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Arbitration Tech Toolbox: Training Arbitration Practitioners to Resist Cyber Attacks

Kluwer Arbitration Blog - Sun, 2022-10-02 01:24

“Dear Arbitrator,

This is your hacker.

You do not know me, but I already know you quite well. I am silently waiting for my opportunity to simply click and collapse your notebook.

I have nothing against you; it is simply that you are a keeper of gold: DATA. And not any type of data; it is actually information from a company that you know as “Claimant”. In fact, I have been trying for many months to build a supply-chain attack on Claimant… and guess what? I found that you are the weak spot into the company. Yes, you are the weak link in the chain as an external professional service provider.

I discovered on social media that your favourite city is Rotterdam, and after a few clicks and noting your dog’s birthday, I have your password! Unfortunately, you use almost the same password for your work devices too, so I already have access to your work notebook. You’ve also skipped the latest update of your operating system in your super interconnected phone – perfect, do not rush!

Last but not least, I am still deciding if I should claim a ransomware to you directly or to the company instead. I will see how you work on your group paper, or the document titled “Award”. Oh, and after checking your browser history, I see that you do not read or study anything about cybersecurity topics, suggesting that you are indeed my perfect target.

Again, it’s not personal – I just have to do my thing.

Best of luck with your concurring opinion, I hope you can finish it before your nephew’s wedding.

Apologies, but YOU HAVE JUST BEEN HACKED!”

Not all mail that you are surprised to see in your inbox results in a fairytale romance. To the contrary, the odds of that happening are likely to be quite low. Moving everything online, we have become perfect targets for hackers, increasing the risk of receiving a similar note. Such an email could indicate that you are actually hacked, or the email itself could be the beginning of the scam. As an arbitration community, we must get more resilient to cyber-threats.

Since the beginning of its activities in late 2020, CyberArb has aimed to provide practical tools and educational pieces, including its newly launched newsletter, to bridge the gap between theory and practice. To this end, CyberArb has partnered with ArbitrateUniversity.com to offer a new online training module on cybersecurity essentials in international arbitration, dedicated to all arbitration practitioners. The module begins with a brief introduction by Karina Albers (independent arbitrator, Chair of the London Branch of CIArb and member of CyberArb’s Executive Board), who explains that cyber-attacks are a growing threat worldwide. The Covid-19 pandemic has compelled us to move to a hybrid work environment, one that relies heavily on the Internet and that results in an escalation of cyber-attacks. The international arbitration community has pioneered virtual hearings, which, on the one hand, have put parties at ease but, on the other hand, have made arbitral institutions and law firms especially vulnerable to cyber-attacks.

 

Soft Law Instruments to Promote Cybersecurity in International Arbitrations

The module includes input from Shobana Iyer (independent arbitrator, founder of Swan Chambers and member of CyberArb’s Advisory Board), who shares her insights on the soft law of cybersecurity and international arbitration. The increase in the use of data, and advancements in technology such as videoconferencing and e-filing, have made cybersecurity a more pressing issue. The involvement of parties located in various jurisdictions using different technologies has created pressure on digital infrastructure, making it more vulnerable to cyber-attacks. Iyer highlights that any cybersecurity breach could result in reputational damage for the parties and arbitrators. This may also lead to issues in the enforcement of an award as such breaches would taint the data and confidentiality involved in the arbitral proceedings.

These risks have spurred the formulation of various soft laws in the form of guidelines and protocols in international arbitration. Such guidelines include the ICCA-NYC Bar-CPR Protocol on Cybersecurity in International Arbitration (the latest version of which was recently presented during the 2022 ICCA Conference in Edinburgh), which aims to increase cybersecurity awareness in international arbitrations and provide a framework for incorporating cybersecurity measures in arbitral proceedings; the AAA-ICDR Best Practices Guide for Maintaining Cybersecurity and Privacy (2020), which offers useful guidance to parties, their representatives and arbitrators concerning cybersecurity measures they should consider adopting; the CIArb Framework Guideline on the Use of Technology in International Arbitration (2021), which covers a series of principles on technology use and introduces best practice to ensure cybersecurity in arbitration; and the ICC Arbitration and ADR Commission Report on Leveraging Technology for Fair, Effective and Efficient International Arbitration Proceedings (2022), which contains a variety of resources to promote the safe use of technology in arbitration, including sample procedural language relating to technology tools, checklists for virtual hearings etc.

 

Implications for Admissibility of Evidence

Cemre Kadıoğlu (Ph.D Candidate at University of Leicester and member of CyberArb’s Executive Board) discusses the consequences of cyber-attacks on arbitration. She analyses several important international arbitration cases to discuss the admissibility of evidence obtained through cyber-attacks. Kadıoğlu further touches upon the cost element of such breaches and the allocation of costs. Issues such as the role of arbitrators in cybersecurity challenges and the use of cybersecurity breaches as a guerilla tactic are addressed while relying upon existing international protocols and guidelines. These issues are not merely academic: in 2021, the defendant in a multibillion-dollar Brazilian ICC arbitration challenged the award on the grounds that the claimant had orchestrated a hacking of its servers and had thus gained access to confidential information during the arbitral proceeding.

 

Practical Tips to Enhance Cybersecurity Throughout Arbitrations

Uniquely, this module also includes the expertise of Tony Gee (an ethical hacker and Security Consultant at Pen Test Partners) who provides practical tips on how to be cyber secure at all stages of an arbitration. In particular, Gee recommends that arbitrators remain cautious and protect themselves from cyber-attack by, inter alia, using complex passwords with special characters and numbers; applying different passwords for different platforms; storing said passwords on a Password Manager; implementing multi-factor authentication; and keeping the systems and software of digital devices including computers and mobile-phones up to date. Gee also gives several tips on what to do if one experiences a real hack. For example, he advises that arbitrators should consider obtaining liability insurance for cybersecurity in advance, and should act rapidly to seek help from a service provider, such as an incident response company, if they experience a hack.

Any individual or institution involved in arbitral proceedings may become a target of cyber-attacks. Becoming aware of the threats and learning how to respond once faced with them is crucial not only to avoid cybersecurity-related problems but also to create a more robust arbitration community. The training course is a good first step to help practitioners get more knowledgeable about cybersecurity, build defenses against attack, and possibly avoid heartbreak along the way.

Readers wishing to learn more about CyberArb e-learning programs can contact CyberArb here.

 

Further posts on our Arbitration Tech Toolbox series can be found here.

The content of this post is intended for educational and general information. It is not intended for any promotional purposes. Kluwer Arbitration Blog, the Editorial Board, and this post’s authors make no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information in this post.

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International Law Talk Podcast and Arbitration: International Disputes and Digital Disruption, in Conversation with Claudia Salomon, President of the ICC International Court of Arbitration

Kluwer Arbitration Blog - Fri, 2022-09-30 01:37

International Law Talk is a series of podcasts through which Wolters Kluwer provides the latest news and industry insights from thought leaders and experts in the fields of International Arbitration, IP Law, International Tax Law and Competition Law. Here at Kluwer Arbitration Blog, we highlight the podcasts focused on international arbitration. In this latest episode, Kiran Nasir Gore, Associate Editor of Kluwer Arbitration Blog, interviews Claudia Salomon.

Claudia developed her expertise in international arbitration at leading global law firms before launching her practice as an independent arbitrator. She presently serves as President of the ICC International Court of Arbitration and is the first woman to hold this position in its nearly 100-year history. During her first year in the role, ICC has launched a series of initiatives to assure that its dispute resolution services continue to meet the needs of global business.

The podcast discussion centers on technology in arbitration and various disruptions and opportunities that are anticipated to shape the future of dispute resolution. As the world’s preferred arbitral institution, ICC is leading this charge.

http://arbitrationblog.kluwerarbitration.com/wp-content/uploads/sites/48/2022/09/KLI-afl-21-trailer-DEF.mp3

The conversation explores:

  • The recent evolution in international arbitration, beginning with the accelerated use of virtual and hybrid hearings due to COVID-related lockdowns and precautions, reflecting the adaptability of the international arbitration community, especially as compared to many courts around the world, and new expectations of in house counsel.
  • The need for increased consideration of data privacy and cybersecurity in international arbitration, especially as we increasingly exchange digital communications on platforms that may have not been designed or intended for such sustained use. Claudia urges us to read the updated Report of the ICC Commission on Arbitration and ADR Task Force on the Use of Information Technology in International Arbitration, which includes checklists, draft procedural orders, and template data privacy language that can be incorporated into procedural materials.
  • How the decentralization of web3, including blockchain technology, digital currencies, and tokenizations, will give rise to new and different kinds of disputes. Claudia comments that, at a basic level, ‘off-the-chain’ disputes that imply web3 will still need to engage with traditional dispute resolution methodologies, including contract interpretation and application of the law. Meanwhile, ‘on-the-chain’ disputes may lead to new modes of dispute resolution and new methodologies and solutions will need to be developed by thought leaders in law, business, and academia.
  • The nexus between access to information and the digital transformation of various industries. The decentralization of information has led to the prevalence of new tools, including for example Kluwer’s Profile Navigator and Relationship Indicator tools, which are informed by artificial intelligence and Kluwer Arbitration’s deep archives of legal materials and commentaries.
  • Hybrid dispute resolution, including the use of arbitration in conjunction with other methods of alternative dispute resolution (ADR), both on a phased and simultaneous basis. The ICC Task Force on ADR and Arbitration will issue a report later this year, reflecting ICC’s focus on assuring global business has access to all of the tools in the toolbox to resolve their disputes.

Throughout, the conversation touches upon the ICC Court’s upcoming 2023 centenary celebration and the institution’s leadership in the field of international arbitration.

Listen to the discussion: International Disputes and Digital Disruption, in Conversation with Claudia Salomon, President of the ICC International Court of Arbitration.

Follow the coverage of the International Law Talk arbitration podcasts on Kluwer Arbitration Blog here.

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Crypto Arbitration: A Survival Guide

Kluwer Arbitration Blog - Thu, 2022-09-29 01:46

As the Crypto Winter’s chilling effect continues to be felt across the crypto sector, with crypto assets having declined in value by approximately US$ 2 trillion since their 2021 peak, international arbitrations over disputes related to crypto assets (“Crypto Arbitrations”) look set to multiply in 2022. This post provides an introduction to the types of challenges, whether legal, practical or valuation related, that arise in Crypto Arbitrations.

 

Decrypting Crypto Disputes

Crypto disputes come in all shapes and sizes. Some may raise novel legal issues such as what law applies to a blockchain transaction in the absence of a governing law clause or whether a binding dispute resolution clause can be embedded in a smart contract.

However, where the disputing parties’ relationship is governed by a traditional contract, which will frequently be the case, lawyers will already be familiar with many classes of crypto disputes, and the legal issues they raise, because they also arise in the context of other types of disputes:

  • investment (e.g., seed capital and venture capital investments in crypto platforms; shareholder disputes associated with such investments);
  • financial transactions (e.g., margin calls against traders and/or forced close-outs of trades by crypto exchanges; failure of crypto platforms to return non-fungible tokens (‘NFTs’) or other crypto assets provided as collateral for loans of cryptocurrencies);
  • supply of services (e.g., service outage claims by crypto exchange users);
  • sale of goods (e.g., defective, or delayed supply of, bitcoin mining equipment);
  • fraud and mis-selling (e.g., misrepresentations as to the nature or value of reserve assets behind ‘stablecoins’);
  • outstanding debts (e.g., failure of crypto hedge funds to repay loaned crypto assets); and
  • intellectual property (e.g., use of artworks for NFTs without copyright licences).

Although the substantive legal issues that arise in crypto disputes may therefore be familiar to lawyers, the same will often not be true of disputed factual issues. For example, input from industry experts may be required for lawyers to understand how a DeFi platform’s risk management system operates and whether it is in line with market practice. Accordingly, like in construction disputes, lawyers may find it necessary to obtain expert advice to fully evaluate the merits of their client’s case.

 

Crypto Arbitration Challenges

Many crypto businesses include arbitration agreements in their contracts. This is unsurprising, both conceptually and practically. Conceptually, crypto’s decentralised ethos sits well with arbitration’s focus on party autonomy and (relative) freedom from national court interference. Practically, the features that make arbitration well-suited to resolving cross-border disputes apply equally to crypto disputes, including procedural flexibility, neutrality, confidentiality, the ability to appoint arbitrators with relevant experience and, subject to the public policy point described below, international enforceability of awards.

Crypto Arbitrations can nevertheless be challenging for lawyers and their clients. Examples of five challenges are set out below.

