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.
Flore Poloni and Kimberley Bazelais discuss the Kraydon Ltd v ICC case in LexisNexis
A Cour de cassation decision of 22 March 2023 sheds light on the firm stance taken by French courts with respect to the scope of arbitral institutions’ civil liability. In Kraydon v. ICC, the losing party to concluded arbitration proceedings took a rather uncommon approach in initiating a lawsuit against the arbitration center (the ICC) for certain procedural decisions made by the arbitral tribunal, on the basis that the ICC had appointed the tribunal.
Declining to quash the judgment of the Paris Court of appeal and thus hold the ICC liable, the French highest court made a clear distinction between the jurisdictional function of an arbitral tribunal and the organisational function of an arbitral institution. In affirming that there is no equivalence between liability-incurring acts by arbitrators and liability-incurring acts by arbitral institutions, it is likely the court sought to quell any volition from parties to challenge unfavorable arbitration results and seek compensation through the prism of a lawsuit against the arbitration centre, rather than through annulment proceedings.
You can read the analysis by Partner Flore Poloni and Associate Kimberley Bazelais published by Lexis Nexis here.
Signature Litigation was once again a sponsor of the 2023 edition of Paris Arbitration Week.
Two events were held in Signature’s Paris office, as well as in an online format.
On 28 March 2023, Partners Flore Poloni, Tsegaye Laurendeau and Neil Newing, from Signature’s Paris and London offices, hosted a panel discussion entitled “Arbitration today, arbitration tomorrow: A look at the proposed, desired and necessary changes in UK legislation with cross-Channel perspectives”.
Aiming to look at the differences and similarities in the approaches adopted in the primary arbitration legislation in France and in England and Wales, the session focused on the proposed changes in the upcoming UK arbitration law reform.
The panellists highlighted welcome changes, such as the introduction of express powers for summary dismissal or the codification of arbitrators’ duty to disclose, controversial proposals such as the removal of the right to a re-hearing for a Section 67 jurisdiction challenge, and potential missed opportunities such as the absence of a clear position on confidentiality or third-party funding.
Flore, Tsegaye and Neil pointed out and discussed the differences in approach from one side of the Channel to the other and opened a debate on how better to reflect best practices in legislation.
On 29 March, a roundtable debate entitled “Legislating for international arbitration in the Caribbean: the journey so far and the road ahead” was hosted by Partner Flore Poloni and moderated by Kimberley Bazelais of the Signature Paris Office.
The discussion featured guest speakers Bernhard Maier, Counsel at the Signature London Office, Shan Greer, CEO of the BVI International Arbitration Centre, Andrés Villegas, Partner at Sygna Partners and former Senior Counsel to the Colombian Ministry of Foreign Affairs, Marie-Camille Pitton, Secretary-General of the OHADAC Regional Arbitration Centre and Theominique Nottage, Arbitration Consultant for the Government of The Bahamas.
The panelists gave their perspective and shared their practical experience with the various Caribbean arbitration frameworks, and discussed the challenges and opportunities of past and prospective legislative reforms. Other topics addressed included avenues to explore and prioritise in terms of capacity-building in the region, whether the arbitration market could already be too crowded, and how realistically to make space for ESG considerations.
The Kabab-Ji ruling: cementing a cross-Channel clash
French arbitration law affirms its rules on the governing law of arbitration agreements by putting the Kabab-Ji / KFG saga to a close in a decision of 28 September 2022 (Cour de cassation). In this cross-channel saga, the arbitral tribunal had asserted jurisdiction toward KFG, a non-signatory of the arbitration agreement, on the grounds that this company had been involved in the performance of the litigious contract.
Both the English and French courts were seized of the issue of the applicable law to the arbitration agreement at the enforcement or annulment stage. The issue was of importance as French and English arbitration laws do not handle the question of non-signatories in the same fashion.
The Paris Court of Appeal held that the arbitration agreement was governed by the substantive rules (“règles matérielles”) of the seat of arbitration, in this case Paris.
