Arbitration in Business Law | FTU lecture.pdf

Artribation in Business Law is one of the key solutions for parties

1. Dispute
Resolution

2. Outline
•LESSON 1: OVERVIEW OF
COMMERCIAL DISPUTES AND
METHOD OF SETTLEMENT
•LESSON 2: INTERNATIONAL
COMMERCIAL ARBITRATION
•LESSON 3: ARBITRATION
AGREEMENT
•LESSON 4: ARBITRAL TRIBUNAL
•LESSON 5: ARBITRAL PROCEEDINGS
•LESSON 6: ARBITRAL AWARDS
•LESSON 7: ARBITRATION IN
PRACTICE
•LESSON 8: VIETNAM COMMECIAL
ARBITRATION LAW

3. MATERIALS
Compulsory reading materials
•UNCTAD,InternationalCommercialArbitration,UNCTAD’s
ModulesofCourseDisputeSettlement,Modules5.1–5.9,available
at
http://unctad.org/en/Pages/DITC/DisputeSettlement/Courses.aspx
•Redfer/Hunter,LawandPracticeofInternationalCommercial
Arbitration,5thed.,Sweet&Maxwell2009.
•UNICITRALModellawoninternationalcommercialarbitration
1985,asrevisedin2010.
•NewYorkConventionontheRecognitionandEnforcementof
ForeignArbitralAwards1958.
•VietnamLawonCommercialArbitrationNo.54/2010/QH12.

4. Supplementary reference materials
•GaryB.Born,InternationalCommercialArbitration
LawandPractice,KluwerLawInternational
(November21,2012).
•ĐỗVănĐại,TrầnHoàngHải,Tuyểntậpcácbảnán,
quyếtđịnhcủatòaánViệtNamvềtrọngtàithương
mại,LabourPublishingHouse,2010.
•VIAC,50phánquyếttrọngtàichọnlọc.

5. LESSON 1: OVERVIEW OF COMMERCIAL
DISPUTES AND METHOD OF SETTLEMENT
Commercial dispute
•Conflict><Dispute
•Aseriousdisagreementorargument(Oxford
dictionary)
•Aseriousincompatibilitybetweentwoormore
opinions,principles,orinterests(Oxforddictionary)
•Adisagreementorargument

6. •Disputesareshort-termdisagreementsthat
arerelativelyeasytoresolve.
•Long-term,deep-rootedproblemsthatinvolve
seeminglynon-negotiableissuesandare
resistanttoresolutionarewhatreferedto
asconflicts.

7. •Conflict as the fundamental disagreement
between two parties, of which a dispute is one
possible outcome.
•Costintino, C.A. and Merchant C.S.Designing Conflict Management Systems: A Guide to
Creating Productive and Healthy Organizations. San Francisco: Jossey-Bass, 1996, pp 4-5
•A conflict can exist without a dispute, but a
dispute cannot exist without a conflict.

8. •Commerce dispute
•Commercial disputes include disputes arising
from, for example, a payment default on
delivery of goods or a dispute concerning the
payment and/or finalisationof projects
http://omnibridgeway.com/commercial-disputes/

9. Classification of Dispute –by subject matter
-Sale of goods
-Sale of services
-Investment disputes: both foreign direct and
indirect disputes
-IP disputes

10. Classification of Dispute –by Parties
-Between different states
-Between state and nationals of other states
-Between nationals of different states

11. WTO DS
•Disputes between members
•DSB under WTO rules
•Settlement disputes in accordance with WTO
rules (DSU & various agreement)
ICSID DS
•Convention on the settlement of disputes
between the state and Nationals of Other
states

12. DS between Nationals of Other states
•Judicial method
•Non-judicial method
–Alternative Dispute Resolution (ADR)
Alternative by parties’ consent
Legal status of the resolution
Application of ADR

13. International Commercial Sales Transaction
4 main
contracts
Sales
Contract
Insurance Payment
Documentary
Credit
Bill of
Exchange
Carriage
Incoterms

14. SomeExporter Legal Risks
Customerdoesnotpay-unpaidseller
Unabletorecover/enforcerightsinforeigncountry
Productliability-wrongitem,quality,quantity,
unsafe,late,incomplete
Unabletoproduce/acquire-breachcontract
Lossintransit-whobearsloss?
Competitioncheaper-buyerdefaultssotheycan
takeadvantageofcheaperopportunity

15. Some importer legal risks
Goodsorservicesinappropriate,notwhatwas
ordered-claimforcompensationavailable?
Supplydoesnotmeetlocalstandards/laws
Crime–bribingforeignofficials
Tax,customsissues
Unfamiliarwithparticularfreetradetreaty
provisions
Unabletoenforcerights/recovermoneyinaforeign
country
Unabletosellitemspurchased
Vulnerabilitytolocalcustomersforproblems

16. Some manufacturing risks
Raw material problems
Machinery
Finance
Delivery
Quality/quantity issues
Damage to others
Failure to sell products
Title issues
©MNoonan2009

17. Risk and Insurance
Unskilled allocation of risks (usually based on an
incorrect assumption that they can be imposed on
other party or left to insurance) in contract
negotiation and drafting stage can lead to:
•Multiple insurances covering same risks
•Unnecessary extra costs built into prices
•Unexpected contribution results between insurers.
•Unexpected legal consequences
•Some risks not covered at all

18. There is only one good kind of legal dispute
18
The one that is prevented!
“You have a chance to go broke
twice in your life; once when you
lose a lawsuit, the other time, when
you win.”
Prevention of commercial disputes

19. Cooperation and Problem Prevention Stage.
Dispute Control Stage.
Nonbinding Facilitated Resolution Stage.
Binding Resolution Stage.

20. Methods of dispute resolution of
International commercial disputes
International commercial Arbitration
Trans national Litigation
ADR-e.g. expert determination on a particular
issue, negotiation, mediation.

21. 21
Litigation
vs.
Alternative Dispute Resolution
Litigationrefers to lawsuits; the process of
filing claims in court, and ultimately going to
trial.
Alternative Dispute Resolutionis any other
formal or informal process for settling disputes
without going to trial.

22. 22
Alternative Dispute Resolution
(most common forms)
Negotiation
•Parties make offers and counter-offers for settlements.
•May be face-to-face or through lawyers.
Mediation
•Neutral person (mediator) attempts to get parties to
reach a voluntary settlement.
•Mediation may be ordered by a judge.
•Mediator does not render a decision.
Arbitration
•Neutral person (arbitrator) is involved.
•Arbitrator does render a binding decision.
•Arbitration may be mandatory, if chosen in advance as
the method for dispute resolution.

23. Alternative Dispute Resolution
(less common forms)
23
Mini-trial
•Parties stage a short trial to a panel of three “judges.”
•Two of the “judges” are executives of the disputing
corporations; the third is a neutral party.
•Lawyers present shortened cases; “judges” discuss
settlement.
Summary Jury Trial
•Initiated and supervised by a court.
•Each side summarizes to a mock jury what witnesses
would say if called before a real jury.
•Jury deliberates and tries to reach consensus, but may
vote individually if necessary.
•Allows each side to see how a trial might turn out.
Click here to search the internet for Alternative Dispute Resolution

24. Litigation
24
The Judiciary’s Role
Interpret the lawJudicial review
Jurisdiction
Jurisdiction over
persons or property
Jurisdiction over
subject matter
Jurisdiction in
cyberspace
Venue Standing to sue

26. Disadvantages of Litigation
•Deprives business leaders of the opportunity to maintain
control over their disputes
•Takes too long.
•Is too expensive.
•Lacks expertise.
•Is too public.
•Is too uncertain.
•Is too disruptive of business relationships.
•Few conventions
•Difficult enforcement of foreign judgment due to lack of
appropriate international convention (Domestic law and
reciprocity

28. LESSON 2: INTERNATIONAL COMMERCIAL
ARBITRATION
•History of ICA
•Definition and characteristic
•Arbitration: disadvantage and advantage
•Kind of International commercial arbitration
•Legal regime governing international
commercial arbitration
•The fundamentals of arbitration

