FORUM: Comparing regional arbitration processes
October 2013 | SPECIAL REPORT: INTERNATIONAL DISPUTE RESOLUTION
Financier Worldwide Magazine
FW moderates a discussion on regional arbitration processesbetween Elie Kleiman at Freshfields Bruckhaus Deringer LLP, Adrian Cole at King & Spalding, L. Santiago Soria at Marval O’Farrell & Mairal, Karam Singh Parmar at Tan Kok Quan Partnership, and Dieter Hofmann at Walder Wyss Ltd.
FW: How would you describe arbitration facilities and processes in your region? How do they compare internationally?
Kleiman: Paris is arguably one of the world’s best-equipped cities to host international arbitrations. It is home to the ICC International Court of Arbitration, the world’s premier arbitral institution, and enjoys an exceptionally strong practice in the field of international arbitration. Consequently, many first-class conference facilities, combining modern technology with reliable services are available, including the ICC’s dedicated arbitration hearing centre. In addition, the courts in Paris have a long-established familiarity with arbitration-related matters, and French arbitration law offers one of the most arbitration-friendly legal environments, guaranteeing an impartial and efficient arbitral process. Finally, the cost of an arbitral process in Paris is noticeably lower than the European average, and in the event of state court involvement – for interim measures, annulment proceedings, and so on – French courts are faster and less expensive than most other state courts.
Cole: The Middle East region is reasonably well-equipped with arbitration facilities and these compare favourably with those internationally. There are a number of significant regional arbitration centres – for example, Dubai International Arbitration Centre (DIAC); DIFC/LCIA situated in the Dubai International Financial Centre; the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC); Qatar International Court and Dispute Resolution Centre (QICDRC); and the Bahrain Chamber for Dispute Resolution/American Arbitration Association (BCDR-AAA). In addition, many arbitration hearings are held at international-class hotels which are commonly preferred by tribunals and parties due to the enhanced quality of their facilities and catering arrangements.
Soria: Argentina, as an international arbitration centre, provides a wide array of facilities to support both domestic and international arbitration. A large workforce of first-class bilingual and multilingual professionals – attorneys, translators, accountants, for instance – can provide a high quality and committed service. Also, Argentina is far less expensive than other traditional arbitration centres such as New York, Paris or Madrid. To date, both domestic and international arbitration are governed by the National Civil and Commercial Code of Procedures (CPC), and the Model Law on International Commercial Arbitration (MLA) has not been incorporated to the Argentine legal system. Although several bills based on the MLA have been submitted to the Congress, none of them have been enacted so far.
Parmar: The standard of Asia’s arbitration facilities and processes is good, with a number of arbitration centres already operating at an international standard. Facilities and processes may vary from jurisdiction to jurisdiction, but the trend is towards improvement. In my opinion, the Singapore International Arbitration Centre (SIAC) stands out above the other regional arbitration centres. The country boasts a state of the art, integrated dispute resolution centre that houses first class hearing facilities and offices of top ADR institutes and dispute resolution professionals. Furthermore, Singapore has a judiciary that supports arbitration and there is a constant re-examination of legislation to ensure arbitration-friendly laws and processes are in place to promote and support arbitration.
Hofmann: Arbitration facilities and processes are of a high level in Switzerland. This is because Switzerland enjoys a long tradition of hosting foreign and domestic arbitrations. Moreover, arbitration is recognised as a preferred method of dispute resolution in Swiss legal culture. The Swiss legal community, therefore, strives to maintain an effective environment to conduct arbitrations. This has led to the enactment of a flexible lex arbitri for international arbitrations and to the Swiss Rules of International Arbitration – the unified institutional rules of various Swiss Chambers of Commerce. Despite their name, the Swiss Rules operate on a global level: the parties are not required to appoint Swiss nationals as arbitrators or to choose Swiss law to govern their dispute.
FW: How supportive are courts in your region in upholding and enforcing arbitral awards? Is the judiciary ‘arbitration friendly’?