  1. Crypto Regulation, Arbitrability and Public Policy

Mainland China, Russia and Qatar, among other jurisdictions, have banned crypto assets or heavily regulated their use. If a Crypto Arbitration is seated in such a jurisdiction, or enforcement of an award is sought there, national courts may rule that crypto disputes are not arbitrable or deny enforcement of awards on public policy grounds. Indeed, in 2020, a court in Mainland China set aside an award concerning a cryptocurrency dispute on public policy grounds.1)Gao Zheyu v Shenzhen Yunsilu Innovation Development Fund Enterprise (LP) and Li Bin (2018) Yue 03 Min Te No. 719. jQuery('#footnote_plugin_tooltip_42695_9_1').tooltip({ tip: '#footnote_plugin_tooltip_text_42695_9_1', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top right', relative: true, offset: [10, 10], }); Similarly, in 2021, an appellate court in Greece confirmed a court of first instance’s judgment that had refused enforcement of an award denominated in bitcoin on public policy grounds.2)Western Continental Greece Court of Appeal, 27 September 2021, unreported; Court of First Instance Agrinio, 23 October 2018, unreported. jQuery('#footnote_plugin_tooltip_42695_9_2').tooltip({ tip: '#footnote_plugin_tooltip_text_42695_9_2', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top right', relative: true, offset: [10, 10], });

Sometimes such risks may be mitigated through careful drafting of a party’s request for relief. For example, depending on the jurisdiction, requesting an award of damages quantified in fiat currency of equivalent value to the crypto currency in dispute, rather than the crypto currency itself, may reduce the likelihood of enforcement being denied.

  1. Identifying the Correct Counterparty to the Arbitration

Crypto businesses are sometimes organised and operated in an opaque manner. It may not be apparent, based on publicly available information, whether a business uses a conventional corporate structure (e.g., parent company / subsidiary relationship) or even the jurisdiction(s) in which it is based.

This can create challenges for Crypto Arbitrations, including with respect to identifying the parties to the arbitration agreement and their role, if any, in the dispute. For example, Binance’s User Terms contain an arbitration agreement between the user and “Binance Operators”, explored further here. This open-ended definition includes but is “not limited to legal persons (including Binance UAB), unincorporated organizations and teams that provide Binance Services and are responsible for such services”. When a dispute arises, Binance’s User Terms make the claimant party responsible for determining the “counterparties” to the dispute “depending on the specific services you [the claimant] use and the particular actions that affect your rights or interests”. Absent joint and several liability, arbitrating against the wrong party could lead to a tribunal rejecting an otherwise valid claim.

Once the correct party or parties have been identified, thought should also be given to their ability to ultimately satisfy an award for damages since the Crypto Winter has negatively impacted many crypto businesses’ finances. Arbitrating against a party on the verge of financial collapse may be of limited use.

  1. Securing Interim Measures Over Crypto Assets

Crypto businesses’ main assets are generally not traditional assets, like real estate, but crypto assets. Interim measures can therefore be essential in Crypto Arbitrations given the potential for crypto assets to be dissipated in seconds, with only a few mouse-clicks.

While the legal issue of whether crypto assets are “property” remains controversial in many jurisdictions, this has not stopped courts in Hong Kong3)Yan Yu Ying v Leung Wing Hei [2022] HKCFI 1660; Nico Constantijn Antonius Samara v Stive Jean Paul Dan [2022] HKCFI 1254. jQuery('#footnote_plugin_tooltip_42695_9_3').tooltip({ tip: '#footnote_plugin_tooltip_text_42695_9_3', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top right', relative: true, offset: [10, 10], }); and Singapore4)CLM v CLN and others [2022] SGHC 46. jQuery('#footnote_plugin_tooltip_42695_9_4').tooltip({ tip: '#footnote_plugin_tooltip_text_42695_9_4', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top right', relative: true, offset: [10, 10], }); from granting proprietary injunctions over crypto assets. English courts have also been prepared to grant injunctions over crypto assets.5)AA v Persons Unknown [2019] EWHC 3556 (Comm). jQuery('#footnote_plugin_tooltip_42695_9_5').tooltip({ tip: '#footnote_plugin_tooltip_text_42695_9_5', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top right', relative: true, offset: [10, 10], }); Indeed, the English courts have shown an admirable willingness to embrace technology in the context of crypto disputes, including by allowing proceedings to be served via an NFT on the blockchain.6)D’Aloia v Person Unknown & Others [2022] EWHC 1723 (Ch). jQuery('#footnote_plugin_tooltip_42695_9_6').tooltip({ tip: '#footnote_plugin_tooltip_text_42695_9_6', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top right', relative: true, offset: [10, 10], });

Emergency arbitration may also offer a viable method for obtaining interim measures over crypto assets, particularly where emergency arbitrators are prepared to grant urgent ‘preliminary orders’.7)See Prime Finance Arbitration Rules 2022, Article 25(7). jQuery('#footnote_plugin_tooltip_42695_9_7').tooltip({ tip: '#footnote_plugin_tooltip_text_42695_9_7', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top right', relative: true, offset: [10, 10], });

  1. Valuation Challenges

Valuing crypto currencies can be straightforward since there are frequently readily available quoted prices similar to observable commodity prices. However, difficult issues can arise where the crypto currency is illiquid, including with respect to the bid-ask spread and purchase price premium.

Valuing crypto businesses may also pose problems. One key challenge is the lack of comparable publicly listed companies with sufficient and robust financial information to conduct a market-based valuation. Taking the crypto exchange industry as an example, the only major publicly listed exchange is Coinbase and its market observed pricing data only goes back to 14 April 2021 when it was publicly listed.

Another key challenge is assessing a crypto business’ future prospects at the valuation date and identifying corresponding implications on the key value drivers. For example, in an exchange, higher trading volume will generate higher transaction revenue and profit, resulting in a higher valuation. Forecasting future trading volumes may not be straightforward where the valuation date falls in a period of significant market volatility as seen during the Crypto Winter.

Indeed, with the sharp decline in cryptocurrency values since 2021, the choice of valuation date can significantly impact the quantification of damages. Similarly, given this market volatility, the damages available under a tort claim may be very different from those under a contractual claim given the different measures of damages that can apply to such claims.

  1. Arbitration Rules and Class Actions

 Most institutional arbitration rules are already sufficiently flexible to allow arbitrators to adapt procedures suitable for Crypto Arbitrations. However, their limits are already being tested in certain respects, with one hot topic being class-action style disputes. For example, when a crypto exchange experiences an outage, there may be hundreds of impacted parties, each with a relatively small claim against the exchange. Class-actions could help address access to justice concerns in these situations since it would otherwise be uneconomical for each individual party to bring a separate arbitration. Whether the creative application of joinder and consolidation mechanisms in arbitration rules, for example, can accommodate class-actions remains to be seen.

 

Conclusion

Crypto Arbitration is still at an early stage of development. This post has identified several challenges but others will undoubtedly emerge over the coming months as arbitral tribunals and national courts are exposed to more crypto disputes. It will be interesting to see how these challenges are addressed and also how much traction competitors to traditional arbitration, like decentralized blockchain-based arbitration services such as Kleros (explored here), can gain in the burgeoning crypto dispute market.

References[+]

References ↑1 Gao Zheyu v Shenzhen Yunsilu Innovation Development Fund Enterprise (LP) and Li Bin (2018) Yue 03 Min Te No. 719. ↑2 Western Continental Greece Court of Appeal, 27 September 2021, unreported; Court of First Instance Agrinio, 23 October 2018, unreported. ↑3 Yan Yu Ying v Leung Wing Hei [2022] HKCFI 1660; Nico Constantijn Antonius Samara v Stive Jean Paul Dan [2022] HKCFI 1254. ↑4 CLM v CLN and others [2022] SGHC 46. ↑5 AA v Persons Unknown [2019] EWHC 3556 (Comm). ↑6 D’Aloia v Person Unknown & Others [2022] EWHC 1723 (Ch). ↑7 See Prime Finance Arbitration Rules 2022, Article 25(7). function footnote_expand_reference_container_42695_9() { jQuery('#footnote_references_container_42695_9').show(); jQuery('#footnote_reference_container_collapse_button_42695_9').text('−'); } function footnote_collapse_reference_container_42695_9() { jQuery('#footnote_references_container_42695_9').hide(); jQuery('#footnote_reference_container_collapse_button_42695_9').text('+'); } function footnote_expand_collapse_reference_container_42695_9() { if (jQuery('#footnote_references_container_42695_9').is(':hidden')) { footnote_expand_reference_container_42695_9(); } else { footnote_collapse_reference_container_42695_9(); } } function footnote_moveToReference_42695_9(p_str_TargetID) { footnote_expand_reference_container_42695_9(); var l_obj_Target = jQuery('#' + p_str_TargetID); if (l_obj_Target.length) { jQuery( 'html, body' ).delay( 0 ); jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight * 0.2 }, 380); } } function footnote_moveToAnchor_42695_9(p_str_TargetID) { footnote_expand_reference_container_42695_9(); var l_obj_Target = jQuery('#' + p_str_TargetID); if (l_obj_Target.length) { jQuery( 'html, body' ).delay( 0 ); jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight * 0.2 }, 380); } }More from our authors: International Investment Protection of Global Banking and Finance: Legal Principles and Arbitral Practice
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The Normal New Normal in the US, Circa September 2022

ADR Prof Blog - Wed, 2022-09-28 18:41
President Biden caused a little brouhaha when he said that the pandemic is over. I think that he was trying to convey that what I called the “crisis new normal” … Continue reading The Normal New Normal in the US, Circa September 2022 →

The “Single Proceeding Model” Prevails in Ontario…at Least for This Case

International Arbitration Blog - Wed, 2022-09-28 09:48

In Mundo Media Ltd. (Re),2022 ONCA 607, the Court of Appeal for Ontario (the “Court of Appeal”) dismissed a motion for leave to appeal the motion judge’s decision in Royal Bank of Canada v. Mundo Media Ltd.,2022 ONSC 2147. This decision addressed the tension between a contractual arbitration clause versus the “single proceeding model” under a receivership.

Stacia Jones to Deliver Moritz’s 2022 Lawrence Lecture – hybrid event

ADR Prof Blog - Tue, 2022-09-27 10:08
On Monday October 31, beginning at 12:10 EST, Stacia Jones will deliver The Ohio State University Moritz College of Law’s Lawrence Lecture on Dispute Resolution titled A Better Way to … Continue reading Stacia Jones to Deliver Moritz’s 2022 Lawrence Lecture – hybrid event →

Poland to Withdraw from the ECT: Who Does It Benefit?

Kluwer Arbitration Blog - Tue, 2022-09-27 01:33

Poland surprised the world when on 25 August 2022 the Government submitted to the Polish Parliament a draft law authorizing the President of Poland to terminate the Energy Charter Treaty (ECT) and the Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects. The idea of Poland terminating the ECT had not been floated in the media nor was it on Poland’s political parties’ agenda before the step was taken. This post presents Poland’s stated reasons for withdrawal of the ECT and explains why the actual motives behind this decision remain unclear.

 

Draft Law

The draft law and the termination instrument attached to the Polish Government’s decision are simple and succinct. They are limited to a plain vanilla authorization for the President to withdraw from the ECT unilaterally. Attached to them is an interpretative declaration to the ECT, which seeks to reflect Poland’s position that, following Komstroy, arbitral tribunals lack jurisdiction to hear intra-EU claims under the ECT.

As required by Polish law, the draft act is accompanied by a written statement of motives explaining the need for the new regulation, its basic concepts, anticipated social and economic impact, as well as the assessment of conformity of the proposed act with EU law.

 

Official Reasons for Poland to Leave the ECT

According to the statement of motives, Poland considers the withdrawal from the ECT to be necessary, primarily because the treaty is incompatible with EU law. Poland asserts that most ECT arbitral tribunals disrespect jurisdictional limitations resulting from EU law. It also perceives that the chances to accomplish a successful reform of the ECT in the current negotiations process are low. Thus, unilateral withdrawal is presented as the only way to achieve compliance with EU law.

Poland asserts that the negotiations mandate of the European Commission does not entail the amendment to Article 26 ECT. This statement does not address the fact that in accordance with draft Modernized ECT released in June 2022, the application of Article 26 ECT shall be excluded, as between Member States of the same Regional Economic Integration Organization.

Poland also maintains that while its nationals are reportedly uninterested in the investment protection options under the ECT, Poland has been a respondent state in numerous arbitrations under this treaty, incurring significant defence costs. These costs are now presented as the potential savings which Poland stands to gain upon its withdrawal from the ECT. The document also asserts that the “accelerating energy transformation” would be “impaired”, if Poland were obliged to pay “high damages based on vague treaty standards to fossil fuel investors” for “alleged breaches of their rights”. Again, no reference is made to the draft Modernized ECT, which seeks to address the risk of slowing down the climate change by fossil fuel industry investors.

The statement of motives maintains that there is no clear evidence to suggest that Poland remaining as a party to the ECT would attract new investments. It suggests that other legal mechanisms, including proceedings before domestic courts and international human rights bodies, offer comparable standards of protection to individuals and their investments. At the same time, the document underlines the reported vagueness of the ECT provisions and refers to the risk of ‘regulatory chill’ which the ECT is said to produce. Again, no reference is made to the way in which the Modernized ECT purports to address this problem.