29. •No
dispute,
No
arbitration

30. History of international commercial arbitration
•Periodsofthedevelopmentofinternationalcommercial
arbitration
•Domesticarbitration→internationalarbitration
•From1923GenevaProtocolonArbitralClauses→1927
ConventionfortheExecutionofForeignArbitralAwards
•1923ICCestablishedtheCourtofArbitration.
•InternationalLawAssociationadoptedtheAmsterdam
Rulesinits1938session
•NewYorkconventionontheRecognitionandEnforcement
ofForeignArbitralAwards→1961EuropeanConvention
•ModelLawin1985→amended2006
•ICSID1965

31. Definition of ICA: Meaning of commerce
•“EachContractingStatereservestherighttolimitthe
obligationmentionedabovetocontractswhichareconsidered
ascommercialunderitsnationallaw.”
The 1923 Protocol on Arbitration Clauses
•NewYorkConventional1958:Thelimitationappliesonlyifa
Statemakesthenecessarydeclaration.
•“to arbitration agreements concluded for the purpose of
settling disputes arising from international trade between … .”
•1961 European Convention on ICA
•Commercial–abroadinterpretationofcommercialityshould
beadopted:anyinternationalarbitrationbetweencompanies
wherethedisputeiseconomicincharacterwillbeconsidered
tobecommercial.
•Model Law 1985

32. Vietnam
•Article2.Arbitration'sjurisdictiontosettledisputes
•1.Disputesamongpartieswhicharisefromcommercial
activities.
•2.Disputesamongpartiesatleastoneofwhomconducts
commercialactivities.
•3.Otherdisputesamongpartieswhicharestipulatedbylaw
tobesettledbyarbitration.
•Article3.Commercialactivitymeansactivityforprofit-making
purposes,comprisingpurchaseandsaleofgoods,provisionof
services,investment,commercialenhancement,andother
activitiesforprofit-makingpurposes.(CLV)

33. International–anarbitrationisinternationalis:
1.thepartiestoanarbitrationagreementhave,atthetimeofthe
conclusionofthatagreement,theirplacesofbusinessindifferentStates,
or
2.oneofthefollowingplacesissituatedoutsidetheStateinwhichthe
partieshavetheirplacesofbusiness:i)theplaceofarbitrationif
determinedin,orpursuantto,thearbitrationagreementii)anyplace
whereasubstantialpartoftheobligationsofthecommercialrelationship
istobeperformedortheplacewithwhichthesubject-matterofthe
disputeismostcloselyconnected;or
3.thepartieshaveexpresslyagreedthatthesubjectmatterofthe
arbitrationagreementrelatestomorethanonecountry.
Model Law 1985
The meaning of international arbitration

34. •Thetermisrarelydefinedinbothnationallawsand
internationallawonarbitration
•Arbitrationisamethodofdisputeresolution
involvingoneormoreneutralthirdpartieswhoare
usuallyagreedtobythedisputingpartiesand
whosedecisionisbinding.
•Internationalcommercialarbitrationistheprocess
ofresolvingbusinessdisputesbetweenoramong
transnationalpartiesthroughtheuseofoneor
morearbitratorsratherthanthroughthecourts.
International Commercial Arbitration: optimal method

35. -Consent
•Providing the power of the arbitrators to decide the
dispute.
•Limiting an arbitrator’s power
•Semi-consensual
•Compulsory arbitration
-Non-Governmental Decision-Makers
•Arbitrators are private citizen >< Judges
•Arbitrators do not have to be lawyer
•Arbitrators are independent and impartial
-A Final and Binding Award
•Cannot be appealed to a higher level court
International commercial arbitration and
its characteristics

36. •“(1)If,duringarbitralproceedings,thepartiessettlethe
dispute,thearbitraltribunalshallterminatetheproceedings
and,ifrequestedbythepartiesandnotobjectedtobythe
arbitraltribunal,recordthesettlementintheformofan
arbitralawardonagreedterms.
•(2)Anawardonagreedtermsshallbemadeinaccordance
withtheprovisionsofarticle31andshallstatethatitisan
award.Suchanawardhasthesamestatusandeffectasany
otherawardonthemeritsofthecase.”
•Article 30 of the Model Law

37. Arbitration and its advantage
1.Final, binding decision
2.Party autonomy
3.Confidentiality
4.International recognition and enforcement
of arbitral awards
Should concern:
National court’s supervision on the arbitration

39. Recognition and enforcement
•The1958NewYorkConventionstatesasfollows:“eachcontracting
stateshallrecognizeanagreementinwritingunderwhichthe
partiesundertaketosubmittoarbitrationalloranydifference
whichhavearisenorwhichmayarisebetweentheminrespectofa
definedlegalrelationship,whethercontractualornot,concerninga
subjectmattercapableofsettlementbyarbitration.”
•“Recognitionandenforcementofanarbitralawardmayalsobe
refusedifthecompetentauthorityinthecountrywhere
recognitionandenforcementissoughtfindsthat:1)thesubject
matterofthedifferenceisnotcapableofsettlementbyarbitration
underthelawofthatcountry,or2)therecognitionorenforcement
ofthewardwouldbeofthatcountry.”contrarytothepublicpolicy

40. •InFrance,CivilCode–“onecanarbitratewithrespectto
allrightsofwhichonecandisposefreely.”“onecannot
submittoarbitrationquestionsofstatusandcapacityof
persons,questionsrelativetodivorceandseparation,or
questionsrespectingcontroversiesthatconcernpublic
entitiesorpublicestablishmentsandmoregenerallyany
matterthatconcernsthepublicorder.”
•Inchina,accordingtothe1994ArbitrationLaw,
contractualdisputesbetweencitizenofequalstatus,
legalpersonsandothereconomicorganizationsand
disputesarisingfrompropertyrightsmaybeputto
arbitration.Andthefollowingdisputescannotbeputto
arbitration:1)disputesarisingfrommarriage,adoption,
guardianship,bringingupofchildrenandinheritance2)
disputesthathavebeenstipulatedbylawtobesettled
byadministrativeorgans.

41. Arbitration and its disadvantage
•Lessdiscoverymaybegenerallyviewedasanadvantage
•Thelackofabilitytobringanappealcanbefrustratingtoa
party
-Thepartieshavewrittenintotheirarbitrationagreementsarighttoa
judicialappealonthemeritsofanarbitrationaward.
•Arbitratorshavenocoercivepowers
•Inmultipartydisputes,anarbitraltribunalfrequentlydoesnot
havethepowertojoinallrelevantparties
•Thepoolofexperiencedinternationalarbitratorslacksboth
genderandethnicdiversity

42. 1.ad hoc arbitration
2.institutional arbitration
Kind of International commercial arbitration

43. Arbitration administration
•Institutional-established institutions with
rules, procedures etc.
•Ad hoc-the parties design it themselves.

44. International Arbitral Institutions
•International Court of Arbitration and ICC in Paris
•London Court of International Arbitration
•Swiss Chambers of Commerce and Industry
•Arbitration and Institute of Stockholm Chamber of Commerce
•American Arbitration Association
•HK International Arbitration Centre
•Singapore International Arbitration Centre
•China International Economic and Trade Arbitration Commission
•Kuala Lumpur Regional Centre for Arbitration
•The Australian Centre for International Commercial Arbitration
•International Centre for the Settlement of Investment Disputes
Asia Pacific Regional Arbitration Group (APRAG) is association of 17 regional
arbitral institutions in our area. See www.aprag.org
©MNoonan2009

45. Institutions
Advantages
Preestablishedandtestedrules,guidelinesand
practices
Establishedformatwhichhasprovedworkable
Neutralentitytocollectandholdfees,deposits
Listofexperiencedarbitrators,oftenbyexpertise
Efficientwithtrainedandexperiencedstaff
Physicalfacilities..roomsetc
Neutralandindependent

46. Specialist forms of Arbitration
LondonMaritimeArbitratorsAssociation-maritime
disputesbetweencommercialparties
CourtofArbitrationforSport-Lausanne,NYandSydney
WorldIntellectualPropertyOrganisation(WIPO)
Geneva
InternationalCentreforSettlementofInvestment
Disputes-involvesstates
WTO

