions of procedure may be decided by a presiding arbitrator, if so authorized by the parties or by all members of the arbitral tribunal”). 7 Alan Redfern, “Dissenting Opinions in International Commercial Arbitration: The Good, The Bad and The Ugly” in 20(3) Arbitration International 2004 at p. 224.
- 171. KIAC 2014 CONFERENCE REPORT |161 This practice originated in the Anglo-American judicial culture,8 in contrast to civil law jurisdictions, in which “generally the only written opinion emanating from a multi-judge tribunal is the decision itself”.9 Perhaps because of differences in legal culture and practice in national courts on this point, most arbitration legislation and arbitration rules do not expressly regulate the right to issue a dissenting opinion. (And perhaps also because drafters do not wish to encourage the practice!). For instance, the UNCITRAL Model Law, the UNCITRAL Arbitration Rules, the LCIA Arbitration Rules and the ICC Rules of Arbitration do not contain provisions on dissenting opinions (so that they are neither required nor prohibited). In practice, however, dissenting opinions are usually permitted in arbitrations taking place under those Rules, unless prohibitedbythelegislativeframeworkofthearbitralproceedings.10 They are also permitted in the practice of the International Court of Justice (and its predecessor the Permanent Court of International Justice). And the ICSID Convention explicitly provides in Article 48(4), that “Any member of the Tribunal may attach his individual opinion to the award, whether he dissents from the majority or not, or a statement of his dissent.”11 To dissent or not to dissent? Under most systems and sets of rules, therefore, it is possible for an arbitrator who disagrees with a majority decision to issue a dissenting opinion. The real question is whether that arbitrator should do so. Hamlet famously had trouble making up his mind; Professor Albert Jan van den Berg has less trouble taking decisions and says “no”.12 8 Albert Jan van den Berg, “Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration”, in Mahnoush Arsanjani et al. (eds.), Looking to the Future: Essays on International Law in Honor of W. Michael Reisman, at p. 822. 9 Mosk &Ginsburg, “Dissenting Opinions in International Arbitration” at p. 260. 10 Manuel Arroyo, “Dealing with Dissenting Opinions in the Award: Some Options for the Tribunal” 26 ASA Bull. 437, 459 (2008), at p. 441. 11 See also Iran-US Claims Tribunal Rules of Procedure (Article 32) (“Any arbitrator may request that his dissenting vote or his dissenting vote and the reasons therefore be recorded.”) 12 Van den Berg, “Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration”, at p. 823.
- 172. 162 | KIGALI INTERNATIONALARBITRATION CENTRE First though, are there any arguments in favor of dissenting opinions in international arbitrations? Well, some say that: dissent may lead to a better award, i.e., the dissenting arbitrator may point out problems that the majority does not see, leading the majority to construct a better award; 13 the majority will act more responsibly; dissents may bolster party confidence in the process “by showing the losing party that alternative arguments were considered, even if ultimately rejected”; 14 and dissents may contribute to the development of the law (although this argument is perhaps only really valid only for common law courts and at best of indirect relevance in international arbitration, which knows no formal system of precedent). On the other hand, there are many valid reasons to avoid the issuing of a dissenting opinion15 For instance, it may risk violating the confidentiality of deliberations. As already noted, this is critical element of collegial arbitral decision-making.16 It may also raise the costs of arbitration: the drafting of separate opinions takes time, the honing of majority awards to anticipate attacks by a dissenting arbitrator takes time, and the more time spent by the arbitrators, the more costs will increase for the parties. It may increase the likelihood that awards will be challenged or refused enforcement. There are notorious examples of this happening in practice. But perhaps the strongest argument against the issuing of dissenting opinions is that they may damage the legitimacy of the arbitral process by highlighting an inappropriate connection between parties and their appointed arbitrators.17 And here I come back to Professor van den Berg, as this point is graphically illustrated in this table on the screen put together by Professor van den Berg in an empirical survey conducted of dissenting opinions issued in ICSID and other investor-State arbitrations through 2008, indicating a clear link between the issuing of a dissenting opinion and the party that appointed the dissenting arbitrator. Of the 150 cases examined, 34 dissenting opinions were issued by party- 13 See also Mosk & Ginsburg, “Dissenting Opinions in International Arbitration” at p. 270. 14 Mosk & Ginsburg, “Dissenting Opinions in International Arbitration” at p. 272. 15 Mosk & Ginsburg, “Dissenting Opinions in International Arbitration” at pp. 273-283. 16 See, eg., CME v Czech Republic, proceedings in Svea Court of Appeal, Sweden. 17 See also Van den Berg, “Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration”, at p. 828.
- 173. KIAC 2014 CONFERENCE REPORT |163 appointed arbitrators. Of these 34 dissenting opinions, nearly 100% were issued by the arbitrator appointed by the party that had lost in whole or in part. In investor-State arbitration, in any event, it is clear that serious questions have been raised with regard to the neutrality of dissents by party-appointed arbitrators. With that sobering thought, I hand over to my colleague Johnny Veeder, who may be willing to make the case for the dissenting opinion.
- 174. 164 | KIGALI INTERNATIONALARBITRATION CENTRE 1 Introduction: It is of great interest to note that the resolution of dispute by arbitration is as old as the history of human civilization. In writing the history of English Law Holdsworth spoke of arbitration as a practice which came naturally to primitive bodies of law. The choice of arbitrators, the procedure to be adopted by them, choice of law and the form of the award and the manner of its enforcement were matters dictated by the nature of the dispute as well as the culture of the times. Itisimportanttonotethatculturalvalueshavealwaysbeenpowerful in the development of human society and most institutions both in character and functioning have been affected by such prevailing factors. Thus in the relatively uncomplicated values of the early society, commercial disputes were resolved through an agreement to refer them to a jointly appointed arbitrator and the acceptance with which his decision was honoured found its sanction in the trade culture of the community or the guild of traders. This behavioural pattern is even more illuminating and transparent when reading the anthropological research studies of some regions oftheworldparticularlytheAfricanregionwhichhadbeenculturally proconciliation and had achieved peaceful settlement of dispute within their various communities without confrontation through litigation. Such disputes used to be settled out of State Courts by recourse to village elders, respected personalities within the village or through city merchant circles. Such personalities jointly chosen by disputant parties played the role of arbitrator(s), conciliator(s), PRESENTATION ON THE ARBITRAL AWARD AND THE DISSENTING OPINION Chief (Mrs.) Tinuade Oyekunle, Nigeria
- 175. KIAC 2014 CONFERENCE REPORT |165 mediator(s) to settle conflicting interests by rendering binding decisions based on fairness and justice without applying specific rules of law and legal procedural rules. However, as society grew more organized and developed it became imperative to have specific rules to resolve disputes hence the provisions for arbitration in the municipal laws of many countries. The increase in commercial activities between people of many countries of the world also brought about the signing of bilateral and multilateral treaties to regulate trade between their countries. Consequently, when international commercial arbitration became more identified and established, reliance for guidance was based on domestic arbitration laws which considerably differed from one country to the other and such arbitration clauses were viewed with suspicion and rivalry amongst judicial authorities. After the First World War the increased use of international commercial arbitration led the newly established International Chamber of Commerce (ICC) in Paris to promote an international convention by which one of the major obstacles of that time to arbitration, that is, the enforceability of the Arbitral Clause and referring future disputes to arbitration would be removed. The initiative of the ICC later taken over by the League of Nations resulted in the adoption of Geneva Protocol on Arbitration Clauses in 19232 . Article 1 of the Geneva Protocol declared valid arbitration agreement, “whether relating to existing or future differences”. The Protocol also provided for the obligation of a Court of a contracting State to refer the parties to arbitration if it was seised of a dispute regarding which it had been agreed to arbitrate. Having thus established the international validity and enforceability of the arbitral clause, the international enforcement of the arbitral award was put in place by the Geneva Convention on the Execution of Foreign Award concluded under the auspices of the League of Nations in 19273 . The 1927 Convention regulated the enforcement of Arbitral Awards made in pursuance of an arbitration agreement falling under the Geneva Protocol of 1923. Although the Geneva Protocols of 1923 and 1927 were definitely an improvement on the state of the Arbitral 2. 27 League of Nations Treaty Series 158(19240 3. 92 Leagues of Nations Treaty Series 302 (1929-1930).
- 176. 166 | KIGALI INTERNATIONALARBITRATION CENTRE clauses and awards, they were still regarded as inadequate for the purposes of finally settling international commercial disputes. Some of the objections to the inadequate applicability of the 1923 and 1927 protocol were as follows:- (a) Limitation of the field of application of the Protocols e.g. the parties had to be subjected to the jurisdiction of different contracting states, for example, Article 2 of the Geneva Protocol on Arbitral Clauses provided that ‘the arbitral procedure shall be governed by the will of the parties and by the law of the country in whose territory the arbitration takes place’. (b) The imposition of a heavy burden of proving the conditions for enforcement on the party seeking enforcement e.g the award had to become “final” in the country where it was made (ie. the country of origin) many courts interpreted this condition as requiring a leave of enforcement (exequatur) from the court of the country of origin before seeking exequatur elsewhere, this requirement led to what became known as “double exequatur” It was strongly felt that the combined effect of the 1923 and 1927 Geneva Protocols was to make the enforcement mechanisms exceedingly difficult and the choice of an unfamiliar venue for arbitrationfraughtwithdanger. Itwasfurthersaidthattheexistence of some unanticipated form of recourse in a neutral venue having no connection with the parties or the unwitting failure to observe particular local norms, could destroy the award or tie it up in years of litigation before enforcement in the relevant forum (ie. where the losing party had assets) Such a state of affairs could endanger frustration in cases where the award was perfectly valid under the law of the enforcement forum; and furthermore whenever the arbitral venue was in one of the litigants home jurisdictions, the Geneva system put the process at the ultimate mercy of the procedural requirements or the partiality of that party’s court which is said to be the very thing international arbitration intended to avoid. (c) The requirement that the constitution of the arbitral tribunal and the arbitral procedure should have taken place in
- 177. KIAC 2014 CONFERENCE REPORT |167 conformity with the law governing the arbitral procedure – which has always been the law of the country where the arbitration took place. This last condition actually prompted the International Chamber of Commerce (ICC) to launch a project for a new international Convention after the Second World War. The draft Convention issued in 1953 aimed essentially at an arbitration which would not be governed by a national law, even though as at that date the idea of a truly international commercial arbitration solely based on an International Convention was still unacceptable to most States. For example smaller countries of the world had become parties to multilateral treaties under the apron of their colonial masters and at independence the freedom to act was handed over with a fait accompli which manifested itself in such emergent States, inheriting strict rules and practice to which they were not parties and which had not taken into account their disadvantaged positions. Consequently, the United Nations Economic and Social Council (ECOSOC) to whom the ICC draft was presented came forward in 1955 with another draft Convention which was much closer to the aforementioned Geneva Treaties – in which the ICC draft referred to “International Arbitral Awards”, the ECOSOC draft referred to “Foreign Arbitral Awards”. The ECOSOC draft was circulated to Governments and inter- governmental organizations for comments. In the light of the comments received the “Conference on International Commercial Arbitration” convened at the Headquarters of the United Nations in New York from May 20th – June 10th, 1958 resulted in the adoption of the New York Convention 1958. The New York Convention for enforcement of Arbitral Awards 1958 became more favourable than the previous Geneva Protocols and by the early 1980 about 56 States had adhered to it. The adhering States parties to the Convention included almost all the important trading countries from the former Capitalist and Socialist countries of the world as well as many developing countries including Nigeria4 . 4. Nigeria acceded to the New York Convention 1958 on March 17, 1970 and entered the two reservations by signifying as follows:- “In accordance with paragraph 3 of the Article 1 of the Convention the Federal Military Government of the Federal Republic of Nigeria declares that it will apply the Convention on the basis of reciprocity and enforcement of awards made only in the territory of a State party to this Convention and to differences arising out of legal relationships whether contractual or not which are considered as commercial under the laws of the Federal Republic of Nigeria.
