General – Page 2 – International Arbitration

August 11, 2023 by Mark Handley

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.

Continue reading “New Code of Conduct for arbitrators in investment arbitration”

July 6, 2023February 12, 2024 by Paul-Raphael Shehadeh

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).

Continue reading “The Development and Structure of the Court of Arbitration for Sport”

June 26, 2023 by Chris J. Chasin

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.

June 9, 2023June 20, 2023 by Julia Jaremko

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”

June 2, 2023 by Priscila Bandeira

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.

May 18, 2023 by Ramsey Schultz

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.

Continue reading “Eleventh Circuit Expands Standards for Vacatur of International Arbitration Awards”

April 17, 2023April 17, 2023 by Oliver Kent

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?”

April 13, 2023 by Duane Morris

Arbitration in the Kingdom of Saudi Arabia

By N. Gordon Knox, Partner

Over the last decade, the Kingdom of Saudi Arabia (the “KSA”) has made significant strides to create a robust arbitration regime. This is due in part to new arbitration and enforcement laws, an increase in support of the arbitration process from the KSA’s judiciary and, significantly, to the work of a dynamic and innovative arbitration institution – the Saudi Center for Commercial Arbitration (the “SCCA”).

The SCCA was established pursuant to Ministerial Resolution No. 257 of 14/6/1435H and became operational in late 2016 when it opened its headquarters in Riyadh. Its mission is to provide “professional, transparent and efficient ADR services”. The SCCA also has offices in Jeddah as well as Dubai.

As part of its Vision 2030 Initiative, unveiled in 2016, the KSA articulated its desire to encourage global investment within the Kingdom and diversify is sources of revenue. The SCCA was established as part of KSA’s plan and one of the SCCA’s goals is to “create a safe environment that attracts both foreign and domestic investment to the [KSA]…. by eliminating obstacles and difficulties related to ADR between investing parties.” The SCCA administers arbitration and mediation proceedings in both Arabic and English and is dedicated to providing professional, transparent and efficient ADR services, inspired by Sharia law. An arbitration may take the form of a standard arbitration, an expedited arbitration, an emergency arbitration or an online arbitration. Continue reading “Arbitration in the Kingdom of Saudi Arabia”

April 11, 2023 by Julia Jaremko

The Impact of Sanctions on International Arbitrations

One of the most important issues facing the parties (or potential parties) to an international arbitration is whether an award will ultimately be enforceable against opposing parties and their assets. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”), usually provides the most direct means to enforce an award. And, as a general rule, the Convention’s application makes enforcement of International Arbitral awards a more straight forward process than judgments from foreign courts. But, parties must remain aware of and consider the limited defenses or obstacles to enforcement that still exist under the Convention, including where enforcement of an award would be contrary to public policy. This “public policy exception” is particularly relevant when issues of international sanctions are involved.

Russian Court Ruling Impact on International Arbitrations

After the Russian invasion of Ukraine, dozens of countries, including the United States, introduced or greatly expanded sanctions against Russia, the Russian President Vladimir Putin as well as high-powered Russian government officials and other influential Russian interests. These sanctions have been extensive, going so far as to prevent Russian banks from using the SWIFT international payment system.

The Russian government responded to these sanctions, in part with the introduction of Federal Law No. 171-FZ, which provides Russian parties to an international arbitration (who are also the subject of Russian sanctions) the opportunity to apply to a Russian court for an injunction prohibiting foreign claimants from continuing the arbitration and receiving an award. The Russian court can also award the sanctioned individual a sum of money that equals the sum of the international award against the sanctioned person thereby eliminating the award against the sanctioned person. Continue reading “The Impact of Sanctions on International Arbitrations”

April 4, 2023 by Paris Mayfield

The Benefits of International Arbitration

Arbitration is quickly emerging as one of the preferred methods for dispute resolution in the United States. The pros and cons of domestic arbitration are well known, and at times hotly contested. While many of the same arguments apply to international arbitration, in the context of cross-border business transactions, international arbitration can provide the neutrality, predictability, enforceability, and efficiency that is critical to achieving a just outcome.