47. Arbitral Administration
SAMPLE ISSUES
•How will arbitrators be chosen?
•What language will be used for documents and oral hearings-
who will translate
•What if one party delays or refuses to take a step
•Interim measures
•Degrees of discovery or disclosure
•Procedure at hearings
•Rules of evidence
•Fees
•Liability for costs

48. Legal regime governing international
commercial arbitration
•NewYorkConvention
•Nationallaw
•Arbitrationrules
•Arbitrationpractice

49. International treaty
International arbitration practice
National Laws
Arbitration Rules
Arbitration agreement

50. The fundamentals of arbitration
1.The agreement to arbitrate
2.Applicable law of contract & other aspects.
3.Seat of arbitration
4.The arbitrators
5.The procedure
6.Confidentiality
7.The award

51. Session 3: The agreement to arbitrate
Agreementincontract→Basisforthearbitraltribunal’s
jurisdiction
SubmissionAgreement→ muchlesscommonthan
arbitrationclausesincontracts
Functionandpurpose
Empowersindependentarbitrator(s)todetermineissues
anddisputes
Enablespartiestochoosearbitrator,language,rules,
jurisdictiongoverningproceduralissuesandmerits
Makesdecisionbinding
IsenforceableunderUNConventionontheRecognitionand
EnforcementofForeignArbitralAwards1958(NY
Convention1958)

52. •The parties may also stipulate the dollowing
matter in the arbitration clause:
1.the place of arbitration and hearing
2.the language of the arbitration
3.the number of arbitrations
4.the nationality of arbitrators
5.the method of selection of arbitrators
6.the applicable law of the contract
7.the application of ordinary procedure or
summary procedure.

53. Arbitration clause examples
•“Alldisputesarisinginconnectionwiththepresent
agreementshallbesubmittedinthefirstinstanceto
arbitration.Thearbitratorshallbewell-knownof
commerce…designatedbymutualagreementbetween
buyerandseller.”
•Alldisputesshallberesolvedbyarbitration.Intheevent
ofanyclaimsarisingbetweentheparties,thematter
shallbereferredtotheArbitrationCourtofLondonor
Paris.”
•“Anydifferencebetweentheparties,includingwith
respecttointerpretation,whichtheycannotresolveby
agreement,shallbeamicablyresolvedbyinternational
arbitrationundertheEnglishSupremeCourt.”

54. •“Anydisputesarisecannotbesettledbyamicable
negotiationwillbetransferredtoVIACatHoChi
MinhCity,Vietnamforfinaldecision”
•AlldisputeifanytobesettledbyVietnamInternational
CenteratChamberofCommerceandIndustryof
Vietnam
•Ifthetwopartiesfailtoresolvesuchadisputeor
differencebymutualnegotiation,thedisputeshallbe
finallysettledundertheRulesofConciliationand
ArbitrationoftheCourtofArbitrationinVietnam

55. 55
•MọitranhchấpphátsinhtừHợpđồngsẽđượcgiảiquyếtbằng
thươnglượng.Nếutranhchấpkhôngthểgiảiquyếtđượcbằng
thươnglượnggiữahaiBênthìtranhchấpsẽđượcđưaraPhòng
ThươngmạivàCôngnghiệpViệtNamđểgiảiquyết.
•“…Nếukhôngthỏathuậnđượchaibênsẽviệndẫnđếntrọngtài
kinhtếThànhphốHàNội,quyếtđịnhcủatrọngtàikinhtếsẽlà
quyếtđịnhcuốicùngvàbắtbuộchaibênphảithihành…”
•“Mọitranhchấpphátsinhtừhaycóliênquanđếnhợpđồngnàysẽ
đượcgiảiquyếttại…Nếumộtbênkhôngđồngývớiphánquyếtcủa
trọngtàithìcóquyềnkiệnraTòaánnướcbịđơn”

56. The hybrid institutional clauses
•RecentlyupheldbytheSingaporeCourtofAppealinInsigmaTechnology
CoLtdvAlstomTechnologyLtd[2009]SGCA24
✓ArbitrationclausespecifiedICCRulesadministeredbySIAC
✓AttempttosetasidetheawardonthegroundsthattheTribunallacked
jurisdictionandarbitrationagreementinoperativeforuncertainty
✓SingaporeHighCourtrejectedapplicationandCourtofAppealrejected
appeal:
“wherethepartieshaveevincedaclearintentiontosettleanydisputeby
arbitration,thecourtshouldgiveeffecttosuchintention,evenifcertain
aspectsoftheagreementmaybeambiguous,inconsistent,incompleteor
lackinginparticulars…”

57. The arbitration clause: somegood examples
Example1:SIAC
“Anydisputearisingoutoforinconnectionwiththiscontract,including
anyquestionregardingitsexistence,validityortermination,shallbe
referredtoandfinallyresolvedbyarbitrationinSingaporeinaccordance
withtheArbitrationRulesoftheSingaporeInternationalArbitration
Centre("SIACRules")forthetimebeinginforce,whichrulesaredeemed
tobeincorporatedbyreferenceinthisclause
TheTribunalshallconsistof[one/three]*arbitrator(s)tobeappointed
bytheChairmanoftheSIAC.
Thelanguageofthearbitrationshallbe________________.”
•Example2:ICC
“Alldisputesarisingoutoforinconnectionwiththepresentcontract
shallbefinallysettledundertheRulesofArbitrationoftheInternational
ChamberofCommercebyoneormorearbitratorsappointedin
accordancewiththesaidRules.”

58. Think about it!
The arbitration agreement should be carefully drafted
to maximise chances of enforcement in the particular
circumstances:
Rules
Consider location of assets of counterparty
Agree a seat which maximises chances of
enforceability-i.e. in arbitration friendly jurisdiction
Specify that arbitral award is final and binding
Tailor agreement to address any issues arising from
domicile of counterparty, type of business.

59. Recognition and effects
•New York Convention Article II
1.EachContractingStateshallrecognizeanagreement[…]underwhichtheparties
undertaketosubmittoarbitrationalloranydifferenceswhichhavearisenorwhich
mayarisebetweentheminrespectofadefinedlegalrelationship,whether
contractualornot,concerningasubjectmattercapableofsettlementbyarbitration.
3.ThecourtofaContractingState,whenseizedofanactioninamatterinrespectof
whichthepartieshavemadeanagreementwithinthemeaningofthisarticle,shall,
attherequestofoneoftheparties,referthepartiestoarbitration,unlessitfinds
thatthesaidagreementisnullandvoid,inoperativeorincapableofbeing
performed.
UNCITRAL Model law art 8, vogl§7
(1)Acourtbeforewhichanactionisbroughtinamatterwhichisthesubjectofan
arbitrationagreementshall,ifapartysorequestsnotlaterthanwhensubmittinghis
firststatementonthesubstanceofthedispute,referthepartiestoarbitrationunless
itfindsthattheagreementisnullandvoid,inoperativeorincapableofbeing
performed.

60. Dispute Resolution Clause
•Whether to refer disputes to arbitration or some other
method
•Institutional or ad hoc arbitration
•Rules, if institutional
•Language
•Where arbitration will be held
•“seat” of arbitration-which law will govern procedure?
•Which law will govern arbitration
•Which law will govern merits of dispute-e.g. contract.
•Activation trigger

61. Which law determines the validity
of an arbitration agreement?
•New York Convention art V
1. Recognition and enforcement of the award may be refused […]
only if […] :
(a) The […] agreement referred to in article II […] is not valid
under the law to which the parties have subjected it or, failing
any indication thereon, under the law of the country where
the award was made;

62. Formal validity
•New York Convention article II
1. Each Contracting State shall recognize an agreement
in writing […]
2.Theterm"agreementinwriting"shallincludean
arbitralclauseinacontractoranarbitration
agreement,signedbythepartiesorcontainedinan
exchangeoflettersortelegrams.