- 178. 168 | KIGALI INTERNATIONALARBITRATION CENTRE Even after the adoption of the New York Convention, there still remained a lot of concern amongst states with regard to the provisions in municipal laws of the states in respect of arbitration and many foreign entrepreneurs view such laws with mistrust. In order to eliminate this mutual mistrust discussion was begun within the United Nations circles and draft of acceptable arbitration rules was put on the agenda of the United Nations Trade Law Commission (UNCITRAL). Simultaneously, similar discussions took place at the meeting of the Asian African Legal Consultative Committee (AALCC) whose preoccupation at that time was the improvement in the growth of commerce and the rules for settlement of international dispute which might arise from commercial intercourse. During the deliberations in the UNCITRAL Working Group considering the adoption of the draft UNCITRAL arbitration rules, many important issues were highlighted and discussed; references were in particular made to the inadequacies of the existing mechanisms, while emphasis was placed on the importance of development of national laws and setting up of institutions on arbitration. The UNCITRAL Arbitration Rules was adopted in 19765 . The UNCITRAL MODEL Law was adopted 19856 . 2. Awards and Dissenting Opinions There is no internationally accepted definition of the term “award”7 . The term was not even defined in the Geneva Protocol, Geneva Convention and the New York Convention referred to in the previous paragraphs. A definition which was proposed during discussion in the UNCITRAL Working Group though not adopted in the Model law itself read as follows:- Award means “a final award which disposes of all issues submitted to the arbitral tribunal and any other decision of the arbitral tribunal which finally determines any question of substance or the question 5. The UNCITRAL Arbitration Rules 1976 has been subsequently amended in 2010 6. The UNCITRAL Model Law 1985 has been subsequently amended in 2006. United Nations documents A/40/17 annex I and A/61/17 annex I
- 179. KIAC 2014 CONFERENCE REPORT |169 of its competence or any other question of procedure but, in the later case, only if the arbitral tribunal terms its decision an award” This definition makes adequate reference to a final award without encompassing other types of awards that are contemplated in the Model Law itself, e.g a plea that the arbitral tribunal does not have jurisdiction may be dealt with either as a preliminary question and an award rendered or may be postponed for decision as a final award or part thereof. In practice the term “award”7 is reserved for decision that finally determines the substantive issues with which they deal. Therefore an award simply defined is:- “The decision published by either the Arbitrator or Umpire after considering all the evidence adduced by the parties and which disposes of the facts in dispute which have been referred to him or them for a decision” This definition distinguishes an award concerning issues from procedural orders and directions which are given by the arbitral tribunal in the conduct of the arbitral proceedings. Procedural orders and directions relate to the matters taking place during the arbitral proceedings such as the written evidence, production of documents and arrangements for the conduct of the hearings. 2.1 Form of an Award After the arbitral proceedings of a case an award will be rendered on the decision of the Arbitrator(s) Where there is a single (or sole) Arbitrator the task of making an award will be by the sole Arbitrator who will affix his signature, date and place to the award issued. However where there are more than one Arbitrator, decisions are either made unanimously or by the majority, or by the Presiding Arbitrator where he has decisive role depending on the international or institutional rules on which the arbitration is based; for example under the UNCITRAL Rules it is provided that where there are three arbitrators, any award or other decision of the arbitral tribunal shall be made by a majority of the Arbitrators8 . 8. UNCITRAL Arbitration Rules. Art.31.(1) providing that where there are three arbitrators any award or other decision of the arbitral tribunal shall be made by a majority of the arbitrators.
- 180. 170 | KIGALI INTERNATIONALARBITRATION CENTRE An exception to this rule is provided in relation to questions of procedure which allows the presiding arbitrator to decide such questions on his own, subject to revision by the tribunal9 . The provisions on the tribunal decision as it appears in the UNCITRAL Rules does not give the presiding arbitrator a casting vote. This poses a problem because the arbitrators are forced to continue their discussion and deliberation until a majority decision or compromise solution has been reached. It has been observed that while the application of such provisions may be ideal in some cases, it leads to curious concurring opinions in others; for example reference is often made to occurrences at the Iran-US claims tribunal where in order to reach a majority decision such words that are used include:- “I concur in the Tribunal’s partial award. I do so in order to form a majority so that the award can be rendered”10 and “ Unfortunately, however the damages awarded are only about half of what the governing law requires. Why then do I concur in this inadequate award, rather than dissenting from it?... something is better than nothing”11 The arbitrators in these cases had no choice because the rules of the arbitral tribunal are based on the UNCITRAL Rules in which award has to be made by a majority of the arbitrators. A commentator making reference to how these decisions were reached said that it would have been preferable, if the arbitrators had simply agreed and not issue a concurring opinion which signaled their disagreement12 . 9. Article 31 (2) of UNCITRAL Arbitration Rules- providing that in the case of questions of procedure, when there is no majority or when the arbitral tribunal so authorizes, the presiding arbitrator may decide on his own, subject to revision. The UNCITRAL Arbitration Rules contains no ‘fall back’ provision for the case in which no majority is formed. 10. Ultras systems Inc V Iran. 2 Iran – US cl. Trib. Rep. 100 1975 (Richard Mosh) 11. Economy Forms Corp. V Iran. 3 Iran – US cl. Trib. Rep 42 (1983) (Howard Holtzmann) 12. Albert Jan van den Berg, “Dissenting Opinions by Party – Appointed arbitrators in Investment arbitration.
- 181. KIAC 2014 CONFERENCE REPORT |171 Under the ICC Rules it is provided that where three arbitrators have been appointed, the award is given by a majority decision but if there is no majority, the Chairman of the arbitral tribunal makes the decision on his own13 . The LCIA Arbitration Rules contain similar provisions14 . A similar approach is adopted by the English Act 199615 . Subsequent to the adoption of the UNCITRAL Model law, most of the countries which have revised their arbitration laws to reflect the objectives of UNCITRAL have incorporated the rules and award are to be made by the majority rule where there is more than one arbitrator. For instance under the Arbitration and Conciliation Act of Nigeria;16 . The Arbitration Act of Kenya;17 , The Arbitration Act of Ghana;18 , The Arbitration Act of South Africa;19 , The Arbitration Act of Tanzania;20 . The Mauritian International Arbitration Act 200821 . The new amendment in the Mauritian International Arbitration Act 2008, granting the Chairman of the arbitral tribunal power to decide alone in the absence of a majority was put in because it was said that 13. ICC Arbitration Rules Art. 25 (1). 1988; Art. 31 (1) of the new ICC Arbitration Rules. 2010 14. Article 26 LCIA Rules. 15. Under section 52(3) of the UK Arbitration Act 1996 it is provided that ‘The award shall be in writing, signed by all the arbitrators or all those assenting to the award; and under section 20 (3) Decisions, orders and awards shall be made by all or a majority of arbitrators (including the Chairman) and 20(4) provides that ‘the view of the chairman shall prevail in relation to a decision, order or award in respect of which there is neither unanimity nor a majority under subsection (3)’. 16. Arbitration and Conciliation Act chapter 19, Laws of the Federation of Nigeria 1990; section 24(1) provides that “in an arbitral tribunal comprising more than one arbitrator any decision of the tribunal shall, unless otherwise agreed by the parties, be made by a majority of all its members”. 17. Arbitration Act No. 4 of 1995 Laws of Kenya. (Revised Edition 2012) section 32(1) provides that ‘ an arbitral award shall be made in writing and shall be signed by the arbitrator (s)’; section 32(2) provides that ‘ for the purpose of subsection(1) “ in arbitral proceedings with more than one arbitrator the signatures of the majority of all the arbitrators shall be sufficient” Reasons for any omitted signature are stated. 18. Ghana Alternative Dispute Resolution Act 2010 section 49(1) provides that “ where there is more than one arbitrator the signatures of the majority of the arbitrators shall be sufficient where the reason for the omission of the signatures of some of the arbitrators is stated. 19. South Africa Arbitration Act 42 of 1965 as amended by Justice Laws Rationalization Act 18 of 1996, General Law Amendment Act 49 of 1996. Section 24 (1) provides that “the award shall be in writing and shall be signed by all the members of the arbitration tribunal; section 24(2) provides that “ if a minority of the members of the arbitral tribunal refuse to sign the award, such refusal shall be mentioned in the award but shall not invalidate it”. 20. The Arbitration Act of Tanzania – An Act to provide for arbitration of disputes made22nd May, 1931 and subsequent ords No 26 of 1931, 32 of 1932 and of 1971. Section 12(1) provides that “when the arbitrators or umpire have made their award, they shall sign it and shall give notice to the parties of the making and signing thereof…”
- 182. 172 | KIGALI INTERNATIONALARBITRATION CENTRE 21. The Mauritian International Arbitration Act 2008 (Text and material updated 2014 Edition) Section 34 enacts Article 29 of the Amended Model Law and provides that “unless the parties have agreed otherwise) the Chairman of an arbitral tribunal may decide alone in the absence of a majority” 22. The KIAC Arbitration Rules Article 38 provides that “where the Arbitral Tribunal is composed of more than one arbitrator an award is made by a majority decision. Failing a majority decision on any issue, the Presiding Arbitrator shall make the award for the Arbitral Tribunal. 23. Washington Convention 1965 Article 48(1) 24. ICSID Arbitration Rules, rule 16(1). 25. E.g. Under Art.25 of the ICC Rules where the award may be made by a majority of arbitrators and if there is no majority by the Chairman alone. The LCIA Arbitration Rules also contain similar provisions, so are KIAC Rules. There is no such fallback position under the UNCITRAL Rules. although the topic proved to be controversial within the UNCITRAL Working Group when addressed in the context of the modification of the UNCITRAL Arbitral Rules but it was felt that the provision is necessary in a law (as opposed to the rules) if complete deadlock situations are to be avoided. It was proposed that if the parties wish to agree a “majority only” decision process and thereby to take the risk of such deadlock they are free so to agree. The KIAC Arbitration Rules22 produced by the Kigali International Arbitration Centre in 2012 also has a similar provision. Although there are few exceptions to the “majority rule” where the Presiding Arbitrator is empowered to take the final decision, under the ICSID arbitrations, the majority rule prevails. The Washington Convention 196523 provides that “The Tribunal shall decide questions by a majority of the votes of all its members. The provision in the Convention is carried into effect in the ICSID Rules which provides that “Decisions of the Tribunal shall be taken by a majority of the votes of all its members. Absenteeism shall count as a negative vote24 . 3. Dissenting Opinion Arbitrator(s) who have been seised of the matter before them and had thereby gone through the proceedings either by oral or documentary evidence are required to end their work by giving their decision in the form of an award which has been unanimously given or by majority decision or in some cases the decision of a presiding arbitrator alone will be sufficient. (If allowed by the Rules25 ). An Arbitrator who disagrees with the majority may sign the award and also issue a dissenting opinion criticizing the entire award or some of the decisions on certain issues decided in the award. Dissenting opinion is not an award but simply an opinion of an
- 183. KIAC 2014 CONFERENCE REPORT |173 arbitrator. Arbitrators in international commercial arbitrations sometimes show their dissent to the form and contents of an award by refusing to sign the award and on some occasions writing dissenting opinions. The dissenting opinion of an arbitrator may sometimes be annexed to an award if the other arbitrators agree or it may be delivered to the parties separately. In either case it has been repeatedly said that the dissenting opinion is not an “award” it is an opinion26 . It has been acknowledged that dissenting opinion in international commercial arbitration is a feature of the common law system where the Anglo-American judicial culture allows dissenting opinions in contrast to the civil law system where the tradition of maintaining the secrecy of the deliberations of a national court or arbitral tribunal is of fundamental importance and there is said to be collegiality in the dispensation of justice27 . Dissents are also allowed by the 1899 Hague Convention on the Pacific Settlement of International Dispute and by the European Court of Justice. It has been observed that modern legislation does not deal with the question of dissent expressly, for example the 1987 Swiss Act does not mention dissenting opinion; The Netherlands Arbitration Act 1986 also contains no express provision though the commentary took note that whilst dissenting opinions are not customary in Netherlands, they are not excluded; Article 27(3) of the new Vienna Rules only make indirect reference to that possibility since the arbitrator can request that an express statement be included in the award that it was the result of a majority decision. The LCIA Rules do not mention dissenting opinions but it has been said that this was probably not necessary since the right of an arbitrator to issue a dissenting opinion is well recognized in England. Neither do, The AAA, WIPO nor the ICC Rules contain provisions on dissenting opinions. The ICSID Rules recognized the right of an arbitrator to issue an individual opinion by providing that – 26. Redfern and Hunter, Laws and Practice of International Commercial Arbitration. Pg 398 27. see Albert Jan Van den Berg, “Dissenting Opinions by party appointed Arbitrators in investment arbitration: where the German Constitutional Court was pointed out as an example of a civil law system who may issue dissenting opinions.