Neutral Site and Predictability
International Arbitration provides a neutral forum for dispute resolution, thereby avoiding even the perceptions of ‘home court advantage’ that often times complicate selection of domestic courts. Often times, a dispute that crosses international boundaries is potentially subject to jurisdiction in more than one country. Parties may have concerns about navigating unfamiliar legal terrain or bias in another party’s home jurisdiction. Under traditional litigation, usually one party gets to decide where, and under what laws, the litigation will be resolved. Even if parties agree to a forum selection and choice of law clauses ahead of time, inevitably one party is likely to be disadvantaged by local procedures and/precedents in the chosen venue. While these advantages and disadvantages are part of general litigation strategy, they are often barriers to fair and effective dispute resolution.

International arbitration provides parties the opportunity to choose where the arbitration will take place, what laws will apply, and even the makeup and nationalities of the arbitrators. From there, parties will know what to expect in term of pleading rules, discovery procedures, and the types of damages and other remedies that are available. Most importantly, both parties will be given the same set of circumstances to arbitrate under, without substantial advantages given to either party. International arbitration allows disputes to be decided on the merits without influence from potentially biased judiciaries, disadvantageous procedural technicalities, and other issues that muddy the waters in traditional litigation.

Predictability
In addition to providing an opportunity for neutrality that is not always available through traditional litigation, international arbitrations provide invaluable predictability to both parties. One of the biggest issues that arises in international litigation is the uncertainty that comes with navigating a foreign judicial system. Rules and procedures governing what claims may be brought, the discovery process, the trial itself, and remedies vary widely across jurisdictions. When parties agree to arbitrate an international dispute, they have the opportunity to create certainty and predictability in how the dispute will be resolved. The location of the arbitration and the rules governing the arbitration will be agreed upon prior to the dispute arising. The parties will have an opportunity to assemble an agreed-upon panel of fair minded individuals with alleviates the fear of being subject to the whims of a foreign judicial system. Parties in international arbitration have much more control over the length of the process without having to worry about a backlogged court-docket and other procedural delays that often cause traditional litigation to go on for years. Overall, international arbitrations provide parties with the resources to maintain control over their own disputes in many ways that traditional litigation does not.

An Increased Likelihood that Judgments are Enforceable
The Convention on the Recognition and Enforcement of Foreign Arbitral Award (otherwise known as the “New York Convention) provides a straightforward mechanism for enforcement of international arbitral awards. Over 150 countries have ratified the Convention and it provides a guarantee a mechanism that allows, and encourages, courts within the various signatory countries to enforce an international arbitration clause and award. This level of comity provides a significant benefit over the difficulties faced when seeking to enforce a foreign-court judgment. For example, a judgment from a United States court is not automatically enforceable in other countries – even those with similar legal traditions. A claimant may have to go through a second series of expensive and time-consuming litigation just to prove that the judgment should be enforceable in the foreign jurisdiction. An award secured in international arbitration however, provides more security to the prevailing party that they will be able to recover their award no matter where they need to enforce the judgment.

Pick the Panel
When parties decide to resolve their dispute through international arbitration, one of the key benefits is the ability to appoint arbitrators with relevant expertise. This removes a lot of the variability seen when presenting cases before judges and juries who may not be well-versed in the subject matter of the dispute. The presence of subject matter experts on the tribunal usually provides assurance to the parties that their claims are being adjudicated properly and fairly and reduces the need for appeals based on incorrect findings.

Affordability and Efficiency
While the affordability and efficiency of arbitration versus domestic litigation can be hotly contested, many of the rules and forums common to International Arbitration provide at least the possibility for significant cost and time benefits. When viewed in contrast with the American legal tradition, this is particularly so given the lack of expensive pre-trial discovery and post-trial appeals that are prevalent in many US jurisdictions and which may prolong a case for years. Under an arbitration agreement, parties are encouraged to move through the process quickly with a panel of arbitrators dedicated to their case. For example, the International Chamber of Commerce Rules of Arbitration offer an expedited procedure in cases where the amount in dispute does not exceed $2 million. This is meant to streamline the arbitration process and keep costs low. Unfortunately, in traditional litigation, there is not a similar mechanism in the United States or other jurisdictions. After an arbitration has ended and the tribunal has issued a final award, that dispute is usually over. Challenges to arbitral awards are also generally more limited than domestic court judgments. In addition, parties in international arbitration proceedings are often awarded reimbursement of their attorneys’ fees and other arbitration costs which has the potential to make arbitration an even more affordable option.

Resolving an international dispute does not have to be a lengthy, confusing, or expensive endeavor. Parties engaged in international business transactions should consider that agreeing to arbitrate can keep costs manageable while moving the dispute along efficiently with fairness and predictability.