Signature Litigation Paris International Arbitration News

International arbitration is an evolving and fast changing area of law.

From changes to institutional arbitration rules, to new rulings which impact the course of ongoing and forthcoming commercial arbitrations and investment arbitrations, it is crucial that companies, states and arbitration practitioners remain up to date on pertinent matters shaping the arbitration arena.

Paris partner and leading international arbitrator Flore Poloni sets below our firm’s insights on recent international arbitration developments.

FRANCAIS Arbitrating Disputes in France

December 2021

Can national arbitral institutions find a place under the sun in the international arbitration market?

It surely appears to be the ambition of the Paris Centre for Mediation and Arbitration (“CMAP”), a reputable Parisian institution for mediation and arbitration, highly-regarded in economic spheres, which has adopted a new set of arbitration rules applicable to proceedings initiated after 1 January 2022.

Going beyond even the most recent market trends, these new CMAP rules aim to effectively increase efficiency of the arbitral proceedings through:

  • the digitalisation of the entire proceedings, from the submission of the arbitration request to the issuance of the award.
  • the consolidation of complex multiparty and/or multi-contract proceedings into a single proceeding provided, however, that all the parties have consented to the arbitral tribunal’s jurisdiction.
  • the modifications of the Emergency Proceedings (“EP”) to limit the exchange of memoranda and exhibits to a single written submission for each party (for those of you not familiar with the CMAP rules the delay to issue an award from the tribunal’s constitution is of 3 months only when EP are applicable – the EP are applicable subject to the consent of all parties).
  • the interconnection of the new CMAP rules and the Emergency Decision Rules for arbitration agreements concluded after 1 January 2022 (in the absence of opt out provisions), thus boldly excluding any parallel requests for interim relief before state courts (provided however that such an exclusion is authorised under the applicable law).
  • the possibility for the arbitral tribunal to be constituted, if the funds provided by one of the parties are deemed sufficient to move forward despite the other party’s default.
  • the introduction of a faculty of the arbitral tribunal to take “all appropriate measures” to prevent the occurrence of conflict of interests during the course of the arbitral proceedings, specifically through the addition or replacement of the parties’ counsels.
  • the introduction of an obligation to disclose any recourse to third-party funding.

A more complete review of the above-mentioned revisions to CMAP Rules may be found here.

October 2021

Paris Court of Appeal, 28 September 2021, Libya v. Nurol (RG No. 19/19834)

The effect of corruption allegations on jurisdictional awards

The Paris Court of Appeal was recently asked to rule on the conformity of an investment to Libyan law as Libya challenged the jurisdiction of the arbitral tribunal based on the Libya-Turkey BIT. Following allegations by Libya that certain contracts were obtained through corruption, the Court stated that whether corruption could affect the arbitral tribunal’s jurisdiction was a matter relating to the substance of a case, to be decided by the arbitral tribunal, unless the “alleged [corruption] related to the jurisdiction of the arbitral tribunal itself”.

This follows the principle already set in its 25 May decision (Libya v. Cengiz, RG No. 18/27648): “the standing offer to arbitrate [the dispute] is autonomous and independent of the validity of the transaction giving rise to or supporting the investment. Therefore, the acceptance of [the offer to arbitrate] resulting from the notification of the request for arbitration is sufficient to justify the jurisdiction of the arbitral tribunal to rule on the legality of the investment and the claim for compensation.”

From a practical perspective, this means that as regards awards on jurisdiction, allegations of corruption will not be analysed by the Court unless they target the constitution of the tribunal or the arbitration agreement very specifically.

Interestingly, the Court criticised the fact that Libya had not raised the inapplicability of the Libya-Turkey BIT due to a notification failure at the end of the ratification process in the Cengiz case, implying that it could not raise it now.

A link to the decision in Libya v. Nurol can be found here.

September 2021

Paris Court of Appeal, 7 September 2021, Guinea v. Global Voice (RG No. 19/17531)

Reaffirming standards of annulment regarding the validity of an arbitration agreement, constitution of the tribunal and international public policy when it comes to corruption

Back to school with a refresher on numerous principles applied by the Paris Court of Appeal in its review of international arbitration awards.

