General – Page 3 – International Arbitration

March 24, 2023March 23, 2023 by Priscila Bandeira

Arbitration Case Management: Procedural Innovation or Getting Back to Original Intent? Cost and Schedule Efficiency

Originally promoted as a cost-efficient alternative to the public court system, International Arbitration has faced increased criticism by parties and attorneys worldwide for the increasing length and cost of arbitral proceedings. In a 2018 survey conducted by the School of International Arbitration at Queen Mary University of London (“QMUL Survey”), 67% of respondents identified cost as one of the three worst characteristics of international arbitration and 34% identified lack of speed as one of three worst characteristics[1]. Issues that were listed by respondents to this survey as possible contributing factors to the increase of the cost and length of arbitral proceedings include the lack of consequences for delay by arbitrators and/or parties and insufficient principles or guidance on the allocation of costs[2].

As a response to these concerns, arbitration institutions around the world have issued an array of new case management rules. In 2018, the International Chamber of Commerce (“ICC”), for example, issued a report on Techniques for Controlling Time and Costs in Arbitration. The ICC stated that this report “should be seen as an adjunct to the [2012 ICC] Rules” which included, among other things, additional guidance as to the mandatory initial case management conference and as to the explicit obligation on both the arbitral tribunal and the parties “to make every effort to conduct the arbitration in an expeditious and cost-effective manner.”[3]

Thereafter, in 2020 and 2021 two of the most prominent global arbitration institutions, the London Court of International Arbitration (“LCIA”) and the ICC, respectively, published new rules which both institutions announced as being designed to promote more efficient, flexible and transparent arbitrations.

Main common changes in the LCIA 2020 Rules[4] and in the ICC 2021 Rules[5]: both sets of new rules provide for (i) paperless filings and communications; (ii) remote hearings; (iii) expedited procedures; and (iv) clarification of prior rules and new rules concerning consolidation of arbitrations.

Other relevant changes in the ICC 2021 Rules: (i) ability of the tribunal to make “additional awards” where they omit to address claims in the main Award (Article 36.3); (ii) the value in dispute in order for the Expedited Procedure Rules to apply (under Appendix VI and Article 30(2)) increased from $2 million to $3 million; (iii) additional rules and transparency as to third-party funding; (iv) ICC Court discretion in “exceptional circumstances” to deviate from any agreement by the parties on the method of constitution of the arbitral tribunal and appoint the entire tribunal to avoid a significant risk of unequal treatment; and (v) more flexible joinder provisions.

Many other arbitration institutions, for example the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) in 2022, followed suit and published similar updates to their procedural rules[6]. All of these changes are a welcome development in addressing the continuing concerns of arbitrations users as to time and cost effectiveness, especially the increased use of technology, which received an additional push after the COVID-19 Pandemic.

However, it is important to keep in mind that establishing these case management rules is not necessarily an innovation to the International Arbitration practice, but is a necessary adaptation to challenges presented by the welcome growth of use of International Arbitration to resolve cross-border disputes. Moreover, delays can start to set in from the beginning of an arbitral proceeding, especially in complex matters, and, although the flexibility of arbitration is also part of its original appeal, too much flexibility can lead to increased time and cost[7].

Accordingly, even though many International Arbitration institutions do not prescribe specific timelines in their rules for all stages of arbitration, the most prominent International Arbitration Rules have been determining mandatory case management hearings in order for the Arbitral Tribunal, with the agreement of the parties, to determine case management procedures, which is a positive feature. Similarly, the availability of specific expedited procedures, for example, is a welcome development, but there are many other changes that arbitration users would like to see, such as (i) more tailored procedures for complex and multi-party arbitrations; (ii) cost sanctions for delay by arbitrators; (iii) rules giving extensive case management powers to arbitrators including robust sanctions in relation to the behavior of parties and counsel; and (iv) limitations on length of written submissions and oral hearings on procedural issues, etc[8].

It is noteworthy that users generally still believe that International Arbitration is a better method of dispute resolution than the courts, and it is clear that institutions around the world are and should continue working on addressing concerns that this general belief might change. Although time and cost are still some of the main concerns between users of International Arbitration, in the most recent 2021 QMUL Survey, International Arbitration is still the preferred method for an overwhelming 90% of respondents to resolve cross-border disputes, either on a stand-alone basis (31%) or in conjunction with ADR (59%)[9].

As long as both, arbitration institutions and parties, maintain the focus on the original intent of International Arbitration as a flexible, time and cost-effective alternative to public court systems, new rules and updates on case management features should continue to be published for this purpose. And, of course, it is important that the parties themselves also understand the institutions and procedures best suitable for their case.