- 184. 174 | KIGALI INTERNATIONALARBITRATION CENTRE 28. Rule 47(3). While Rule 47 (2) provides that the Award shall be signed by the members of the Tribunal who voted for it, the date of the each signature shall be indicated. 29. Redfern and Hunter, ‘ Law and Practice of International Commercial Arbitration’. Page 339-400 “any member of the Tribunal may attach his individual opinion to the award, whether he dissents from the majority or not or a statement of his dissent”28 The practice under the ICC Rules is slightly different. Since the Final Report of the ICC working party on Dissenting Opinions established by the ICC’s Commission on International Arbitration was unable to identify any national laws that impose any specific consequences of a breach of any such rule by an arbitrator (e.g. a dissenting opinion neither invalidate the award nor render the dissenting arbitrator liable to panel sanctions or civil proceedings) the practice is neither to encourage nor to discourage the giving of dissenting opinions. Consequent to the Report, the ICC did not consider it practicable to promote harmonization of different practices in national legal systems, or to develop a standard practice for ICC arbitrations. Instead guidelines were recommended in relation to the communication of dissenting opinions to the ICC Court for the purpose of its scrutiny of draft awards under the ICC Rules. Under the guidelines a dissenting opinion is submitted to the ICC Court within a reasonable time as the draft of the majority award is scrutinized. The guidelines also indicate the desirability of the majority arbitrators having an opportunity to see the dissenting opinion before the majority award is finalized; and that dissenting opinion should normally be notified to the parties by the ICC Court except where the validity of the award might be imperiled both in the country in which the arbitration took place and in any country to which (so far as the ICC Court could reasonably forsee) recognition or enforcement of the award was likely to be sought. It was however, noted that in any event the ICC Court has no power to prevent a dissenting arbitrator from communicating his opinion to the parties29 . The party appointed arbitrator is definitely not the party’s advocate but part of his function is to ensure that all issues before the arbitral tribunal are judicially well considered and fully discussed to ensure fairness to the parties including the party who appointed him.
- 185. KIAC 2014 CONFERENCE REPORT |175 Although there is no specific qualification for an arbitrator except as agreed by the parties, another importance of the arbitrators role is to channel into the case his expertise, knowledge and competence in order to reassure the parties about his ability to understand the case, discuss the issues involved and to persuade his colleagues on the tribunal on the right course to take and the right decision to arrive at without being prejudicial to either party. It is important that all the arbitrators understand the case, and the parties perspective without bias and unjustified confrontation. Arbitration has been referred to as an ‘art’ that require careful crafting to arrive at justifiable decisions on all issues put before the tribunal by the parties. It has been alleged and rightly too that an arbitrator who puts aside his duty of impartiality and independence and who openly or surreptitiously counsel the course of their nominating party is likely to lose his credibility amongst his colleagues and he will bring himself to disrepute in addition to subjecting himself to challenge. 3.1 Appointment of Arbitrators – Parties Right One of the most significant attributes in international arbitration is the autonomy of the parties to appoint their own nominees to the arbitral tribunal. The arbitral tribunal may consist of one or three arbitrators in accordance with the agreement between the parties or in accordance with the institutional rules under which the arbitration is being administered. In an international arbitration, depending on the complexity of the matter, disputes are likely to be referred to a sole arbitrator or a panel of three arbitrators. Consequently there is a connection between the parties and the members of the tribunal. Where a sole arbitrator is to be appointed the parties may jointly agree on the appointment of one person however, in the case of a three member arbitral panel, each party will appoint one arbitrator and the two appointed arbitrators will jointly appoint a third arbitrator ( usually the presiding arbitrator). Hence there is usually a connection between the parties and the members of the tribunal. All the members of the panel will also have their fees, expenses including administrative expenses paid by the parties either directly or through arbitral institutions.
- 186. 176 | KIGALI INTERNATIONALARBITRATION CENTRE 3.2 The question may be asked, should this state of dependency neutralize the duty of independence and impartiality required of the arbitrator? The appropriate answer, is , No, it shouldn’t. Parties have the right to appoint whoever they find suitable to handle the adjudication of their case (an element of party autonomy). 3.3 Questions have been posed on whether or not such dissenting opinions serve any useful purpose in the context of an international commercial arbitration? Whether dissenting opinions should be discouraged as being unhelpful or as indicating evidence of bias which does not fit into the requirement of independence and impartiality on the part of international arbitrators?30 Members of the arbitral tribunal, including the party appointed arbitrators, once appointed are not representatives or advocates of the party who appointed them. Concern for the maintenance of the independence and impartiality of arbitrators have been raised and discussedatvariousforibycompetentanddistinguishedarbitrators, academicians, representatives of international organizations and institutions. Consequently International Institutions throughout the world promote the fairness of the arbitrator. The requirement of impartiality and independence of the arbitrator are emphasized in the rules and codes of most arbitral institutions and formulating agencies such as UNCITRAL, ICC, ICSID, AAA, LCIA and IBA. Prior to appointment international arbitrators are required to sign a declaration of independence and impartiality. The rules also normally require the disclosure by the arbitrator of any circumstances or facts that may influence a reasonable person against one of the parties. The disclosure is an ongoing requirement for the arbitrator throughout the arbitral process; if in the process of the proceedings any new circumstances arise that may influence the arbitrators’ impartiality or independence he is required to disclose them. The IBA guidelines31 on conflicts of interest in international 30. See 2003 Freshfields – Lecture on Dissenting Opinions in International Commercial Arbitration. “The good, the bad and the ugly”. By Alan Redfern. ARBITRATION INTERNATIONAL vol.20 No 3; LCIA 2004.
- 187. KIAC 2014 CONFERENCE REPORT |177 arbitration provide helpful development in promoting a practice in this area in the form of guidelines which although do not override international rules and national laws but have provided useful information on what may or may not amount to bias which may affect the independence and impartiality of the arbitrator. This topic of impartiality and independence of arbitrators will not be dealt with in this paper because it was thoroughly discussed during the KIAC Workshop which took place in Kigali in December 2013. 3.4 The case of the Dissenting Opinion of a Party-Appointed arbitrator in favour of the Party who appointed him. High brows have been raised in cases where a dissenting arbitrator disagrees with the majority and does so in terms which are likely to find favour with the party who appointed him and the resultant searchlight prompting the question of whether or not the dissent arises from a genuine difference of opinion from that of the other arbitrators (majority) or by other less credible considerations? Thisdebatehasresultedinmoderateandextremepronouncements such as – (a) Suggestion of appointment of arbitrators by a neutral body from a pre-existing list of qualified arbitrators. This suggestion was disagreed with on the following grounds:- (i) that party’s involvement in the appointment of arbitrators ensures that the decision making process is not perceived as something external to the parties; rather it is perceived as a legitimate mode of resolving disputes. It was also felt that the pre existing list approach unnecessarily infused politics into the system because potential arbitrators must have close connections with the States or the appointing institutions to be included in the institutions’ list. Furthermore such politics could create artificial barrier to entry. (a point which is said to conflict with the recent call by the ICSID Secretary-General for “additional qualified arbitrators” on the ICSID Panels due to the Institution’s increasing case load). 31. IBA Guideline on Conflicts of interest in International Arbitration May 22, 2004 available at http://www.ibanet.org/images/download/guidelines%. Note: Even though there may have been some criticisms of the guidelines, it still serves a useful purpose in illustrating what types of disclosures or non-disclosure are relevant.
- 188. 178 | KIGALI INTERNATIONALARBITRATION CENTRE 32. Charles N Brower and Charles B. Rosenberg “The death of the two-head Nightingale: Why the Paulsson- Van den berg Presumption that party-appointed Arbitrators are untrustworthy is wrong-headed. 33. Daphna Kopelink ”The Repeat Appointment factor: Explaining Decision Patterns of Elite Investment Arbitrators” 96 Cornell L. Rev. 47,54 (2010) 34. Daphna Kopelink , “Collegial Games: Analyzing the effect of Panel Composition on outcome in Investment Treaty arbitration” 31 Rev. Litig. 267, 311 (2012) 35. Lucy Reed, partner, Freshfields Bruckhaus Deringer(Hong Kong) and Head of Freshfields Global International Arbitration Group, at the Mauritius International Arbitration Conference 2012 (ii) that parties will have greater faith in the arbitral process if they themselves are creators of the tribunal that will judge them indicating a close connection between the perceived legitimacy of international arbitration and appointment of the arbitrator by the parties. (iii) that the legitimacy of the proceedings may translate into respect for the arbitral award regardless of the outcome, as well as respect for the ultimate enforcement proceedings if at all required, in other words, it was felt that a losing party may be less likely to challenge the legitimacy of the decision making process where he himself played an intimate part in the constitution of the arbitral tribunal32 This suggestion to appoint from the pre-existing list of qualified arbitratorshasalsonotfoundsupportfromarecentempiricalstudy33 which result demonstrates that the selection of an experienced party-appointed arbitrator, as opposed to a newcomer, does not increase an appointing authority’s prospects. The research has found no statistical significant relationship between panel composition distinguished by the prior experience ofparty-appointedarbitratorsandtheoutcomeinICSIDinvestment treaty disputes34 In reference to the result of this study by Daphna, a well known experienced international arbitrator, directing her focus to whether an empirical approach helps in appointing arbitrators, was pleased to see that the study confirmed her personal policy of appointing “younger” arbitrators whenever possible for the unscientific reason that they work hard and are up to date. She concluded by proposing that, instead of selecting the arbitrators who make unappealable decisions when faced with arbitrators selection, the challenge for the arbitration community is to take responsibility for widening the field35 .
