English court decision on anti-arbitration injunctions

The High Court in London has granted an anti-arbitration injunction to prevent the commencement of an arbitration within the context of a series of long-running disputes between the parties.

The case is Sodzawiczny v Smith (Re Arbitration Claim) [2024] EWHC 231 (Comm). The decision contains a useful and detailed review of the case law regarding anti-arbitration injunctions.

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UK Law Commission Publishes Its Review of the Arbitration Act 1996: Final Report and Bill

On 6 September the Law Commission published its final report and recommendations on reforms to the Arbitration Act. The full report is available here.

Below follows a non-exhaustive summary of some of the key changes:

Statutory Rule on Governing Law of an Arbitration Agreement

English law has developed common law rules to determine which law governs an arbitration agreement. These rules were summarised by the UK Supreme Court in Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, and largely confirmed in Kabab-Ji SAL v Kout Food Group [2021] UKSC 48. Broadly speaking, absent an agreement to the contrary the choice of law of the main contract would also apply to the arbitration agreement.

The proposed new Section 6A would alter that framework for agreements post-dating the new Act becoming law. The new Section 6A still recognises the parties’ positive choice of governing law in the arbitration agreement as determinative. Failing such choice, however, the law of the seat will be applied as the governing law.

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ICSID Caseload Statistics (2023 Fiscal Year)

The ICSID Caseload Statistics have now been updated with new data for the fiscal year 2023 (“FY2023”) to capture statistics drawn from cases registered under the ICSID Convention, the Additional Facility Rules and other ICSID-administered cases between 1 July 2022 and 30 June 2023.

The International Centre for Settlement of Investment Disputes (“ICSID”) was established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”) as a means of furthering the World Bank’s objective of promoting international investment through the provision of a neutral and reliable forum for the resolution of disputes between foreign investors and States. To date, the ICSID Convention counts 158 Contracting States and seven signatory States, bringing the total number of ICSID Member States to 165. Continue reading “ICSID Caseload Statistics (2023 Fiscal Year)”

New Code of Conduct for arbitrators in investment arbitration

The UN Commission on International Trade Law (UNCITRAL) has approved a Code of Conduct for arbitrators in international investment arbitration (available here). The Code is intended to apply to members of an ICSID arbitral tribunal or ad hoc committee, and to candidates for such roles, and also to apply to other investor-state arbitrations. The precise mechanics by which this will be achieved is unclear, and the commentary to the Code suggests that it may come to be incorporated into the UNCITRAL Arbitral Rules. Parties are free to agree that the Code should apply in their arbitrations and it is likely that this will become common.

The Code of Conduct is a mixture of codifying existing best practice, such as a prohibition on ex parte communications outside the remit of an initial appointment, and a requirement for independence and impartiality.

The Code also, however, contains a number of far-reaching new rules, in relation to so-called “double-hatting” where the same person acts as both arbitrator and party-appointed counsel in relation to the same actions by particular states or the same treaty provisions; in relation to the a requirement to maintain an arbitration’s confidentiality; and requirements for arbitrator disclosure.

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The Development and Structure of the Court of Arbitration for Sport

The Court of Arbitration for Sport (“CAS”) is the world’s leading arbitration institution for sports-related disputes.

Headquartered in Lausanne, Switzerland, the CAS has further branches (described as “decentralised offices”) in Sydney and New York City which have been in operation since the mid-nineties. It also functions as an ad hoc tribunal during the Olympic Games.

According to statistics published by the CAS, a total of 8,865 cases were submitted to the CAS between 1986 and 2021. Rather than adopt a one-size-fits-all approach to dispute resolution procedure, the CAS offers a suite of different dispute resolution services to serve the sports industry (see further below).

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Supreme Court Rules on When RICO Standing Exists to Protect Domesticated International Arbitration Awards

The federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) and international arbitration are strange bedfellows at first glance. But one of the largest challenges in international disputes can be enforcing judgments, and RICO can be a powerful tool to guard against illegal conduct designed to hinder the enforcement of judgments giving effect to international arbitration awards.

On June 22nd, the Supreme Court issued its Opinion in Yegiazaryan v. Smagin and CMB Monaco v. Smagin, consolidated cases that questioned whether a foreign individual could sue for RICO violations impairing his ability to recover on a domestic judgment enforcing a foreign arbitration award. The issue before the Supreme Court was whether the injury alleged—interference with a federal court judgment—was “domestic in nature” and therefore conferred standing to bring a RICO claim under RJR Nabisco Inc. v. Eur. Cmty., 579 U.S. 325 (2016).