 

Appraisal of Poland’s Stated Reasons for Withdrawing from the ECT

These reasons for withdrawal can, of course, be easily criticized. Poland pretends to be a defender of EU law, when it ostensibly violates EU law on various points, including judicial independence. Poland considers its domestic court system and the international human rights protection system as equivalent to investor-state dispute settlement mechanisms under the ECT, while it has spent the last six years dismantling the independence of its judiciary.  Indicatively, the Polish Constitutional Court even issued a politically-loaded judgment stating that Article 6(1) of the European Convention of Human Rights is inconsistent with the Polish Constitution (Case No. K 7/21 of 10 March 2022, in the aftermath of the ECtHR judgments in the case of Xero Flor v. Poland (application no. 4907/18), as well as in the case of Dolińska-Ficek and Ozimek v. Poland (applications nos. 49868/19 and 57511/19). Poland refers to the risk of from fossil fuel claims when it has promoted the coal and gas sectors in the past several years. None of these officially stated reasons is really convincing.

A closer reading of the statement of motives suggests the importance of Article 47(3) ECT for Polish Government. Poland invokes that provision to assert that once the withdrawal takes effect, no new extra-EU investments shall enjoy protection under the ECT in Poland, during the sunset period. In accordance with Article 47(2) ECT, the withdrawal shall take effect after one year after the date of the receipt of the notification by the depositary. The investments that shall exist on the date the withdrawal takes effect, shall be protected for 20 more years. In other words, the intention behind the withdrawal is to exclude protection in Poland of the investments from outside the EU, made in late 2023 or later.

With regard to intra-EU investments, Poland relies on the CJEU judgment in Komstroy, to conclude that such investments do not enjoy protection under the ECT even now. Upon withdrawal, Poland intends to make a unilateral declaration under Article 30(4) VCLT asserting that the arbitration clause contained in Article 26 ECT cannot be applied in intra-EU disputes. This declaration is unlikely to be accepted as binding by the arbitral tribunals. It is consistent, however, with the approach recently taken by Poland to terminate its intra-EU BITs invoking their incompatibility with EU law.

 

Question Marks

Two questions immediately spring to mind as a reaction to Poland’s proposed withdrawal from the ECT. Why now? And, which investors, if any, are targeted by the intended withdrawal?

The timing of the draft law is peculiar. If perfected, the withdrawal shall enter into force around the time of next parliamentary elections in Poland, which may be lost by the incumbent political party. In such case, any perceived benefits of the withdrawal would fall on the opposition.

On the other hand, the proposed withdrawal comes two months after an agreement in principle was reached in June 2022 on the draft Modernized ECT. As stated in the statement of motives, Poland believes that the final approval is unlikely and that the ratification process would take years. This pessimism can be linked with the recent initiative of several EU Member States, including Spain, Germany, and Belgium, to convince the European Commission about the need to collectively withdraw the EU from the ECT. It appears, however, that the European Commission has so far resisted these demands. Hence, either Poland’s skepticism is unwarranted, or more withdrawals may be expected to come.

Assuming that the purpose of the withdrawal is to deprive new investors of their protection, the question arises if any particular investor group is at risk. Although the statement of motives specifically refers to fossil fuel investors, this can be a red herring. In Poland, most of the fossil fuel industry is owned by the state who has increased its market share through recent acquisitions of privately-owned power plants and the construction of new power generation units. The largest claims currently pursued against Poland under the ECT, such as Prairie Mining (now GreenX Metals), are not concerned with climate-related decarbonization, but Claimants instead claim that Poland discriminates against them in comparison to state-owned companies regarding access to hard-coal exploitation concessions.

If new claims arise in the future against Poland in the energy sector, they will rather concern energy sectors other than fossil fuels. The dry reality is that the war in Ukraine and Russia’s energy blackmail deployed against Europe have mercilessly revealed deficiencies of Poland’s energy strategy. The country desperately needs to limit its overdependence on coal and gas. This means the return to renewable energy and an attempt to build nuclear power plants. In all such energy projects, Poland will have to rely on foreign equipment, know-how, capital, and technology. This can be clearly evidenced in the ongoing licensing processes of offshore wind farms on the Baltic Sea, which are expected to bring additional 10 GW to Poland’s generation capacity. In turn, Poland’s new nuclear project will be constructed in cooperation with a US company – Bechtel. These and similar, capital-intensive, high-tech investments carry an inherent risk of regulatory disputes against the state.

 

Conclusion

In summary, the proposed withdrawal from the ECT fits into Poland’s broader policy of limiting the access of foreign investors to international arbitration as well as curtailing external arbitral and judicial scrutiny. The financial impact assessment stops at the relatively low savings in arbitration costs or ECT membership fees, while ignoring the costs of raising capital for accelerated energy modernization under unfavorable market and geopolitical conditions. The timing of this move creates confusion, both in terms of the ongoing ECT renegotiations and the energy deficit created by the war. As a result, it raises concerns that the supposed benefits are purely political, and they increase the level of political risk of doing business in Poland.

 

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Would you like to read a WIP draft?

ADR Prof Blog - Mon, 2022-09-26 19:49
I will present a draft of my article, Real Mediation Models to Help Parties and Mediators Achieve Their Goals, at the Works-in-Progress conference next month and I am posting it … Continue reading Would you like to read a WIP draft? →

Arbitration and Mediation in Japan: Is the Sun Rising?

Kluwer Arbitration Blog - Mon, 2022-09-26 01:30

The dispute resolution landscape in Japan is almost unrecognisable from the position 20 years ago.  In that time, Japan has evolved into a significant market for cross-border contentious legal matters.  Sophisticated Japanese corporations with significant overseas business are comfortable using international arbitration and mediation as methods of dispute resolution. 86% of the case load of Japan Commercial Arbitration Association (JCAA) from 2017 to 2021 involved international cases although overall case numbers remained largely static in 2020 and 2021 with an average of around 17 cases per year.  The HKIAC and SIAC remain popular institutions in the region for Japanese parties to resolve their disputes with recent annual reports showing an increase in cases involving Japanese parties.

Some of these changes include the updating by the JCAA of its institutional rules and other practices, the successful launch of the Japan International Dispute Resolution Center (“JIDRC“) and the opening of the Japan International Mediation Center in Kyoto.  However, more changes are still on the horizon including important changes to the Japanese legislative framework governing arbitrations seated in Japan as well as legislation designed to promote Japan’s attractiveness as a centre for mediation.

 

Upcoming changes to the arbitration legislative framework in Japan

In late October 2021, the Japanese Ministry of Justice’s Legislative Council outlined its proposals to amend Japan’s Arbitration Act (Act No. 138 of 2003) (the “Arbitration Act“). The proposals largely reflect the integration into Japanese law of the provisions of the UNCITRAL Model Law 2006.

 

Interim measures

The proposed changes include:

  • clarifying the types of interim measures that can be granted by tribunals including, specifically, orders to maintain or restore the status quo of the subject-matter of the dispute (such as freezing orders), orders to preserve property necessary for the realisation of an arbitral award and orders to preserve evidence;
  • requirements that tribunals can impose before granting interim measures such as the provision of security;
  • the termination or modification of interim measures; and
  • the enforcement by the Japanese courts of interim measures granted by arbitral tribunals and limited grounds for refusing enforcement.

In addition, the Ministry of Justice’s proposals include empowering the Japanese court to order payment of a penalty fee where a party breaches an interim prohibitory injunction granted by a tribunal.  This provision is particularly noteworthy for two reasons.  First, such a power goes beyond the contents of the UNCITRAL Model Law 2006.  Secondly, it is a significant change given the absence of an equivalent power where a party ignores an interim prohibitory injunction granted by the Japanese courts

The proposals do not extend to the enforceability of interim measures granted by an emergency arbitrator. This reflects both the position under the UNCITRAL Model Law 2006, which equally does not address this issue, and some concerns as to whether enforcement of such interim measures should be granted before the tribunal has had a chance to review them.

The clarity brought by the proposed amendments is largely to be welcomed as they bring the Japanese legislative framework into line with that found in other leading international arbitration centres in the region, including Singapore and Hong Kong.

 

Proposed administrative changes to the Arbitration Act

A number of the other proposals are aimed at relieving the administrative or other burdens on arbitration users in line with modern practice, such as:

  • extending the jurisdiction of the Tokyo District Court and Osaka District Court to hear arbitration-related cases. Currently, arbitration-related proceedings must be brought in (i) the district court designated by the parties, (ii) the district court having jurisdiction over the seat of the arbitration, or (iii) the district court having jurisdiction over the counterparty. The Ministry of Justice wanted to make proposals to cater for circumstances where determining the district court with jurisdiction may not be straightforward e.g. if the parties failed to specify a city in Japan as the seat and neither of them was a Japanese entity.  The change should also help contribute to increased expertise in dealing with arbitration-related cases in these two District Courts;
  • waiving the requirement to provide Japanese translations of all or some of the evidence in arbitration-related cases. Some non-Japanese parties have been wary to agree to arbitrations seated in Japan in the event they need to engage with the Japanese courts and incur the costs of translating lengthy documents from English to Japanese such as the Award or key contracts.  The proposals will help reduce these costs burdens for international parties considering arbitrations seated in Japan by allowing the courts to dispense with translations of all or parts of documents where it considers it appropriate to do so having heard submissions from the parties; and
  • parties to oral or other types of less formal agreements will also be able to refer disputes to arbitration more readily. Currently, Article 13(2) of the Arbitration Act prescribes the format of a written arbitration agreement.  The proposed changes will mean that the Arbitration Act will reflect Article 7(3) of the UNCITRAL Model Law 2006 in that an arbitration agreement is deemed to be in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct or other means. These changes will be welcomed by businesses where contracts are often made orally such as in ship salvage transactions.

 

Further proposed changes to enhance Japan as a destination for international mediation

On 4 February 2022, the Japanese Ministry of Justice’s Legislative Council published legislative proposals for the enforceability of settlement agreements arising out of mediations whether domestic or cross-border. The proposals include amendments to the Act on Promotion of Use of Alternative Dispute Resolution (Act No. 151 of 1 December 2004) (the “ADR Act“) which applies to domestic mediations, while a new law is proposed for those arising out of international mediation.

Japan is not yet a signatory to the Singapore Convention on Mediation but it has been examining whether signing up to it would require any amendments to domestic law. The new legislative proposals were made in that context with a view to future implementation of the Singapore Convention in Japan. This move is significant given the increasing prevalence of mediation in the toolkit for dispute resolution in Japan. Other significant developments in this regard are the launch of the Japan International Mediation Center in Kyoto (JIMC-Kyoto) in 2018 and the JCAA’s publication of its own Commercial Mediation Rules in 2020.

 

Concluding remarks

The proposed changes to the Arbitration Act would see Japan join the other leading arbitral jurisdictions in the region in modifying their legislation to conform with the UNCITRAL Model Law 2006.  The arbitral community in Japan welcomes these changes as well as those additional changes designed to increase the attractiveness of Japan as a seat for international arbitration.

It is hoped that the relevant changes will be passed into law in 2023.

Japan is also likely to take steps to enhance its position as the leading regional centre for mediation.  It seems likely that Japan will eventually ratify the Singapore Convention after it has adapted its domestic legislation to cater for its implementation.

Of course, the dispute resolution landscape does not remain static.  As soon as the proposals discussed in this article are implemented, the Japanese Ministry of Justice will need to address new topics such as the legal framework for third-party funding in international arbitration as well as whether any legislative changes are required to reflect the recent popularity of emergency arbitrator provisions. Nonetheless, this continues to be an exciting time for the Japanese arbitration community as it looks – albeit somewhat belatedly – to carve out its position in the Asia-Pacific international dispute resolution market.

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ICCA Edinburgh 2022: An Outside Perspective, the Renaissance Arbitrator and a ‘Great Debate’: the ICCA Congress 2022 in Edinburgh Comes to a Successful Close

Kluwer Arbitration Blog - Thu, 2022-09-22 09:37

After a gala evening at the National Museum of Scotland filled with Scottish gastronomy and ceilidh dancing, delegates returned to the conference centre for the last day of the ICCA Congress.

Renaissance Arbitrator

This panel asked: “what can lawyers and arbitrators learn from disciplines outside the law and arbitration?”. That question is particularly timely as the issues being decided by arbitration increasingly require an understanding of areas outside the law, including complex technical and scientific issues, forward-looking damages issues requiring the application of sophisticated economic and finance models, the application of cybersecurity and data protection principles during the proceedings, and the impact this may have on good case management.

Elie Kleiman moderated the session, addressing the concept of cross-fertilisation, picking up on Lucy Reed’s intervention on the first Congress day on the human advantage of adding reasoning to decisions as opposed to relying strictly on self-learning machines. The renaissance human being is associated with philosophers, painters, engineers and more; the renaissance arbitrator today embraces multiple disciplines.