63. Example
•Assumethatpartiesreachanoralagreement
bytelephone.Oneofthepartiessendsa
writtenconfirmation,whichcontainsan
arbitrationclause.Theotherpartyperforms
underthecontract,forexample,itships
goods,butitneversendsawrittenresponse
tothefirstparty’swrittenconfirmation.Does
ithaveaArbitrationclause?

64. UNCITRAL Recommendation of 7.7.06
on the interpretation of article II(2)
1.RecommendsthatarticleII,paragraph2,ofthe
ConventionontheRecognitionandEnforcementof
ForeignArbitralAwards,doneinNewYork,10June
1958,beappliedrecognizingthatthecircumstances
describedthereinarenotexhaustive;

65. UNCITRAL Model Law, article 7
Option I
(2) The arbitration agreement shall be in writing.
(3) An arbitration agreement is 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 by other means.
(4) The requirement […] is met by an electronic communication if the
information contained therein is accessible so as to be useable for
subsequent reference; […]
(5) Furthermore, […] if it is contained in an exchange of statements of claim
and defencein which the existence of an agreement is alleged by one
party and not denied by the other.
(6) The reference in a contract to any document containing an arbitration
clause constitutes an arbitration agreement in writing, provided that the
reference is such as to make that clause part of the contract.

66. UNCITRAL Model Law, article 7
Option II (vogl §10)
“Arbitration agreement” is an agreement by the
parties to submit to arbitration all or certain
disputes which have arisen or which may arise
between them in respect of a defined legal
relationship, whether contractual or not.

67. Development
•Traditionally: New York Convention art II
preferred as a uniform standard which is
arbitration-friendly
•Now: state law may be more arbitration-
friendly
•State law may be applied under New York
Convention article VII

68. The agreement to arbitrate
Decide whether parties want the agreement to
enable:
•Referral of any and all disputes arising in
relation to or out of agreement, to arbitration
•Referral of a specific dispute type to
arbitration only.

69. Substantial validity –A defined legal
relationship
•Any dispute “arising under” this contract:
–Only disputes on contractual rights and
obligations
•Any dispute “in relation to” this contract/
“connected with” this contract/ arising out of
agreement
–Also tort, statutory or other non-contractual
claims connected with the contractual relationship
Overseas Union Insurance Ltd v AA Mutual International Insurance Co Ltd [1988] 2
Lloyd’s Rep 63

70. •In Heyman v. DarwinsLtd [1942] AC 356 , 399 Lord Porter said that
the former had a narrower meaning than the latter but in Union of
India v. E B Aaby’sRederiA/S [1975] AC 797 Viscount Dihorne, at p
814, and Lord Salmon, at p 817, said that they could not see the
difference between them. Nevertheless, in Overseas Union
Insurance Ltd v. AA Mutual International Insurance Co Ltd [1988] 2
Lloyd's Rep 63, 67, Evans J said that there was a broad distinction
between clauses which referred “only those disputes which may
arise regarding the rights and obligations which are created by the
contract itself” and those which “show an intention to refer some
wider class or classes of disputes.” The former may be said to arise
“under” the contract while the latter would arise “in relation to” or
“in connection with” the contract. In Fillite(Runcorn) Ltd v. Aqua-
Lift (1989) 26 Con LR 66, 76 Slade LJ said that the phrase

71. Example
•Asupplierdecidedtoterminateaninternational
distributionagreement.Withouttheknowledge
ofthedistributor,thesupplierhiredsomeofthe
distributor’skeyemployeestoworkforanew
distributioncompanythatwouldbeownedby
thesupplier.Theterminationofthedistribution
agreementwouldnottakeplaceforafew
months,andduringthattime,thekeyemployees
continuedtoworkforthefirstcompany,but
solicitedcustomersofthatcompanytoswitchto
thenewcompanyonceitwouldbeinoperation.

72. Narrow Clauses
•Alldisputes,controversies,ordifferences
whichmayariseoutoforinrelationtothe
calculationoftheroyaltiesdueunderclause
___ofthiscontractshallbesettledby
arbitration***.

73. Fiona Trust & Holding Corporation and others v Privalov
and others[2008] 1 Lloyd’s L Rep 254
•ChristopherButcherQC–Arbitration–Charterparty
providingthat“Anydisputearisingunderthischarter”
shouldbereferredtoLondonarbitration–Shipowners
bringingcourtproceedingsclaimingrescissionofcharter
partiesforbriberyandfraud–Whetherarbitrationclause
covereddispute–Whethercharterersentitledtostayof
proceedingsunderArbitrationAct1996,section9.
•These fine distinctions reflect no credit upon English commercial
law
•The time has come to draw a line under the authorities to date and
make a fresh start
•Ifthepartieswishtohaveissuesastothevalidityoftheircontract
decidedbyonetribunalandissuesastoitsmeaningor
performancedecidedbyanother,theymustsaysoexpressly

74. Model arbitration clauses
•Any dispute arising out of or in connection with this
contract, including any question regarding its
existence, validity or termination
http://www.lcia.org/Dispute_Resolution_Services/LCIA_Recommended_Clauses.as
px
•Any dispute, controversy or claim arising out of or in
connection with this contract, or the breach,
termination or invalidity thereof http://sccinstitute.se/engelska-
16.aspx

75. Model clauses
•Any dispute, controversy or claim arising out of or in
relation to this contract, including the validity,
invalidity, breach or termination thereof
https://www.sccam.org/sa/en/clause.php
•Any dispute, controversy or claim arising out of or
relating to this contract, or the breach, termination
or invalidity thereof
http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules-revised/arb-rules-
revised-2010-e.pdf

76. Negotiation, Conciliation or Mediation
Before Arbitration.
•Intheeventofanydispute,claim,question,or
disagreementarisingoutoforrelatingtothis
Agreementorthebreachthereof,thepartieshereto
shallusetheirbesteffortstosettlesuchdisputes,
claims,questions,ordisagreement.Tothiseffect,
uponthewrittenrequestofanyparty,theyshall
consultandnegotiatewitheachother,ingoodfaith
inanattempttoreachajustandequitablesolution
satisfactorytobothparties.Iftheydonotreachsuch
solutionwithinaperiodof60days...

77. How Many Arbitrators?
•a. Costs
•b. Independence
•c. Scheduling
•d. Reasoned award
•e. Enforcement considerations
•f. Comfort level for foreign companies

78. Selection Process.
•a. Institutional factors;
•b. Appointing authorities;
•c. That the Parties agree on certain arbitrators in
advance;
•d. Party chosen arbitrators with a neutral third
arbitrator;
•e. Replacement considerations; and
•f. Special expertise or nationality requirements
for the arbitrators.

79. Arbitration clause
•Sufficientlyprecisetopermitidentifyingthe
scopeofthedisputeandthetypeof
arbitration

80. Separability
•UNCITRAL Model Law art 16
(1)For[the]purpose[ofdetermining
jurisdiction],anarbitrationclausewhich
formspartofacontractshallbetreatedasan
agreementindependentoftheotherterms
ofthecontract
The arbitration agreement is not affected if the
main contract is void, terminated, illegal etc.

81. Legal capacity of the parties
New York Convention article V:
1. Recognition and enforcement of the award may be refused […]
only if […]:
(a) The parties to the agreement referred to in article II were,
under the law applicable to them, under some incapacity […];

82. Arbitrability
•The subject matter has to be arbitrable
•Ex: criminal matters, child custody, family matters, and bankruptcy
•UNCITRAL Model Law art 1(5)
•This Law shall not affect any other law of this State by virtue of which certain disputes may not be submitted to
arbitration or may be submitted to arbitration only according to provisions other than those of this Law.
•Vogl§9
•Disputes on matters within the parties’ free disposal are arbitrable, including private law effects of competition
regulation
•From second look doctrine
•Mitsubishi Motors Corp v Soler Chrisler-Plymouth, Inc., 473 U.S. 614 (1985) and Scherk v. Alberto-Culver Co., 417 U.S. 506, to
•To ensuring application of rules
•Belgium, Cass., 16.11.06, Germany, OLG München, 17.5.06, U.S., Thomas v Carnival Corp, England, High Court 30.10.09

83. Kompetenz-Kompetenz
•Model Law art 16
(1)The arbitral tribunal may rule on its own
jurisdiction, including any objections with
respect to the existence or validity of the
arbitration agreement

84. Null and Void, Inoperable or Incapable
of Being Performed
•Null and Void: lack of actual consent because
of fraud, duress, misrepresentation, undue
influence, or waiver or Capacity issues
•Inoperable: another legal forum or a required
time limit had expired.
•Incapable of Being Performed

85. BINDING NONSIGNATORIES
•whether a particular party –a nonsignatory–
can be required to arbitrate, or whether a
non-signatory can compel arbitration with a
signatory. ?