In the UK, the Supreme Court took the opposite view in 2021 and ruled that the law governing the arbitration agreement was found to be the law applicable to the underlying contract, i.e., English law ( UKSC 48), with the Court stating that “it seems difficult to resist the conclusion that a general choice of law clause in a written contract containing an arbitration clause will normally be a sufficient “indication” of the law to which the parties subjected the arbitration agreement”.
Unsurprisingly, the Cour de cassation held fast to the French position, confirming that the parties’ choice of English law as the governing law of the underlying contract is not sufficient to establish the parties’ will to have English law govern the arbitration agreement as well. Absent such clear and unequivocal expression of will, the substantive rules of the seat of arbitration, namely the French substantive rules apply.
Partner Flore Poloni commented in Global Arbitration Review on the clash between the two jurisdictions.
A link to the GAR article can be found here.
Solutions for a European investor in litigation against an EU State
As the European Union is terminating its bilateral investment treaties and recent case law seems to definitively spell the end of investment arbitration based on intra-EU treaties, what are the concrete legal protections and remedies available to investors in European Union law?The European Union’s stance towards intra-EU investment arbitration in the wake of the ECJ Achmea decision (C-284/16), has brought about the end of bilateral investment treaties. European investors are thus now required to decipher EU legislation in order to invoke standards of protection formerly contained in the soon-to-be defunct treaties.From a procedural point of view, and in light of the multiple recent decisions rejecting the jurisdiction of arbitral tribunals based on intra-EU investment treaties, the end of intra-EU investment arbitration is causing investors to find alternative remedies. We have identified three available legal actions – Francovich claims, preliminary rulings, and infringement proceedings –, but we anticipate that the task will be uphill for investors seeking compensation.
You can read the analysis by Partner Flore Poloni and Associate Kimberley Bazelais published by Le Monde du Droit here.
Sanctions against Russia and the impact on arbitration procedures
After the Covid-19 pandemic, arbitration’s resilience is once again put to the test in the current geopolitical context, notably the current crisis in Ukraine.The economic sanctions imposed notably by the European Union pose a number of challenges to the conduct of arbitration proceedings.Arbitral institutions have had to heighten their efforts of regularly investigating, throughout the proceedings, whether any of the parties to an arbitration was targeted by a sanctions programme, in particular in regards to the issue of the payment of registration fees and advances on costs. Nonetheless, under the relevant EU Regulation, an explicit carve-out is provided for the payment of legal services, and the EU confirmed on 21 July 2022 that transactions with Russian state-owned entities are exempt from its sanctions regime where they are strictly necessary to ensure access to arbitral proceedings.
A Russian legislation granting exclusive jurisdiction to Russian courts as regards sanctioned persons could generate a great deal of enforcement issues for arbitral awards condemning sanctioned parties. Furthermore, beyond the issue of jurisdiction, the manner in which arbitral tribunals should deal with sanctions regimes remains very uncertain. We anticipate that the multiplication and multilateralization of sanctions could lead jurisdictions to incorporate international sanctions as part of their public policy.
You can read the analysis by Partner Flore Poloni and Associate Kimberley Bazelais published by Option Droit & Affaires here.
Trends from the Paris Court of Appeal on arbitrators’ duty of disclosure: lessons from the PRIDE case and the Billionaire case
Two decisions dated 17 May 2022 from the Paris Court of Appeal (the “PRIDE” and the “Billionaire” cases) gave the arbitration community an illustration of the evolving position of the Court concerning challenges of awards based on an arbitrator’s alleged lack of independence or impartiality, and the failure to disclose the circumstances giving rise to the party’s doubts in this respect.The Court has established a multi-tiered process of review: its analysis will usually first focus on the notoriety of the alleged circumstances by the party seeking annulment, which is examined as an admissibility requirement of the claim. Second, if the facts are not notorious, the Court will consider whether the arbitrator breached his/her duty of disclosure, and finally, whether the circumstances were likely to create a reasonable doubt as to the arbitrator’s independence or impartiality.The PRIDE and Billionaire decisions give the parties more guidance to navigate these requirements, but the challenge against the award was dismissed in both cases. Indeed, annulments on these grounds remain rare.
A link to the article published on LexisNexis can be found here.