Melanie van Leeuwen used Aristotle’s twelve virtues to explain the character of the renaissance arbitrator: courage, moderation, generosity, magnificence, magnanimity, ambition, patience, truthfulness, humour, kindness, modesty and justice. These come together to show the attributes an arbitrator should strive to possess: a desire to protect the equality of the parties, good humour in proceedings, patience for younger counsel, objectivity, integrity and more.

Kathleen Paisley spoke about how complex modern issues – such as technology, science, allocation of damages and complex regulatory frameworks – impact and influence arbitrators. She noted that many cases turn on a technical question these days, which means that we will all encounter these issues regardless of our own area of expertise. She suggested that we must embrace the law but also vary our skill sets to deal with cases concerning various subject-matters, or engage experts to provide detailed understanding. Members of tribunals with pre-existing experience or interest, she noted, are ideal. For example, the issue of damages today is complex and we have to build our knowledge in addition to relying on the expertise of others.

Janey Milligan provided a history of adjudication as a default and efficient way to resolve disputes, especially in construction, with the aim of illustrating how arbitration might learn and take some elements from adjudication in order to develop. Adjudication benefits from a fixed and expedited timeframe. Ms. Milligan suggested that this encourages succinct submissions and eliminates unnecessary productions. Adjudication is seen as robust, fair and fast-paced, and can address technical nuances of construction due to the expertise of the arbitrators. She accepted that all arbitrations couldn’t be conducted in this way but that it might be sensible if some parts of arbitrations were taken and dealt with expeditiously. Finally, she took heart from young practitioners and their enthusiasm – in her view, they are the renaissance arbitrator, and she concluded by saying “let’s not keep tradition for tradition’s sake”.

Elie spoke to Bruno Guandalini’s paper, as the latter was sadly unable to attend. His paper focuses on human error and the human tendency to rely instead on instinct, as well as on unconscious bias. He asks who, what, why, when, where in the scope of cognitive biases and discusses education and training, awareness, and the need for more empirical data.

 

Different Perspectives

The different perspectives offered in this panel, moderated by Chiann Bao, came from outsiders to arbitration: states, the courts, regulators and – somewhat paradoxically – users of arbitration. As Patrick Baeten pointed out, it is telling of how the “inside” thinks if users of arbitration are considered to be outsiders.

Drawing on data from the annual Queen Mary University of London International Arbitration Surveys, and his own experience as in-house counsel, Mr. Baeten gave the user’s perspective. A key finding is that users and parties do not tend to appoint diverse or junior arbitrators because they want the “sure bet” of naming a well-known, prestigious arbitrator. Users also find that arbitrations are too expensive, but that these costs are difficult for users to control. Rather, they think that counsel must commit to affordable and efficient arbitrations. The overarching theme of Mr Baeten’s presentation was that in arbitration, in-house counsel have the potential to be actors of change, but that external counsel are seen to be obstacles to change.

Alvaro Galindo followed with the state perspective. Governments are supportive, passing arbitration-friendly laws and creating arbitration centres and institutions. Mr. Galindo questioned if there is true demand for these organisations as many will never administer a single arbitration. Rather they act more as promotional bodies, indicating to investors that the state is supportive of private international arbitration proceedings and, by extension, a safe destination for FDI.

Finally, Lord Hodge, spoke about how national courts – or at least the UK courts – view arbitration. In the Arbitration Act 1996 and Arbitration (Scotland) Act 2010, the UK has modern, updated laws favourable to arbitration. As finality in arbitration is ostensibly more important than the right decision, the courts take the stance that they should not intervene in arbitral decisions except where absolutely necessary. The grounds for challenging an award in the UK are limited to points of jurisdiction, serious irregularity, and – very rarely – error of law. As a signatory of the New York Convention since 1975, the UK courts recognise foreign arbitral awards and enable their enforcement, though a mechanism allowing the courts to hear questions of unenforceability exists. Generally, the UK is supportive of arbitration, a position made clear by Lord Hodge’s repetition of Lord Dunedin’s words in Sanderson & Son v. Armour & Co 1922 SC (HL) 117: “If the parties have contracted to arbitrate, to arbitration they must go”.

 

The Great Debate: “A World Without Investment Arbitration?”

The institution of investor-state dispute settlement (ISDS) is under attack. As the world of arbitration reacts, it is not yet clear what reforms will ultimately look like – or whether we’ll see the extinction of the system as we know it today. This event took the form of a debate, with Prof. Dr. Jan Kleinheisterkamp posing to the panellists Carolyn Lamm and Toby Landau KC the question whether a world without investment arbitration would be better. He described the arguments as positions, not truths, and introduced the debate.

Toby Landau KC took the position that the world would indeed be better without investment arbitration and made three main criticisms. First, the economic rationales for the current ISDS system are flawed and do not support it. There is no historical or empirical support for the system as currently devised and there is no evidence that countries have had depoliticisation as an objective. Second, the system suffers from fundamental perceived flaws. These problems are not necessarily real or grounded, but perception in itself is the point. Third, viable alternatives exist, including dispute prevention or ombudsman type processes. He concluded by noting that the arbitration community, as users of the system, do not own it, and the current regime is not theirs to protect. States wanted it only recently and it was not called for by them or investors, and it has no impact on direct investment.

Carolyn Lamm argued the other side. What is depicted as a mass exodus is actually a healthy process, with some withdrawals balanced by some re-joining or renegotiating. The ISDS system needs a vision going forward, which should include focus on climate change and its impact, but eliminating the system is not the answer. Early intervention or an ombudsman can work well together with the system and amending the New York Convention or ICSID Convention would be a process taking many years. Investment arbitration, she concluded, is the past, present and future and it is a viable system, which contributes to job creation, rising living standards, transfer of technology and assurance of due process.

Ong Chin Heng summed up the debate, commentating from the perspective of states. He agreed an ideal world would be better without investment arbitration, but in the real world investment arbitration is a “necessary evil”. However, newer, better alternatives must be considered, taking into account matters such as the equality of arms, as well as issues regarding costs, consistency, independence and impartiality. There is a need for structural reform, he concluded. In this process, the arbitration community should be open minded in what the system might look like and prepared to accept that there is a lot of work to do, taking into special consideration issues such as enforceability and dispute avoidance.

The Congress was brought to a close with a keynote delivered by Lord Carloway, Lord President of the Court of Session and Lord Justice General of Scotland, on the role of the Scottish courts in arbitration, with references to the ideas shared by speakers throughout the various Congress panels.

 

As the 2022 ICCA Congress in Edinburgh comes to a close, we thank our gracious hosts, the Scottish Arbitration Centre, for welcoming us so warmly to Scotland.

On to Hong Kong from here! The 2024 Congress will be hosted by the Hong Kong International Arbitration Centre and held on May 5-8, 2024. Stay tuned for registration details. We hope to see you there!

 

Follow along and see all of Kluwer Arbitration Blog‘s coverage of ICCA Edinburgh 2022 here

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First Appeal Under the New B.C. Arbitration Act: Arbitrator’s Material Misapprehension of Evidence Is an Appealable Legal Error

International Arbitration Blog - Wed, 2022-09-21 10:28

In Escape 101 Ventures Inc. v. March of Dimes Canada, 2022 BCCA 294 (“Escape”), the first appeal under British Columbia’s new Arbitration Act, S.B.C. 2020, c. 2 (the “Act”), the B.C. Court of Appeal (the “BCCA”) held that an arbitrator’s material misapprehension of evidence constitutes an extricable legal error subject to appellate review, and that such an error need not be apparent on the face of the arbitrator’s award. The decision provides useful guidance on the permitted scope of an appeal of a domestic commercial arbitration award under the Act.[1]

ICCA Edinburgh 2022: ISDS, Regional Perspectives, New Frontiers in International Arbitration and More: Some Highlights of the Second ICCA Congress Day

Kluwer Arbitration Blog - Wed, 2022-09-21 09:37

The second day of the ICCA Congress took place on Tuesday, September 20. Delegates gathered in the morning for the presentation of the inaugural ICCA Guillermo Aguilar-Alvarez Memorial Prize, established in honour of former ICCA Governing Board Member Guillermo Aguilar-Alvarez. Professor Stefano Azzali said a few words on the life and career of Guillermo, fondly remembered as ‘Memo’, and Dr. Louie Llamzon followed with an introduction to the prize, its selection committee, and its inaugural winner. Guillermo’s widow and son made the trip to Edinburgh to join in the ceremony.

State of the World in 2022 – New Developments and Reform in International Investment Arbitration

Delegates then took part in the plenary session entitled ‘State of the World in 2022 – New Developments and Reform in International Investment Arbitration’, moderated by Jean Kalicki. She asked each panellist to reflect on key updates since the Sydney Congress in 2018.

Meg Kinnear spoke about the amendment of ICSID Rules effective since July 2022. She noted six key areas addressed in the amended Rules: time and cost of proceedings, third party funding, increased transparency, conciliation, revision of additional facility rules and standalone mediation rules. She also flagged the developing Code of Conduct for Adjudicators in Investment Arbitration. Anna Joubin-Bret then discussed the work of UNCITRAL Working Group III. She summarized four main concerns in ISDS: consistency, legitimacy, cost and duration. Encouragingly, Ms. Joubin-Bret remarked that the two pandemic years were not lost: during that time, Working Group III has developed text with reform options and there is an agreed framework which will act as a vehicle for reform by 2026. Ms. Joubin-Bret also mentioned difficulties that may lie ahead relating to institutional reform. Whilst some elements of the current proposals are far from consensus there is still time, and the architecture of these proposals is now there.

Patience Okala talked about reform taking place multilaterally and looked at developments from a Nigerian perspective. She talked about a disconnect between Nigeria’s aspirations for development and the quality of treaties to meet these aspirations. Ms. Okala mentioned the importance of alignment at an international level and amendments to Nigerian legislation in this area, which is ongoing. She emphasized that substantive reform is essential and that those conversations should be ongoing. For his part, Tom Sikora discussed his involvement with UNCITRAL Working Group III and questioned whether concerns in ISDS can be alleviated by procedural reforms. He spoke on the crisis of legitimacy and the growth of investor claims against states. He talked about proposed reforms including a multilateral investment court where member states elect judges for a nine-year term as salaried staff. This is seen as desirable from a state perspective, but it could be seen to lack legitimacy as it tilts the balance against investors. In his view, this was a political issue.

The panel concluded with a discussion around the reach of investment protection, including with respect to climate change. “Investment law is not an island” and the field must take account of what is happening around it.

The day continued with delegates splitting into three sets of parallel sessions. The morning set of sessions addressed regional themes, taking a “round-the-world trip” into current trends and issues in each region of the world.

Regional Themes I: The Americas and Europe between Constitutionalism and Populism

In this first regional session, moderator Francisco Gonzalez de Cossio, was joined by panellists Julie Bedard, Markus Burgstaller, Sir David Edward, and Eduardo Zuleta to explore the cross-regional concept of constitutionality in the context of arbitration, and the constitutionality of arbitration itself.

Judge Edward adopted a two-pronged approach to his presentation, examining: (1) legal and constitutional considerations between jurisdiction of international arbitral tribunals and transnational courts; and (2) the attitudes of the public and government to arbitration, and what has often been labelled as populism. Judge Edward also spoke to the proposal of the European Commission to develop a multilateral investment court, and stated “I haven’t found any cost benefit analysis of the proposal or quantification of what it will involve in respect of financial/human resources”.

Mr. Burgstaller observed the extent to which arbitral tribunals find themselves bound by judgments of the CJEU, the modernisation of the ECT, and noted that, with one recent exception, international arbitral tribunals in intra-EU BIT and intra-EU ECT cases have not accepted jurisdictional objections by EU member states. Ms. Bedard delivered a ‘conflict of laws’ analysis; reviewing the complex European debate on how the future of international arbitration may be shaped by quasi-constitutional questions such as those raised in the case of Achmea. In conclusion, Ms. Bedard remarked that “we may not know all of the answers but have come to appreciate the level of complexity that we have reached in the interaction between EU law and international arbitration”. Finally, Mr. Zuleta addressed the constitutionalism of arbitration, the fallout of sharpening political populism in Latin America, and the challenges this may pose to international arbitration. Mr. Zuleta passionately recognised that “ICCA has a legitimate voice, and a key part to play”.

Regional Themes II: Asia, Africa and the Middle East: Dynamism and Consolidation

Though Paris and London may have historically dominated the dispute resolution world as seats of arbitration, moderator Shaneen Parikh opened this panel highlighting the rise of arbitration destinations outside of Europe. Most notably, Singapore and Hong Kong have emerged as preferred arbitral institutions, rivalling the LCIA in London and the Paris-based ICC.

This panel went further than Singapore and Hong Kong, however, and opened up the floor to four panellists who described the development of arbitration in China, India, and Africa. To a certain extent, this was a whistlestop tour of these countries and regions’ approaches to arbitration. Sun Wei’s enumeration of the four characteristics of Chinese arbitration showed the structure with which China aims to develop both domestic and international strands of arbitration. Darius Khambata SC made a compelling pitch for India as a seat of international arbitration, highlighting its over 140 years of common law tradition and the willingness of Indian legal scholars and lawmakers to adapt the country’s arbitration laws to meet the community’s needs. Ndanga Kamau focused on the instruments and key parties and dispute types that shape the current arbitral landscape in Africa.