In a case involving the Republic of Guinea, the Paris Court managed earlier this week to:

  • remind that the parties’ choice of governing law does not circumvent the French substantive rule according to which – subject to overriding mandatory rules and public policy – the validity of an arbitration agreement is interpreted in accordance with the parties’ intention. A standard discussed at length in our review of the KFG decision (Paris Court of Appeal, 23 June 2020, RG 17/22943). The arbitration agreement included in an international contract has a specific validity and efficacy which requires its extension to persons that may not be explicitly designated as “parties” in the contract itself but have been, according to the will of the parties and the circumstances of the case, involved in the performance of the contract and may benefit from it.
  • insist that, concerning allegations of corruption, the scope of the Court’s analysis is limited to the effects of the award and whether its enforcement can constitute a manifest, actual and concrete breach of French international public policy. The Court therefore refused to rule on allegations of corruption relating to a contractual amendment that had not been decided upon by the arbitral tribunal. Other allegations of corruption relating directly to the contract analysed by the arbitral tribunal were considered unconvincing in the case at hand.
  • find, regarding the constitution of an arbitral tribunal, that where the parties provide for arbitration under the rules of an institution, those rules supersede domestic legislation with diverging provisions.

A link to the decision can be found here.

August 2021

Publication of the IBA Toolkit on insolvency and arbitration

Did you know that numerous ICC proceedings are impacted by an insolvency issue? (the exact % is actually debated).

No wonder in such a context that the IBA Arbitration and Insolvency Toolkit was rewarded by the GAR Award for Innovation. This toolkit provides practitioners with the clarity and insight needed in what can be a daring topic.

A link to the toolkit may be found here.

July 2021

Update to the WIPO Arbitration and Mediation Center rules

Another world class arbitration institution goes virtual, while promoting transparency and reducing arbitration fees.

The latest WIPO Arbitration and Mediation Center rules, effective from 1 July 2021, include:

  • electronic filing of new cases as a default option;
  • remote meetings and hearings expressly encouraged;
  • disclosure requirements concerning the identity of third-party funders; and
  • a 25% reduction on the WIPO Center’s fees that applies if one or both parties to a dispute is a small or medium-sized enterprise.

The new rules can be found here.

July 2021

Why choose arbitration for new tech related disputes?

Although still underused in this field, there are at least four reasons to favour arbitration in new technology disputes: expertise, efficiency, flexibility, ability to deal with international cases and confidentiality.

  • Expertise. One of the major advantages of arbitration is that it is based on party autonomy. The parties can therefore choose their judge (an arbitrator) according to the specificities of the case and ensure that the tribunal deciding the case has in-depth knowledge of the issues at stake.
  • Efficiency. Contrary to French litigation, arbitration allows expert evidence to be provided in the course of the proceedings without dedicating a lengthy phase to the process (the “expertise”) which saves considerable time.
  • Flexibility. Arbitration has shown great adaptability throughout the pandemic by embracing technology to go digital and virtual when desired.
  • Internationality. The parties’ ability to decide the language of the proceedings is a huge advantage for handling disputes with parties from around the world. Exhibits can often remain in their language of origin with the appropriate choice of counsel and arbitrator. This saves considerable translation costs.
  • Confidentiality – Unlike court proceedings, arbitration can be entirely confidential which prevents instrumentalisation by the media and know-how being potentially disseminated.

We believe these arguments should encourage parties involved in new technologies to introduce arbitration agreements in their contracts to resolve potential disputes. Confidentiality offered by arbitration proceedings is also a very interesting option for tech disputes.

Our Associate Thibaud Roujou de Boubée was recently interviewed on the topic, here.

May 2021

Paris Court of Appeal, 25 May 2021 – Libya v. Cengiz (RG No. 18/27648) and Gabon v. Webcor (RG No. 18/18708)

More on annulment of arbitral awards on corruption grounds

On 25 May 2021, the Paris Court of Appeal decided two different cases in which allegations of corruption were invoked to set aside international arbitral awards providing yet more examples of decisions rendered on such grounds.