86. The ultimate decision is of the courts
•Model Law art 8 vogl §7
(1)A court before which an action is brought in a matter which is the subject of an
arbitration agreement shall […] refer the parties to arbitration unless it finds that the
agreement is null and void, inoperative or incapable of being performed.
•Model Law art 34 vogl §43
(2) An arbitral award may be set aside by the court […] :
(a) […]
(i)[…] the arbitration agreement is not valid […]
(b) […]
(i) the subject-matter of the dispute is not capable of settlement by arbitration
•Model Law art 36 Vogl §46
1.Recognition and enforcement of an award may be refused […]:
(a) […]
(i)[…] the arbitration agreement is not valid […]
(b) […]
(i) the subject-matter of the dispute is not capable of settlement by arbitration

87. The ultimate decision is of the courts
•New York Convention art V
1. Recognition and enforcement of the award may be refused […]:
(a)The […] agreement […] is not valid […];
[…]
2. […]
(a) The subject matter of the difference is not capable of settlement by arbitration […]

88. An illustration
Taken from a Clayton Utz update 7/5/2012
TraxyswasaLuxembourgcompanywhichprovided
financial,marketinganddistributionservicestothemining
industry.BalajiwasanIndiancompanywhichimportedcoal
andcokebutfailedtopayforashipmentin2009.Traxys
resoldthecokeandcommencedarbitrationinLondon(as
peragreement)claimingAUD3m.However,Balajididnot
haveanyassetsintheUKorEurope.Balajicommenced
proceedingsintheIndianCourttohaveawardsetasideor
stayedandobtainedaninjunction.Traxystooknopartin
Indianproceedings,buttookproceedingsinAustraliato
enforceawardagainstsomesharesBalajiownedinan
AustralianCompany.TheapproachoftheIndiancourtsand
Balaji’sblatantbreachofcontractintakingthose
proceedingsmadeitcomplicatedandcostlyforTraxys.

89. •The parties may also stipulate the dollowing
matter in the arbitration clause:
1.the place of arbitration and hearing
2.the language of the arbitration
3.the number of arbitrations
4.the nationality of arbitrators
5.the method of selection of arbitrators
6.the applicable law of the contract
7.the application of ordinary procedure or
summary procedure.

90. Case: Hung CuongVs BetalCompany
Betalcompany,opensaleapartment,invitedcustomerstobuy.LeHa,
anemployeeofthecompany,introduceddiscountprogramstobuy
theproductsintheevent.
HungCuong,acustomer,decidedtobuyandsignthecontractofthe
companyissuedbyLeHa,butdidnotpayattentiontothediscount
termswhichisdifferentwithLeHasaidtohimbefore.
HungCuongpaidsumofmoneyinadvance.
Intheafternoon,HungCuongchangedhismindandreturnedtothe
companytocancelhiscontract.
LeHaannouncedthatthecontracthadbeentransferredtoher
superiorsandsheisnotcurrentlyholding.
HungCuongandLeHamadeawrittenconfirmationofthisissue.
After1month,HungCuongreceivedthecontractsignedbythe
company.
HungCuongsaidthatthecontractwasnotavailable,andrequesteda
refund.
Betaldoesnotagreeanddoesnotpaybackmoney..
HungCuongbringsthecasetoVIAC.DiscussthecompetenceofVIAC
inthatcase.

92. II. Practical Exercises
The Validity of Arbitration Clauses

93. International Commercial Arbitration
Topic 4: The arbitral tribunal

94. Types of disputes
•Sale of good contract
•Banking and finance
•Transportation and logistic
-Accessing the VIAC Arbitrator list to chose the
suitable arbitral tribunal.

95. APPOINTMENT OF ARBITRATORS
1. How Many Arbitrators?
-One
-Three
2. Qualifications
-Knowledge and Experience
-Lawyers or Nonlawyers
-Professors as Arbitrators
-Language Fluency
-Availability
-Reputation
-Specifications and Requirements

96. Method of Selection
(a) the institutional rules provide parties
freedom to choose the arbitrators
(b) they will be limited to a list of names
provided by the arbitral institution,
(c) the institution will choose the arbitrators
(d) some variation of the above

97. Three Arbitrators
•Rules:
•TheICCRulesprovidethatpartiesmayeachselectonearbitrator,
butunlessthepartieshaveagreedotherwise,thethirdarbitrator,
whowillbethepresidingarbitrator,willbeselectedbytheICC
CourtofArbitration
•IntheCourtofInternationalArbitrationattachedtotheChamberof
CommerceandIndustryofRomania,ifthepartiesdidnotagree
uponaselectionprocess,theneachpartywillappointitsarbitrator,
andthetwoarbitratorswillselectthepresidingarbitrator,butmust
maketheselectionfromalistprovidedbytheCourtofArbitration
•CIETAC,themajorarbitralinstitutioninChina,providedforthefirst
timethatpartiescannominatearbitratorsoutsideofthelistof
arbitratorsmaintainedbyCIETAC,solongasthepartiesagree,and
theChairmanofCIETACapprovestheappointment

98. Three Arbitrators
•Practise
ChoosingtheParty-AppointedArbitrators(Coarbitrators):
•Shouldwechooseanarbitratorwhois“theflavorofthe
month.”?
•Whowillbethebestfortheirparticularcase?
•Someofthestrategyinvolvesweighingthemeritsofthe
prospectivearbitratoragainstthoseoftheotherparty’s
arbitrator
•Thefinalchoiceofanarbitratormayinvolvesome
negotiationbetweenclientandcounsel
•Arbitratorisnotsupposedtohaveanybiasesinfavorof
thatparty

99. •AssumetheclaimantisfromAustria,andthelawapplicabletothe
meritsisSwisslaw.ShouldclaimantnowappointaSwissarbitrator
orperhapsanAustrianarbitrator?Ifclaimantdecidestoappointan
Austrianarbitrator,theothersidemaywellappointaSwiss
arbitrator.Atthispoint,claimantmaybeconcernedaboutwhether
thechairshouldbeSwiss,becauseitmightnotwantthechairand
theotherarbitratortobetoocloseonthelegalquestions.
However,ifthechairiswell-known,andhighlyrespectedforboth
hisknowledgeofSwisslawandthestrengthofhischaracterand
personality,thenitwouldnotreallymatterifthechairisalsoSwiss.
Dependingonthecase,knowledgeoftheapplicablelawmaynot
beasimportantasotherqualities,suchasunderstandingpertinent
industrypractices,technicalmattersorotherelementsindispute
ClaudiaK¨alin-Nauer
Switzerland

100. Choosing the Presiding Arbitrator (The
Chair of the Tribunal).
•Twoco-arbitratorsmakethischoicein
consultationwiththepartieswhoappointed
them.
•Party-appointedarbitratorschoosethechairwill
workmoresmoothlythanhavingpartiesmake
thechoice
•Theparty-appointedarbitratorwillnotagreeon
anyoneproposedbytheotherside.
•ThearbitratorischosenbytheICC,as“ICC
roulette