Cole: The courts in the Middle East are generally supportive of both domestic and international arbitration. Regional governments have taken the lead in supporting arbitration as evidenced in recent years by accession to the New York Convention and the passing of various laws to support the arbitral process. In general, the courts recognise the importance of enforcing arbitral awards and many of the courts in the region are developing the experience of doing so. Notwithstanding this, the experience of regional courts is still relatively limited and there have been a number of ‘unusual’ decisions made when it comes to the enforcement of awards. In Qatar, for example, the Qatar Court of Cassation set aside a 2012 arbitration award on public order grounds because the award was not issued in the name of His Highness the Emir of the State of Qatar. In a decision that caused shock and surprise to the legal community, the court held that the requirement for court judgements to be issued in the Emir’s name applied also to arbitration awards. Of particular concern was the fact that the court did not remit the award back to the tribunal for correction, depriving the claimant of its remedy. Qatar is a jurisdiction in which the government is supportive of arbitration and is promoting the Qatar International Court and Dispute Resolution Centre, amongst others, so unusual decisions such as this serve to set this process back. Similarly in Kuwait, the Kuwait Court of Cassation recently held that enforcement of an award should be refused on the grounds that the arbitration agreement had been signed by the claimant’s general manager. The court held that the claimant’s general manager needed a special power of attorney to invoke arbitration and not the general power granted to him by his office. Given that both sides had actively participated in the arbitration, this case shows that losing parties will do anything they can to avoid their liability. It is exactly in these types of circumstances that the regions’ courts need to take a robust stance and support the arbitral process. The UAE has not been immune from decisions which are unfriendly to arbitration. The Dubai Court of Cassation recently caused concern to the market by refusing to enforce three arbitral awards relating to off-plan real estate transactions. In these cases, despite the parties completing the full arbitral process and obtaining awards, it was held that the awards were contrary to public policy – since the awards related to issues of property registration which are exclusively matters for the Land Registry. Whilst an unsatisfactory outcome for the winners in those cases, it is positive to note that the court did not investigate the merits of these cases simply applying domestic public policy to the issue of jurisdiction.
Soria: Argentina is a member of the New York Convention of 1958. Therefore, Argentina recognises the validity and enforceability of foreign arbitral awards, provided said awards fulfil all the requirements set forth in the Convention. If the award has been rendered in a country that is not party to the Convention, then it would be enforceable in Argentina by compelling the provisions set forth in the CPC, which basically take into account due process and public policy issues. In general terms, when the subject matter does not involve public interests, Courts tend to enforce arbitral awards. However, while some Argentine Courts have recently upheld the principles incorporated in the Convention concerning the enforcement of foreign arbitration awards, other courts – considering that public interests were involved – have ruled against the enforcement of such awards.The remedy of annulment is restrictive and may be filed on the grounds of violation of due process – for instance, lack of impartiality, bribery, incapacity of one of the parties, irregularity on the arbitral procedure or composition of the tribunal – if the award exceeds the terms of the submission of the arbitration subject matter, if the subject matter is not capable of arbitration, and if the award contains contradictory provisions in its enacting terms.
Parmar: Singapore’s government and its judiciary are clearly pro-arbitration. The necessary facilities and processes to promote arbitration are in place. Foreign arbitration practitioners are welcomed and the courts have clearly adopted a policy of limited and careful curial intervention in support of arbitrations. Arbitral awards may only be set aside on very limited grounds and this pro-arbitration stance can be seen in a number of cases where the courts have upheld and enforced arbitral awards. For example, the Court of Appeal recently commented that where public policy was cited as the ground for setting aside an arbitral award, this would only be allowed when the decision of the arbitrator “shocks the conscience of the court”.
Hofmann: The Swiss judiciary is arbitration friendly. First, Swiss state courts do not have unfettered powers of review; they may only annul an award if one of the narrow statutory grounds is met. Set-aside actions, therefore, are hardly ever successful. Second, Swiss state courts will refer the parties to arbitration and assist the claimant in appointing the arbitral tribunal, if there is prima facieevidence of the existence of an arbitration agreement. If the seat of the arbitration is in Switzerland, the claimant need not demonstrate the jurisdiction of the arbitral tribunal in detail in order to get the arbitration started. Third, Switzerland is a signatory to the New York Convention and enforces foreign arbitral awards in line with this Convention. Swiss enforcement courts, in particular, refrain from favouring a – losing – domestic party.
