(Freshfields Bruckhaus Deringer LLP)
2017 was a busy year for international arbitration. Taking a walk down memory lane, we saw new players and new industries entering the game, institutions adopting new rules, and we have some new challenges to tackle.
This note summarizes some highlights and low lights in international arbitration during 2017 from across the globe.
Happy Holidays and Happy New Year!
1. New Players: third party funders arrive in Singapore and Hong Kong
Third party funding involves a third party funder paying for the costs of a legal proceeding, in return for a share of the proceeds if the claim is successful.
Previously, Singapore prohibited third party funding and Hong Kong did not have a legal framework expressly permitting it.
In 2017, third party funding expanded its footprint to both markets. This is a welcomed development, bringing Singapore and Hong Kong in line with other common law jurisdictions.
Singapore was first to establish a framework for third party funding in March 2017, adopting legislation which (i) abolished the common law torts of maintenance and champerty, and (ii) provided that third party funding by qualifying third party funders in relation to international arbitration and related court or mediation proceedings is not contrary to public policy or illegal.
Shortly thereafter, in June 2017, Hong Kong passed long-awaited legislation making it clear that third party funding of arbitration is permitted under Hong Kong law. Unlike Singapore, though, the Hong Kong legislation has not yet come into force: watch this space in 2018.
2. New Industries: arbitration continues to aim at financial industry disputes (with the rise of expedited and summary procedures)
Arbitration is widely used in some sectors, such as the oil and gas industry, but less widely used in others, such as the financial industry. The reason for this relative lack of popularity of arbitration in the financial services sector is partly because, among financial institutions, there are perceived shortcomings of arbitration: at the core of those shortcomings is the perceived lack of availability of “summary judgment” or similar mechanisms for early disposition of simpler cases.
Arbitration institutions continuously have been refining their procedural rules in order to address this issue. SIAC was a leader, having introduced its expedited procedure rules in 2010, and last year having made available a summary disposition procedure. Tribunals have arguably always had the authority and discretion summarily to dispose of cases, pursuant to their broad case management powers. However, concerns about due process and the enforceability of arbitration awards, which is sometimes criticized as “due process paranoia,” appear to have deterred many tribunals from exercising that power.
Other institutions have met critiques of the efficiency of the arbitral process by including provisions for early dismissal or summary determination. In January 2017, the Stockholm Chamber of Commerce (SCC) adopted a new procedure which allows for summary proceedings when certain conditions are met.
In August 2017, the HKIAC also invited practitioners to weigh in on whether it should adopt a similar new procedure for the early determination of disputes.
The latest effort that has led to new rules came in March, with the ICC Arbitration Rules revisions incorporating expedited proceedings which apply automatically to any arbitration in which the amount in dispute is less than USD$2 million. Notable features of this procedure include: (i) the dispute is normally decided by a sole arbitrator; (ii) the Terms of Reference phase is dispensed with; (iii) awards must be made within six months; and (iv) the Tribunal has discretion to decide the case with no hearing, no document production and no witness examinations.
Elsewhere, in January 2017, Russia’s most prominent arbitral institution, the Moscow-based International Commercial Arbitration Court at the Chamber of Commerce and Industry, and the Vietnam International Arbitration Centre also introduced similar expedited arbitration procedures in their revised rules.
It remains to be seen whether these changes in arbitration rules will influence parties in the financial services sector to choose arbitration as their preferred method for dispute resolution.
3. New Rules: investment arbitration rules
“Investment arbitration” refers to investment disputes between a foreign investor and a host State under a treaty between the host State and the investor’s home State. Even as debates about the legitimacy and future of investment arbitration have raged, there has been a steady increase in the number of investment arbitrations around the world. Historically, investment arbitrations have been administered mainly by ICSID under the ICSID rules, as ad hoc arbitrations under the UNCITRAL Arbitration Rules, or administered by the SCC.
In an effort to increase the number of investment arbitrations it administers, in January 2017, SIAC released separate rules for investment arbitration: the SIAC Investment Arbitration Rules (SIAC IA Rules). In recognition of the differences between commercial and investment arbitrations, the SIAC IA Rules include unique features such as (i) the possibility of submissions by third parties, (ii) discretionary publication of the Tribunal’s decisions and award, and (iii) different time limits for certain filings, for the challenge of arbitrators, and for the decisions by the Tribunal.
The SCC also introduced a separate set of investment arbitration rules in Appendix III of the 2017 SCC Rules.
SIAC and the SCC were the first major arbitration institutions to offer rules for commercial arbitrations and specialized rules for investment arbitrations, but they are not the only ones. In August 2017, the HKIAC also invited practitioners to weigh in on whether it should develop its own investment arbitration rules. On 1 October 2017, in preparation for “One Belt, One Road” disputes, CIETAC also adopted new rules for investment disputes.