101. •Iwasaco-arbitratorinacasewheretheotherco-arbitrator(whohad
neverbeeninvolvedinanyarbitrationbefore)askedmehowweshould
proceedtoselectachair.Isuggestedfivenamesofprospective
arbitrators.HeaskedmeifIknewanyofthem.IrepliedthatIknewthem
all,onafirstnamebasis.Hethensaid,“Idon’twantthem,ifyouknow
them.”Isaid,“Look.Whydon’tyouconsideritforacoupleofdaysand
consultyourappointor,andthengetbacktome?”Twodayslaterhe
agreedononeofthefiveIhadsuggested(aleadingEnglishQcwithalong
trackrecordasaninternationalarbitrator,particularlyasChairman),
havingfoundoutintheinterim(a)thatmyknowingtheChairman
professionallyinnowayputhimorhisappointoratanydisadvantagein
thetribunal,and(b)mypersonalassuranceoftheproposedchairman’s
qualitieswasinitselfofvalueandgreatlypreferabletopickingunknowns
offalist.
HewDunda
London

102. The perfect chair
•Bright and knowledgeable
•Impartial
•Has common sense
•Has a lot of authority, but not too much Listens
carefully
•Thoughtful (hesitates), but is able to decide Available
•Not self-conscious, not arrogant
•Will draft a beautiful award
Pierre Mayer
Professor, arbitrator, and counsel in Paris

103. A Sole Arbitrator
•The parties will need to reach agreement on
who should be chosen
•Should we select an arbitrator in advance and
put her name in the arbitration clause?
•Thearbitralinstitutionwillchoosethesole
arbitrator

104. Ad hoc arbitration
•Parties agree on arbitration -They specify that the
arbitration shall be ad hoc, or They do not say anything
•The selection method should be clear
•A time frame for making the selection
•How the issue will be resolved if parties cannot agree
on a sole arbitrator
•Provide for an appointing authority
•The court at the seat of the arbitration can be called
upon to appoint an arbitrator
•The court in the country whose substantive law applies
to the arbitration

105. Interviewing Prospective Arbitrators
“beauty pageants.”
•Is not supposed to ask questions about the
merits of the case
•Should not be any discussion that might cause
the potential arbitrator to view the case in a
particular light
•A sole arbitrator –would both meet with the
arbitrator at the same time
•three arbitrators -meet individually with the
one arbitrator they intend to select

106. THE INTERVIEW DILEMMA
•...Igenerallydon’tsubmittointerviewswherethe
partyisaU.S.ormultinationalcompany.However,Ido
bendmyprohibitioninthesituationofaforeignparty
thatisrelativelyunfamiliarwiththeinternational
arbitralprocess.Inthatevent,Iwillmeetwithaparty
representativeandcounselforahalf-hour
meeting...withonlycounselaskingquestions.However,
mygroundrulesprohibitdiscussionofdetailormerits
ofthecase.
GeraldAksen
UnitedStates

107. OBLIGATIONS OF ARBITRATORS
1.IndependenceandImpartiality:
-Thearbitratorisnotbiasedbecauseofanypreconceived
notionsabouttheissues
-Anyreasontofavoronepartyoveranother
-Nofinancialinterestinthecaseoritsoutcome
-doesnothaveaclosebusinessorprofessionalrelationship
withoneoftheparties.
-ModelLawrequiresanarbitratordisclosewithoutdelay
anycircumstanceslikelytogiverisetojustifiabledoubtsas
toherimpartialityorindependence
-Someinstitutionissuedtheguidelines:TheIBAGuidelines
onConflictsofInterest

108. The IBA Guidelines on Conflicts of Interest
Red List –Non-Waivable
1.3Thearbitratorisamanager,directoror
memberofthesupervisoryboard,orhasa
similarcontrollinginfluenceinoneofthe
parties.
Red List –Waivable
2.1.2 The arbitrator has previous involvement in
the case.

109. Orange List
•3.1.2Thearbitratorhaswithinthepastthree
yearsservedascounselforoneofthepartiesor
anaffiliateofoneoftheparties...inanunrelated
matter,butthearbitratorandthepartyorthe
affiliateofthepartyhavenoongoing
relationship.
Green List
•4.4.2Thearbitratorandcounselforoneofthe
partiesoranotherarbitratorhavepreviously
servedtogetherasarbitratorsorasco-counsel.

110. Other Obligations
•The most fundamental obligation is torender
an enforceable award, or at least to make best
efforts to render an enforceable award.
•The Parties have imposed specific obligations
•Specificdutiesimposedbyanarbitral
institutionorbythearbitrationrules,

111. Legal framework
•Arbitration agreement
•(Arbitration rules)
•Arbitration law
•Conventions
•Soft law

112. CHALLENGES TO THE ARBITRATOR
•Aconflictofinterest-improperconduct
•“justifiabledoubtsastohisimpartialityorindependence,”
orifhe“becomesunableorunfittoact.”
•Ifapartyintendstochallengeanarbitrator,itmustdoso
promptlyorriskbeingdeemedtohavewaivedany
objection
•Ifthechallengeisnotsuccessful,inmanyjurisdictionsthe
partythatbroughtthechallengemaytaketheissuetoa
court
•Ifthearbitrationisadhoc-locallawwilldetermine
whetherornotapartyhastherighttochallengean
arbitratorpriortotherenderingofafinalaward.

113. EXAMPLE OF A CHALLENGE THAT FAILED
•InanarbitrationinAustraliaarisingoutofacontractforsale
ofoffshorenaturalgas,plaintiffbuyersoughttoremovean
arbitratoratthebeginningofthearbitration.Thegrounds
wereasfollows:
•1.Thearbitratorhaddecidedtechnicalissuesinfavorofthe
sellersinanotherarbitration,andthebuyerassertedthose
issuesweresimilartotheissuesintheinstantcase.
•2.Thearbitratorhadbeenleadcounselforsomeproducersin
apriorarbitrationconcerningon-shorenaturalgas,andhad
madesubmissionscriticizingexpertwitnesseswhowere
expectedtobecalledintheinstantcase.
•3.Thearbitratorhadfailedtodisclosepertinentinformation
concerninghisparticipationintheearlierarbitrations.

114. FLAWED CONDUCT OF ARBITRATORS
•Arbitratorsdonotmovetheproceedings
alongefficiently,anddonotprovideanaward
inatimelymanner.
•TheArbitratorisalawuntohimself,andthere
arelittleornocontrolsonhisconduct.
→Thereareproposalsforfinesandreductions
infeesforarbitratorswhodonotperformas
theyshould

115. •InCaracas,theChamberofCommercehasa
listofarbitrators.Partiesarefreetochoose
someonenotonthelist,butgenerallythey
tendtochoosefromthelist.Thelistisrevised
everytwoyears,andindividualscanbe
removedfromthelistforvariousreasons,
includingimproperconduct.
Diana Droulers
Venezuela

116. REPLACEMENT OF ARBITRATORS
•Institutional rules will provide the method for
replacement
•Anadhocarbitration-thecourtatthesitusof
thearbitrationcanbecalledupontomakean
appointment.
•Itmaybethecasethatanarbitratorresignsat
orneartheendofthearbitration
proceedings?

117. ARBITRATOR IMMUNITY
•Discuss about should the tribunal has
immunity?
•differentlegalsystemstakedifferent
approachestoarbitralimmunity.Inall
systems,however,arbitratorsarenotimmune
fromcriminalliability.

118. •Incommonlawcountries,courtstendtoprovide
immunitytoarbitratorswhentheyareactinginaquasi-
judicialfunction.
•TheUnitedStatesprobablytakesthemostprotective
stancetowardarbitrators,providingalmostabsolute
immunitytoanarbitratoractinginadecision-making
capacity.Somestatesevenprovideforimmunityby
statute.
•TheAustralianInternationalArbitrationActof1984
providesthatarbitratorsarenotliablefornegligence,but
canbeliableforfraud,inrespecttoanyoftheirduties.
•InEngland,anarbitratormaybeliableforactinginbad
faithandalsoifacourtdeterminesthatshewithdrew
fromthearbitrationwithoutgoodreason.