The decision concerning the Republic of Gabon annulled the award on the ground that a luxurious honeymoon trip as wedding gift was a red flag of corruption. The Court describes the trip in detail: business class tickets to Cape Town, Johannesburg, Durban and a Suite at the Twelve Apostles Hotel including a “heavenly honeymoon package“… evidenced by a letter confirming to a Gabonese official the fulfilment of all his requests concerning his itinerary.

In the decision concerning the Republic of Libya, an atmosphere of corruption, links with the former head of State and distantly related corruption indictments were not considered sufficient evidence of corruption. The Court notes that allegations of corruption were not specific enough as the corrupt individuals were not identified nor was the allegedly corrupt State entity.

These cases show that corruption is not a password to annulment in France.

Libya v Cengiz (RG n° 18/27648)

Gabon v Webcor (RG No. 18/18708)

April 2021

Paris Court of Appeal, 13 April 2021 – Guinea v. AD Trade RG No. 18/09809

Can breach of a foreign overriding mandatory rule be a ground for annulment of an award in France?

On 13 April, the Paris Court of Appeal reminded that annulment of an award on such grounds is only possible where foreign overriding mandatory rules protect “values and principles” also protected by French public policy.

In the case at hand, the underlying arbitration had handled overriding Guinean procurement legislation requiring a Minister’s approval for all procurement contracts. To decide if a breach of this legislation also violated French public policy, the Paris Court of Appeal looked at:

  • whether French procurement law had similar provisions; and
  • whether such a formality resulted from an international consensus as expressed by the UNCITRAL model law on Public Procurement.

As neither sources supported such a specific approval, the Paris Court of Appeals denied annulment on such grounds.

The Court also noted that the Guinean Republic had itself breached the legislation and could not invoke such a breach to avoid its obligations under the contract.

It also looked at whether the underlying contract breached sale restrictions on weapons.

A link to the ruling can be found here.

March 2021

Privinvest’s prevailing sheds light on a specificity of English arbitration

The excellent outcome obtained by Signature Litigation on 11 March 2021 for its client Privinvest in a matter against Mozambique provides us with an opportunity to remind you of a specificity of arbitration under English law (when compared to French law).

In France, unless an arbitration agreement is manifestly void or inapplicable, a judge lacks jurisdiction to hear a case where there is an arbitration agreement (the so called negative effect of “competence-competence”). It is only at the annulment or enforcement stage that judges will look at the validity and scope of an arbitration agreement.

In England, the judge can rule on the validity and scope of an arbitration agreement before an award is rendered and throughout arbitration proceedings.

In the Privinvest matter, English judges unanimously found – as arbitration proceedings were ongoing – that the requests made by Mozambique fell under the arbitration agreement’s scope and therefore could not be decided before a judge.

For more information, please click here.

February 2021

Update to IBA Rules on the taking of evidence

The International Bar Association (IBA) Rules are a soft law instrument which provides a framework for the exchange and production of documents in international arbitration (conditions for production orders: confidentiality, relevance, custody, importance for the dispute’s outcome), witness and expert examination (admissibility of an employee’s testimony, consequences of renouncing cross examination) etc.

In this slide show, Ryan Cable highlights the most important modifications of this recent update:

  • the possibility to organise virtual hearings;
  • the tribunal being invited to discuss cybersecurity and data protection with the parties;
  • simplification of document production by not imposing the production of identical documents;
  • the possibility for parties to file modified witness statements and expert reports, to handle facts which may not have been taken into consideration;
  • the possibility for the tribunal to exclude all documents obtained illegally.

January 2021

Day 21 of Signature’s Slide Show series

2020 has been the year of diversity and ecology

Lucy Greenwood’s Green Pledge was granted the Global Arbitration Review award for the best development.

The ICCA’s 2020 Task Force statistics on diversity show an increase in the proportion of women appointed as arbitrators from 12.2% in 2015 to 21.3% in 2019 (almost twice more!). We also note the London Court of International Arbitration (LCIA) was nominated as the institution appointing the most female arbitrators.

But the need for diversity obviously goes beyond gender. Other new initiatives have emerged. The R.E.A.L. – Racial Equality for Arbitration Lawyers is certainly an initiative to follow!

For more information, please click here.

January 2021

Day 20 of Signature’s Slide Show series

How has the pandemic impacted the arbitration market?