Paris Tech Arbitration – Tech Disputes Café
Last week, Paris Tech Arbitration, a think tank co-founded by Partner Flore Poloni, organised its first Tech Disputes Café, the new meeting place for dialogue between the arbitration community and tech experts.Our first guest was Jonathan Williams from Calame – The Legal Ops Company, which supports companies and legal departments in their digital transformation. Participants discussed the interactivity between tech and arbitration – the links to be forged and the preconceived ideas to be deconstructed.A range of topics were addressed, to which Jonathan was able to bring his perspective, based on his experience and interactions with industry experts:
- What are the aspects of arbitration that could appeal to tech players and overcome their reluctance towards this procedure? Jonathan and the panelists noted that “tech” actually covers an almost infinite multitude of types of structures. Highly innovative companies (metaverse, crypto and web3) are quickly evolving, which testifies to the adequacy of arbitration and its speed in handling disputes compared to litigation. Tech companies will also see arbitration, with its ability to adapt court expertise, as a more compatible solution to high-tech disputes.
- How can an arbitration practitioner specialise in a field that is constantly evolving and where skill obsolescence is almost instantaneous? Rather than being in a race to constantly update, for example to constantly update a list of arbitrators who would be most up to date with the latest technological developments in each specific sector, Jonathan spoke of the importance for arbitration professionals wishing to deal with these types of disputes to cultivate a sectoral culture – to understand the management of these structures and to be able to never lose sight of the market and trade aspect of the field.
- Will we need to move away from the traditional arbitration structure to consider a procedure more in tune with the field, along the lines of decentralised dispute resolution? Jonathan and the panelists acknowledged that the concept of earning “tokens” to administer justice is an interesting and potentially useful model in an increasingly decentralised economy. They spoke of a future where the civil community contributes to the administration of justice, which is ultimately where arbitration originated.
To stay informed and participate in the next #TechDisputesCafé, please join us on LinkedIn: Paris Tech Arbitration. Please note that all of the events are held in French.
The key takeaways of the 2021 LCIA report: The impact of the pandemic and the Russian-Ukraine conflict
As the arbitration community was recovering from the COVID-19 pandemic, new challenges from the Russian-Ukraine conflict have emerged. Arbitration practitioners must now navigate a global environment that is marked by the conflict’s ongoing consequences, including sanctions against Russia and Belarus.In Law.com International, Ryan Cable and Kimberley Bazelais noted that it is difficult to predict the long-term impact at present, however lasting effects can be anticipated on the number and types of disputes that will be generated by these geopolitical developments.Statistics published in the LCIA’s annual report provide insight into themes and trends emerging in international arbitration. On a global scale, the LCIA continues to be one of the preferred institutions of arbitration, despite the decrease in cases involving Western European parties. However, there is an increasing popularity with American parties, including Caribbean parties.
Ryan and Kimberley highlight that the abolishment of the DIFC-LCIA Arbitration Centre in September 2021, and the subsequent agreement in March 2022 noting that the LCIA in London will administer all existing DIFC-LCIA cases, it is likely that there is be an increase in cases connected to the Middle East.
Ryan and Kimberley are optimistic that there will be an increase in the number of female appointments by parties. They also hope that there will be an increase in the use of mechanisms to expedite proceedings, in light of the impact of the conflict in Ukraine.
French Court of Appeals rules in new annulment proceedings on grounds of violation of international public policy based on corruption allegations
What do a Louis Vuitton bag full of cash, the payment of repeated stays and business class plane tickets to Italy for the family of members of the Government, and a multimillion allowance dedicated to “the reception and support of officials” have in common?
They are all key facts of the Santullo case, where red flags of corruption recently provided the Paris Court of Appeals with the opportunity to confirm the new annulment standard for breach of international public policy, adopted two weeks ago by the Cour de Cassation.Moving from the former standard used by French courts – requiring a showing of “manifest, concrete and effective breach of international public policy”, the Cour de cassation used the arguably broader standard of “characterised breach of international public policy” in its Belokon case of 23 March 2022 (see our comment on Belokon below).In line with this new standard, the 5 April 2022 decision of the Court of Appeals found that “recognition and enforcement of the award in France was likely to enable the Santullo Group to benefit from the product of fraudulent activities, which constitutes a characterised breach of international public policy”.