The Court’s decision resolves a circuit split regarding how to determine the location of injury associated with a judgment enforcing an arbitration award for purposes of RICO. In Armada (Singapore) PTE Ltd. v. Amcol Int’l Corp., 885 F.3d 1090 (7th Cir. 2018), the Seventh Circuit adopted what has come to be known as the “residency test,” concluding that an injury to intangible property occurs solely at the plaintiff’s place of residence. Applying that standard, the Court concluded that a Singapore company could not bring a RICO claim based on injuries to its ability to enforce a domestic judgment enforcing an arbitration award, because any harm to the plaintiff’s “intangible bundle of litigation rights” was suffered in Singapore and therefore was not a domestic injury conferring standing to bring a RICO claim.

The Ninth Circuit, in Smagin v. Yeglazaryan, 37 F.4th 562 (9th Cir. 2022), reached a different conclusion, deciding that efforts to impair a judgment to enforce a foreign arbitration award entered by a federal district court constituted an injury in the state where the Court was located. The Ninth Circuit reasoned that the federal judgment to enforce the award only provided rights within California and did not provide any rights in the plaintiff’s place of residence, and further noted that much of the conduct underlying the alleged injury occurred in or was targeted at California.

The Supreme Court’s decision affirms the Ninth Circuit’s reasoning, concluding that “in assessing whether there is a domestic injury, courts should engage in a case-specific analysis that looks to the circumstances surrounding the injury. If those circumstances sufficiently ground the injury in the United States, such that it is clear the injury arose domestically, then the plaintiff has alleged a domestic injury.” In applying that analysis, the Court noted that many of the racketeering acts alleged (including creation of shell companies to hide assets, submission of forged documents to a federal court, and witness intimidation) occurred in the United States and that the injurious effects of the racketeering activity largely manifested in California, where they thwarted rights conferred in California by a District Court judgment.

Although this decision does not establish a bright-line rule, it provides a clear roadmap for determining when conduct intended to prevent the domestic enforcement of an international arbitration award establishes standing to bring a RICO claim. The articulation of this standard and resolution of the circuit split will provide a powerful tool to litigants seeking to enforce international arbitration awards domestically. 

CryptoCrossroads: Unraveling the Blockchain Knots in International Disputes

In the rapidly evolving digital landscape, cryptocurrencies have emerged as disruptive sources, revolutionizing traditional financial systems and introducing unique legal challenges. As the global adoption of crypto continues to gain momentum, disputes arising from their use, ownership, and transactions have become increasingly prevalent. International arbitration stands as a vital mechanism for resolving cross border disputes by offering parties a neutral platform to navigate the complex legal issues arising from the decentralized nature of cryptocurrencies.

Developing Rules & Regulations

In April 2021, the UK Jurisdiction Taskforce developed and published the brief but innovative, Digital Resolution Rules, designed to guide parties through a procedural framework that allows for the resolution of disputes relating to, among other digital technologies, cryptocurrency. The Rules include a default period of thirty days where an arbitral tribunal must determine a dispute within this timeline. Another key benefit of these rules is anonymity between parties – although the tribunal might request information regarding the identity of the parties, the parties can remain anonymous as to each other. The Rules also specify that English law is the default procedural law that governs the dispute as well as the arbitration agreement, which shortens the arbitration time period as parties cannot challenge jurisdiction. Continue reading “CryptoCrossroads: Unraveling the Blockchain Knots in International Disputes”

Codes of Conduct for Arbitrators

Codes of conduct for international arbitrators provide ethical guidelines and professional standards that arbitrators must adhere to when conducting international arbitration proceedings. These codes aim at establishing ethical and professional standards for arbitrators to ensure fairness, impartiality, and integrity in the arbitration process.

The most recent development in this matter was the announcement by Shane Spelliscy, Chair of the United Nations Commission on International Trade Law (“UNCITRAL”) Working Group III (“WGIII”), at the 45th Session of the WGIII on March 31, 2023, that a workable compromise had been reached on the issue of how to regulate double hatting[1]. Consequently, Mr. Spelliscy announced that an agreement was reached on a text of the Code of Conduct for Arbitrators in Investor-State Dispute Settlement (“ISDS”)[2] to be presented for final approval at the UNCITRAL Commission in July 2023.[3] This code of conduct had been first proposed in 2019 and it focuses heavily on disclosures obligations by arbitrators.

This is a significant announcement, as several other prominent international arbitration centers have also continuously worked on similar codes of conduct and/or guidelines. Accordingly, while different institutions and organizations may have their specific codes of conduct, there are several common principles that are generally included:

  • Independence and Impartiality
  • Integrity and Fairness
  • Disclosure of Information
  • Competence and Diligence
  • Confidentiality
  • Transparency and Disclosure
  • Respect for Due Process
  • Compliance with Applicable Laws and Rules

Of course, the codes of different arbitration institutions and organizations may include additional or more specific provisions tailored to the particularities of the institution or organization (for example in the case of ICSID due to the nature of the disputes before such institution). Additionally, some international arbitration guidelines, such as the International Bar Association (“IBA”) Guidelines on Conflicts of Interest in International Arbitration, provide detailed guidance on managing conflicts of interest and disclosure obligations for arbitrators[4]. These guidelines are widely recognized and often referenced in international arbitration practice.