The London Court of International Arbitration (LCIA) announced a record number of cases (+10% compared to 2019).

The International Chamber of Commerce (ICC) recorded its second best year and has known a +9% increase compared to 2019.

Both institutions have modified their rules in the middle of the crisis, which is evidence of their agility.

Many developments have also taken place, such as:

  • the opening of an ICC office in Abu Dhabi;
  • the authorisation of foreign arbitral institutions to provide services in Beijing.

We have been impressed by the resilience of arbitration compared to court litigation, especially in France.

For more information, please click here.

January 2021

Day 19 of Signature’s Slide Show series

The activity of the “new” International Commercial Chamber of the Paris Court of Appeals (ICCP-CA) in 2020

Amongst the 13 decisions rendered by the ICCP-CA in 2020, one clarifies the extent of arbitrators’ duty of disclosure relating to information which can be accessed by the parties, in essence:

  • the fact that information is easily accessible may only have an influence on the content of the arbitrator’s duty of disclosure – the duty therefore exists even for such information; and
  • this tolerance is applicable to the duty of disclosure before the arbitration but not throughout the arbitration, Dommo, 25 February 2020.

For more information, please click here.

January 2021

Day 18 of Signature’s Slide Show series

How do US sanctions against Iran fit in French international public policy?

The Paris Court of Appeal’s decision of 3 June 2020 clarifies how United States sanctions fit in French international public policy. The Court explained that foreign overriding mandatory rules were a part of international public policy only if “they carry values and principles which may not be breached according to French public policy, even in an international context”.

Please note that this does not mean US sanctions will never apply in disputes linked to France. US sanctions may apply with respect to the lex contractus or the subject matter of the dispute. However, deciding the scrutiny they require or determining whether they should apply is not a question for the annulment judge but for the arbitral tribunal.

For more information, please click here.

January 2021

Day 17 of Signature’s Slide Show series

How to enforce an insufficiently clear arbitral award in England

On 22 April 2020, the High Court firmly indicated that an insufficiently clear award could not be enforced by withdrawing an enforcement order.

The situation was the following: the succumbing party had to pay a principal amount and interest, excepted if the principal was paid on time. The debtor was late to pay but argued that the creditor had offered the possibility to do so considering compliance constraints induced by the transfer of the amounts.

This ambiguity led the High court to decide in its A v B [2020] EWHC 952 (Comm) decision that the enforcement order had to be withdrawn as it was necessary to issue a new decision on the payment of interest obligation.

For more information, please click here.

January 2021

Day 16 of Signature’s Slide Show series

Can discovery be used in support of arbitration proceedings?

This powerful tool of US civil procedure allowing access to the opposing party’s documents (including – and most importantly – adverse documents) can be used before foreign and international tribunals (pursuant to 28 USC 1782).

Whether it can be used in arbitration proceedings depends on US States.

2020 shed light on a Circuit split. Requests filed on such grounds to obtain orders in support of an arbitration seated outside of the US have been:

Granted in:

  • the 4th Circuit (Maryland, Virginia, West Virginia, North Carolina and South Carolina); and
  • the 6th Circuit (in particular Kentucky, Michigan, Ohio and Tennessee).

Denied in:

  • the 2nd Circuit (Connecticut, New York and Vermont);
  • the 5th Circuit (Louisiana, Mississippi and Texas); and
  • the 7th Circuit (Illinois, Indiana and Wisconsin).

For more information, please click here.

January 2021

Day 15 of Signature’s Slide Show series

The Yukos awards revived

The difficult enforcement of the 50 billion dollar Yukos awards has also known developments in 2020: on 18 February, the Hague Court of Appeals reversed the 2016 annulment decision rendered on grounds that the arbitral tribunal lacked jurisdiction. An appeal was filed by the Russian Federation.

The enforcement proceedings have resumed but were suspended in the United States pending a final outcome in the Dutch proceedings.

At the heart of the debate is the application of the Energy Charter Treaty (ECT) and in particular its provisions allowing recourse to arbitration – which had not been ratified by the Russian Federation despite Article 45 (1) providing that signatories must apply the ECT temporarily, insofar as it is not contrary to their constitution, laws or regulations.