- 189. KIAC 2014 CONFERENCE REPORT |179 (b) Suggestion that “ there is no such right” for a party to name an arbitrator. This suggestion was also disagreed with by stating as follows:- (i) That the right to name an arbitrator has existed for decades and even centuries and that States have historically insisted on the right to appoint arbitrators. A handful of examples that had been given by the experienced international arbitrators and jurists has been very illuminating. For example, reference was made to the following historical examples • 1794: The Jay Treaty between the United States and Great Britain, one of the earliest examples in modern history of the use of an international tribunal to resolve an international dispute; • 1871: The Treaty of Washington between the United States and Great Britain, which established a Tribunal of Arbitrators to resolve the “Alabama Claims,” • 1899: The Hague Convention of 1899. Which established the Permanent Court of Arbitration in the Hague; • 1907: The Hague Convention of 1907, which amended and expanded the 1899 Convention; • 1920: The Statute of the Permanent Court of International Justice, which established the PCIJ and allowed for the appointment of ad hoc judges; • 1945: The Statute of International Court of Justice, which established the ICJ and preserved the right to appoint ad hoc judges; • 1959: The Germany-Pakistan BIT, the very first BIT;
- 190. 180 | KIGALI INTERNATIONALARBITRATION CENTRE • 1963: The Netherlands-Tunisia BIT, one of the first BITs providing for investor-State arbitration; and • 1985 and 2006: The UNCITRAL Model Law (ii) The fact that the right to appoint an arbitrator is included in all of today’s major international arbitration rules and many States domestic arbitration laws including those of Canada, England, France, etc; In addition all the UNCITRAL Model Law States provide for the right to appoint an arbitrator. The purpose of the model law to grant such a right is said to have become an established principle of law, which have been recognized and now have judicial backing of the highest Court of record: (iii) Another advantage of parties being involved in the appointment of the tribunal is that legitimacy of the proceedings may translate into respect for the arbitral award regardless of the outcome, as well as respect for the ultimate enforcement proceedings if required, in other words, a losing party may be less likely to challenge the legitimacy of the tribunal. (iv) Referencetothecurrentmajorinternationalarbitration rules that provide that party- appointed arbitrators must be independent and impartial. Also, it should be noted that an arbitrator’s reputation for apparent bias will undercut his or her credibility (influence) within a tribunal. It is said that there is little advantage to having one guaranteed vote on a three-person tribunal. Taking account of the preferred advantages granted by the incidence of party appointed-arbitrators the conclusion has been reached that there has been an established practice of a right for a party to appoint an arbitrator and that such a right has become an established principle of law. (c) Another writer submitted that his survey contradicts the argument that dissenting opinion contributes to the development of the law and that dissents by party-appointed arbitrators have become suspicious.
- 191. KIAC 2014 CONFERENCE REPORT |181 The response to this submission is that a dissent may give rise to intellectual debate which may contribute to the evolution of the law, even if the dissent is not cited in a subsequent case. Other advantages that a dissent may have were also stated as follows:- (i) a dissent may stimulate deliberations by encouraging dialogue (ii) a dissent circulated within the tribunal prior to issuance of the award may produce a better award as a dissent may ensure that the award is well reasoned by raising the most difficult problems with the majority reasoning (iii) a losing party may be more likely to accept the legitimacyofthearbitralprocessifitfeelsitsarguments are well considered by the tribunal, even if such arguments are ultimately rejected by the majority36 . It appears that the right of parties to appoint or nominate their arbitrators offers tremendous advantages from all that has been discussed above. 3.5 Other Dissenting Opinions not issued by Party appointed arbitrator: Occasions may arise where another arbitrator, other than a party- appointed arbitrator may feel the need to issue a dissenting opinion, for example a Presiding Arbitrator after due discussion and consultation with the other arbitrators may still feel the need to issue a dissenting opinion in addition to the majority decision of the other two party appointed arbitrators. A recent case in point is where a Presiding Arbitrator stated as follows:- “I agree with the final Award delivered by my esteemed co- arbitrators with regard to issues for determination Nos. 1,2,3,5 and 6. I, with enormous trepidation and with much respect, disagree with them on issue No. 4, the claim for interest on delayed settlement of invoices. I fully agree with the conclusions reached by my colleagues on the issue of liability on issue No. 4 i.e. whether interest is payable to Claimant with regard to that claim. However, with regard to the period of computation of interest and the basis 36. Ibid note 33 at page 19.
- 192. 182 | KIGALI INTERNATIONALARBITRATION CENTRE 37. Alan Redfern “The 2003 Freshfields Lecture Dissenting Opinions in International Commercial Arbitration: The Good, the Bad and the Ugly”. Arbitration International vol. 20 No. 3 LCIA 2004. of assessment of the quantum of that interest, I hold a different view and by reason of that difference, my conclusions as regards the grant of a monitory award on cost are also different”. In this case the Presiding Arbitrator issued a minority opinion (that is a dissenting opinion) with a lot of decorum and tact as opposed to the Arbitrator who issued a dissenting opinion in which he attacked the conduct of the arbitration by alleging, amongst other things, that he had been deliberately excluded from the deliberations of the other two arbitrators. As the matter proceeds to hearing either orally or by documentary evidence each arbitrator sitting at the arbitral tribunal in his/ her own right, forms his/her views on the facts of the case and on each issue for determination that needs to be decided and efforts should be made to exchange views on these matters so that a fair understanding can be achieved which will lead to a clear and cohesive decision. Even where circumstances arise where a dissenting opinion becomes necessary it is advised that such opinion should be short, polite and restrained37 . 4. Conclusion: The historical development of the practice of international commercial arbitration has advanced to such an extent that its workings should be embraced by the appointment of worldwide qualified arbitrators of different nationalities, sex or background, who the parties to the agreement containing an arbitration clause, have decided to nominate to the tribunal. Gone are the days where only few arbitrators constitute the ‘cartel’ of the exclusive list of Arbitrators. The divide of appointing male as opposed to female Arbitrators is also narrowing. Party autonomy is jealously guided and it should take precedence over other considerations. Fair hearing and equal opportunity should be given to each party involved in the process. What is required by the parties is the ultimate settlement of their disputes in a judicially satisfactory manner which results in an award (decision) that is enforceable. Theidealfactorisforthetribunaltoreachaunanimousdecision,and
- 193. KIAC 2014 CONFERENCE REPORT |183 in order to achieve this, the arbitrators (both party appointed and the chairman) should endeavour to have continuous interchange of views on all issues prior to reaching that all important decision (the award). It will be doing the parties a great disservice where an arbitrator (whether party appointed or otherwise,) would through lack of responsibility and due diligence prove to be stumbling block to the work of the tribunal. However, every arbitrator must bear in mind that he/she must remain independent and impartial in the course of his/her duty. A dissenting opinion should only be issued when the dissenting arbitrator has exhausted all avenues to convince his co-arbitrators of his position on certain issues and where he conscientiously feel that his point of view should be put across as an opinion for the benefit of the case before the tribunal. Even where he has that conviction the language of the dissenting opinion should be moderate rather than brutal or critical of the views of the majority. The Chairman of the tribunal should also refrain from behaving autocratically, but follow a principle of collective responsibility by allowing for interchange of views through thorough discussions of the issues for determination before the arbitral tribunal, prior to reaching final decisions. A worthy arbitrator appointed by the party, once appointed should have no loyalty to the party who appointed him rather he should comply with the highest standard of the arbitral code of conduct denoting his independence and impartiality. This fundamental requirement has the effect of strengthening the validity and acceptance of arbitral awards in international commercial arbitration.
- 194. 184 | KIGALI INTERNATIONALARBITRATION CENTRE Discussion STEVEN MUSISI (UGANDA): I would like to thank all our panellists for the wonderful presentations. At this point I would like to invite comments from the audience. They should be brief and precise because time is not on our side. Consequently I will take three questions from the left side and three from the right. DR FABIAN AJOGWU (NIGERIA): I have a dissenting view on the whole subject. My point from counsels refusal to sign the award. I think this means that the dissenting opinion does partly count in the sense that the majority rule becomes the award. In circumstance where there had been many counsels who refuse to sign the award, it curtails the whole arbitration and defeats the essence of having 3 people in the panel just to ensure that there will be no deadlock where one person refuses to sign, it becomes a deadlock. Can we, or may I suggest that we drive the practice towards having individual awards and concurrence than simply taking the majority as the award, rather than having one document at the mercy of the dissenting arbitrator to sign or not to sign? Thank you. KIHARA MURUTHI WAWERU (KENYA): I am a practicing lawyer and an upcoming arbitrator. The issue I want the panel to clarify is how the parties participating in arbitral processes can verify trust issues, the independence and impartiality of the arbitral tribunal itself. Apart from having written and signed on the arbitral certificate, the parties participating have nothing else to rely on and I suggest that could this be taken up? Could the same Centres of the arbitration take it upon themselves to have a list of all cases held in the centres and members of the tribunal so as to facilitate the independent verification of the parties in the arbitral processes? Thank you.
- 195. KIAC 2014 CONFERENCE REPORT |185 Counsel Veeder: An arbitrator who dissents must still sign the award. He is an arbitrator-he is a member of the tribunal. Of course he signs subject to his dissent. It may be a separate document or it may be that he is sufficiently clear on his dissent in the body of the award. He does not give reasons for his dissent. But when the dissenting member of the tribunal signs, he is not assenting to the award. It means that he signed as a witness to his two colleagues, the members of the tribunal who made the award. So my friend Alexander Cockburn was condemned at the time in 1872 for not signing the award. It would be recognized as giving a dissenting opinion but I think we should implicate any arbitrator who refuses to sign the award. The dissenting behaviour is not acceptable and not certain in many systems of which I am familiar. Thank you. CHIEF TINUADE (NIGERIA): There is deadlock if the dissenting arbitratordoesnotsigntheaward.Theawarditselfisthejudgement. That is what the parties think. LISE BOSMAN (NETHERLANDS): On verifying the independence of the tribunal, I think in practice what happens is that arbitral instituteskeepinformaltrackoftherecordofeachoftheappointees to the tribunal, so unless arbitrators who behaved inappropriately wouldn’t have to be reappointed. More broadly there have been calls for the creation of some sort of database of arbitrators with a track record of their conduct is clear and transparent but at the moment it hasn’t been put in place. I think it is in the hands of heads of arbitral institutions to appoint and reappoint and to make sure that they take in consideration the track record of the arbitrator from the past activities. STEVEN MUSISI (UGANDA): I would like to thank everyone who took part in this discussion, thank you for your contributions. A round of applause for our panellists please!
- 196. 186 | KIGALI INTERNATIONALARBITRATION CENTRE PanelEight Influence of Legal Systems in International Arbitration: PRACTICAL ISSUES The session discussed the interplay between two legal systems (Civil law and common law) at every stage of the arbitral proceedings, (from the preliminary stage of the procedure up to the Enforcement stage), and determine whether there is conflict, cultural shock or harmony. PANELISTS: Duncan Bagshaw, Registrar LCIA-MIAC, Mauritius David Greene, Edwin Coe LLP, United Kingdom CHAIR: Dr Emmanuel Ugirasebuja, Judge President (Designated) East African Court of Justice (EACJ) DR EMMANUEL UGIRASHEBUJA (RWANDA): The topic we are looking at today is the influence of legal systems in international arbitration, the practical part, not the theoretical one which I was used to when I was still in the ivory tower, otherwise known as university. On my right here, I want to say that we are privileged to have David Greene. He has been a partner with Edwin Coe since 1984. He was appointed senior partner of the firm in 2001. On my left, we are delighted to have Duncan Bagshaw, who is the Registrar of LCIA/MIAC and he practices mainly in commercial and property disputes and he is a barrister in the English BAR but now he has moved permanently to develop the arbitration centre. So without further ado, let me invite Mr Green to begin his presentation.