But Ms. Kamau’s presentation was more than a description of arbitration with African features. She embarked from a point of lyricism and history, recounting how the Portuguese explorer Diogo Cão voyaged up the Congo River in the 15th century, making an early trade connection between Europe and Africa. The shape of that economic connection would change with colonial regimes and the legal institutions and frameworks that would, in the post-colonial era, remain or be rejected by African countries – and here, Kamau was sure to underline that the continent consists of 57 sovereign nations and that the continent and the future of arbitration there cannot be dealt with monolithically.

In the afternoon, delegates were invited to choose again between a set of parallel sessions.

The Sociology of Arbitration

There is perhaps no field that loves a dispute as much as arbitration. That this panel pitted two academics against each other to debate the sociology of arbitration therefore feels like a mise en abyme of the profession. But as far as abysses go, it was an instructive one, for Malcolm Langford and Florian Grisel examined in great depth the practice of double hatting in the arbitration community. To double hat is to act as both arbitrator and counsel to parties at the same time – although obviously not for the same arbitration. Langford and Grisel do not necessarily make moral judgments on the practice of wearing two hats. Rather, the dispute at hand is about whether double hatting is waxing (Grisel’s view) or – through industry self-regulation – waning (Langford’s stance). Armed with abundant data, critiques on methodology, and virtuous references to a seminal work by Dezalay & Garth, each scholar made a compelling case for their argument.

Most interesting in this panel though was the third perspective, offered by Janet Walker. For her, Langford and Grisel’s emphasis on quantitative measures is in line with an arbitral community that is, to a certain extent, innumerate and therefore in awe of the mastery of numbers. To impress the arbitral community, talk about the community in figures. She did not encourage a total departure from the quantitative, but to consider the qualitative aspects of the industry’s sociology. She covered its history, considered its debate between transparency and confidentiality, and cited instances like the ICCA Congress itself as opportunities to study and know the community from within.

Ultimately, the dispute – perhaps a quibble – was never resolved. And given that the practice of double hatting seems to be viewed by the community as more virtue than vice – the crowding out of junior talent by more established and esteemed practitioners notwithstanding – its decline or rise is probably unimportant. Critics will continue to criticise it, academics will continue to debate it, and the community’s elite will continue to give patronage to the milliner.

Young Practitioners and our Future

At this session, young practitioners from various jurisdictions came together to lead discussions on six key areas in a “speed-conferencing” format. Delegates were divided into small groups to share views on the latest developments in arbitration, before coming together to report back on their discussions. The session was moderated by Yuet Min Foo and facilitated by Julian Bordaçahar, Naomi Briercliffe, Elizabeth Chan, Valentine Chessa, Arie Eernisse, Iuliana Iancu, Jonathan Lim, Melissa Ordonez, Nesreen Osman, Naomi Tarawali, Siddharth Thacker and Nhu Hoang Tran Thang. Delegates discussed six key topics: the proliferation of young entrepreneurs; AI and digital technologies; climate change and arbitration; corruption in arbitration; geographical diversity; and transparency and confidentiality.

On the proliferation of young entrepreneurs, it was felt that there is no such thing as the “right” age to launch a business (unless launching exclusively as an arbitrator, which was agreed to be too risky without prior appointments). Regarding AI and digital technologies, the group looked at this through two lenses: AI’s contribution to efficiency, and the use of AI in rendering substantive decisions, the latter being more controversial. On the topic of the environment, the group agreed that disputes related to State action to combat climate change will undoubtedly increase. It discussed whether arbitration is fit for purpose, and whether it is a “force for good or evil”?

The group discussing corruption in arbitration wondered whether there was a need for regulation of arbitration. The wide consensus was no, thus favouring party autonomy. There was also a discussion on the role of soft law and the IBA guidelines, flagging the need to refer to and update these types of guidelines more regularly. In terms of geographical diversity, the group discussed the right to a diverse pool of arbitrators, some emphasizing that this was not a right but an expectation from clients. They raised the example of the arbitration involving Jay-Z and how the AAA addressed the lack of diversity in its pool of arbitrators, taking the issue seriously when raised. Finally, the group discussed transparency and confidentiality, including how different jurisdictions viewed the presumption of confidentiality in arbitration. In striking a balance between the two, there was suggestion of a middle ground where awards could be published with redactions if this would be in the public interest. Then again, others remarked that clients agree to publishing awards in principle but are generally reluctant to publish their own.

In the later part of the afternoon, the program offered to the delegates the last set of parallel sessions, looking at two types of legal frontiers: the new technological frontier, and various new substantive frontiers.

New Frontiers I: Arbitration in the Age of (Post-Pandemic) Technology 

International arbitration now operates in an age of accelerating technological advancement – particularly in the post-pandemic world. Professor Fabien Gelinas, moderator, was joined by Ji En Lee, Julie Raneda, Prof. Maxi Scherer, and Kathryn Khamsi. Prof. Gelinas observed that the stabilising objective of the law has meant that it is often resistant to change. He remarked that it is now time to move away from debating “whether” the legal community will keep pace with the tech evolution, but rather, “when and how”.

Mr. Lee analysed how the pandemic has altered the face of legal tech, particularly in relation to hearings, digitisation of documents, the creation of paperless environments, and business travel. Mr. Lee noted that lawyers may now be subject to additional client-scrutiny and may be required to further justify their chosen method of working, in respect of efficiency and cost. Finally, Mr. Lee stated that existing solutions should be integrated in the first instance, rather than reinventing the wheel.  Prof. Scherer explored the use of predictive tools, and the benefits to them. She noted that there are limitations to the use of AI, particularly its inability to provide satisfactory reasons – a crucial requirement of any arbitration, so that precedent can be set. In closing, she remarked: “If we accept AI-based legal decision making, we accept that we depart from known legal theory about decision making and refer to probability and statistics. Is this something that we wish for?”

Ms. Raneda focused on decentralised justice, and the main features of blockchain in practice. Ms. Raneda drew comparisons between current and potential methods of practice, and advanced the view that use of the blockchain in arbitration would make the process less cumbersome and expensive. Finally, Ms. Raneda advised that the use of the blockchain in arbitration must be firmly grounded in party autonomy. Finally, Ms. Khamsi made a case for the use of innovative data collection / analytic models. Ms. Khamsi observed that lawyers do not question the mechanisms behind more familiar tools – we only concern ourselves with the results. As such, Ms. Khamsi advocated for increased trust in new technologies, and encouraged the audience to tap into the “splendid creativity” in which we live.

New Frontiers II: The Subject Matters of the Disputes of Tomorrow

The last panel of the day looked at global issues emerging in the modern world including climate change and environmental protection, global data storage and the cloud, access to ever scarcer water resources, energy and mining transition, and human rights initiatives. The panel was moderated by Nigel Blackaby, who said a few words on the new types of disputes resulting from climate change and new technologies, and the need to balance the rights of investors with human rights and environmental factors.

Değer Boden discussed the reality and consequences of climate change, food insecurity and water scarcity, and the need to balance investment protection with public policy. There was discussion on treaties only protecting investors and the need to renegotiate, while acknowledging the fact that this will take time and that there may be an interim solution. Peter Cameron looked at what is meant by the energy transition, noting that approximately forty percent of ICISD arbitrations were related to energy. He touched on the strong public policy commitment from many governments to shift energy economies to net zero, as well as the disruption and disputes we can expect in this sector in the future, noting that the legal issues will be familiar even if the subject-matter of the dispute is new.

Next, Rodman Bundy centred his remarks on the water disputes likely to arise in the future and the balance that will need to be struck between the right to freshwater resources and the rights of investors. He spoke about the UN Watercourses Convention and settlement of disputes. Finally, Ginta Ahrel spoke about cloud computing and issues around crypto assets, AI and others. She listed the various components of this technology, including hardware, infrastructure, platforms, and applications. Services are intertwined and complex which will lead to disputes, including around the use of data, regulatory and intellectual property issues.

ICCA 2022 in Edinburgh is drawing to a close. Day 3, which wrapped up earlier this afternoon, welcomed delegates to two panels in the morning, followed by a debate on the future of ISDS and a closing keynote. A full report of the last Congress day will come tomorrow – stay tuned!

Follow along and see all of Kluwer Arbitration Blog‘s coverage of ICCA Edinburgh 2022 here

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ICCA Edinburgh 2022: Enlightenment, Adaptation, Classics Revisited and More: A Round-Up of the First ICCA Congress Day

Kluwer Arbitration Blog - Tue, 2022-09-20 02:36

The first full day of the ICCA Congress took place on Monday, September 19. Delegates gathered early in the morning for a keynote speech by Louise Arbour, prominent former Canadian diplomat, Judge, High Commissioner for Refugees and Chief Prosecutor for the Yugoslavia and Rwanda Tribunals. Ms. Arbour spoke of international arbitration from an outward perspective as an instrument of justice, which ‘participates in the larger enterprise of social stability, progress, prosperity and peace’.

After the morning’s welcome session, the Congress programming was paused to enable delegates to watch the official State funeral of H.M. Queen Elizabeth II.

Arbitration’s Age of Enlightenment … and Adaptation?

The Congress resumed with the first plenary of the Congress entitled ‘Arbitration’s Age of Enlightenment… and Adaptation?’, moderated by Loretta Malintoppi. The plenary addressed a variety of topics, namely the historic roots of international arbitration, the modern day impact of artificial intelligence on arbitration, and the submission of States to international arbitration. J. Christopher Thomas began by recounting a brief history of Andrew Carnegie’s contribution of significant funds for the Peace Palace that would later house the Permanent Court Arbitration, with a grander vision for the peaceful resolution of international disputes, a concept that resonates strongly in recent times.

Then, Professor Hi-Taek Shin commented on a wave of ‘nationalistic, protectionist and unilateral policies’ and questioned how international arbitration would fare in these circumstances, noting that international arbitration is premised on neutral, efficient and fair dispute resolution and, by default, seeks to be the opposite of what recent trends have reflected. Yet international arbitration itself is facing a legitimacy crisis, which Carole Malinvaud addressed, suggesting that the concept of procedural loyauté can be developed to act as a remedy for the new wave of legitimacy crises facing international arbitration. Broadly speaking, loyauté could be viewed as an all-encompassing term to capture due process, fairness, equality of arms, and so on. Its application could be as broad as its definition, spanning the entire arbitration procedure, but she cautioned against falling into ‘due process paranoia’.

Finally, Lucy Reed posed the question: ‘AI vs. IA: End of Enlightenment?’. She focused on the probable ability of AI to solve problems without the involvement or understanding of humans, and explored how excessive reliance on precedents in international arbitration (IA), without the application of genuine reasoning, can be seen as a low-tech and low-value type of AI.

Progress Made / Progress to be Made – Exploring the Ways Forward

In the first panel of the afternoon, entitled ‘Progress Made / Progress to be Made – Exploring the Ways Forward’ moderated by Professor Susan Franck, speakers assessed the current state of arbitration in the modern age and the fundamental challenges it will face in the world of tomorrow. Diamana Diawara, Lucy Greenwood and James Hope shared their personal list of “Top 3” issues in international arbitration where change would provide a vital benefit to practitioners and parties alike. The panel arrived at a collective list of challenges facing the discipline. These were (1) costs and efficiency, (2) the environment, and (3) legal culture and equality. The panellists also identified opportunities to implement the change needed to face these challenges.

In general, parties (i.e., clients) want (or say they want) an efficient dispute resolution process delivered at a reasonably low price. Meeting this demand, though not always easy or possible in complex or highly escalated disputes, is how arbitration practitioners stay relevant and desired by clients, according to Diamana Diawara. Some suggested methods to temper costs were to have junior-led teams for price-sensitive parties, keep pleadings short and filings small, eliminate unnecessary fees, and encourage parties to settle wherever possible.

Just as the impact of climate change on arbitration has increased over the past decade, Lucy Greenwood noted that we must be aware of the impact of arbitration on climate change. Here, virtual and paperless hearings and filings can help the industry do its part to avoid contributing to the climate crisis. Though in-person hearings will sometimes still be preferred, arbitration’s carbon footprint can be greatly reduced simply by flying less and printing less.

The arbitration community has seen an increase in women appointed as arbitrators, but there are still gains to be made in diversity and inclusion, notably along ethnic and geographic lines. The historical skew towards male, white, western arbitrators has an economic impact as it may prevent talent from developing outside of established arbitration centres and hamper parties’ faith in the system. Though constrained by party choice and the paramount concern for quality, institutions should advocate for greater diversity in arbitral appointments, perhaps even including clauses addressing diversity in their rules.