119. Incivillawcountries,thereisnoabsolute
immunity,butinsomecasesthereappearstobe
qualifiedorimpliedimmunity.
•Thearbitratorsarenotgoingtobefound
liablefornegligence,butonlyforgross
negligenceorintentionalconduct.Liabilityis
usuallydeterminedonthebasisofcontractor
tort

120. COSTS AND FEES
•Thearbitrators’feesareusuallydeterminedbythe
arbitralinstitution
•Inadhocarbitrations,ontheotherhand,wherefees
maybediscussed,allpartiesshouldparticipatein
discussionswithallarbitratorsabouttheirfees
•Partiesareexpectedtopaysomeinitialfeesandcosts
inadvance.Iftherespondentrefusestopayitsshare,
thearbitrationwillnotgoforwardunlesstheclaimant
paystherespondent’sshare.Althoughthisinitially
burdenstheclaimant,thepaymentsmaybeallocated
againsttherespondentinthefinalaward.

121. Arbitration rules
•UNCITRAL Arbitration Rules, if the parties
have chosen them
http://www.uncitral.org/uncitral/en/uncitral_
texts/arbitration/2010Arbitration_rules.html
•Any rules that the parties may have agreed on
•Any rules that the tribunal may determine
appropriate

122. Arbitration law, conventions, soft law
•Fully applicable to ad hoc arbitration

123. Distinguishing feature
•Need for appointing authority
–UNCITRAL Rules (art. 6): designated by the parties
or by the Secretary –General of the PCA
–UNCITRAL Model Law (art.11): court e.g.Norwegian
Arbitration Act §§6, 13: court that would have had
jurisdiction or court of first instance in Oslo
•Fragile if no applicable rules were designated

124. Institutional arbitration
•Parties agree on arbitration under the rules of
a specific arbitral institution
–ICC
http://www.iccwbo.org/uploadedFiles/Court/Arbitration/other/2012_Arbitration%20and%20ADR%2
0Rules%20ENGLISH.pdf
–LCIA http://www.lcia.org/Dispute_Resolution_Services/LCIA_Arbitration_Rules.aspx
–SCC
http://www.sccinstitute.com/filearchive/3/35894/K4_Skiljedomsregler%20eng%20ARB%20TRYCK_1
_100927.pdf
–Swiss Rules https://www.sccam.org/sa/download/SRIA_english.pdf
–…

125. Legal framework
•Arbitration agreement
•Arbitration rules
•Arbitration law
•Conventions
•Soft law

126. Arbitration rules
•By choosing the institution, its rules
automatically become applicable
•The parties may also agree to have the
proceeding administered by an institution
under the UNCITRAL Rules

127. Arbitration law, conventions, soft law
•Fully applicable to institutional arbitration

128. Distinguishing feature
•Institution acts as appointing authority
•Institution acts as a secretariat in respect of
costs
•Depending on the rules, it may be complex
and time consuming (terms of reference, court
of arbitration)

129. Seat of arbitration
•Proceedings in the territory are subject to that
country’s arbitration law, e.g. UNCITRAL
Model Law art 1(2)
•Arbitration law is procedural, not substantive

130. Seat v. hearings
•Hearings do not have to be held at the seat
–Model Law art 20(2), vogl §22
–UNCITRAL Arbitration rules art 18(2)
–ICC Arbitration rules art 18(2)
–SCC Arbitration rules art 20(2)

131. Arbitration law
•Recognition of arbitration agreements
•Arbitrability
•Role of courts
•Constitution of the arbitral tribunal
•Seat
•Powers of the arbitral tribunal
•Procedural rules
•Costs
•Mandatory principles on due process
•Validity of arbitral awards
•Enforcement of arbitral awards

132. Composition of the arbitral tribunal
•Arbitration agreement
•Arbitration rules
•Arbitration law

133. Number of arbitrators
•Three arbitrators
•Sole arbitrator

134. Arbitration rules
•If parties have not agreed,
•UNCITRAL Rules
–Three arbitrators unless
•Appointing authority deems sole appropriate,
•One party requests, and
•The other party does not object
•SCC
–Three arbitrators unless
–Arbitration Institute deems sole appropriate
•ICC
–Sole arbitrator unless
•Court of arbitration deems three appropriate

135. Arbitration law
•If parties have not agreed and there are no
arbitration rules,
•UNCITRAL Model Law art. 10(2), vogl §12:
–Three arbitrators
•English Arbitration Act sec. 15(3):
–Sole arbitrator

136. Appointmenet of arbitral tribunal
•Arbitration agreement
•Arbitration rules
•Arbitration law

137. Arbitration rules
•If parties have not agreed,
•UNCITRAL Rules art.8, 9:
–Sole: Parties’agreement
–Three: Each party appoints one, two arbitrators appoint chairman
–Failure: Appointing authority with list method
–Failure: Appointing authority
•SCC art 13
–Sole: Parties’agreement
–Three: Each party appoints one, Arbitration Institute appoints chairman
–Failure: Arbitration Institute
•ICC
–Sole: Parties nominate
–Three: Each party nominatesone, Court of Arbitration appoints chairman
–Failure: Court of Arbitration

138. Arbitration law
•If parties have not agreed and there are no
arbitration rules,
•UNCITRAL Model Law art 11, vogl §13
–Sole: Parties’agreement
–Three: Each party appoints one, two arbitrators appoint chairman
–Failure: Court
•English Arbitration Act sec 16-18
–Sole: Parties’agreement
–Three: Each party appoints one, two arbitrators appoint chairman
–Failure: Appointed arbitrator to be treated as sole, or Court

139. Requirements
•Independence and impartiality
•Availability
•Qualifications
•Challenge

140. Topic 5: The Arbitral Proceeding

141. BEGINNING THE ARBITRATION
•Thefirststepforcounselistoreadthe
arbitrationagreement,thenreadandfollowthe
ruleschosenbythepartiesinthatagreement.
•Howthetimeofcommencementofan
arbitrationisdetermined?→astatuteof
limitationsorbytheparties’owncontract.
•Somearbitrationlawsprovidethatiftheparties
havenotagreedotherwise,thearbitrationisnot
commenceduntilappointmentisacceptedbythe
arbitratorortherequesttoappointanarbitrator
hasbeenserved.

142. II. The hearing
•1. Chair Can Decide Procedural Issues
Inathree-arbitratorproceeding,partieswill
oftenagreethatthechairalonecanmake
decisionsaboutproceduralissues
•2. Scheduling the Hearings

143. Arrange the room for meeting
Witness lawyer party
•Arbitrators
{space} lawyer party
Arbitrators
Party Party
{table}
{table}

144. 3. Place of the Hearing
•In the arbitration clause
•The arbitrators will choose a seat
•4. Language of the Hearing
•the arbitration clause
•if the parties cannot agree on the language
•Documents not in the language of the
arbitration must also be translated.

145. 5. Local Bar Requirements
•InPortugal,forexample,itappearsthatto
representapartyinaninternational
arbitration,onemustbeadmittedasalawyer
inPortugal,althoughthereisapparentlyno
courtdecisiononthesubject

146. •6. Closed Hearings
•Becausearbitrationsareprivatematters,a
hearingisnotopenlikeacourtroom.Although
partieshavearighttobepresentatahearing,
anywitnesscanbeexcludedwheneverheor
sheisnottestifying
•7. Record of Proceedings
•8. Technology

147. 9. Time Limits per Side
•Arbitrators may limit the time that each side
can have to present testimony.
10. Default of Appearance
•If the claimant initiates proceedings but then
fails to communicate the statement of claim,
in many cases the proceedings can be
dismissed, and the claimant can be ordered to
pay costs
•What’s about defendent?

148. 11. Expedited Proceedings
•Some arbitration institutions provide that parties can
simply agree to shorten time limits
•A fast track arbitration that does not give arbitrators
any right to extend the time limits.
•Many things could happen that would make it
necessary to extend the limits: an interim award might
be necessary, one party could be uncooperative, or a
co-arbitrator could be uncooperative.
•Depending on statutes of limitations, there might be a
possibility of starting over with a different tribunal

149. Due Process Procedure
•1. Chairperson cites authority to hear case and explain reason for hearing.
•2. Opening statement first by complainant and then be respondent,
briefly explaining the party’s basic position.
•3. The parties will be given an opportunity to present evidence and
testimony in their behalf and they may call witnesses. All parties
appearing at a hearing may be called as a witness without advance notice.
•4. The parties and their legal counsel will be afforded an opportunity to
cross-examine all witnesses and parties.
•5. The panel members may ask questions at any time during the
proceedings.
•6. The Chairperson may exclude any questions which he or she deems
irrelevant or argumentative.
•7. Each side may make a closing statement. The complainant will make
the first closing statement and the respondent will make the final closing
statement.
•8. Adjournment of Hearing.
•9. The Hearing Panel will go into executive session to decide the case.