- 197. KIAC 2014 CONFERENCE REPORT |187 Honourable Justices Ladies and Gentleman, May I first congratulate Bernadette and Thierry on the organisation of this event and the hospitality we have been shown. KIAC is a great venture making waves across Africa. I have been travelling the road in Africa for some 25 years and as commented upon last night Kigali is the cleanest city in Africa I have yet to see. This country is making strides. We are here to talk of the civil law and common law but whilst in Africa we should not forget the role of customary law from which we have much to learn. When we talk of the resolution of disputes, real deep seated community disputes, Rwanda has shown the World, as did South Africa, the manner in which such disputes can be resolved including the use of the Gacaca courts. The World takes its hat off for Rwanda in showing this resolve and leadership. As you know it was intended that Karel Dale is slated for this session but I believe work commitments made that not possible. In his absence I thank him because he prepared the slides that you have on the screen. I also thank Duncan here who will be well known to many of you. Until last night I was going to do this session alone and switch between stands as we covered the two systems. As it is Duncan stepped in to deal with the civil law side. As it is this is the last session and the numbers are down and everyone here is well acquainted with the issues we might in any event convert this into a forum for discussion as we go along. PRESENTATION ON INFLUENCE OF LEGAL SYSTEMS IN INTERNATIONAL ARBITRATION: PRACTICAL ISSUES David Greene
- 198. 188 | KIGALI INTERNATIONALARBITRATION CENTRE How we are going to do this etc That we should be discussing the civil law and common law here in Rwanda is prescient as Rwanda moves from a civil law process adopting some common law concepts. The switch is not easy e.g. Philip’s point but the two systems can live together e.g southern African states, common law and Dutch Roman law. In the UK adopting inquisitorial etc. but there remains nationalistic resistance. We should not over or under emphasis the differences between the two systems But let’s get back to the subject in hand. The ability of the civil law and common law systems to live together and clash together is no greater than in arbitration process. Unsurprisingly as perhaps conservative beasts we tend to adopt the familiar. After 35 years practice I feel safe in the ordered world of pleadings, disclosure, witness statements, experts reports and trial. I am not unadventurous and have litigated in civil law courts but as practitioners arbitrating we tend towards the familiar. As on the slide. Over to Duncan on the civil law approach to the arbitration clause. Slide. On contract interpretation common law approach has altered over the years from one of strict interpretation however unreasonable although the words used are of primary importance the court in interpreting them will look at the words objectively and not subjectively, if it can it will give a meaning that makes commercial sense taking the contract as a whole but the literal meaning is now less important. Duncan. Me. Domestically ss 42 to 44 Arbitration Act 1996. Court only supportive holding the ring until the arbitrator is seised of the case (Econet v Vee Networks). After it is seised then the court again in a supportive role will step in only if the Tribunal does not have the necessary powers. Expedited appointment, Next. Appointment, Next. Pleadings, Next. Disclosure, Next. Witnesses. Newish procedure. Difference in different common law systems. Experts, Hearing.
- 199. KIAC 2014 CONFERENCE REPORT |189 Award.S52 requirements in writing and should state the reasons for the award unless the parties agree otherwise. It must deal with all matters to be decided and be final and must make an award that is certain and capable of performance. The tribunal must give reasons which are sufficiently cogent and detailed to enable the parties to understand why the tribunal found for one party, and to assess the chances of appealing the award. The reasons could be inadequate in some cases, a verbatim recitation of the parties’ arguments, followed by a brief indication of which party’s arguments are preferred, does not amount to adequate reasons (see, for example, the trenchant criticisms of a GAFTA arbitration award in IBA Rules on the Taking of Evidence in International Arbitration (IBA Rules) (which were adopted in May 2010 and replace the 1999 IBA Rules for Taking Evidence in International Commercial Arbitration) permit a party to submit a Request to Produce to the tribunal, in which the requesting party may set out (Redfern Schedule): Documents or a narrow and specific requested category of documents that are reasonably believed to exist and to be in the possession of another party; and An explanation of how the documents requested are relevant and material to the outcome of the case, and in the case of documents maintained in electronic form, a party may be required to identify specific files, search terms, individuals or other means of searching for the documents. Although that standard may sound restrictive to an American lawyer, and reasonable to an English lawyer, it is far broader than any European lawyer would be familiar with in domestic litigation, and represents a compromise between common and civil law approaches. However, the IBA Rules contain no provision for depositions or interrogatories, which are in any event rare in international commercial arbitration.
- 200. 190 | KIGALI INTERNATIONALARBITRATION CENTRE The IBA Rules were drafted to accommodate common law and civil law approaches to taking evidence in international commercial arbitration. They apply if the parties agree or the tribunal so orders. The IBA Rules supplement any institutional rules that apply according to the parties’ agreement and applicable national laws. The Rules can be incorporated into arbitration agreements or can provide a case-by-case framework for taking evidence efficiently. The IBA Rules are particularly useful in dealing with witness evidence and document production; it is becoming increasingly common for these sections of the IBA Rules to be adopted as part of the rules governing the arbitration. The IBA Rules only provide the framework for the process and procedure for taking evidence. All other elements of the arbitration are dealt with, or will need to be dealt with, either in the rules agreed on by the parties or by the tribunal. As countries have modernised their arbitration laws (usually in line withtheUNCITRALModelLaw,orotherwisereflectinginternational standards), the IBA Rules have become widely accepted. Many international arbitrators treat the IBA Rules with great respect, and will consult them when deciding questions of procedure and evidence. The parties to international arbitrations may also use them as a source of general principles for taking evidence. The IBA Rules are considered to have several advantages: Certainty with flexibility. A reduction in time wasted on debating procedural matters. A selection of the best procedures from different legal systems. On the other hand, commentators had suggested that the IBA Rules did not fully address issues relating to e-disclosure (see, for example, John M Barkett, E-Discovery for Arbitrators under the IBA Rules for Taking Evidence, 2007). That criticism has been addressed to an extent in the revised IBA Rules which were adopted in May 2010, although the rules do not provide technical
- 201. KIAC 2014 CONFERENCE REPORT |191 guidance on issues relating to electronic disclosure. (For detailed discussion on electronic disclosure, see Practice note, Disclosure of electronic documents in international arbitration.) The International Bar Association’s (IBA’s) arbitration committee and its task force on counsel conduct, has published the IBA Guidelines on Party Representation in International Arbitration (2013). Party representatives in international arbitration may find they are subject to diverse and conflicting rules and norms that can derive from counsel’s home jurisdiction, the arbitral seat and the physical locations of the hearing. In 2008, the IBA arbitration committee established a task force to focus on these issues. In 2010, the task force circulated a survey seeking views on the impact of ethical constraints on arbitral proceedings (see Legal update, A survey on counsel ethics in international arbitration). Respondents to the survey expressed support for the development of international guidelines. The new guidelines reflect the principles that party representatives should act with integrity and honesty and not engage in activities designed to produce unnecessary delay or expense. They include provisions covering the following: Application of guidelines. • Party representation. • Communications with arbitrators. • Submissions to the arbitral tribunal. • Information exchange and disclosure. • Witnesses and experts. • Remedies for misconduct. The guidelines must be adopted by agreement and are not intended to displace otherwise applicable mandatory laws or rules. Arbitral tribunals may also apply the guidelines in their discretion.
- 202. 192 | KIGALI INTERNATIONALARBITRATION CENTRE Cynics may argue ethics are the last thing advocates need but while lawyers in the UK are highly regulated, the position is less clear in international arbitration. This was one of the topics addressed by Professor John Uff CBE QC in the sixteenth King’s College Construction Law Association (KCCLA) Sweet & Maxwell talk, which took place earlier this month. As he pointed out, advocates in different jurisdictions are subject to different regimes. There is an increasing concern about how advocates behave. This led to the introduction of the IBA Guidelines on Party Representation in International Arbitration (May 2013). How are others regulated? Professor Uff pointed out that other parties in arbitration proceedings are already regulated. The impartiality of the tribunal has been enshrined in section 1(a) of the Arbitration Act 1996 and the IBA Guidelines on Conflicts of Interest in International Arbitration (May 2004) provide a traffic light system for the practical application of general standards by arbitrators. Why should advocates also be regulated? Where advocates are concerned, the consideration of ethics gives rise to many difficulties in international arbitration, including: • Difficultieswhenadvocatesaresubjecttotheprofessional codes of conduct and rules of their own country and not those of the venue of the arbitration. • Inconsistencies between different codes and rules applicable to advocates involved in the same case. • Advocates who are not lawyers and are not subject to any professional codes of conduct. The common issue A typical example of challenges facing advocates are issues regardingconnectionswithtribunalmembersleadingtoallegations of bias. Professor Uff referred to the Hrvatska Elektroprivreda v The Republic of Slovenia ICSID ruling where the tribunal commented that:
- 203. KIAC 2014 CONFERENCE REPORT |193 “The Tribunal is concerned – indeed, compelled – to preserve the integrityoftheproceedingsand,ultimately,itsAward.Undoubtedly, one of the ‘fundamental rules of procedure’ referred to in Article 52(l)(d) of the ICSID Convention is that the proceedings should not be tainted by any justifiable doubt as to the impartiality or independence of any Tribunal member.” The tribunal considered that a barrister’s continued participation could lead to a reasonable observer to form a “justifiable doubt” in the circumstances and disqualified the barrister. However, in the 2010 ICSID case, The Rompetrol Group N.V. v Romania, the tribunal rejected an application for the removal of an advocate who had practised in the same law firm as one of the arbitrators until the end of 2008. With the real possibility of inconsistencies in the application of rules and codes in international arbitration, it is therefore no surprise that little in the way of general principles applicable to the conduct of advocates in international arbitration have been established. What the IBA rules and guidelines have to say The IBA Guidelines on Party Representation in International Arbitration (May 2013) have taken a step towards providing an aligned ethical code for advocates in international arbitration. The guidelines include provisions that advocates: “should not make any knowingly false submission of fact to the Arbitral Tribunal” (Guideline 9.) …and that an advocate… “should not suppress or conceal, or advise a Party to suppress of conceal, Documents that have been requested by another Party…” (Guideline 16.) Guidelines 26 and 27 set out the remedies for misconduct, which include cost sanctions.
- 204. 194 | KIGALI INTERNATIONALARBITRATION CENTRE The draft LCIA Rules issued in February 2014 also include rules and guidelines regarding the conduct of advocates. Notably, Article 18.5 requires each party to ensure that all its legal representatives have agreed to comply with the general guidelines contained in the Annex to the LCIA Rules, as a condition of appearing by name before the Arbitral Tribunal. The annex covers issues such as the: • Unfair obstruction of the arbitration. • Making of false statements and the preparation of false evidence. • Concealment of documents which have been ordered to be produced by the Arbitral Tribunal. The guidelines referred to in Article 18.5 are intended to “promote generally the good and equal conduct of the parties’ legal representatives appearing by name within the arbitration proceedings” (paragraph 1) and are a welcome addition to the new LCIA rules. Further, the guidelines will be contractually binding on the parties once they have adopted the new LCIA Rules. The sanction for non compliance is at Article 18.6, which gives the tribunal the power to order sanctions such as a written reprimand but also any other measure necessary to maintain the general duties of the Arbitral Tribunal. Much more to come What is abundantly clear is that the conduct of advocates is an area that is far from settled and where consistency is required to preserve the integrity of international arbitral awards. This was the background to the introduction of the IBA Guidelines and with the release of the draft LCIA Rules providing for the good and equal conduct of the parties’ legal representatives, it is unlikely to be long before other international arbitral institutions follow suit.