[1] See 2018 International Arbitration Survey: The Evolution of International Arbitration, available at: www.arbitration.qmul.ac.uk/media/arbitration/docs/2018-International-Arbitration-Survey—The-Evolution-of-International-Arbitration-(2).PDF), at pg. 8.

[2] See Id. At pg. 34.

[3] See International Chamber of Commerce (ICC) Commission Report, ‘Techniques for Controlling Time and Costs in Arbitration’ (2d ed. 2018), at pg. 4.

[4] See 2020 LCIA Arbitration Rules, available at: https://www.lcia.org/Dispute_Resolution_Services/lcia-arbitration-rules-2020.aspx.

[5] See ICC Rules of Arbitration entered into force on 1 January 2021, available at: https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/.

[6] See 2022 ICSID Convention, Regulations and Rules, available at: https://icsid.worldbank.org/sites/default/files/documents/ICSID_Convention.pdf.

[7] See International Chamber of Commerce (ICC) Commission on Arbitration and ADR, “Effective Management of Arbitration: A Guide for In-House Counsel and Other Party Representatives” (1st ed. 2018), at pg. 3.

[8] See 2021 International Arbitration Survey: Adapting Arbitration to a Changing World, available at: https://arbitration.qmul.ac.uk/media/arbitration/docs/LON0320037-QMUL-International-Arbitration-Survey-2021_19_WEB.pdf, at pg. 12

[9] See Id., at pg. 12.

March 23, 2023 by Chris J. Chasin

What’s in a Clause: What to Consider when Adopting an Arbitration Clause in Construction Contracts

Many in the construction sector are hesitant to dwell on dispute resolution clauses. After all, when your goal is to build something together, anticipating conflicts at the outset of the relationship can feel unseemly. But this hesitance relies on a misconception of what dispute resolution is: it isn’t the anticipation of conflicts, but instead the development of proactive systems to work through those conflicts with minimal disruption much in the same way that change orders or design modifications are managed in the ordinary course. Proactive management of the dispute resolution process thus is not only consistent with a collegial working relationship but is imperative to achieving the environment of collaboration and partnership that are at the core of so many projects.

There are a myriad of popular form contracts in the construction sphere, including AIA and ConsensusDocs domestically and, internationally, the JCT, NEC, and FIDIC suites. The benefit of relying on such contracts is obvious: their mechanisms and allocations of risk are widely understood, relieving the parties of the need to debate routine provisions. But dispute resolution, although often considered such a provision, is anything but routine. The dispute resolution clause can be one of the most important provisions in a contract, and even minor changes can significantly impact the course of a project and the cost, duration, and inconvenience of any resulting disputes. Jurisdictional and geographic variations can further modify the impact of even standard language. In fact, dispute resolution clauses are one place where it is most important for a contracting party to be proactive in ensuring that its interests are met. Although the benefits of form agreements are manifest, it would be ill-advised to sign off on a dispute resolution provision without at least considering its material terms. There is no one-size-fits all solution, but the following are some of the key issues that warrant consideration.

Continue reading “What’s in a Clause: What to Consider when Adopting an Arbitration Clause in Construction Contracts”

March 10, 2023 by Paul-Raphael Shehadeh

UK Government announces intention to sign and ratify the Singapore Convention on Mediation

On 2 March 2023, the Ministry of Justice published the UK Government’s response (“Consultation Response”) to the consultation on the United Nations Convention on International Settlement Agreements Resulting from Mediation (New York, 2019) (the “Singapore Convention on Mediation”, or the “Convention”) concluding that “it is the right time for the UK to become a Party”.

In some measure, the Singapore Convention on Mediation seeks to replicate the success of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). Continue reading “UK Government announces intention to sign and ratify the Singapore Convention on Mediation”

March 7, 2023 by Duane Morris

A Review of Two Recent Cases: Arbitration Against Consumers in Digital Asset Disputes

There are many reasons (both commercial and legal) as to why a party or parties might elect to refer a dispute as between them to arbitration. In cross-border cases, this could be to ensure that a dispute is determined within a certain jurisdiction, language or otherwise pursuant to specific laws. In addition, and in the absence of a flagrant disregard of the relevant terms or the referral to Court for assistance, the arbitration will be confidential (which could be important).

To read the full text of this post by Duane Morris attorney Chris Recker, please visit the Duane Morris London Blog.

March 3, 2023 by Yuen Zi Gui

An Overview on Summary Procedure in International Arbitration

INTRODUCTION

The benefits and advantages of international arbitration as a dispute resolution process are well known: arbitration proceedings are confidential in nature; there is flexibility to decide on the rules and procedures governing the arbitration; parties have the ability to choose arbitrators with industry or specialist knowledge; and there can be significant savings in time and costs when compared to litigation.