Acknowledging that implementing changes in these areas will be difficult, incremental, and sometime more up to the requests of the parties than the will of arbitration practitioners, Mr. Hope concluded the panel’s comments citing the Serenity Prayer, attributed to the Lutheran theologian Reinhold Niebuhr (1892–1971):

God, grant me the serenity to accept the things I cannot change,

the courage to change the things I can,

and the wisdom to know the difference.

Once Upon a Time in International Arbitration I: Three Classics Revisited

The afternoon then saw delegates split into two sets of parallel sessions. The first of these sets focused on revisiting the past and examining it through modern-day lenses.

Panel 2 was entitled ‘Once Upon a Time in International Arbitration I: Three Classics Revisited’. The panel moderator, Galina Zukova, encouraged the panellists to discuss why three cases, Barcelona Traction, Abu Dhabi Oil, and Mitsubishi Motors, have earned ‘classic’ status, and to analyse how each one may be decided today.

Dr. Nagla Nassar examined the Abu Dhabi Oil judgment. Dr. Nassar reviewed the evolution of the judgment’s relevance – and the advancements in the arbitration field since it was decided in the 1950s. Most poignantly, Dr. Nassar observed that the decision sought to establish fairness, and posed the following question to the audience: “are we expected to strive for fairness and justice, or be guided by a strict need to apply the law?”

Professor Jan Paulsson explored the Barcelona Traction case, analysing the impact of the judgment on the protection of foreign investment, and the risks posed by the objective to potentially resurrect the judgment, which has since been overturned. Professor Paulsson implored the critics who wish to prohibit shareholder claims “to point to awards which have resulted in unjust enrichment to the claimants” and expressed little sympathy towards those who want the Barcelona Traction case to overrule shareholder claims, warning that this will discourage foreign investment.

Finally, Professor George Bermann provided an overview of the Mitsubishi Motors case. Professor Bermann advised that the decision does not mention the relevant agreement’s choice of law clause (Swiss), but rather, states that “if this dispute falls within the scope of the arbitration agreement, then it is arbitrable, and is to be decided under the law from which the claim arose” which in that case, was U.S. antitrust law. As a corollary to this point, Professor Bermann queried whether today’s tribunals could take the same approach: where parties have selected their choice of law, can a tribunal apply a law alternative to the parties’ choice? Finally, Professor Bermann analysed the “second look principle”, and whether it is a benefit to arbitration for courts to reserve the right to review an arbitral decision, in order to analyse whether the right decision was reached.

Once Upon a Time in International Arbitration II: State Responsibility – Then and Now

Panel 3, moderated by Stephen Drymer, and titled ‘Once Upon a Time in International Arbitration II: State Responsibility – Then and Now’ explored an interesting interaction between the ILC’s Articles on State Responsibility and investment arbitration. The panel consisted of Judge Bruno Simma, Professor Christian J. Tams, and Chester Brown. The panellists observed that the ILC Articles have always centred upon inter-state relationships and issues, but there has been a growing trend for investment arbitrations to refer to them. Indeed, it was mentioned that 219 references were noted in publicly-available awards. Concerns have been raised in the past on investment arbitrations being able to correctly apply international law, and cases such as UPS v Canada provide a clear signal that the arbitration community is in fact moving in the right direction. From what may have appeared to be a disharmony between public international law and investment law decisions and arbitrations, panellists remarked that the relationship is shifting towards a more synergic and harmonious one.

Arbitration’s Printing Press

In the later part of the afternoon, delegates were invited to choose between the second set of parallel sessions.

Panel 4 was entitled ‘Arbitration’s Printing Press’. Moderated by Ziad Obeid, the panel was composed of Paula Hodges KC, Lilit Nagapetyan (winner of the Young ICCA Essay Competition) Anke Sessier, Mallory Silberman, and Caroline Simson. Ms. Hodges explored the history of privacy in arbitration, noting that it rested at the forefront of parties’ objectives at the commencement of the arbitration-age. She expressed that, in her view, this objective remains, and is supported by 87% of respondents to a recent study, who confirmed that confidentiality is of key importance to them. The discussion progressed on matters of party autonomy, company reputation, heightening the chances of settlement, the risk of copycat claims and exposing trade secrets. Ms. Nagapetyan analysed the concept of legitimacy, and the foundational question of whose interest confidentiality serves.

As the former General Counsel of a large company, Dr. Sessler answered Mr. Obeid’s question as to whether businesspeople assume that arbitration equals confidentiality as the default position. Dr. Sessler noted that confidentiality clauses are often entered into, and that there exists a notion that privacy is synonymous with the arbitration process. Ms. Simson explored the benefits of increased transparency, including the public interest, predictability, heightened accountability, and legitimacy. In contrast, Ms. Silberman advanced the idea that we cannot debate transparency. She suggested that it was now time to strike this topic from conference agendas arguing that the issue of access was up to the parties or tribunal, not conference delegates. Ms. Silberman observed that there was already extensive information available to the public, and that we are in fact attempting to debate a narrow issue – whether or not parties’ pleadings should be published (an issue that can be resolved to service both parties).

Post Pandemic Dispute Resolution Toolbox

Last but not least, Panel 5, entitled ‘Post Pandemic Dispute Resolution Toolbox’ and moderated by Lindy Patterson KC, delved into the future and optimisation of the international dispute resolution process, structured around five questions: (1) Has the ADR toolbox changed as a result of the pandemic or other factors?; (2) Is the use of mixed-mode DR processes the way ahead?; (3) What can you do upfront at the beginning of the contractual relationship to facilitate mixed-mode DR?; (4) How can stakeholders (neutrals, parties, outside counsel and institutions) best assist and when? (5) What about innovation – new tools?

With these questions in mind, the discussion centred on different models and approaches that could be used when managing disputes. Wolf von Kumberg was a proponent of a mixed-mode approach, wherein a mediation process would run in tandem with an arbitration. The idea is that instead of letting arbitration be seen as the ineluctable result of an escalating conflict, by running it in parallel with a mediation, the option of settlement via mediator is a more present option; should mediation fail, the parties will already have a jumpstart on arbitral proceedings, so no time will be wasted moving from mediation to arbitration.

Elina Mereminskaya suggested that “knowledge-based tools”, which include interdisciplinary, dispute-preventative approaches to projects need to be part of the ADR toolbox. An example of a knowledge-based dispute resolution mechanism is the Technical Panel for the concessions of public works that exists under Chilean law, which must be composed of two lawyers, two engineer, and an economist. In the course of operating a concession, disputes first go through the Panel, which offers a recommendation, which can be accepted by the parties or rejected should they wish to resort to arbitration.

The principle at the heart of such ADR tools was summed up by Justice Joyce Aluoch: Parties want a decision quickly and effectively. If a mixed-mode approach or recourse, knowledge-based tools, or simply encouraging the uptake of mediation over arbitration works for them, then that solution is fit for purpose.

On Day 2, which is now ongoing, delegates can expect another busy day of interesting panels and side events. Panels will touch upon ISDS reform, regional perspectives from all corners of the globe, the sociology of arbitration, and panels on young practitioners, technological innovations, and the subject-matters of the disputes of tomorrow.

 

Follow along and see all of Kluwer Arbitration Blog‘s coverage of ICCA Edinburgh 2022 here

More from our authors: International Investment Protection of Global Banking and Finance: Legal Principles and Arbitral Practice
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Arbitration in Egypt: A Practitioner\'s Guide
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Mediators Help Save the Economy

ADR Prof Blog - Mon, 2022-09-19 20:40
The news media have a well-known bad-news bias.  If something bad is happening or – better yet – threatening to happen, the headlines scream of impending disaster. Good news, not … Continue reading Mediators Help Save the Economy →

ADR at Comic Cons

ADR Prof Blog - Mon, 2022-09-19 15:49
As you may know, Noam Ebner and I have been co-editing a book on Star Wars and conflict resolution, soon to be published by DRI Press! This past summer, we … Continue reading ADR at Comic Cons →

ICCA Edinburgh 2022: Haste Ye Back! Reasons to Return to Scotland

Kluwer Arbitration Blog - Mon, 2022-09-19 03:18

After a long, pandemic-induced delay, the ICCA Congress in Edinburgh is now in full swing.  Six and a half long years after winning the bid to host the XXVth ICCA Congress, I had almost forgotten why we, the Scottish Arbitration Centre, had made the bid in the first place, but as the international arbitration community descends upon Edinburgh, it is all coming back to me: we want you to come back, again and again.

With its rich history, beautiful scenery, wonderful food and drink, and warm hospitality, Scotland is a fantastic place to visit (and to live!), but how is it as a place to arbitrate?  Here are my top ten reasons to use Scotland as a seat and a venue for arbitration.

 

  1. Our Arbitration Law

Our arbitration law is set out in the Arbitration (Scotland) Act 2010.  It is a very modern arbitration statute, modelled on the Arbitration Act 1996 applicable in England and Wales.  Our Act will feel instantly familiar to anyone who knows the 1996 Act, and English authority is frequently referred to when interpreting the equivalent provisions in the Scottish Act.  There are a few differences with the 1996 Act.  For example, we have opt out confidentiality built into the legislation, and some of the lacunae in the 1996 Act have been addressed in the Scottish Act, but there are no surprises.

 

  1. Our Legal Culture

Scotland is generally regarded as a common law jurisdiction, because we have adversarial courts and a system of binding precedent.  It is also true to say that our commercial law is very similar and in some places identical to the law of England and Wales.  However, that is not the whole picture.  The Scots law is best described as a mixed system.  The origins of what might be regarded as the modern Scots law (from the late 1400s) are in Romano-Dutch law and the Canon law, and it is still possible to plead Roman law in certain cases.  Whilst none of that is likely to affect an arbitration, unless Scots law is chosen as the substantive law of the contract, Scottish legal culture is influenced by civilian systems.  A key procedural distinction is that we do not have a duty of disclosure, and we do not have the Anglo American system of document discovery.  In many ways, Scotland’s legal culture is a natural fit with international arbitration.

 

  1. Our Judiciary

The Court of Session, established in 1532, has an impeccable reputation for probity and fairness.  The judges of the Court of Session, known as Senators of the College of Justice, preside over a wide range of cases, with commercial and arbitration related cases being sent to dedicated commercial/arbitration judges.  The Court has developed a streamlined system of dealing with arbitration related applications.  Since the introduction of the 2010 Act, the approach of the arbitration judges has been one of consistent support for the arbitral process.

 

  1. Our Legal Expertise

It is fair to say that Scots law does not have the same currency as, for example, English law.  However, the advantage of this for the Scots lawyer is that in the commercial world we must be familiar with other legal systems as well as our own, and English law in particular.  It is a testament to the excellence of Scottish legal training that both the President and Vice President of the UK Supreme Court (Lord Reed and Lord Hodge) are Scottish lawyers.

 

  1. Our Openness

Scotland is an entirely open jurisdiction for arbitration.  There is no requirement to have a Scots law qualification to sit as an arbitrator, or represent a party in an arbitration seated in Scotland.  Parties are entirely free to appoint their representatives, who may be qualified in any jurisdiction, or none.

 

  1. Accessibility and Connectivity and Safety

There are direct flight to Scotland from airports all over Europe, from the Middle East, from the East coast of the US, and it is easy to reach Scotland from London airports, but also from hub airports like Amsterdam, Istanbul, Qatar and Dubai with connecting flights to Africa, and the far east. Scotland is a safe place, with low crime rates.

 

  1. Facilities

Scotland offers a wide range of venues in which to conduct arbitration: from the hearing rooms of the Scottish Arbitration Centre in central Edinburgh, to the grandeur of the historic hotels in our cities, or indeed the countryside, or the splendour of our time-honoured buildings, like the Signet Library.

 

  1. Enforceability

As part of the UK, Scotland is subject to the New York Convention, and other treaties and agreements governing the recognition and enforcement of foreign arbitration agreements, orders and awards. The situation is no different than it would be for a London seated arbitration.

 

  1. Immunity

The Arbitration (Scotland) Act 2010 makes it clear that neither the tribunal, nor any arbitrator is liable for anything done or omitted in performance of the tribunal’s functions, and extends that immunity to any clerk, agent, employee or other person assisting the tribunal to perform its functions.

 

  1. Our Rules

It is possible to seat an arbitration governed by any set of institutional rules (or none) in Scotland (and indeed we at the Scottish Arbitration Centre encourage you to do so).  The Scottish Arbitration Centre has now launched its own institutional rules.  These are light touch rules, backed by a state of the art online case management system developed with Opus 2, a legal technology company that has been developing digital solutions for courts and arbitration proceedings for over a decade.

 

So, in conclusion, Scotland is now the place to arbitrate!  Come back and see us soon.

Follow along and see all of Kluwer Arbitration Blog‘s coverage of ICCA Edinburgh 2022 here

More from our authors: International Investment Protection of Global Banking and Finance: Legal Principles and Arbitral Practice
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ICCA Edinburgh 2022: “Arbitration’s Age of Enlightenment”

Kluwer Arbitration Blog - Sun, 2022-09-18 04:26

The 2022 ICCA Congress kicks off today in Edinburgh. Together with our Host Committee, the Scottish Arbitration Centre, and my Congress co-chair and immediate past ICCA President Gabrielle Kaufmann-Kohler, it is an honor to declare the XXVth ICCA Congress officially open!