- 205. KIAC 2014 CONFERENCE REPORT |195 1 Introduction: Monosystemic proceedings: civil law practitioners will adopt civil law style proceedings and common law practitioners will adopt common law style proceedings; Mixed proceedings: cultural clash between civil law and common law practitioners; Increasingly common in light of (1) the globalisation of trade and commerce, (2) Africa’s increasing role in the foreign investment arena and (3) the diversification of investors into Africa; 2. Arbitration clause PRESENTATION ON THE INFLUENCE OF LEGAL SYSTEMS IN INTERNATIONAL ARBITRATION: PRACTICAL ISSUES David Greene, Edwin Coe LLP and Karel Daele, Mishcon de Reya Civil law Common law • Standard clause • Simple (arbitration rules, number of arbitrators, language, seat); • Interpretation: the true common intention of the parties • Severability • Standard clause • Simple (arbitration rules, number of arbitrators, language, seat) to sophisticated (method of constituting the Tribunal; consolidation; multi-party proceedings; multi-tier dispute settlement); • Interpretation: the four corners of the contract but now less restrictive; • Severability
- 206. 196 | KIGALI INTERNATIONALARBITRATION CENTRE 3. Court assistance interim measures Civil law Common law • Prior to the constitution of the Tribunal on the basis of (1) urgency; (2) good arguable case and (3) balance of interests; • Post the constitution of the Tribunal: no; • Note emergency arbitrators in f.ex ICC Rules; • Prior to the constitution of the Tribunal on the basis of (1) urgency; (2) good arguable case and (3) balance of interests; • Post the constitution of the Tribunal: only where Tribunal does not have the required powers; • Note expedited appointment in old rules and emergency arbitrators in f.ex new draft LCIA Rules with; Civil law Common law • Duty of independence and impartiality of each arbitrator; • Towards both parties; • Limited communication with candidate party- appointed arbitrators; • Arbitration practitioners and academics; • Expense • Duty of independence and impartiality of each arbitrator; • Towards both parties; • Interviewing candidate party-appointed arbitrators; • QC’s and retired High Court judges; • Expense 4.Appointment of arbitrators
- 207. KIAC 2014 CONFERENCE REPORT |197 Civil law Common law • Weight on the written form; • Two sets of submissions, including both facts, legal arguments and evidence; • Telling a story; • Defendant has the last word; • Weight on the oral advocacy; • Focused on legal arguments with documents, witness statements and expert reports coming later in the process; • Not necessarily telling a story, skeletal; • Defendant has not always the last word; Civil law Common law • Part of the trial process itself; • Documents relied upon in the pleadings; • Extracting only identified documents from the opponent; • Separate stage following statement of claim and defence; • Both helpful and unhelpful documents; • Requests of general discoveries with a view/ in the hope of extracting unidentified documents; • Fresh regime to limit disclosure 5. Pleadings 6. Disclosure of Documents
- 208. 198 | KIGALI INTERNATIONALARBITRATION CENTRE 7. Witnesses Civil law Common law • Distrust of witnesses; • Secondary to written evidence; • Inquisitorial; • Moderation in assisting witnesses; • Simultaneous with the pleadings; • Key evidence; • Lengthy and detailed affidavits, originally drafted by lawyers and sworn by the witness and exchanged; • Separate stage in the proceedings; • Examination-in-chief, cross-examination and redirect; Civil law Common law • Often appointed by the Tribunal to assist with a technical or complex issue; • Tribunal not bound by expert’s opinion but carries considerable weight; • Tribunal is presented with a finished product; • Party-appointed experts; • Experts are players in the procedural game; • Debate among the experts, followed by a debate with the parties and the Tribunal; • Expert conferencing; • Live evidence, examination-in-chief, cross- examination and re-direct 8. Expert evidence
- 209. KIAC 2014 CONFERENCE REPORT |199 Civil law Common law • Rarely exceeding 1or 2 days; • Common to hear no witnesses; • Restating the arguments developed in the pleadings; • Telling a story, presenting a mixture of facts and legal arguments; • Pre-hearing conference; • Common hearing bundle; • Duration unrestricted (2-3 weeks); • Short opening, examination and cross- examination of witnesses and experts and closing arguments summing up the evidence gathered during the hearing; • Post-hearing briefs; Civil law Common law • In writing; • Reasoned; • Lengthy; • In writing; • Not necessarily reasoned; • Short to lengthy; Civil law Common law • Pro enforcement attitude; • Based on national legislation; • New York Convention; • Pro enforcement attitude; • Based on national legislation; • New York Convention; 9. Hearing 10. Award 11. Enforcement
- 210. 200 | KIGALI INTERNATIONALARBITRATION CENTRE 12. Miscellaneous Civil law Common law • Inquisitorial; • Generalists; • Smaller teams; • Paris, Geneva, Stockholm; • Adversarial; Built on mistrust; • High degree of specialisation; • Traditionally Anglo- American firms, throwing in bodies; • London, New York, Washington DC; Singapore, Hong Kong; Civil law Common law • Finding a mutually acceptable path, requiring (1) awareness of the differences, (2) openness of mind in overcoming them, (3) cultural flexibility; (4) good faith and (5) fairness; • IBA Rules on Taking Evidence (1999) • IBA Guidelines on party representation (2014) • Each protagonist insisting on the rigid application of the rules to which it is accustomed; • Bad faith; • Abusive behaviour; 13. Bridging the gap
- 211. KIAC 2014 CONFERENCE REPORT |201 ClosingCeremony NGOGA-GAKUBA THIERRY (RWANDA): Before we close this meeting, as the chair, I would like to call for a vote on two issues about the eight topics we discussed over the two days. First of all, are the topics discussed emerging issues in arbitration? Those saying yes put your hands. Any people saying no? I see none. Secondly, are these topics something a new arbitral seat needs to anticipate? By show of hands again, vote yes or no. I see nobody saying no. I think we achieved the purpose of this meeting and we managed to link the theme to the topics. I now invite the Secretary General to close the meeting. SPEECH BY BERNADETTE UWICYEZA, SECRETARY GENERAL KIAC Mr Chairman Sir, Board Members KIAC, Participants, Ladies and Gentlemen I would like once again to thank you for your active participation in this conference, your dedication and commitment throughout all the sessions have yielded very good results which actually means that we have achieve the goal of this conference. When we set out to organise this conference, our objective was to share knowledge and experience in international arbitration practice so that we can get an insight on how we can move forward to strengthen the capacity of KIAC, so that we can become a regional option for commercial dispute resolution.
- 212. 202 | KIGALI INTERNATIONALARBITRATION CENTRE For our local practitioners who underwent the learning programme leading to adjudication, we wanted them to take another step getting into real issues of the practice. I am glad to say that from the summary of lessons learnt, our efforts have been so much rewarded. I wanted to thank you very much for the contribution you have made and all the support given to us. Finally I would like to thank once again all our various partners, the Government of Rwanda, the Investment Climate Facility for Africa, Private Sector Federation and recognise all our sponsors. Last but not least, I wanted to recognise members of the organising committee for having done a good job, in particular, I want to recognise the effort and commitment of the committee chair, Mr. Thierry Ngoga. Without further delay, let me invited the Chairman of the KIAC Board Mr Faustin Mbundu to come and close this meeting for us. Thank you
- 213. KIAC 2014 CONFERENCE REPORT |203 ClosingSpeech THE CHAIRMAN, KIAC BOARD OF DIRECTORS Mr Faustin Mbundu, THE CHAIRMAN Distinguished Panellists, participants, all protocols observed. OnbehalfoftheBoardofDirectorsofKigaliInternationalArbitration Centre, I take this opportunity to thank you for the work well done. To hold a conference like this one is not an easy task, and indeed I congratulate all of you who have contributed in one way or another to make it a success. Ladies and gentlemen, Africa’s economic development is at a cross road; from the times of independence our economies were ran and managed directly by the state until most recently when the process of Globalization dictated otherwise and thus gave way to the private sector to be the key drivers of most of our economic development agenda. Since then a lot of changes have been witnessed towards improved development and growth. We in Rwanda have had tremendous changes after the tragic period of the 1994 Genocide against the Tutsi. This was due to a clear and strong leadership of this country, which set out a road map for the country’s economic development, the vision 2020; this enabled our private sector to grow steadily and sure. We in private sector do acknowledge the great importance which our government attaches to private initiatives; this has gone a long way to put various mechanisms in place to ensure that frame works such as Kigali International Arbitration Centre are in place and are supported to develop.
- 214. 204 | KIGALI INTERNATIONALARBITRATION CENTRE Given that our economies are set to grow even faster, and given that most African economies are seeking integration for faster growth and cooperation, there are all likelihoods that economic related disputes and conflicts are equally expected to be on the increase. It is for this reason that Kigali International Arbitration Centre was envisaged as the most appropriate institution to preside over dispute resolution and other related issues amicably. There is no doubt that this mechanism will best facilitate our business operations and provide alternative justice to the future arising disputes among our business community across the region. I am convinced that the conclusions drawn from this conference will significantly contribute to the strengthening of KIAC capacity to handle disputes not only from Rwanda but also from the entire region of Africa and beyond. Ladies and gentlemen, once again, I want to thank every one of you for the contribution you have made towards the success of this conference. For those of you who are travelling back home to your various destinations and more especially those going beyond great waters, I wish you safe and comfortable flights. And for those who are still in Rwanda, I wish you pleasant moments as you acquaint yourselves with the beauty of our country of a thousand hills, sometimes we add a thousand smiles and we are hoping to call it a destination for thousands of disputes, thanks to KIAC. We shall be ready to handle them and it is initiatives like this that will make it possible. And we hope to be with you as we grow this arbitration centre as we corporate with others, and one day call it a successful initiative. With those few remarks, I now declare this conference officially closed. Thank you!
- 215. KIAC 2014 CONFERENCE REPORT |205 Speakers’Biography OLASUPO SHASORE, Nigeria, is a partner in the law firm of Ajumogobia & Okeke, a leading commercial law firm in Nigeria. He was until May 2011 the Attorney-General and Commissioner for JusticeofLagosState.Hisareasofspecialisationincludearbitration, commercial litigation, maritime and shipping and commercial and business crime. An experienced practitioner and strategic litigator, Shasore became a member of the inner bar and Senior Advocate of Nigeria in 2006; and is a member of the Body of Benchers. His interest for the development of commercial law and practice resulted in the commencement of Commercial Law Reports Nigeria where he is Publisher and Editor in chief. He has written several articles, and delivered papers on various aspects of commercial law and legal practice globally. He authored the book titled “Jurisdiction and Sovereign Immunity in Nigeria Commercial Law”, he co-authored the most recent Nigerian text on arbitration, “Commercial Arbitration Law and International Practice in Nigeria “Johnson & Shasore” (LexisNexis), published in 2012. In his time as Attorney General of Lagos State, he developed the Limited Liability Partnership Law of Lagos State, the Lagos Arbitration Law, Public Procurement Law; Mortgage & Property Law; the Administration of Criminal Justice Law [re-enactment] 2009; the Criminal Law and Magistrates Courts Law, amongst others. Shasore serves presently as chair of the Law Reform Commission.