Kleiman: With the 2011 French arbitration law reform, France has confirmed its leadership as a pro-arbitration and user-friendly forum. While fostering a culture of minimal court intervention in arbitral proceedings, French courts consistently give their support to international arbitration. As a matter of principle, arbitrators have priority to rule on their own jurisdiction. Accordingly, French courts do not interfere before or during the proceedings, except in support of the arbitration and only at the parties’ request. After the proceedings, French courts will automatically enforce an award if the party relying on it can prove its existence and if such enforcement is not manifestly contrary to international public policy. If the award is challenged or the order granting leave to enforce – exequatur – is appealed, French courts will not review the merits of the case. They will limit themselves to verifying the existence of a valid arbitration agreement, ensuring that the arbitral tribunal was properly constituted; the arbitrators complied with the mandate conferred upon them; the arbitral proceedings complied with the principles of due process; and recognition and enforcement of the award is not contrary to French international public policy.
FW: To what extent will your region assist with the arbitration process when called upon – for example, by empowering the arbitrator, ordering preliminary relief, granting injunctions, and so on?
Soria: Legal scholars understand that, as a general principle, arbitral tribunals do not have the power to grant provisional remedies and that they may only request the courts to do so. They argue that the CPC does not explicitly grant this power to arbitral tribunals and, further, that the CPC would bar arbitrators from granting provisional remedies. However, the prevalent position is that the CPC should not be construed as preventing arbitrators from issuing provisional remedies, but rather as a mere prohibition to enforce such measures by themselves.
Parmar: Singapore’s policy of minimal curial intervention in arbitration proceedings remains. However, when it is necessary to support the arbitral process, the courts have not shied away from assisting. The court’s assistance, however, is not often required as Singapore’s International Arbitration Act empowers an arbitral tribunal to make orders relating to security for costs; discovery of documents and interrogatories; the preservation and interim custody of evidence; securing the amount in dispute; and interim injunctions or any other interim measure. Indeed, the emergency arbitrator can also order interim measures before the tribunal has been constituted.
Hofmann: Swiss state courts will assist the arbitration process. They will, for example, assist in the appointment of the arbitrators or assist in the taking of evidence, if necessary. In the case of interim relief, Swiss-seated arbitral tribunals may issue injunctive relief – the Swiss lex arbitri expressly empowers them to do so. They cannot, however, hold a party in contempt of court. To make up for this lack of coercive powers, Swiss state courts render judicial assistance to enforce the injunction in case of non-compliance. The motto, therefore, is ‘as little as possible, but as much as necessary’, and assistance by Swiss state courts always is set up as ‘support’, not ‘interference’. There is no basis for a Swiss state court to interfere with the conduct of an ongoing arbitration.
Kleiman: The Presiding Judge – juge d’appui – of the Tribunal de Grande Instance of Paris, assists parties to international arbitration, upon request. Applications are made, heard and decided through expedited proceedings. The juge d’appui may decide on the incapacity, removal or resignation of an arbitrator. Prior to the constitution of the arbitral tribunal and, in some circumstances, after its constitution, the juge d’appui may assist the parties in the taking of evidence, in particular where the evidence is in a third party’s possession. Finally, prior to the constitution of the arbitral tribunal and, in some circumstances, after its constitution, the president may order interim and conservatory measures where a party so requests. France has no culture of anti-suit injunctions. As a matter of law, however, French courts must decline jurisdiction when an arbitration agreement applies to a matter before them, unless the arbitration agreement is manifestly invalid or defective, or if all parties fail to raise a jurisdictional objection.