For more information, please click here

January 2021

Day 14 of Signature’s Slide Show series

Where to enforce an award in 2021?

Since their accession to the 1958 New York Convention, you may now go to Ethiopia, Palau, Seychelles, Sierra Leone and Tonga to seek enforcement and recognition of arbitral awards rendered by a tribunal seated in a signatory State.

The 1958 New York Convention is a treaty allowing a foreign arbitral award to be recognised in a signatory State.

For more information, please click here.

January 2021

Day 13 of Signature’s Slide Show series

Must third party funding be disclosed?

The answer is yes for arbitration proceedings under the 2021 ICC rules.

The purpose of this amendment is to avoid potential conflicts of interest being unnoticed.

Preserving the integrity of the arbitral award is obviously an essential preoccupation of third party funders but it remains to be seen whether they will approve of this amendment.

For more information, please click here.

January 2021

Day 12 of Signature’s Slide Show series

How to join a third party in arbitration proceedings?

The 2021 ICC Rules facilitate joinder of third parties during proceedings (Article 7, paragraph 5): parties are allowed to submit requests for the joinder of third parties once the arbitral tribunal has been appointed or confirmed. Such requests are decided by the arbitral tribunal, provided the joined party accepts the constitution of the arbitral tribunal and the terms of reference.

The decision to accept a request for joinder will however not imply that the arbitral tribunal finds that it has jurisdiction over the joined party (Article 7(5)).

In 2019, 31% of cases submitted to the ICC were multiparty proceedings.

For more information, please click here.

January 2021

Day 11 of Signature’s Slide Show series

What should a cyber protocol include?

A cyber protocol is an agreement entered into by the parties notably before a virtual hearing. It should include in particular:

  • a reliable internet connection tested in advance;
  • specific measures to test witness credibility;
  • appropriate document management methods;
  • how technical difficulties will be handled during hearing; and
  • specific measures regarding confidentiality.

For more information, please click here.

January 2021

Day 10 of Signature’s Slide Show series

Arbitration will not be used as a means to endorse a corruption agreement

The red flags – or circumstantial evidence – test is now clearly established as the Paris Court of Appeal’s preferred means of looking at whether enforcement of an award will give effect to a corruption agreement in the French legal order. Latest cases from the Paris Court of Appeal in 2020, such as the Libya v. Sorelec case confirm its application in annulment proceedings where corruption allegations have not been invoked during the arbitration proceedings.

This case should push arbitral tribunal to be extremely cautious as we wait for a decision from the Supreme Court.

For more information, please click here.

January 2021

Day 9 of Signature’s Slide Show series

Did you know it is possible to force someone located in the UK to be a witness in arbitration proceedings seated abroad?

In practice, this means that in the context of arbitration proceedings seated in Paris, one may seek the support of English courts if a potential witness located in England refuses to cooperate. Individuals refusing to comply with court orders will be held in “contempt of court”.

For more information, please click here.

January 2021

Day 8 of Signature’s Slide Show series

What are the amendments to the Swiss international arbitration law applicable from 1 January 2021?

Notably:

  • recognition of modern means of communication to prove the existence of an arbitration agreement;
  • enhanced assistance form the Swiss State Courts to appoint arbitrators;
  • revision as an additional remedy available to parties (in line with international developments seeking to fight against fraud); and
  • the possibility for parties to submit a request for annulment in English.

These amendments are welcome as they enhance the legislation’s readability. They prove Switzerland is one of the major hubs for arbitration.

For more information, please click here.

January 2021

Day 7 of Signature’s Slide Show series

Is there an arbitrator’s duty of disclosure in English law?

The question asked to the English Supreme Court in the Halliburton v. Chubb case was whether an arbitrator should disclose – in the course of arbitration proceedings relating to the DeepWater Horizon black tide where Chubb was a party – that he had been appointed by Chubb in subsequent arbitration proceedings relating to the same circumstances.

In its 27 November 2020 decision, although the Supreme Court did not recuse the arbitrator, it clearly set out the arbitrator’s duty of disclosure under English law. However, in this instance, the Court found that lack of disclosure did not necessarily imply bias, other circumstances had to be met for lack of impartiality to be found.

For more information, please click here.