- 216. 206 | KIGALI INTERNATIONALARBITRATION CENTRE He has been engaged in the resolution of various commercial disputes by arbitration and has advised various clients in the oil and gas industry, power, and construction matters. He was member/secretary of the Presidential petroleum revenue special taskforce and has chaired the Committee on reform of the National Arbitration law. He is a Fellow of Chartered Institute of Arbitrators (UK) and is frequently appointed counsel, expert and arbitrator in domestic and international commercial arbitration. He is currently the chairman of the arbitration and ADR committee of the section on business law of the Nigerian Bar Association. GÜNTHER J HORVATH, Austria, is a partner and head of the International Arbitration Group (IAG) in the Vienna office of Freshfields Bruckhaus Deringer. He specialises in international commercial arbitration with a primary focus on energy matters and corporate disputes as well as industrial engineering. With over 35 years’ experience as a lawyer he has excellent technical, procedural and interpersonal skills developed when acting as a counsel, chairman and party-appointed arbitrator in well over a hundred high-profile disputes. Selected matters on which Günther has recently worked on include: An energy and environmental services company in an ICSID and in an ICC arbitration against a South Eastern European state in a dispute arising out of a number of government and state-entity measures which affected the investor’s investment following the privatization of the electricity distribution sector; A gas import and distribution company in two ICC arbitration proceedings against a major European gas exporter regarding contract and competition law issues and flexibility of suppliers; A Swiss electricity company in arbitration proceedings under the Vienna Rules concerning a dispute in connection with electricity supply contracts against a state-owned agency;
- 217. KIAC 2014 CONFERENCE REPORT |207 A German energy group in a gas price review arbitration against two European suppliers; A Southern European energy group in a price review arbitration against a European supplier; An international provider of technology, engineering and construction of bioprocess plants, in an arbitration proceeding under the ICC Rules against a German company with regard to a dispute resulting out of the provision of engineering and supply services for a bioethanol plant; and A German gas distribution company in a price review arbitration against a global supplier. An international investment bank in ad hoc arbitration proceedings against an Southeast European state and state owned entities for the payment of the investment bank’s services in connection with a telecommunications privatisation in the region; A leading European bank in a post-acquisition arbitration regarding purchase price adjustment claims; A European energy group in two separate arbitrations under the ICC Rules concerning a long-term, large-volume natural-gas supply contract; and Austrian Airlines in an ICSID arbitration against the Slovak Republic relating to debt obligations following the investor’s acquisition of a majority stake in the state’s national airline. Günther J Horvath is Vice President of the Vienna International Arbitral Centre (VIAC), a former member of the ICC International Court of Arbitration, Past-Chair of the IBA Committee on Closely Held and Growing Business Enterprises, Chairman Emeritus of Lex Mundi Ltd., Houston; he is a member of the Austrian Bar Association. Günther frequently speaks at conferences and publishes on arbitration, corporate law, and industrial property. Recent books
- 218. 208 | KIGALI INTERNATIONALARBITRATION CENTRE in the field of international arbitration are: “Guerilla Tactics in International Arbitration” (editor und co-author, Kluwer Law International, 2013) and “Cost in International Arbitration” (Linde, 2008). Günther Horvath received his legal education at the Universities of Graz (Doctor of Laws - Dr iur, 1976) and New York (MCJ, 1977). He joined the firm in 1978 and has been a partner since 1982. Günther speaks English, German and basic Italian. DR. URS WEBER-STECHER, Switzerland, regularly acts as arbitrator or party representative in international and national arbitrations and represents clients in state court proceedings. His focus is on disputes arising out of M&A transactions, commercial contracts, agency, distribution and license agreements, energy and natural resources, construction, engineering, information and communication technology. He regularly gives lectures on topics in international arbitration. Positions | Functions President of the Commission of Arbitration (National Committee) of ICC Switzerland Member of the Arbitration Court of the Swiss Chambers’ Arbitration Institution Chairman of the Board of the Swiss Arbitration Academy (SAA) Lecturer for international arbitration at the Law School, University of Zurich Commissions and Professional Organizations ICC Commission on Arbitration Chartered Institute of Arbitrators (CIArb) Association Suisse de l’Arbitrage (ASA) London Court of International Arbitration (LCIA) Deutsche Institution für
- 219. KIAC 2014 CONFERENCE REPORT |209 Schiedsgerichtsbarkeit (DIS) International Bar Association (IBA Dispute Resolution Section, Arbitration Committee; Antitrust and Trade Law Section, Antitrust Committee) Studienvereinigung Kartellrecht (Germany, Swiss chapter) DR. FABIAN AJOGWU, Nigeria, is a Senior Advocate of Nigeria and Principal of the law firm, Kenna Partners. He holds a Doctorate degree in law from University of Aberdeen, Scotland and other law degrees from the University of Nigeria, and the University of Lagos. He holds an MBA Degree from IESE Business School, University of Navarra, Barcelona, Spain. He is the author of the books – ‘Law & Society;’ ‘Corporate Governance & Group Dynamics’; ‘Commercial Arbitration in Nigeria: Law & Practice’; ‘Fair Hearing’; ‘Mergers & Acquisition in Nigeria: Law & Practice’, ‘Corporate Governance in Nigeria: Law & Practice’; and co-author of ‘Legal & Regulatory Aspects of Commerce’. The Learned Senior Advocate has been Counsel to the President of Nigeria, and to the Federal Government of Nigeria in several cases of national importance in the field of Energy and Natural Resources, Banking, Aviation and Defence. He served as Honorary Counsel to the States of Israel, Venezuela, and South Africa. Dr Ajogwu is a member of the International Council for Commercial Arbitration; Lagos Court of Arbitration; London Court of International Arbitration, and the Council of Legal Education (Nigeria Law School). He is a Fellow of the African Leadership Initiative West Africa, Aspen Institute’s Henry Crown Global Leadership, a Fellow of the Society for Corporate Governance Nigeria, and Fellow of the Chartered Institute of Arbitrators Nigeria. MR. EGWUAGU EMMANUEL, Nigeria, bagged his LL.B at the prestigious University of Benin in 1998 and was subsequently called to the Nigerian Bar in 2000. He has vast experience in Litigation, Arbitration & Conciliation and commercial practice and is frequently called upon to render legal advice to some of the leading financial institutions in Nigeria.
- 220. 210 | KIGALI INTERNATIONALARBITRATION CENTRE He has participated in several Arbitration Proceedings in respect of commercial transactions involving multinationals before Arbitral panels and institutions, including the ICC International Court of Arbitration. He is currently a member of the legal team constituted to represent the Federal Republic of Nigeria before the ICC in London between AES Nigeria Barge Limited (formerly ENRON) and the Federal Republic of Nigeria and between Dayson Holding Ltd (BVI) v. Federal Government of Nigeria. He is also particularly proficient in the area of Criminal Prosecution and hasprosecuted(onbehalfofObla&Co.)severalcasesincluding the Pension Fraud case, the Halliburton bribery case (TSKJ Consortium), Siemens AG Bribery Scheme and Shell Petroleum Development Company/ Panalpina Bribery Scheme, Halliburton Nig. Limited, Kellog, Brown, Roots Inc. Snamprogetti Netherland B.V., Technip S.A., Japan Gasoline Corp, Siemens AG, Siemens Nigeria, Shell Petroleum Development Company, Panalpina amongst many others. He has rendered professional advice and other legal services to several reputable organizations including the Central Bank of Nigeria, Universal Services Provision Fund, Nigerian Communications Commission, Economic and Financial Crimes Commission, Power Holding Company of Nigeria, Federal Inland Revenue Services (FIRS), and a host of Banks and other financial institutions. Mr. Egwuagu is an Associate Member of the Chartered Institute of Arbitrators (CIArb). He joined Obla and Co in 2007 and is currently the Head of Practice. PAUL NGOTHO, Kenya, is an Land Economist, Member of the Royal Institution of Chartered Surveyors (MRICS) and Fellow of the Chartered Institute of Arbitrators (FCIArb) with some 30 years of experience in the construction/development, valuation and management of prime urban and rural properties in Kenya and the United Kingdom.
- 221. KIAC 2014 CONFERENCE REPORT |211 His experience as arbitrator extends to real estate, construction, joint-ventures, shareholder agreements, employment, insurance and general commercial disputes. He is also an adjudicator, dispute board member and mediator. He is on the following panels and databases of arbitrators: Kigali International Arbitration Centre, Cairo Regional Centre for InternationalCommercialArbitration,LondonCourtofInternational Arbitration, Stockholm Arbitration Institute, Centre for Arbitration & Dispute Resolution (CADER) of Uganda and Chartered Institute of Arbitrators Kenya Branch. He is a pro-bono mediator at FIDA Kenya. Mr Ngotho has taken part in international and regional arbitration conferences in New York, Malaysia, Dubai, Eqypt, South Africa, Nigeria, Rwanda and Kenya. He is a Fellow of the under the Higginbotham Fellowship, which is administered by the American Arbitration Association, through which he is specialising in international commercial arbitration. He has written numerous articles on contemporary issues in arbitration for various professional journals, industry magazines and daily newspapers. Some of them are on www.ngotho.co.ke. The Bastard Provision in Kenya’s Arbitration Act, which is available online in English and French, remains a popular attraction. JUSTICE EMMANUEL KAMERE, Rwanda, LLM from the University of the WITWATERSRAND (JOHANNESBURG-Republic of South Africa) President of the Commercial High Court (Rwanda) MICHAEL BURKART, Switzerland, is a Research Assistant and a PhD Candidate at the University of Lucerne. He works at the chair of Prof. Dr. Daniel Girsberger in the field of International Arbitration, Swiss and International Private, Business and Procedural Law and Comparative Law. Mr. Burkart graduated from the University
- 222. 212 | KIGALI INTERNATIONALARBITRATION CENTRE of Lucerne and studied also at the John Marshall Law School in Chicago and at the University of Stockholm. He is a Member of Young ICCA as well as of ASA Below 40 and currently holds the position of Director of Studies of the Swiss Arbitration Academy. Mr. Burkart speaks German, English, French and Spanish. JOHN M OHAGA, Kenya, LL.B (Hons.), Nbi. Diploma in Law (KSL), FCIArb. Advocate, Commissioner for Oaths, Notary Public. John has a passion for litigation and particularly Commercial Litigation. However, he also has significant experience in other aspects of Civil Litigation including Employment and Labour Disputes, Landlord and Tenant, Public Procurement and Constitutional Law. He is also interested in Alternative Dispute Resolution and in particular Arbitration. He is a Fellow of the Chartered Institute of Arbitrators and is the Convenor of the Law Society of Kenya Committee on Alternative Dispute Resolution. In addition, he Chairs the Appeals Committee of the Advertising Standards Board, the Appeals committee of the Kenya Rugby Football Union and has recently been appointed as Chairman of the Sports Disputes Tribunal established under the Sports Act, No. 25 of 2013. He has been included in the Best Lawyers (www.bestlawyers.com) listforKenyainthespecialtyofLitigation,aswellasinthePrestigious Annual Chambers Global Guide to International Lawyers as one of the best practitioners in the Litigation and Dispute Resolution category (www.chambersandpartners.com); he is also the 2010 winner of the International Law Office (ILO) Client Choice Awards for Kenya in the category of Litigation (www.clientchoiceawards. com). V.V. VEEDER QC, UK, Arbitrator (practising from Essex Court Chambers, London); ICCA Governing Council Member; Vice- President of the LCIA; Council Member of the ICC Institute of
- 223. KIAC 2014 CONFERENCE REPORT |213 World Business Law; Judicial Member of FIA Disputes Board; Visiting Professor King’s College, London University on Investment Arbitration; United Kingdom Government Delegate and Adviser to the UNCITRAL Working Group on Arbitration. Educated Paris, Bristol and Jesus College, Cambridge. DR. EUN YOUNG PARK, South Korea, is partner with Kim & Chang, who serves as the co-chair of the International Arbitration & Cross- Border Litigation Group. He also practices in anti-corruption and regulatory compliance, and international trade and customs. Dr. Park is Vice-Chair of IBA Arbitration Committee, Co-Chair of IBA Asia Pacific Arbitration Group, Member of the Court of LCIA and Board of Directors of SIAC. He is also Vice President of Korean Arbitrators Association, Board Member of Korean Council of International Arbitration, Executive Member of Seoul IDRC, and registered arbitrator with SIAC, DIAC, KLRCA,HKIAC and KCAB. He concentrates his practice on international arbitration proceedings as well as court proceedings in multiple jurisdictions, including international arbitrations in various venues under the rules of the ICC, LCIA, SIAC, HKIAC, KLRCA, UNCITRAL, AAA/ICDR, SCC and the KCAB. He also sits as an arbitrator in international arbitration cases. He also represents his clients in government investigations related to white-collar crimes including foreign bribery statutes, securities and corporate fraud before various government agencies, and regularly advises his clients on trade sanctions and disputes. Dr. Park has recently published “Appellate Review in Investor State Arbitration”asapartofReformofInvestor-StateDisputeSettlement Project, “The Analysis of the Iran Sanctions Act of the United States and the Strategy of the Overseas Construction Project”, “The Defense of Necessity in International Investment Dispute” and regularly co-authors the Arbitration and Anti-Corruption sections for Law Business Research. He has also co-authored the book Alternative Dispute Resolution Methods around the Globe. He has
- 224. 214 | KIGALI INTERNATIONALARBITRATION CENTRE earned numerous top rankings as one of the “leading attorneys” in Chambers Asia-Pacific for international arbitration, Expert Guide and The International Who’s Who of Commercial Arbitration. Dr. Park has served as a judge in the Seoul District Court and teaches at law schools in Korea. He received a doctorate degree (J.S.D.) and an LL.M from the NYU School of Law after graduating from the Seoul National University (M.Jur & B.Jur). He is admitted to the New York bar and Korea bar. REMY GERBAY, France, is an academic specializing in international arbitration based at the School of International Arbitration at Queen Mary, University of London. Remy also sits as arbitrator (co-arbitrator, sole arbitrator, and Chairman) in ICC, LCIA and ad hoc arbitrations. UntilFebruary2012,Remywasthe“DeputyRegistrar”oftheLondon Court of International Arbitration (LCIA), and the “Registrar” of the DIFC-LCIA Arbitration Centre (Dubai). Before that, he was in private practice with Herbert Smith LLP, in London and Paris, where he concentrated on public international law and international arbitration. In this capacity, Remy participated, as counsel, in LCIA, ICC, UNCITRAL and ICSID arbitration proceedings in a range of industry sectors including, among others, finance, mining & energy, IT & telecoms, construction & engineering. Remy first started his career at a United Nations agency in Geneva. Remy holds a French law degree (Honours) from the University of Lyon, a Master’s degree from the Graduate Institute (University of Geneva), and an LL.M. from Georgetown (Dean’s List), where he was a Fulbright Scholar. Remy is admitted to practice as an Attorney (state of New York) and as a Solicitor (England and Wales; non-practising). Since 2013 Remy is co-Chair of the Young International Arbitration Group (YIAG), a 6,000-member association for practitioners,
- 225. KIAC 2014 CONFERENCE REPORT |215 students and younger members of the arbitration community founded by the LCIA. Remy is also a member of the Fulbright Association, the British Fulbright Scholars Association, CFA-40, ICC YAF, and Young ICCA. Remy is a frequent speaker at international arbitration conferences. His recent publications include: - Arbitrating under the 2014 LCIA Rules, Kluwer Law International (book co-authored with Dr Maxi Scherer and Lisa Richman), forthcoming 2015. - “London Court of International Arbitration”, in Arbitration in England, Julian D.M. Lew, H. Bor, G. Fullelove, Joanne Greenaway (eds), Kluwer Law International (2013) (ISBN 9041139982). - “The LCIA”, in World Arbitration Reporter, Larry Shore and Loukas Mistelis (eds), Juris (2013) (ISBN 9781933833460). - “International Fraud and Asset Tracing – France” (co-authored with Denis Chemla, European Lawyer Reference Series (2011) MARK APPEL, USA, is Senior Vice President of the International Centre for Dispute Resolution (ICDR). ICDR is the international division of the American Arbitration Association (AAA), the world’s largestproviderofprivatedisputeprevention,conflictmanagement and dispute resolution services, education, and training since 1926. A member of the Association’s senior management team, Mr. Appel is charged with primary responsibility for ICDR operations in Europe, the Middle East and Africa. During his 30+ years of global dispute resolution experience, Mr. Appel has managed virtually every aspect of AAA administrative, education and outreach services. Mr. Appel opened ICDR’s first non-US office in May 2001 in Dublin, Ireland. Working with company law departments and outside counsel, Mr. Appel has helped build understanding and use of ICDR services across the EMEA region.