Cole: The courts in the Middle East region are generally supportive of the arbitral process and are empowered to grant a range of relief. For example, under the UAE’s Civil Procedure Law, the court may, inter alia: decline jurisdiction if the parties have an arbitration agreement, unless the parties agree to the Court’s jurisdiction; appoint the Tribunal to determine the dispute in the event that the parties refuse or cannot agree on the choice of Tribunal; decide a preliminary matter which is beyond the Tribunal’s jurisdiction; and request the Tribunal to examine matters it omitted to decide upon or to clarify the award prior to ratification of the award. Under the DIFC Arbitration Law 2008, the court may, inter alia: grant a party an interim measure either before or during arbitral proceedings; enforce an order from the Tribunal granting an interim measure; finally determine any procedural challenge to the arbitration brought by either of the parties; appoint the Tribunal if the parties fail to appoint or agree the Tribunal; and assist in the taking of evidence if requested by the Tribunal. Parties should, however, be aware that, save in respect of the DIFC, the region’s courts generally conduct proceedings in Arabic. This can create issues in English or any other foreign language arbitration where key documents will have to be translated, often at considerable expense and time delay.
FW: Have you seen any recent changes in arbitration rules in your region? If so, when will these be brought into force and how do you expect they will affect the arbitration process?
Parmar: Legislative changes to arbitration have developed quickly in Singapore. Recent changes pursuant to the International Arbitration (Amendment) Act 2012 include the removal of the strict writing requirement for a valid arbitration agreement; giving the courts the power to review a negative jurisdiction ruling; recognition for the emergency arbitrator; and redefining the meaning of a foreign ‘arbitral award’. The SIAC’s rules have also been changed to keep abreast of the legislative changes. The fifth edition of the SIAC arbitration rules came into effect on 1 April 2013. Some of the changes include extending the jurisdiction of the SIAC to cover disputes arising under an investment treaty; granting greater power and control over the arbitration process to the SIAC Registrar; and giving powers to the arbitral tribunal to decide issues not expressly or impliedly raised in submissions. These changes will help reinforce the stability and certainty in the arbitral process.
Hofmann: The Swiss lex arbitri for domestic arbitrations has been modified, effective as of 1 January 2011. It does, however, only apply to purely domestic arbitrations – that is, to arbitrations to which all parties are Swiss domiciled. The new rules, therefore, do not affect international arbitrations seated in Switzerland. The same, in substance, holds true even for domestic arbitrations. The new rules mainly reflect traditional Swiss practice and the amendments are limited to modernising certain rules and to eliminating a few rules that were criticised by arbitration practitioners and scholars. The new rules, therefore, will only alter the conduct of domestic arbitrations to a very limited degree.
Kleiman: On 13 January 2011, France adopted a new law on arbitration, in force as of 1 May 2011. The reform introduced two major innovations that have enhanced France’s reputation and attractiveness as a seat for arbitration. The first is the possibility for parties to waive their right to lodge an action to set aside an arbitral award. The second is that annulment proceedingsor appeal of the exequatur order no longer stay execution as a matter of law. This new regime improves the enforceability of awards, prevents delaying tactics and affords a high level of protection to the winning party. Another noteworthy change, although not specific to France, is the revision of the ICC Rules as of 1 January 2012. The key procedural changes under the 2012 rules include enhanced measures to promote cost and time efficiency in arbitration, clear procedures for dealing with complex arbitrations involving multiple parties or contracts, and emergency arbitration for parties seeking interim and conservatory measures. Also worthy of note is the release, in 2013, of the Paris Arbitration Rules, a set of ad hoc rules that are designed to provide users of international arbitration with a cost-effective and rapid means of resolving disputes, including complex disputes, which is consistent with the requirements of justice and due process.
Cole: The Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC) recently amended its procedural regulations of arbitration. This is a move that will be welcomed by all users of ADCCAC as the previous rules were a hotchpotch of provisions from different sources and lacked clarity and structure. The new rules are intended to reflect current best practice to streamline procedures and effectively support the arbitral process. Unfortunately, the requirement that all arbitral awards are produced in Arabic in addition to any other necessary language prevails. Whilst a translation of the award may be necessary to enforce in local courts, this is an expensive and unnecessary requirement where an award is to be enforced overseas. Past issues in respect of determining arbitrators’ fees will hopefully be resolved by the adoption of a table of fees similar to that of the ICC rules. Tribunals in the past have sought to avoid the ADCCAC rules or to supplement them with rules from other institutions – for instance the ICC. It is hoped that the new rules will create a comprehensive and well-structured framework for arbitrations in the future. Other recent changes in the region include the new Saudi Arbitration Law which came into effect in July 2012. Hopefully this new law will lead the way in making the Kingdom of Saudi Arabia a more attractive place for resolving commercial disputes in arbitration, reflecting the KSA’s ambition to modernise. The new law is more closely aligned with international practice than previously, although remains subject to local and Shariah law influences.