4. New Challenges: TPPA and NAFTA trumped
Sticking with treaties and controversy: President Donald Trump lived up to his campaign promise and on his first full day in office, took action to withdraw the US from the Trans-Pacific Partnership Agreement (TPPA). Trump described the move as a “great thing for the American worker.”
The TPPA is a free trade agreement signed on 5 October 2015 by 12 States responsible for an estimated 40% of the global economy: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. It is (or, was) intended to create major links between the Americas and Asia ex-China. It includes investor-State dispute settlement protection through binding arbitration.
As currently drafted, the TPPA can only enter into force if it has been ratified by the US. Thus, Trump’s withdrawal from the TPPA scrapped those plans…or so it seemed. The remaining 11 TPPA Member States are still considering whether to abandon the TPPA or to find a way to preserve it, without the US. In October and November 2017, they held formal negotiations. It remains to be seen whether a new deal will be reached, but there is indication the 11 TPPA Member States are serious about it.
Trump has also lived up to his promise to go after NAFTA. Trump’s Administration started renegotiations of NAFTA in August. It remains unclear whether the Administration will keep the investor-State dispute settlement in its current form or whether it will reform or replace it. 5. The Next Big Thing: IA meets AI?
Many say the legal industry, including the practice of international arbitration, needs updating. With the rise of new technology, it is undergoing a technological revolution. This is particularly apparent in Singapore where the importance of technology is impressed upon lawyers by the government in its effort to position Singapore as a legal hub and make it a “Smart Nation.”
The buzz phrase in the legal industry in 2017 was certainly “technological innovation,” including artificial intelligence (AI).
Legal technological innovation tools have been used in litigation and corporate work for some time, with software used to review large sets of documents for document production or due diligence, to do legal drafting or research through automated processes, for general case management and document organization, and to complete such mundane tasks as proofreading, formatting and editing legal documents. It is also making its way into ADR proceedings, with the latest being the use of DRExM in Egypt to resolve construction disputes. In March 2017, the Swiss Chambers Arbitration Institution held its first legal innovation conference where technological innovation in the practice of international arbitration was discussed.
Legal technological innovation has been and can be highly beneficial in international arbitration, providing numerous benefits for a more efficient and effective way of working, including by reducing costs, avoiding mistakes, and lowering lawyer stress, saving time and identifying risk early on. The demand for quality work at a reduced price to be done within a limited time frame requires the right base systems in place so that lawyers can add value where it matters most.
Credit: http://arbitrationblog.kluwerarbitration.com/2017/12/28/2017-year-review-top-5-international-arbitration/
Arbitration, and typically commercial arbitration, is an Alternative Dispute Resolution (ADR) which is agreed by parties of the dispute. Arbitration can be used to replace the traditional way of litigation in court.
Derive from arbitration’s dispute settlement principles, arbitration shows many pros and brings many benefits for parties in commercial dispute, specifically as follows:
A Polish appeals court vacated an International Chamber of Commerce (ICC) partial award for alleged irregularities in the arbitrator's appointment (for further details please see " ICC award set aside due to irregularities in arbitrator's appointment "). The sole arbitrator's final award was also successfully challenged and set aside. The first reason to vacate the final award was also the issue of the sole arbitrator's appointment.
It is normal to inspect the goods that have been lost or damaged during the performance of the sales contract and in the contract of carriage. However, improper inspection can lead to significant disputes and damages that you can refer to below.
The ten years of Law on Commercial Arbitration 2010 (LCA) are also the 10-year development period of VIAC - the first institutional arbitration organization in Vietnam, the organization that goes along with the formation and advancement of the legal framework of commercial arbitration in Vietnam.
Law on Commercial Arbitration (“LCA”) enacted in 2010 was considered a major step forward for the development of commercial arbitration in Vietnam. Compared with the previous years and with international standards, LCA has made remarkable progress, namely recognizing enterprises’ freedom of choice, broadening the scope of arbitration, raising the arbitral tribunal’s authority, valuing court assistance (especially interim measures enforcement), encouraging flexibility in language of arbitration, and improving party’s autonomy in arbitration while maintaining proper manners during arbitral proceedings.
Mr. Doug Jones, a leading arbitrator in the international arbitration community, revealed to me his infatuation with the beautiful beach and Vietnamese delicacies after a seminar in Da Nang. He was also inspired by the confidence, assertiveness, competence and the ambition to improve domestic arbitrators to the same level as those working in the international sphere of young arbitrators and VIAC Secretaries.