In its red flags analysis, the Paris Court was ill at ease to take into account the confessions of the members of government indicted for corruption which might have been provided through torture.
It appears that the Paris Court gave specific care to respect the arbitral tribunal’s own findings and based part of its factual analysis on pending criminal proceedings in Switzerland (specifically an order) which the arbitral tribunal could not have been aware of at the time of its deliberations.
The full text of the decision can be found here.
French Cour de cassation renders decision in Belokon case
There is now confirmation of the “maximalist review” to prevent recognition and enforcement of awards that contravene international public policy.The much-awaited French Cour de cassation decision in the Belokon case was finally rendered on Wednesday 23 March 2022.It provides confirmation that allegations of an award’s breach of international public policy can give rise to a so-called “maximalist review” by the annulment judge in order to prevent the recognition and enforcement of an award which would allow a party to profit from internationally recognised criminal offenses.
The Cour de cassation noted that the Paris Court of Appeals had recalled that its role was not to check conformity to Kyrgyz law or to fair and equitable treatment under the applicable BIT, but to verify if the recognition and enforcement of the award would hinder the fight against money laundering as imposed by international standards by allowing a party to profit from activities of such nature.
It therefore found that the Court of Appeals “had rightfully found that such a review, conducted for the safeguard of international public policy, was neither limited to the evidence submitted before the arbitral tribunal, nor by its findings, appreciations and qualifications, its only duty in that respect being to ensure the submission of evidence before the Court respects the adversarial principle and equality of arms”.
The ruling may be accessed (in French) here.
In May 2022, the Paris arbitration team was invited by Global Arbitration Review to publish an article examining the Belokon decision. A link to the article can be found here.
2021 developments on the issue of the governing law of the arbitration agreement in the UK
Continuing our review of key arbitration developments from 2021 (see Bernhard Maier’s briefing here on mining treaty disputes), Neil Newing looks at the UK Supreme Court (“UKSC”) decision of Kabab-Ji SAL v Kout Food Group here – the second case within the space of a year in which the Supreme Court looked at the issue of the governing law of the arbitration agreement. For busy readers, the key takeaways from the decision are the following:
- The UKSC unanimously held that although there was no express choice of governing law for the arbitration agreement, the parties had included an express choice of English law to govern the underlying franchise development agreement and that this should extend to apply to the arbitration agreement.
- The UKSC’s decision is another example after Enka of how choice-of-law rules under Article V(1)(a) of the New York Convention may conflict in practice. Approaches may not be reflected uniformly across jurisdictions, as the Paris Court of Appeal’s decision in the same matter indicates. Having observed the finale of Kabab-Ji’s English proceedings, we now await the French Court of Cassation’s decision to see how Kabab-Ji’s v KFG’s French “story” will conclude
- This case, and particularly the difference in treatment between the different jurisdictions, highlights once again the importance of including an express governing law provision for an arbitration clause. This is especially true where the parties intend for this to be different to the governing law of the underlying contract.
Key developments in mining disputes
Our team at Signature has started the year with a brainstorming session on key developments from 2021 that we wish to share with you to start the conversation on #InternationalArbitration, on LinkedIn.Most probably you have – like us – witnessed a surge in mining treaties disputes. As Bernhard Maier explains here, we saw a series of high-profile and high-value claims against numerous Sub-Saharan African states over the alleged expropriation of mining licenses, as well as a claim against France by a Russian investor concerning mining rights in French Guiana. As concerns new trends, we believe electric vehicle production will increase demand for supplies of strategic minerals such as lithium, cobalt, nickel etc. Given the increasingly complex business and human rights regulations all around the world, this will certainly foster disputes in relation to the transparency, traceability and due diligence in supply chains.
The general increase in Foreign Direct Investments
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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  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.
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:
- the 4th Circuit (Maryland, Virginia, West Virginia, North Carolina and South Carolina); and
- the 6th Circuit (in particular Kentucky, Michigan, Ohio and Tennessee).
- 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.
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.
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.
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.
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.
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.
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.
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
Day 8 of Signature’s Slide Show series
What are the amendments to the Swiss international arbitration law applicable from 1 January 2021?
- 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.
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.
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.