Soria: There have not been any relevant changes to the arbitration rules in Argentina in recent years. Several bills based on the MLA have been submitted to Congress but none of them have been enacted yet. It is important to point out that a draft of the new Civil Code has been submitted to the Congress and contains, among others, the following contributions. First, that the arbitration agreement is considered as autonomy agreement; second, that the arbitrators are entitled to decide about their own jurisdiction; and third, that arbitrators have the power to grant precautionary provisional remedies.
FW: How would you describe the local resources available to support arbitration in your region, including a network of experienced professionals?
Hofmann: Switzerland offers all the resources required to successfully conduct an international arbitration. First, there are numerous highly qualified arbitration practitioners, both counsel and arbitrators. Many of them studied or worked abroad and are capable of attending to arbitrations in different languages. Second, the infrastructure necessary for arbitration is readily available in Switzerland, and the country is easily accessible from all over the world. Third, the Swiss Chambers of Commerce offers efficient institutional services and modern arbitration rules, which are available in various languages. Fourth, Swiss state courts are effective and swift in supporting Swiss-seated arbitrations, if required.
Kleiman: Paris is home to a large, multinational community of legal professionals dedicated to the practice of international arbitration. This community includes attorneys, arbitrators, experts, interpreters and court reporters from a variety of legal backgrounds, with extensive experience in appearing before arbitral tribunals and in-depth understanding of technical issues in various industries. Many of those practitioners are internationally recognised leaders in the field of arbitration. Additionally, Paris offers all the logistical advantages of a large, modern capital city including a substantial selection of accommodation facilities and excellent air travel connections, thanks to two well-connected international airports.
Cole: Much of the commerce in the region is linked to energy and infrastructure development. Arbitration is commonly selected as the forum of choice, for construction and development projects in which many disputes arise. Accordingly, within the Middle East region – and in the UAE and Qatar in particular – there are many international and local firms of claims consultants. Some of these firms also supply expert witnesses in matters such as quantum, programming and analysis. In respect of financial disputes, there is a good selection of experienced accountants in the region. High quality experts in engineering and other disciplines, however, are harder to find, with the UK and the US being the principal sources. The last few years have also seen the number and quality of experienced arbitrators in the region increase, with institutions such as the Chartered Institute of Arbitrators and some of the arbitral institutions themselves providing training courses.
Soria: There is a wide range of local resources available to support arbitration in Argentina. First, there are several local arbitration institutions which administer arbitration proceedings such as the General Arbitration Tribunal of the Buenos Aires Stock Exchange, the Argentine Chamber of Commerce and the Business Centre of Mediation and Arbitration. Second, there is a highly qualified network of professionals specialising in arbitration which can provide legal advice in several languages. Third, Argentina – in particular Buenos Aires – is usually the venue of international conferences on arbitration, international competitions and postgraduate programs in international arbitration, which contribute to Argentine lawyers’ increasing experience and knowledge of arbitration law.
Parmar: Local resources to support arbitration in Singapore can only be described as ‘superb’. High ethical standards, high quality advocacy and high quality jurisprudence are the hallmark of the arbitrators and lawyers practising arbitration in Singapore. ‘Local resources’ must necessarily include non-residents practising in Singapore. Singapore’s arbitration regime has been kept deliberately open, so that parties are free to engage lawyers of any nationality and use any governing law. Non-residents do not require work permits to carry out arbitration services in Singapore and, indeed, are offered incentives to ply their trade in Singapore. This all adds to a high quality local pool of experienced professionals supporting the arbitration regime.
FW: What particular issues tend to arise when undertaking complex international, multi-jurisdictional arbitrations in your region?