Given that one of the key traits of international arbitration is the savings in time and costs, it is logical that arbitration tribunals and institutions find ways to reduce costs and the length of proceedings in natural ways – summary procedures are a great tool to achieve this goal, however, litigants and arbitral tribunals have been slow to take advantage of such procedures.

OVERVIEW OF SUMMARY PROCEDURES AND ITS INCREASING PREVALENCE IN MAJOR INSTITUTIONAL RULES

Summary procedures in international arbitration enable an arbitral tribunal to reach an early determination of the matter on the merits, without a full hearing of the evidence, or can be used to narrow the issues. Akin to summary judgment motions in common law court proceedings, summary procedures allow the arbitral tribunal to dispose of unmeritorious claims and defences at an earlier stage.

There is a difference between summary procedures from expedited proceedings as the latter provides for a more streamlined arbitration proceedings, usually by the prescription of shorter timelines, while the former is an application taken out in the ordinary arbitration proceedings.

For a period of time, there was doubt as to whether arbitral tribunals have the authority to summarily issue awards or dispose of a party’s claim and arbitral tribunals appeared to be hesitant to decide on such matters. To address this concern, an increasing number of major arbitral institutions amended their rules to expressly provide arbitral tribunals with such authority, including:

(a) In 2006, the International Centre for Settlement of Investment Disputes (ICSID) introduced Rule 41 which allows parties to file an objection that a claim is manifestly without legal merit.

(b) In 2016, the Singapore International Arbitration Centre (SIAC) introduced Rule 29 to the SIAC Rules which allows parties to apply for the early dismissal of a claim or a defence on the basis that the claim or defence is manifestly without legal merit or manifestly outside the jurisdiction of the Tribunal.

(c) In 2017, Article 39(1) was introduced the Stockholm Chamber of Commerce Arbitration Rules allowing parties to request the arbitral tribunal to decide on issues of jurisdiction, admissibility or merits.

(d) In 2017, the International Chamber of Commerce Court of Arbitration issued a revised practice note confirming that Article 22 of the ICC Rules allows applications for the expeditious determination of manifestly unmeritorious claims or defences.

(e) In 2018, Article 39 of the 2018 Hong Kong International Arbitration Centre (HKIAC) Administered Arbitration Rules introduced an early determination procedure empowering the arbitral tribunal to decide on points of law or fact on the basis that they are manifestly without merit, manifestly outside the arbitral tribunal’s jurisdiction or in instances where no award could be rendered in favour of a party even if the facts or law as alleged are assumed to be correct.

(f) In 2020, the London Court of International Arbitration introduced Article 22(viii) which provided for an early determination procedure which empowered arbitral tribunals to make an order or award in the event that a claim, defence or counterclaim is inadmissible or manifestly without merit.

Given the significant uptake in the number of major arbitration institutions which have adopted rules permitting summary procedures, arbitral rules permitting summary procedures would likely be the default option moving forward.

ENFORCEMENT OF SUMMARY AWARDS

As summary procedures have only taken root in institutional rules relatively recently, and with the historical hesitancy of arbitral tribunals relying on such powers, there is some level of uncertainty regarding the enforcement of summary awards given the limited quantity of such cases. This uncertainty creates a self-perpetuating cycle as it has been one of the reasons why arbitral tribunals have been reluctant to grant summary awards.

Nevertheless, so long as parties adhered to the agreed rules and parties were able to present their respective cases, there is no reason to believe that summary awards would not be enforced in the same manner as an arbitral award obtained after the conclusion of an arbitration. In particular, parties that see the benefit of summary procedure should consider adopting rules that explicitly authorise summary procedures.

This position is supported by the English decision of Travis Coal Restructured Holdings LLC v Essar Global Funding Ltd [2014] EWHC 2510 (Comm) where ICC arbitral tribunal had already granted an award against the defendant by way of a summary judgment procedure. In the enforcement proceedings brought by the plaintiff, the defendant alleged, amongst others, that the arbitral tribunal had exceeded its powers by adopting the summary judgment procedure and that the summary judgment process is a violation of due process. These arguments were rejected by the Commercial Court which noted that the arbitral tribunal had made every effort to conduct the arbitration in an expeditious and cost-effective manner, had given each party a fair opportunity to present its case and that the summary judgment procedure fell within the arbitration clause.