January 2021

Day 6 of Signature’s Slide Show series

Can a virtual hearing be imposed due to the pandemic or is it a breach of a fundamental right or equality between the parties?

The Austrian Supreme Court was the first to rule in favour of virtual hearings in this context.

When it comes to time difference between the parties’ during the hearing, the Court found that starting a hearing at 6am (for the Californian party) was less burdensome than traveling from Los Angeles to Vienna.

For more information, please click here.

January 2021

Day 5 of Signature’s Slide Show series

In its Enka decision of 9 October 2020, the UK Supreme Court clarified the law applicable to the arbitration agreement

In a nutshell, in England, the conflicts of law rule is a closest connection test. The law with the closest connexion to the arbitration agreement will apply. In France, a substantive rule is applied, as reminded by the KFG decision of 23 June 2020.

For more information, please click here.

January 2021

Day 4 of Signature’s Slide Show series

What are the latest developments on intra-EU Bilateral Investment Treaties (BITs)?

In its Achmea decision of 2018, the ECJ found that arbitration proceedings based on intra-EU bilateral investment treaties were incompatible with EU law.

Neil Newing highlights here the fact that claims based on the Energy Charter treaty (ECT) remain to be decided as the issue of its compatibility with EU law has been referred to the ECJ.

January 2021

Day 3 of Signature’s Slide Show series

The ICC sets a new threshold for expedited arbitration proceedings

Amongst the many modifications of the ICC Rules, the new threshold for application of the expedited proceedings shows the efficiency of such proceedings. Expedited proceedings show that arbitration can be quick and not necessarily more costly than court proceedings, depending on the complexity of the dispute (or the unreasonableness of some or by habit instead of seeking tailored solutions).

For more information, please click here.

January 2021

Day 2 of Signature’s Slide Show series

The London Court of International Arbitration (LCIA) Rules have been modified. The institutions has decided to favour digitalisation

The approach is different from that chosen by the ICC essentially since instructions to the arbitrators and parties are directly incorporated in the Rules.

The approach of both institutions should be approved since it allows to continue handling cases despite lockdowns and sanitary restrictions (or at least despite most of such restrictions, as do virtual hearings). A clear advantage compared to court litigation.

For more information, please click here.

January 2021

Day 1 of Signature’s Slide Show series

Virtual and hybrid hearings surging

2020 has seen virtual hearings surge (10 times more).

The tools were already in place but the pandemic has forced us to use them. It is however difficult to measure exactly whether this practice will remain in the long run. We however believe that there is no going back to the old ways.

For more information, please click here.

December 2020

Paris Court of Appeals (on 23 June 2020, RG No. 17/22943) and the UK Supreme Court (on 9 October 2020, [2020] UKSC 38)

Cross channel perspectives on the law applicable to the arbitration agreement

The law applicable to the arbitration agreement can be revealing of contrasting legal cultures: French Courts apply a substantive rule, while UK Courts use the “closest connection test”. This was made clear almost simultaneously by the Paris Court of Appeals (on 23 June 2020, RG No. 17/22943) and the UK Supreme Court (on 9 October 2020, [2020] UKSC 38).

November 2020

Recent updates to the LCIA and ICC rules are revealing of users’ concerns

Our cross-channel arbitration team at Signature Litigation argues in the Global Arbitration Review that the recent modifications of the ICC (applicable from 1 January 2021) and LCIA rules (applicable from 1 October 2020) are telling as to arbitration users’ current concerns:

  • efficiency and transparency remain a primary concern;
  • effective management of complex cases is made easier; and
  • the digitalisation of arbitration necessitated by the coronavirus pandemic is likely to increase in the future because of the efficiencies it brings.

October 2020

Key takeaways of the new ICC Rules

A new version of the ICC Rules will be coming into force on 1 January 2021 – the most important modifications include:

  • Additional provisions on the consolidation of cases and the joining of additional parties during the arbitration;
  • Third party funding now to be disclosed;
  • Possibility to exclude new party representatives in the course of the proceedings to prevent potential conflicts of interest;
  • Modification of the expedited proceeding opt-out threshold (now at 3MUSD); and
  • Authority of the tribunal on whether to hold a hearing by videoconference or in person.