Kleiman: In complex, multi-jurisdictional arbitrations, the most common issues arise from the fact that such arbitrations usually involve multiple parties or contracts. One such issue relates to the principle of party equality in theappointment of arbitratorsin multi-party arbitrations. This was illustrated in the famous French Supreme Court Dutco case of 1992, in which two defendants were not prepared to jointly appoint a singlearbitrator, considering that they had divergent interests. Other issues may arise where a party wishes to join one or more additional party or parties, or consolidate two or more pending arbitrations into one. The 2012 ICC Rules have set out clear guidelines and solutions to these potential issues based on the ICC Court’s existing practice.
Cole: There are a multitude of issues that arise when undertaking complex international arbitrations in the region. These include the availability of visas for foreign witnesses to attend hearings; the requirement to swear oaths in a particular format and that losing parties tend to seek to raise any argument possible to resist enforcement.
Soria: The main issues which arise in cases of complex international and multinational arbitration in Argentina include: whether, and if so under what circumstances, non-signatories may be bound to arbitration proceedings; the appropriate scope of discovery, especially in cases when the parties come from different legal traditions; and whether, and under what conditions, injunction measures should be ordered by local tribunals. Other important issues include the admissibility of challenge to arbitrators on the basis of a lack of independence and impartiality – particularly in non-institutional arbitrations governed by Argentine laws; and disagreements in the constitution of arbitral tribunals in cases of non-institutional arbitrations.
Parmar: When undertaking international, multi-jurisdictional arbitrations, the very first issue that arises is a logistical one. Scheduling teleconferences over different time zones, coordinating the travel schedules of counsel, arbitrators and experts for hearings, and ensuring support services such as translators are available, are some examples of the logistical issues that need to be addressed. Parties also need to overcome cultural differences and their differing expectations of how the arbitral procedure will be conducted. Parties from different jurisdictions with different arbitral practices often have very different expectations of the way evidence is taken, in the discovery procedure, in the role played by the arbitrator, and so forth.
Hofmann: There are no issues that routinely arise in international and complex multi-jurisdictional settings. In particular, the Swiss lex arbitri, reduces the risk that foreign parallel proceedings influence Swiss-seated arbitrations. The lex arbitri instructs the arbitral tribunal to proceed with the arbitration and decide on its jurisdiction irrespective of whether a suit has previously been brought in another forum. The Swiss lex arbitri thus protects the integrity of the arbitration agreement. However, it does not expressly provide a basis for active interference with foreign arbitrations or litigations by Swiss-seated arbitral tribunals. While certain scholars express the view that they are empowered to issue anti-suit injunctions, this view has not yet been tested before the Swiss judiciary.
FW: What trends do you see in terms of the choice of venue, compared to the choice of seat, for arbitrations conducted in your region? To what extent does one choice influence the other?
Cole: The two main venues for arbitration in the UAE are Dubai and Abu Dhabi. Manama in Bahrain and Doha in Qatar are also used. These venues have a number of world-class hotels which are experienced in hosting arbitrations, as well as the arbitration centres themselves. Accordingly, the choice of venue will often simply come down to the parties’ preferences, although in practice the choice of seat will often inform the venue, rather than vice versa. Many parties are attracted to an arbitration seated in the DIFC, for example, due to DIFC law being founded on common law principles. Furthermore, regional governments remain supportive of their ‘local’ arbitration centre. Thus, for example, contracts with the Abu Dhabi government commonly require arbitration in the Abu Dhabi Commercial Conciliation and Arbitration Centre, and so on.
Soria: Regionally, the usual places chosen as a seat of arbitration are Sao Paolo in Brazil, Mexico City in Mexico, Santiago in Chile and Buenos Aires in Argentina. In Argentina, Buenos Aires is usually chosen as a venue of international arbitrations for several reasons. First, it has experienced arbitrators, lawyers and arbitral institutions. Second, it is a great international city with one of the world’s great centres for finance, commerce, culture, art and tourism. Third, the city’s robust arbitration culture is strengthened by the fact that Argentina has ratified several international agreements concerning recognition and enforcement of arbitral awards, including the Treaties on Procedural Law executed in Montevideo in 1889 and 1940; the Inter-American Convention on International Commercial Arbitration, signed in Panama in 1975; the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards, signed in Montevideo in 1979; and the Protocol on Jurisdictional Cooperation and Assistance in Civil, Commercial, Labour and Administrative Matters within the MERCOSUR. In the region, the choice of venue is influenced by the choice of seat.