- 226. 216 | KIGALI INTERNATIONALARBITRATION CENTRE Mr. Appel has also worked with conflict management community stake holders (e.g. Chambers of Commerce; Law Societies; Bar Councils; Ministries of Justice; State Attorneys General; Judiciary; leading companies and law firms) in Ireland, Bahrain, Cameroon, Egypt, France, Germany, Italy, Kosovo, Lebanon, Malta, Poland, Portugal, Romania, Russia, Saudi Arabia, Slovenia, Spain, Sweden, Tunisia, Turkey, UAE and the UK to further the effective use of mediation and arbitration. Highlights include working with stakeholders in Ireland to create modern enabling legislation for arbitration and mediation; training Judges and lawyers in Malta in connection with Malta’s mandatory mediation scheme; conceiving and creating a new global NGO focused on quality assurance in mediation (the International Mediation Institute (http://www.imimediation.org); providing critical design and start up assistance to an AAA joint venture with the Kingdom of Bahrain (http://www.bcdr-aaa.org); ongoing assistance to UNCTAD-WTO in providing advice and assistance to start-up dispute resolution Centres in Europe, Africa and Asia; creation, in 2004, of ICDR Young and International, a global networking/education organization for young internationalists now including over 2,400 Associates in 96 countries; mediation skills training in Prague at the request of the International Bar Association, Tripoli, Lebanon, in cooperation with Lebanese NGO Azm & Saade Association and Manama, Bahrain for Saudis and Bahrainis in cooperation with the Bahrain Chamber for Dispute Resolution (BCDR-AAA). Mr. Appel has taught arbitration law and procedure and overview courses in dispute resolution at the graduate and post- graduate (law) levels. Mr. Appel has trained legal and business professionals and government staff on four continents in negotiation, mediation and arbitration skills, both on behalf of the ICDR-AAA and on behalf of state court systems and professional associations. He is a frequent lecturer at educational forums convened by industry and professional associations internationally.
- 227. KIAC 2014 CONFERENCE REPORT |217 LISE BOSMAN, Netherland, Permanent Court of Arbitration (The Hague, The Netherlands): Senior Legal Counsel, Permanent Court of Arbitration, ExecutiveDirector,InternationalCouncilforCommercialArbitration (ICCA) University of Cape Town (Cape Town, South Africa): Adjunct Professor, Commercial Law Dept. (LLM course in international arbitration) Translink Systems B.V. (Amersfoort, The Netherlands): In-house Legal Counsel to Dutch-French-UK public-private partnership (specialised in dispute resolution; competition; privacy) Freshfields Bruckhaus Deringer (Amsterdam, The Netherlands): Senior Associate in International Arbitration Practice (specialised in international commercial arbitration; investment arbitration; cross-border transactions; joint ventures) Stibbe Simont Monahan Duhot (Amsterdam, The Netherlands): Associate in Arbitration Unit Iran-United States Claims Tribunal (The Hague, The Netherlands): Legal Adviser Legal Resources Centre (Johannesburg, South Africa): Fellow in Public Interest Law practice (specialised in land, labour, housing, litigation) EDUCATION AND QUALIFICATIONS Adjunct Professor, University of Cape Town (UCT), South Africa Admitted to practise in South Africa LLM in International Law (1992), University of Notre Dame, USA (summa cum laude) LLB (1988-1990), UCT, South Africa (Dean’s Merit List)
- 228. 218 | KIGALI INTERNATIONALARBITRATION CENTRE Bachelor of Arts (1985-1987), UCT, South Africa (English and African literature) PUBLICATIONS AND OTHER PROFESSIONAL ACTIVITIES Fellow and Arbitrator: Southern African Association of Arbitrators General Editor and Contributing Author: “Arbitration in Africa: a Practitioner’s Guide” (Kluwer, 2013) Series Editor: PCA Award Series (2010 onwards) Author: articles in ICC Bulletin, Hague Yearbook of International Law, Stellenbosch Law Journal Member: Advisory Board of Africa International Legal Awareness; Member, Board of Reporters, Institute for Transnational Arbitration Founder of young practitioner’s group, Young ICCA. PROF. DATUK SUNDRA RAJOO, Malaysia, is the Director of the Kuala Lumpur Regional Centre for Arbitration (KLRCA). He was the Immediate Past President of the Asia Pacific Regional Arbitration Group (APRAG) [2011-2013], a federation of nearly 40 arbitral institutions in the region. Professor Datuk Sundra is a Chartered Arbitrator and an Advocate & Solicitor of the High Court of Malaya (non-practising). He is also a Professional Architect and Registered Town Planner. He has had numerous appointments as chairman, co-arbitrator of three-man panels and sole arbitrator in international and domestic arbitrations. He serves on the panel of numerous international arbitral institutions and organisations. He is also a Visiting Professor at The National University of Malaysia (UKM). Professor Datuk Sundra has authored and co-authored several books on arbitration and contract law, including, “Law, Practice and Procedure of Arbitration” (2003); “The Malaysian Standard Form of Building Contract (The PAM 1998 Form)” (1999); the Arbitration title for Halsbury’s Laws of Malaysia (2002); “Arbitration Act 2005
- 229. KIAC 2014 CONFERENCE REPORT |219 – UNCITRAL Model Law as Applied in Malaysia” (2007); “The PAM 2006 Form” (2010); “Construction Law in Malaysia” (2012); and “The Malaysia Arbitration Act 2005 (Amended 2011): An Annotation” (2013). DR. EMMANUEL UGIRASHEBUJA, Rwanda, is the Judge President (Designate) of the East African Court of Justice. He is the former Dean of the School of Law, University of Rwanda. He has and still serves on several Boards and Councils. He served on a regional team of experts on East African Integration. He has served as an arbitrator, mediator and expert witness in several cases. He also previously served as a legal advisor for the Rwandan Constitution Commission, the Rwanda Environment Management Authority and other organizations. He has on occasion been invited to offer expert opinion on different cases. He has taught at University of Edinburgh and Dar es Salaam. Dr. Emmanuel Ugirashebuja is a knowledgeable lawyer with solid academic and work background. He possesses comprehensive knowledge of the civil law and common law traditions, East African law, international law, international economic law and environmental law. Dr. Ugirashebuja completed his PhD at the University of Edinburgh. He is also a fellow of the Draper Hills Summer Fellowship Program. NGOGA-GAKUBA THIERRY, Rwanda, is the Registrar of the Kigali International Arbitration Centre (KIAC) since January 2012. He Holds an LLB degree from the National University of Rwanda in 2004 and professional trainings in management, international human rights law and ADR from institutes and law school in France (2006), Austria (2007) and Swaziland (2008). Prior to joining the arbitration Centre, He was the Executive Secretary of the Kigali Bar Association since 2009. He also worked in the Rwandan Ministry
- 230. 220 | KIGALI INTERNATIONALARBITRATION CENTRE of Justice as Legal Expert from 2006 to pilot the access to Justice Bureau Initiative in Rwanda. He has prior experience working with international NGOs. He is a Board Member of Rwanda Society of Authors, 2012 to date and also served as Board Member of Transparency International Rwanda (2005-2009) His work in the last nine years focused on program management, policy formulation in the area of legal aid, access to justice, reform of the legal profession, regional integration & Alternative Dispute Resolution. He has represented KIAC in various international arbitration & ADR gatherings. Following are selected articles and speaking engagement in the above aria: ADR in Rwanda: what Rwanda leant from Gacaca courts and mediation committee to the International Arbitration Centre, Paper presented to the Annual Regional ADR Conference, July,2013, Nairobi –Kenya ‘’The rise of the arbitration centres in Africa, Paper presented to IBA Africa Regional Forum; Uganda, August 2012 “A study of the constraints and obstacles to liberalization of the legal services regime in the East African Community” World Bank report, Dec 2010( as Consultant), Dec 2010 « Rwandan Practices and Strategies of Coping with Violent Conflicts: Formal & Informal means”, paper presented at ARCA- Net International Scientific Conference titled: “The Nexus of Natural Resources and Violent Conflicts in Sub-Saharan Africa”, Berlin-Germany, July 2007. “The Rwanda bar association after the genocide and the process of regional integration within the East African Community, (article published in the Jurist International, UIA, 3. 2010) “The review of the legal profession in Rwanda: Lessons Learnt from the East Africa legal professions, report presented to the Rwanda parliament, Sept 2009. He speaks English, French, plus a good command of other East & central African dialects.
- 232. P. o. Box695 Kigali - Rwanda T: +250 788 316 099 E: info@kiac.org.rw W: www.kiac.org.rw KIAC office in Nyarutarama, Kigali