Arbitration’s Age of Enlightenment?

The XXVth ICCA Congress has been seven years in the making, starting in 2015 with the bidding process to host the 2020 ICCA Congress (as it was then scheduled). At the closing ceremony of the last Congress in Sydney, in 2018, our Scottish hosts invited us to “look to Scotland” and take part in spring 2020, in arbitration terms, in the “blossoming of a new Scottish enlightenment”. After three postponements due to the Covid-19 pandemic, we are thrilled to welcome over 1,300 delegates, some 80 speakers and moderators, and more than 50 exhibitors from every part of the globe. This looks to be the highest ICCA Congress attendance ever, proving just how important it is for us to see each other in person again.

The theme of this year’s Congress is “Arbitration’s Age of Enlightenment?”, an appropriate tribute to the host city of Edinburgh and the Scottish Enlightenment. Hailed as one of Scotland’s most innovative periods, the Scottish Enlightenment was an age in which the old order was challenged, and new ideas led to accelerated progress in numerous fields of human civilization. Similarly, albeit modestly, by raising the question of arbitration’s age of enlightenment, the Congress Program Co-Chairs Cavinder Bull, Loretta Malintoppi and Constantine Partasides invite us to discuss the progress made in the field of arbitration thus far and its role in the global system of law going forward.

The Congress program reflects this objective. The panels, adapted to keep up with events over the past two years, will touch upon questions such as the impact of new technologies on international arbitration, the state of our field and its most pressing issues, the cross-fertilization of international arbitration and other disciplines, regional perspectives from Africa, the Americas, Asia, Europe and the Middle East, and the future of investment arbitration. We also look forward to the opening keynote addresses by prominent former Canadian diplomat, Judge, High Commissioner for Refugees and Chief Prosecutor for the Yugoslavia and Rwanda Tribunals Louise Arbour, and the closing address by Lord Carloway, Lord President of the Court of Session and Lord Justice General of Scotland.

Importantly, ICCA and the Host Committee will mark the passing of Her Majesty Queen Elizabeth II, and have adjusted the programming to enable delegates to follow the official State Funeral on Monday, 19 September.

The next blog posts in this special ICCA Congress series will report on the highlights of each Congress Day and offer analyses of the cross-cutting issues addressed across panels during the Congress.

 

ICCA Congresses through the Years

ICCA is a global non-governmental organization devoted to promoting the use and improving the processes of arbitration, conciliation and other forms of international dispute resolution. Today, its main activities include Congresses, specialized publications, projects and judicial outreach. The ICCA Congresses are the largest regular gatherings on the international arbitration calendar. Held biennially (except in pandemics!), the Congresses are a time to reunite and connect with colleagues old and new. They also provide an opportunity to welcome emerging practitioners onto the arbitration scene.

ICCA was founded in 1961, the same year its first Congress was held in Paris. Since then, ICCA has held Congresses on every continent, striving for geographic diversity and representation. Today, ICCA Congresses aim to showcase their host countries as arbitration seats and stimulate the practice of international arbitration at the host venue. The four Congresses held in the last decade took place in Singapore (2012), Miami (2014), Mauritius (2016) and Sydney (2018), which are all increasingly recognized as emerging hubs for international arbitration.

 

ICCA Projects Featured in Edinburgh

ICCA Congresses are the ideal occasion to showcase ICCA’s latest initiatives. At ICCA Edinburgh, delegates can expect a series of project launches from ICCA’s task forces and working groups.

On the morning of the first Congress day (Monday 19 September), the ICCA-ASIL Task Force on Damages will present their Damages in International Arbitration (DIA) application. Launched in the fall of 2021, this web- and smartphone-based app provides practical guidance on the key legal, quantitative and procedural issues implicated in quantifying damages in international arbitration. The objective of the Task Force is to promote rigor and consistency in our field’s approach to this critical stage of an international arbitration. Delegates will have the chance to experiment with the app and take part in a discussion lead by Task Force Co-chairs Catherine Amirfar and Gabrielle Nater-Bass.

At a lunch symposium on Monday, the Working Group on Cybersecurity in International Arbitration will present its 2022 Protocol on Cybersecurity. The product of a collaboration between ICCA, the New York City Bar Association and the International Institute for Conflict Prevention and Resolution (CPR), the Protocol serves as a set of guidelines on reasonable security measures for users of arbitration, counsel, arbitrators and arbitral institutions. The Protocol was launched in November 2019 and has become even more necessary in the wake of the Covid-19 pandemic and the shift to virtual proceedings. Brandon Malone, Chair of the Working Group (and member of the Congress Host Committee) will host a lunch event and present delegates with the new features of the 2022 Protocol.

On Monday evening, the ICCA Task Force on Standards of Practice in International Arbitration and Co-chairs Abby Cohen Smutny and Guido Santiago Tawil will be hosting a small get-together to acknowledge the recent release of the Guidelines on Standards of Practice, meant to serve as guiding principles of civility, taking into account the many cultures and situations in which international arbitration is employed. Readers can also listen to Abby discuss the work of the Task Force in a prior episode of Kluwer’s International Law Talk podcast series.

On the second Congress Day (Tuesday 20 September), ICCA’s Diversity and Inclusiveness Committee, chaired by Sylvia Noury, will be hosting a breakfast with the Cross-Institutional Task Force on Gender Diversity in Arbitral Appointments and Proceedings, chaired by Carolyn Lamm. The Committee will discuss ICCA’s diversity policies and explore the way forward. The Task Force will also be presenting an updated version of its 2020 report on recent statistics on the appointment of female arbitrators in international arbitration, as well as best practices to promote gender diversity in our field.

At lunchtime on Tuesday, we will turn our attention to the topic of data protection. The ICCA-IBA Joint Task Force on Data Protection in International Arbitration, co-chaired by Kathleen Paisley and Melanie van Leeuwen, will release the official ICCA-IBA Roadmap to Data Protection in International Arbitration. Delegates will learn about key data security concerns in arbitral proceedings and contribute to a discussion on the practicalities of applying data protection rules during an arbitration, using practical examples from the Roadmap.

Finally, on the third Congress day (Wednesday 21 September), the co-editors of ICCA’s comparative research project “Does a Right to a Physical Hearing Exist in International Arbitration?”, Giacomo Rojas Elgueta, James Hosking and Yasmine Lahlou, will host a breakfast event to celebrate the release of their general report analysing the multi-jurisdictional survey conducted in 78 national jurisdictions on whether a right to a physical hearing exists in international arbitration. The general report will be published along with a set of essays exploring the interaction between remote hearings and fundamental conceptual issues in international arbitration.

 

A Renewed ICCA – Kluwer Arbitration Partnership

ICCA is proud to announce the renewal of its ongoing relationship with Kluwer Arbitration. Kluwer Arbitration has been the exclusive publisher of ICCA’s specialized arbitration publications for many years, namely: the ICCA Yearbook Commercial Arbitration, a key source of information concerning international arbitration jurisprudence; the ICCA International Handbook on Commercial Arbitration, a comprehensive guide to arbitral law and practice covering over 85 countries; and the ICCA Congress Series, a compendium of papers and keynotes presented at every ICCA Congress since 1982. The papers presented in Edinburgh will be published in the 21st edition of the Congress Series and distributed to all Congress delegates. These and other ICCA publications are prepared with the assistance of the Permanent Court of Arbitration.

 

Opening the Doors to International Arbitration

Diversity and inclusiveness are central ICCA values. ICCA’s branch of over 8,000 young practitioners worldwide, Young ICCA, will be hosting a mentorship lunch during the Congress and a Young ICCA event on Wednesday after the close of the official Congress. For the first time, the winner of the inaugural Young ICCA Essay Competition will be speaking at the Congress session on “Arbitration’s Printing Press”.

We have spearheaded initiatives to open Congress attendance to a broader audience of younger and diverse practitioners. For the first time, through the ICCA Inclusion Fund, twenty-three ICCA and Young ICCA members have received funding to travel to and attend the Congress. ICCA and the Scottish Host Committee have also supported the Karl-Heinz Böckstiegel Foundation to offer young academics the funding necessary to attend. Finally, ICCA has awarded delegate status to the recipient of the inaugural ICCA-Guillermo Aguilar-Alvarez Memorial Prize, the individual under 40 who wrote the best published work on international arbitration, to be announced at the Congress.

And that is not all.  I will have the pleasure of announcing the recent launch of the ICCA Johnny Veeder Fellowship Program at our gala dinner on Tuesday night. These new Fellowships will provide “micro-grants” to allow qualified recipients to pursue study, internships, research and writing projects or other one-off projects in the field of international arbitration.

Finally, in the spirit of maximizing inclusiveness, ICCA will be making all session recordings available shortly after the Congress free of charge on the ICCA website.

The road to Edinburgh has been filled with twists and turns, highs and lows.  But we made it! On behalf of ICCA, I welcome all who are here in person and invite you all to follow Congress coverage on the Kluwer Arbitration Blog over the next few days and weeks.

Follow along and see all of Kluwer Arbitration Blog‘s coverage of ICCA Edinburgh 2022 here

More from our authors: International Investment Protection of Global Banking and Finance: Legal Principles and Arbitral Practice
by Arif H. Ali & David L. Attanasio
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Arbitration in Egypt: A Practitioner\'s Guide
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Open Position: Assistant Editor of Kluwer Arbitration Blog

Kluwer Arbitration Blog - Thu, 2022-09-15 09:15

The Editorial Board of Kluwer Arbitration Blog announces the opening of the following position with Kluwer Arbitration Blog: Assistant Editor for Investment Arbitration. 

The Assistant Editor reports directly to the coordinating Associate Editor and is expected to (1) suggest, solicit, edit and review submissions related to investment arbitration for posting on the Blog, including by proactively identifying ways to ensure Blog coverage of developments related to investment arbitration; and (2) write blog posts as contributor. You have the opportunity to work with a dynamic and dedicated team and liaise with the best arbitration counsel in the world.

The Assistant Editor will work remotely. Please note that this is a non-remunerated position. If you are interested, please submit a resume and cover letter by email to Dr Crina Baltag, crinabaltag@gmail.com. Only shortlisted candidates will be contacted. The deadline for receiving applications is 7 October 2022.

More from our authors: International Investment Protection of Global Banking and Finance: Legal Principles and Arbitral Practice
by Arif H. Ali & David L. Attanasio
€ 202
Arbitration in Egypt: A Practitioner\'s Guide
by Ibrahim Shehata
€ 190


The threshold for setting aside an arbitral decision remains high

International Arbitration Blog - Wed, 2022-09-14 09:59

The recent decision of NDK Ltd v HUO Holding Ltd [2022] EWHC 1682 (Comm) is evidence of English courts’ continued support for arbitration and the significant hurdler one faces to appeal arbitral awards. In this decision, s. 67 challenges of the Arbitration Act 1996 (the “Act”) were rejected by the Commercial Court (the “Court”).

Interviews with Our Editors: Lord Chief Justice Hon. Michael H. Whitten KC, Supreme Court of Tonga

Kluwer Arbitration Blog - Wed, 2022-09-14 01:48

Lord Chief Justice Hon. Michael H. Whitten KC has been the Lord Chief Justice of the Kingdom of Tonga since 2 September 2019. After gaining early broad experience in various areas of law, Chief Justice Whitten was called to the Queensland Bar in 1990 before moving to Victoria where he practised for more than 20 years in commercial litigation, specialising in building, construction, infrastructure and energy disputes. Chief Justice Whitten appeared in all jurisdictions and fora across Australia and took silk in 2015. He also appeared, as a barrister, in commercial arbitrations, both domestic and international, and expert determinations. Chief Justice Whitten is a Fellow of the Chartered Institute of Arbitrators and was a member of the Australian Bar Association’s Arbitration committee until his appointment to the judiciary.

Chief Justice Whitten’s work in Tonga has included consulting on the International Arbitration Bill, following Tonga’s accession to the New York Convention on 12 June 2020. Kluwer Arbitration Blog has previously published a post highlighting the key provisions of Tonga’s International Arbitration Act 21 of 2020 / Lao ki he Fakatonutonu Fakavaha’apule’anga – Lao Fika 21 ‘o e 2020 (the “Act”) as well as the first two decisions mentioning the Act, both of which were handed down by Chief Justice Whitten.

It is therefore an immense privilege to be joined by Lord Chief Justice Whitten on Kluwer Arbitration Blog!

 

  1. Could you please share with us some of the defining moments in your career to date that led you to develop a practice in international arbitration? Could you also share with us your journey to becoming Lord Chief Justice of Tonga?