Parmar: For a long time, Singapore has been said to be an ideal ‘venue’ for arbitration because of its geographical convenience, political stability, efficiency, integrity, sophistication and good communication and transportation infrastructure. However, more and more, one hears of Singapore being selected for its arbitration friendly laws. If there is a trend, this suggests that Singapore as the ‘seat’ – as opposed to the ‘venue’ – of arbitration, is of equal or greater importance to litigants. To this end, the ‘seat’ of arbitration is not the physical location or venue where the arbitration is held but is understood to be the ‘connecting factor’ to a given procedural order or lex arbitri governing the arbitration. The choice of the seat of arbitration certainly influences the choice of the venue, and vice versa, as a party would want to be within the jurisdictional limits of the courts that have jurisdiction over the arbitration proceedings.
Hofmann: The Swiss lex arbitri clearly distinguishes between the seat of the arbitration and the venue of the arbitration hearings. If the seat is in Switzerland, the Swiss lex arbitri applies – irrespective of whether the hearings are held at another domestic or foreign location. If only the venue of one or all hearings – but not the seat – is in Switzerland, then the Swiss lex arbitri does not apply. The Swisslex arbitri, therefore, affords the parties flexibility. They may choose to seat their arbitration in Switzerland, but may conduct it elsewhere, if that proves to be more efficient. The parties should, however, be cautious and check whether holding a hearing outside Switzerland causes the lex arbitri of another jurisdiction to additionally apply to the arbitration. If so, the parties run the risk of conflicting procedural rules applying to their arbitration.
Kleiman: Under French international arbitration law, the seat of arbitration does not necessarily cause the procedure to be governed by the principles applicable before the courts of that jurisdiction. Nevertheless, the choice of the seat remains significantas the seat of the arbitration is the place where the award is deemed to have been made and as the law of the seat determines the grounds on which an award can be challenged before local courts. In contrast, the choice of venue, which is merely the place where arbitral proceedings will be physically conducted, is of no legal relevance and often chosen for reasons of convenience. Several sets of arbitration rules provide that the arbitral tribunal may, after consultation with the parties, conduct hearings at any location it considers appropriate. While Paris is regularly the venue of choice for hearings in arbitrations that have their seat outside France, the opposite is not true – when parties elect to have Paris as the seat of an arbitration, they also mean Paris as a venue.
FW: Is there any advice you can give to parties who are considering arbitration proceedings in your region?
Soria: We would advise parties considering arbitration in Argentina to draft the arbitration agreement in clear terms to avoid pathological clauses from being a hurdle to institute proceedings. In addition, the arbitration agreement should establish, preferably in broad terms, the scope of the issues to be submitted to arbitration, state whether the dispute must be settled ex lege or ex aequo et bono – absent any indication, Argentine law construes that the parties intended to settle the dispute ex aequo et bono – and include an express waiver to any appeal against the arbitration award. If possible we would recommend agreeing on institutional arbitration over ad hoc arbitration proceedings, so as to deal more efficiently with issues that may delay the arbitration proceeding, such as the constitution of the arbitral tribunal and challenges to arbitrators. All these measures would be particularly helpful to avoid undesirable judicial interventions, delays and an increase in costs in arbitration proceedings.
Parmar: If a party is considering arbitration proceedings in Asia, it would want to select a venue that is geographically convenient. Ideally, it would want such a venue to be modern, clean, efficient, with good infrastructure and world class communications. It would also want a venue that has an arbitration regime supported by a physical, legal and political infrastructure that supports arbitration. Such a venue should offer professionals – arbitrators, lawyers and experts – that are sophisticated, skilled and of high integrity. If all this is desired, then my advice to such a party is to select Singapore as the venue and seat of your arbitration.