POTENTIAL REASONS FOR USING SUMMARY PROCEDURES

The most obvious benefit of summary procedures are the significant savings in time and costs. For instance, the average duration of cases in the SIAC is 13.8 months and even cases involving the SIAC Expedited Procedure would only an expect an award issued within 6 months of the constitution of the arbitral tribunal. By comparison, pursuant to the various summary procedures under the SIAC, ICSID and HKIAC Rules, the arbitral tribunals would be required to issue a decision or award within 60 days of the application or the constitution of the tribunal. The shortened length consequently means that there is a corresponding reduction in the parties’ cost and legal fees.

Interestingly, commentators have also voiced some concerns that the introduction of summary procedures can have an opposite effect by extending arbitration proceedings as a party may file an unmeritorious application for summary procedure in order to further delay matters and cause the other party to incur further unnecessary costs. In this regard, given the expedited timelines contained in many of the institutional rules on summary procedures, as well as the potential costs orders that may be made against such applications, there is limited cause for concern that summary procedures would be abused.

Summary procedures may also reduce the number of unmeritorious claims being brought forth in the first place as such claims would likely face an application for the case to the summarily dismissed almost immediately. This can give parties additional comfort that unmeritorious claims can be disposed of without incurring the cost of a full arbitration as they would otherwise have to wait until the conclusion of a full arbitration before receiving a cost award.

While summary procedures may not always be useful, it serves as a helpful tool that can and should be relied upon in the appropriate circumstances and advocates and arbitrators should not be afraid to rely on the same when the time arises.

March 1, 2023 by Charlyn Cruz

Reaping the Awards – Avoiding the Pitfalls of Enforcing Arbitral Awards

By Charlyn Cruz

As with litigation, a successful arbitral award is a hollow victory if the responding party refuses to honour it, and enforcement proceedings are necessary. Given the international nature of arbitration, a number of things could go wrong at this stage and put a downer on a successful award. There are matters that ought to be considered strategically at the outset at contract stage and beyond to be ready to deal with a reluctant party after the award. It is therefore crucial to take certain steps at various stages to ensure you cross the finish line and reap those awards. Continue reading “Reaping the Awards – Avoiding the Pitfalls of Enforcing Arbitral Awards”

February 23, 2023March 1, 2023 by Charlyn Cruz

The Glass Ceiling Looms Large – Gender Diversity in Arbitration

In a previous blog, we looked at diversity, specifically in relation to gender parity, in the context of adjudication.[1] Although we have come a long way in this arena, the issue of gender diversity still casts a long shadow. It should therefore be no surprise that the world of arbitration suffers much of the same problem. Continue reading “The Glass Ceiling Looms Large – Gender Diversity in Arbitration”

February 23, 2023 by Oliver Kent

Jurisdictional challenges and arbitration clauses – that old chestnut! – The UK perspective

By Oliver Kent

Picture this. You are a Director at a substantial widget manufacturing company. One of your key materials suppliers, with whom you’ve had a relationship for many years, is causing you grief. There have been a number of complaints from customers in recent times about a decline in widget quality, which appear to be the fault of your supplier. However, you’re behind on your payments to the supplier and they are starting to threaten supply, with disastrous effects for the company. A dispute is brewing.

You have been involved with litigation before and have experience of court proceedings. However, when you check with your legal team about next steps, you learn that your agreement with the supplier contains a clause which appears to indicate that all disputes must be referred to arbitration. The clause is perhaps not drafted with the certainty it should and could have been, and it is not clear the extent to which it is enforceable. The issue usually is framed on the basis of whether there is a valid and enforceable agreement to refer disputes to arbitration.

There are also commercial considerations that may be relevant. Is it preferable to litigate in the domestic courts or arbitrate? This may be a commercial call, just as much as a legal one. This blog shares some of the practical considerations around these issues.
Continue reading “Jurisdictional challenges and arbitration clauses – that old chestnut! – The UK perspective”

February 16, 2023February 16, 2023 by Duane Morris

Expedited Arbitrations: Can We Learn Anything from Adjudications?

By Luis Duhart

Introduction

Construction projects are a ripe ground for disputes. When these disputes arise, they often threaten to bring the project itself to a halt if not resolved expeditiously. However, many large-scale construction projects (particularly international ones) provide for their disputes to be referred to arbitration. Continue reading “Expedited Arbitrations: Can We Learn Anything from Adjudications?”

February 16, 2023February 17, 2023 by Duane Morris

Growing Acceptance and Benefits of International Arbitration in the Banking and Finance Industries

By Nicole Mirjanich Moore

The banking and finance industries have historically chosen litigation as their preferred dispute resolution, generally in the New York or London courts. Due to increased globalization and participation from emerging markets (e.g., Africa and Asia), international arbitration of banking and finance disputes is rising in popularity. Continue reading “Growing Acceptance and Benefits of International Arbitration in the Banking and Finance Industries”