At the start of my legal career in Queensland, I practised in all areas. When I moved to Victoria in 1996, where the Bar has a clerking system, I was fortunate enough to be accepted to List G, which was, and remains, one of Australia’s leading commercial lists. Within a relatively short time, the majority of cases in which I was briefed involved building and construction law. That area developed into an interest, and eventually participation, in domestic and international arbitration work. One of my first major briefs in the latter (as then one of a number of junior counsel led by George Golvan KC) was in 2004 for an arbitration hearing in Hong Kong involving the Cheung Kong Centre.

In 2015, I (along with, I suspect, most barristers in Australia, New Zealand and elsewhere in the region) received an email calling for expressions of interest in appointment as the Lord Chief Justice of the Kingdom of Tonga. I was immediately curious, but the timing wasn’t quite right. I felt I had ‘unfinished business’ in terms of work achievements at the Bar and my wife and I still had children at home. At that time, I was also avidly involved with both the Victorian and Australian Bar Association’s arbitration committees in developing the arbitration market and opportunities for Australian advocates and arbitrators in the region.

In early 2019, some years after having taken silk and having just completed a long running trial in Western Australia (final appeals from which are soon to be heard by the High Court), the same email appeared. I reactively pressed send with my expression of interest not thinking much would come of it. About 20 minutes later, I received a reply asking for my CV. After pressing send again, I told my wife what had happened. For both of us, a mildly excited but silent anticipation followed.

After what seemed like an eternity, and I had begun to believe my initial expectation, I received a call from the then Chief Justice, Owen Paulsen, advising that I had been ‘shortlisted’ and that the Judicial Appointments and Discipline Panel (a Tongan Constitutional body of advisors to the King) would like to interview me. The first questions during my interview with the Panel members in Auckland, and my first glimpse into Tonga, were about religion and my views on the death penalty. Of all the topics for which I had endeavoured to prepare, those were not among them. Towards the end, I was asked about something on which I had necessarily introspected for some time. In answer to Harry Waalkens KC, the then Lord Chancellor, about why I wanted the job, the short answer, I said, was: to serve.

About six weeks later, Harry sent an email commencing with the word “Congratulations”. Shortly after that, my wife and I flew to Tonga during the last week of Owen’s tenure for a ‘handover’. That week saw us emerge from the seeming romance of the looming adventure to the reality of the enormity of the task, including, not least, that under the Constitution, the Chief Justice is a multi-faceted role. We also realised that our understanding of the word ‘service’ was about to be redefined.

And so, after wrapping up my practice and our life in Melbourne, on 1 September 2019, I was sworn in before Cabinet. About 15 minutes later, I walked into court 1 and commenced my judicial experience as President of the Court of Appeal. Thankfully, I was accompanied by preeminent judges in the Hon. Ken Handley (New South Wales Court of Appeal, retired), Sir Peter Blanchard (Supreme Court of New Zealand, retired) and Richard White (New South Wales Court of Appeal, serving). For their example, wisdom and patience, I shall always be grateful.

 

  1. Aside from Fiji and the Cook Islands, Tonga is the only other Pacific Island country to enact legislation based on the UNCITRAL Model Law on International Commercial Arbitration. What has contributed to Tonga’s success as a leader in international arbitration reform in the Pacific?

While Tonga is among the first of the contracting States in the Pacific to manifest its accession to the New York Convention through enacting the International Arbitration Act 2020 (“the Act”), its true success in that initiative will be measured by the extent to which Government and the private sector engage in and with international arbitration. The catalyst, and indeed, imperative, for that engagement, is foreign investment. While I do not presume to speak for the Legislative or Executive branches of Government, or for His Majesty, it would appear self-evident that Tonga’s progress in this regard has been borne of the realisation that, like many developing countries in the region, attracting positive foreign investment is key to its economic future. Without that, Tonga will continue to be heavily dependent on the support of foreign development partners and remittances from family and friends throughout the Tongan diaspora. For a country whose population size is inverse to its apparent geopolitical significance in the Pacific, healthy development of its natural resources in areas such as tourism (where Fiji, among others, is a prime example), agriculture, seafood and subsea minerals, not to mention the extraordinarily high proportion of its population with tertiary qualifications, requires both domestic and foreign investment. Tonga’s engagement with, and implementation of, the Convention principles serves to enhance its attraction to those investors.

 

  1. What further steps can be taken to effectively implement the New York Convention in Tonga? In your view, what role does the judiciary play in this regard?

Firstly, the starting point for greater implementation must be the inclusion of arbitration agreements in relevant commercial and investment contracts. The terms of those provisions must either specify or at least reflect the UNCITRAL Model Law and Arbitration Rules to provide congruence with the Act.

Secondly, the facilitation of international arbitrations requires greater capacity-building both in terms of qualified and experienced arbitrators in the region and the establishment of institutional arbitration centres similar to SIAC, HKIAC and those in Korea, Japan and Shanghai. While the volume of arbitrations in Tonga are, at present, unlikely to necessitate or support the establishment of a dedicated centre for some time, a centre for Polynesia (with Suva being among the most obvious geographical candidates) is, in my view, demonstrably warranted.

The role of the judiciary in supporting international arbitration is prescribed by the Act (in Tonga and in comparable legislation elsewhere) as including giving effect to arbitration agreements, interim measures, assistance in taking evidence, appointment of arbitrators, determination of preliminary points of law, and, most importantly, setting aside or recognition and enforcement of awards. Further support has been demonstrated worldwide in jurisdictions where specialised arbitration courts, or at least, dedicated lists within existing superior courts, have been established.

 

  1. As covered in a previous blog post, we understand that the Asian Development Bank (“ADB”) in cooperation with UNCITRAL provided technical assistance to Tonga in implementing its legislative framework for arbitration. What role has such technical assistance had in boosting knowledge about arbitration and its popularity in the region? What support could other stakeholders such as arbitral institutions provide?

The ADB and UNCITRAL representatives were instrumental in the creation and passing of Tonga’s International Arbitration Act. Gary Born and his cohort of advisors deserve special recognition for their work with the Tongan Government and other stakeholders in the work leading to accession and enactment.

As mentioned above, the presence and commitment of arbitral institutions in this region is, in my view, an important element to ensuring that the legislative initiatives become manifest in attracting foreign investment and providing proven support in facilitating international dispute resolution through arbitration (and Med-Arb) procedures. Institutions are also likely to attract qualified and experienced arbitrators to the region as well as providing education on the advantages of party autonomy including choice of law, forum and arbitral tribunal.

 

  1. Are there any emerging trends in the adoption of arbitration among businesses in the Pacific Islands and international investors, such as in the energy, construction or climate finance sectors?

So far as Tonga is concerned, the first inklings of adoption (which, by definition, involves a confidential process and thus, in the absence of arbitral institutions, overt statistics are necessarily hard to come by) are by Government. A recent example was discussed in the decision of Kacific Broadband Satellites International Ltd v Registrar of Companies [2021] TOSC 93, involving an arbitration seated in Singapore between the Tongan Government and a satellite internet provider. I expect that the experience and outcome in that case, and others, either has, or will, inform the extent to which Government contracts with foreign suppliers will include arbitration agreements and their terms.

So far as matters coming before the Supreme Court would indicate, adoption of arbitration and therefore the application of the Act is still in its nascent stages. Where domestic arbitration agreements have been included, the general experience so far has been of the parties effectively waiving those agreements, mainly because of a perceived lack of any duly qualified and/or (truly) independent arbitrators in the Kingdom.

 

  1. In 2018, Justice Laki Niu became the first Tongan to be a member of the Supreme Court of Tonga in over a hundred years. Apex courts in many Pacific Island jurisdictions consist of a mix of foreign and local judges, in light of factors such as close family and community connections of local judges.1)See Rosalind Dixon & Vicki Jackson, ‘Hybrid Constitutional Courts: Foreign Judges on National Constitutional Courts’ (2019) 57(2) Columbia Journal of Transnational Law 283, 308. jQuery('#footnote_plugin_tooltip_42590_30_1').tooltip({ tip: '#footnote_plugin_tooltip_text_42590_30_1', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top right', relative: true, offset: [10, 10], }); In the context of domestic and international arbitration, how important is it to increase the pool of local arbitrators, especially as more Pacific Island parties become users of arbitration? How might this be achieved?

The answer to this question segues from the last. In any relatively small population, ensuring the independence of decision-makers (i.e. that he/she is not related in some way to anyone involved in the case) is often a challenge. It would appear to be part of the reason that successive Kings of Tonga have appointed foreign judges for over a century. For the same reason, any pool of arbitrators servicing Tonga and the Pacific will likely comprise a significant percentage of foreigners (or ‘palangi’). That does not mean, however, that local practitioners (who have invaluable insights and experience as to local customs and expectations) should be overlooked in terms of training and capacity building. It does mean that choice, which is inherent in arbitration, will be critical.

 

  1. In the case of Fe’ao Vunipola v Tonga Rugby Union, Your Honour observed (at para. 107) that changes to arbitration laws “insofar as they relate to domestic commercial arbitration, are yet to find their way into the Tongan legal framework.” Would the enactment of legislation on domestic arbitration be a desirable future step and what impact could this have on dispute resolution trends in Tonga domestically?

Absolutely. Domestic arbitration legislation is a natural concomitant to the now established international framework. In most jurisdictions, the order of adoption has been the other way. The fact that international arbitration legislation has been enacted first in Tonga is a reflection of Government consciousness of the need to attract foreign investment by ensuring modern, consistent and well-established means of dispute resolution.

Within the Tongan domestic arena, a consciousness of (or appetite for) the advantages of alternative dispute resolution, whether by way of mediation or arbitration, appears to also be in its nascent stages. At present, mediation cannot be ordered by the Court without the consent of all parties. In my time in Tonga, and despite enthusiastic encouragement from the Bench, that consent has rarely been forthcoming. So far as I have been able to fathom, there are cultural attitudes at play in litigation in Tonga, including a war like mentality (possessed by parties, most of their lawyers, or both) which often tends to preclude just about any possibility of resolution prior to judgment. Incentives for party driven resolution have been slowly introduced by measures such as preliminary determination of pivotal issues and more significance being given to effective offers of compromise on questions of costs. Beyond that, greater enforcement by the Courts of arbitration agreements, where they exist (compare Vunipola v Tonga Rugby Union Incorporated [2021] TOSC 141), will have a positive impact on domestic dispute resolution in Tonga.

 

  1. Finally, what, in your view, is the biggest challenge and opportunity for arbitration in the Pacific Islands region?

If the challenges (and there are many) can be ranked in order of magnitude, I think education is probably the ‘biggest’. The advantages of arbitration must be known, and realised, before greater adoption can be expected.

A related requirement is trust. For that, enabling legislation (as per Fiji, the Cook Islands, and now, Tonga) is essential. So too is demonstrated preparedness by the Courts to enforce (where appropriate) foreign arbitral awards. The support of arbitration institutions and availability of experienced, independent arbitrators are also critical to developing confidence amongst stakeholders.

The opportunities for arbitration in the Pacific are untold and, so far, relatively untapped. That potential, however, is dependent upon, and will be measured by, the extent to which the above challenges are addressed. The inclusion of ADR regimes in contracts between trading parties engaging in and with the Pacific will be heavily informed by their level of confidence that, for instance, arbitration processes and outcomes will be efficient, effective and enforceable in the region.

 

Thank you, Lord Chief Justice Whitten, for taking the time to share your invaluable perspectives with our readers.

This interview is part of Kluwer Arbitration Blog’s “Interviews with Our Editors” series. Past interviews are available here.

References[+]

References ↑1 See Rosalind Dixon & Vicki Jackson, ‘Hybrid Constitutional Courts: Foreign Judges on National Constitutional Courts’ (2019) 57(2) Columbia Journal of Transnational Law 283, 308. function footnote_expand_reference_container_42590_30() { jQuery('#footnote_references_container_42590_30').show(); jQuery('#footnote_reference_container_collapse_button_42590_30').text('−'); } function footnote_collapse_reference_container_42590_30() { jQuery('#footnote_references_container_42590_30').hide(); jQuery('#footnote_reference_container_collapse_button_42590_30').text('+'); } function footnote_expand_collapse_reference_container_42590_30() { if (jQuery('#footnote_references_container_42590_30').is(':hidden')) { footnote_expand_reference_container_42590_30(); } else { footnote_collapse_reference_container_42590_30(); } } function footnote_moveToReference_42590_30(p_str_TargetID) { footnote_expand_reference_container_42590_30(); var l_obj_Target = jQuery('#' + p_str_TargetID); if (l_obj_Target.length) { jQuery( 'html, body' ).delay( 0 ); jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight * 0.2 }, 380); } } function footnote_moveToAnchor_42590_30(p_str_TargetID) { footnote_expand_reference_container_42590_30(); var l_obj_Target = jQuery('#' + p_str_TargetID); if (l_obj_Target.length) { jQuery( 'html, body' ).delay( 0 ); jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight * 0.2 }, 380); } }More from our authors: International Investment Protection of Global Banking and Finance: Legal Principles and Arbitral Practice
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