Hofmann: The Swiss lex arbitri and the Swiss Rules are easily accessible. They are available in English and the same is true for certain textbooks and case law of the Swiss Supreme Court. Moreover, the Swiss lex arbitri and the Swiss Rules are in line with what arbitration practitioners from around the world would expect. As elsewhere, there are, however, a number of features which foreign practitioners may find peculiar at first glance – for example, the parties are obliged to immediately protest if they believe the arbitral tribunal has interfered with their due process rights, otherwise the conduct of the procedure is deemed accepted. Also, the jurisdiction of Swiss arbitral tribunals, as a rule, extends to set-off defences. In order to avoid any issues, it may, therefore, be advisable to discuss key procedural features with a Swiss-based co-counsel before initiating arbitration.
Kleiman: Confidentiality, if important to the parties to an arbitration agreement, should be expressly agreed. While French law provides that, unless parties agree otherwise, domestic arbitration proceedings are confidential, this default provision does not apply in international arbitration. Often considered implicit, confidentiality is not presumed by the Paris Court of Appeal: in 2004, the Court dismissed a claim from a party who was seeking damages for the alleged breach of an implicit duty of confidentiality on the ground that the demonstration that such an implicit duty existed had not be made. The existence and the extent of a duty of confidentiality in respect of international arbitration are therefore uncertain. For that reason, it is advisable for parties who wish to ensure confidentiality to expressly agree on confidentiality provisions and to determine the extent of such confidentiality obligations – for instance, to cover the award, the pleadings, any document exchanged during the proceedings, or even the mere existence of the arbitration – and to define the sanctions in the event of a breach. If an award is challenged, or enforcement proceedings are brought before French courts, the existence of the award and the court’s decision will be public. The award itself and the rest of the court file will, however, remain inaccessible to third parties.
Cole: Parties should be very selective when it comes to the choice of tribunal – there are some very good but also some very poor arbitrators. Ensure the local law requirements are known and adhered to by the parties and the tribunal in order to minimise the risk of challenges to the award. There are numerous local idiosyncrasies, such as the requirement for all pages of an award to be signed which need to be followed. Consider carefully whether external counsel is entitled to appear in the country of the hearing. Prepare cases well – many cases that are seen, both as counsel and tribunal, are not well prepared and fail to demonstrate causative links between claims and relief sought. In terms of prejudice, recognise that there is no privilege against disclosure and therefore written offers of settlement, unless carefully managed, may be disclosed.
Elie Kleiman is a member of the dispute resolution team and managing partner of the Paris office. Mr Kleiman’s clients come from a variety of sectors and industries. He has in-depth knowledge of the oil and gas, mining, chemicals and pharmaceutical areas.
Adrian Cole leads King & Spalding’s Middle East Dispute Resolution Practice. He is a construction law specialist advising on disputes relating to energy and infrastructure development. Mr Cole is qualified as a quantity surveyor and has first-hand experience of the engineering and construction industries. He is an experienced arbitrator, adjudicator and mediator and is a Fellow of the Chartered Institute of Arbitrators and a member of the Chartered Institute of Building.
Santiago Soria joined Marval, O’Farrell & Mairal in 1997 and has been a partner of the firm since 2008. He has vast experience in complex commercial litigation, including disputes among shareholders, ‘class actions’, and commercial contracts. He has also actively participated in contentious issued related to administrative law matters. Currently, his professional practice also includes domestic and international arbitrations.
Karam Singh Parmar is a senior partner at Tan Kok Quan Partnership (TKQP) and is called to the Singapore Bar, and the Bar of England and Wales. He practices civil and commercial litigation and a large part of his practice involves arbitrations where he acts as counsel. Mr Parmar is a Fellow of the Singapore Institute of Arbitrators and a Fellow of the Chartered Institute of Arbitrators.
Dieter Hofmann heads the Litigation & Arbitration Team. His primary focus is dispute resolution in complex, mainly international cases, ranging from pre-litigation advice, representation of clients in court and in arbitration proceedings, coordination in cases involving multiple jurisdictions, enforcement of foreign judgments and arbitral awards and international legal assistance. He also sits as arbitrator in international arbitrations.
© Financier Worldwide
Freshfields Bruckhaus Deringer LLP
King & Spalding
L. Santiago Soria
Marval O’Farrell & Mairal
Karam Singh Parmar
Tan Kok Quan Partnership
Walder Wyss Ltd.