Other important centers for international arbitration which have taken several initiatives to address and promote codes of conduct for their arbitrators include the International Chamber of Commerce (“ICC”) and the London Court of International Arbitration (“LCIA”). The ICC, for example, incorporates ethical and professional standards in its own standard Rules, but has adopted additional rules and guidelines such as its 2016 Guidance Note on Conflict Disclosures by Arbitrators[5] and the 2017 ICC Arbitrator Statement Acceptance, Availability, Impartiality and Independence form[6]. Similarly, the LCIA incorporates ethical and professional standards in its own Arbitration Rules (specifically, but not limited to, Rules 5, 18.5 and 18.6 & Annex), in addition to publishing the 2017 LCIA Notes for Arbitrators[7].

It is noteworthy that the evolution of codes of conduct in international arbitration will be influenced by the evolving needs and expectations of the arbitration community, as well as legal developments and societal trends. For example, current challenges related to codes of conduct for international arbitrators include challenges in diversity and inclusion within arbitral tribunals and emerging ethical issues with regard to third-party funding, cybersecurity, or the use of artificial intelligence. The specifics of future codes of conduct will depend on the actions and initiatives taken by arbitration institutions, professional organizations, and stakeholders in the field to address these and other challenges.

[1] “Double hatting” is commonly used to refer to the practice of arbitrators who also carry on other activities such as counsel or expert witness. This means that someone who acts as arbitrator in some proceedings acts “the subsequent day” (so to say) in other proceedings for example as counsel or expert witness, possibly even in front of arbitrators who have been acting as Counsel before him in the above referred to arbitral proceedings.

[2] Full text of the draft is available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/draft_code_of_conduct_for_arb_advance_copy.pdf

[3] See “Working Group III: Investor-State Dispute Settlement Reform”, available at: https://uncitral.un.org/en/working_groups/3/investor-state

[4] Full text of the IBA Guidelines on Conflicts of Interest in International Arbitration available at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ibanet.org/MediaHandler?id=e2fe5e72-eb14-4bba-b10d-d33dafee8918.

[5] See “2016 Guidance Note on Conflict Disclosures” available at: https://iccwbo.org/news-publications/news/icc-court-adopts-guidance-note-on-conflict-disclosures-by-arbitrators/

[6] See 2017 ICC Arbitrator Statement Acceptance, Availability, Impartiality and Independence form available at: https://iccwbo.org/news-publications/arbitration-adr-rules-and-tools/icc-arbitrator-statement-acceptance-availability-impartiality-independence-form/#single-hero-document

[7] See LCIA Notes for Arbitrators available at: https://www.lcia.org/adr-services/lcia-notes-for-arbitrators.aspx#:~:text=Under%20Article%205.4%20of%20the,to%20their%20impartiality%20or%20independence.

Eleventh Circuit Expands Standards for Vacatur of International Arbitration Awards

On April 13, 2023, the United States Court of Appeals for the Eleventh Circuit overturned decades of precedent in determining the grounds that can be asserted to vacate an arbitral award governed by the New York Convention (the “Convention”)[1]. The Eleventh Circuit in Corporación AIC v. Hidroelectrica Santa Rita, sitting en banc, held that in a case under the Convention where the United States is the governing jurisdiction, the grounds for vacatur of a domestic award are set out in domestic law, currently Chapter 1 of the Federal Arbitration Act[2] (“FAA”).[3] In doing so, the Eleventh Circuit overruled the two prior controlling cases on the issue and settled a circuit split, realigning their opinions with that of its sister circuits. This decision—which expands the grounds for challenging arbitration awards beyond those provided in the Convention—could have significant implications on parties choosing the Eleventh Circuit as the seat of arbitration moving forward.

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Arbitration: the Brexit get out of jail free card?

One of the most useful assets in the classic board game Monopoly is the famous get out of jail free card. A player who finds themselves in jail can utilize it to ‘free’ themselves, almost immediately, but more importantly without paying a monetary penalty.

But what has Monopoly got to do with Brexit or arbitration? Whilst the similarities may not be immediately obvious, for commercial agreements made after 11:00 pm on 31 December 2020, jurisdiction clauses that specify arbitration are in many ways a legal get out of jail free card.
Continue reading “Arbitration: the Brexit get out of jail free card?”

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