Law on Commercial Arbitration 2010 (LCA)- the procedural law governing arbitration proceedings whose seat is in Vietnam
Nowadays, as the digital economy emerges, electronic agreements on online websites are becoming more and more prevalent; hence, the legal effect of establishing terms and conditions of service when accessing the website (browse-wrap) and clicking (click-wrap) are of particular interest. The following paper analyzes some of the legal aspects of online agreement conclusion, especially the establishment of the arbitration agreement by means of browse-wrap and click-wrap.
Whether settling disputes in Court or through arbitration, when a party has the burden of proof, it must submit evidence to the arbitral tribunal. The evidence can be in many different forms: Document electronic evidence, audio recordings, video recordings, witness statement, etc. In international arbitration practice, especially in complex disputes, a type of evidence that is frequently used by the parties to defend their opinion/request is testimony/report of "expert witness".
In international commerce and investment, parties to a dispute often select arbitration as an alternative dispute resolution other than litigation in which the court, an authorized state agency, adjudicate disputes. An explanation for this phenomenon is that arbitration may be the optimal means that the parties can exercise their autonomy in writing to select one or several individuals who are not representing state agencies and state power (the so-called private parties) to resolve disputes. However, to prevent the possibility of arbitrators "privatizing" justice, [1] the New York Convention and the ICSID Convention set out the rules for annulment of arbitral award when such award violates arbitral proceeding. Here, questions arise. What rules of procedure are violated? And to what extent is the commercial and investment arbitral award annulled? This article seeks to elucidate the theory and practice of annulment for violations of procedure under the New York Convention and the ICSID Convention.
Goods can be consolidated, batched, packed, sorted, and grouped for a certain period of time before being loaded onto a trailer for carriage to the consignee. Disputes about whether the time to do these things are within the scope of insurance liability or not is an issue worth knowing (through the lawsuit with the documents of a foreign law firm) below for readers’ reference.
Mr. Vu Anh Duong is the Secretary General of the Vietnam International Arbitration Centre (“ VIAC “), which is the leading Vietnamese arbitration and mediation institution . Mr. Duong has contributed significantly to the development of arbitration in Vietnam in various ways; in addition to his role with the VIAC, Mr. Duong has served as a member of various drafting committees dealing with not only the VIAC’s Rules of Arbitration (2017) (“ VIAC Rules ”), but also Vietnam’s arbitration-related legislation. He also regularly lectures on commercial arbitration and sits as an arbitrator in both international and domestic commercial arbitrations.
Abstract: This discourse focuses on a detailed analysis of some theoretical and practical issues about the application of interim emergency measures involving third parties, in the field of domestic and international. Besides, the discourse provides measures to enhance the ability to enforce the decisions applying interim emergency measures with the third parties within the realm of international arbitration law. Subsequently, it extracts experience and recommendations pertaining to the legal framework in Vietnam regarding this matter.
During arbitral proceedings, the mediation process may cause some certain conflicts that requests the Arbitral Tribunal to seriously consider. Resolving effectively these conflicts based on fundamental legal principles and the arbitration skills of the Tribunal will ensure the rights and interests of disputing parties and third parties. This discourse focuses on analyzing potential conflicts and providing recommendations to the Tribunal to maximize the effectiveness of the mediation process and reduce conflict occurrence.
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According to the Department of Judicial Support , Ministry of Justice, currently , there have been 48 arbitration institutions established in our country, with over 600 arbitrators participating in resolving thousands of commercial disputes each year 1 . An arbitration service has been developed. Along with the growth , the trait of this service became more apparent , includi ng the relevance of third-party interests. Unlike court litigation, in principle, arbitration is a private dispute resolution method , therefore, the involvement of third parties is exceptional. The discourse discusses how the arbitral tribunal considers and guarantee s the third party's interest in the arbitra l proceedings by providing some situations in which disputing parties or the arbitral tribunal may need to consider the interests of third parties. The goal of arbitr ation is to make contributions to resolving disputes fairly, thereby encourag ing parties to fulfill their obligations voluntarily in order to avoid further dispute escalation of disputes . Based on the analysis , the author suggests policy improvements pertaining to third parties that may be considered in the upcoming revision of the Law on Commercial Arbitration.
In August 2024, the International Council for Commercial Arbitration (ICCA) formally published the second edition of the ICCA’s Guide to the Interpretation of the 1958 New York Convention. The Guide is a clear, concise yet inclusive handbook, written in plain language, on the essential aspects of the scope, interpretation and application of the Convention. Though principally aimed at judges determining applications under the Convention, the Guide, which benefits from the extensive practical and academic experience of its authors (prominent arbitrators and ICCA members) will also be of interest to students, teachers and practitioners as an introduction to the Convention.
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