150. Evidence
•Thetribunalgenerallyhasthepowerto
determinetheadmissibilityandtheweightofthe
evidence.
•IBAin1999adoptedRulesontheTakingof
EvidenceinInternationalCommercialArbitration
(“IBARulesofEvidence”.TheIBARulesof
Evidencehavecontributedtoharmonizingthe
approachusedinmanyinternationalarbitrations
forthetakingofevidence.

151. Hearsay Evidence
•Tribunals will generally admit all documents
•Hearsay evidence is considered not reliable
but will assert that it will be given appropriate
weight.

152. Authentication
•Documentsaregenerallyassumedtobe
authenticunlessobjectedto.
•If the party is unable to do so, the document may
be rejected.
•ifsomejustificationisgivenforthemissing
original,thedocumentcouldbeadmitted(unless
patentlyfraudulent),withacaveatbythetribunal
thatitwillgivethedocumentappropriateweight,
presumablylessthanifitsauthenticitywerenot
atissue.

153. Document Requests
•Partiesarechargedwithprovidingtothetribunalandtheother
partyalldocumentstheyintendtorelyontosupporttheirclaims
ordefenses
•Inpractice,however,requestsfordocumentsmustbespecific.
•Inordertoobtaindocumentsfromanopposingparty,the
requestingpartyhasarelativelyheavyburdenofestablishingthe
existenceofthedocumentsaswellastheirimportancetothe
outcomeofthecase.
•whathappensifsomeofthedesireddocumentsareinthehands
ofnonparties?USA→subpoenapower
•Butwhataboutarecalcitrantparty?Whathappenswhenaparty
hasbeenorderedbythetribunaltoproducedocumentsandhas
simplyrefused?

154. Arbitrator Discretion
•Asageneralrule,arbitratorsaregoingto
admitanyevidencetheybelievewillhelp
establishthefactsofthecase.
•Theyhavethepower,however,torefuseto
admitevidencethatisirrelevant,duplicative,
defamatory,undulyburdensome,orotherwise
inappropriate.

155. 4. Fact Witnesses
•a. Testimony Prior to the Hearing
•Commonlawlawyerstendtotakelengthydepositionsin
ordertolearnwhatinformationwitnessesfortheopposing
sidepossessthatmayformthebasisoftheirtestimony
•Forcivillawlawyers,ontheotherhand,factwitnessesare
generallynotconsideredveryimportant
•Inaninternationalarbitration,thetreatmentofwitness
testimonypriortothehearingtendstofollowahybridlaw
model.
•Depositionsarealmostneverallowed,unlessbothparties
agreetothem.Eventhen,theyarelikelytobefewin
numberandlimitedintime.

156. b. Witness Statements
•In many jurisdictions, it is generally recognized that the
witness statements are prepared by counsel
•The statement should be complete, because the
witness may not be permitted to add to the statement
at the oral hearings
•The IBA Rules of Evidence, witnesses may, within a
time period determined by the tribunal, submit revised
witness statements, generally limited, however, to
responding to matters that were stated in a witness
statement filed by the opposing party

157. c. Who Can Testify
•Any person may testify at the hearing,
including a party
d. Meeting with Witnesses
itisgenerallyexpectedininternational
arbitrationsthatwitnesseswillbe
interviewed

158. e. Examining Witnesses
•Incivillaw,thesystemforexaminingwitnessesiscalled
“inquisitorial,”whichmeansthatmostofthe
questioningisdonebythejudgeorarbitrator.
•Incommonlaw,thelawyersdomostofthe
questioningbydirectexaminationandcross
examination,followedbyredirectexamination,the
systemisreferredtoas“adversarial.”
•Ininternationalarbitration,thecommonlawsystemof
examinationandcross-examinationisfrequentlyused,
althougharbitratorsmayintervenefromtimetotime
toquestionawitness,and,aswillbediscussedbelow,
directexaminationisfrequentlyeliminated.

159. f. Arbitrator Intervention
•Arbitratorsneedtobediscreetandeven-
handedwhentheyintervene.Buttheyshould
bewillingtotellpartiesiftherearecertain
mattersthattheythinkareimportantfor
themtoknow.Forexample,thetribunalmight
saytotheparties,“WeneedtoknowaboutX.
WhatcanyoutellusaboutX?

160. g. Availability of Witnesses
•AccordingtotheIBARulesofEvidence,a
witnesswhohasprovidedastatementmust
beavailabletotestifyatthehearing,unless
thepartieshaveagreedotherwise.Ifthe
witnessdoesnotshowupforthehearings,
andthereisnovalidreason,thenthetribunal
willdisregardthewitnessstatement,unless
thereareexceptionalcircumstances

161. h. Compelling Witness Testimony
•TheIBARulesofEvidencealsostatethatifa
partywantstocallawitnesswhowillnot
appearvoluntarily,thepartymayaskthe
tribunaltotakewhateverstepsarelegally
available

162. 5. Expert Witnesses
•Whenanexpertisneeded,thepartiesgenerallydecidewhether
eachsidewillcallanexpert,orwhethertheypreferthatthe
tribunalchooseanexpert.
•Ifthetribunalisappointinganexpert,itislikelytofirstconsultwith
theparties,andinvitethemtoagreeonthechoiceofexpert.
•Oneoftheconcernswhenatribunalhasappointedanexpertis
whetheritissimplydelegatingitsdecision-makingauthoritytothe
expert.
•Partiesgenerallyhavetherightnotonlytoexamineanexpert’s
reportandsubmitaresponseinwritingpreparedbythepartyorby
aparty-appointedexpert,butalsotoexamineanyofthe
documents,goods,orotherinformationonwhichtheexpertbased
thereport.

163. F. POST-HEARING PROCEEDINGS
•Post-hearing proceedings involve the submission of
briefs that may summarize the evidence and
arguments.
•If one party has turned up new evidence at the end of
the trial, sometimes the other party will have the
opportunity to respond to that evidence in a post-
hearing brief, rather than having to return for another
hearing.
•If new evidence is somehow discovered by one of the
parties after the close of the hearing, but before the
award is made, the party can seek to reopen the
hearing.

164. Confidentiality and privacy
•.Itiswidelyviewedthatconfidentialityisoneoftheadvantageous
andhelpfulfeaturesofarbitration.Nevertheless,thereisno
uniformanswerinnationallawsastotheextenttowhichthe
participantsinanarbitrationareunderthedutytoobservethe
confidentialityofinformationrelatingtothecase.
•Moreover,partiesthathaveagreedonarbitrationrulesorother
provisionsthatdonotexpresslyaddresstheissueofconfidentiality
cannotassumethatalljurisdictionswouldrecognizeanimplied
commitmenttoconfidentiality.
•Furthermore,theparticipantsinanarbitrationmightnothavethe
sameunderstandingasregardstheextentofconfidentialitythatis
expected.Therefore,thearbitraltribunalmightwishtodiscussthat
withthepartiesand,ifconsideredappropriate,recordanyagreed
principlesonthedutyofconfidentiality

165. Confidentiality and privacy
•Anagreementonconfidentialitymightcover,forexample,oneor
moreofthefollowingmatters:thematerialorinformationthatis
tobekeptconfidential(e.g.piecesofevidence,writtenandoral
arguments,thefactthatthearbitrationistakingplace,identityof
thearbitrators,contentoftheaward);measuresformaintaining
confidentialityofsuchinformationandhearings;whetherany
specialproceduresshouldbeemployedformaintainingthe
confidentialityofinformationtransmittedbyelectronicmeans(e.g.
becausecommunicationequipmentissharedbyseveralusers,or
becauseelectronicmailoverpublicnetworksisconsiderednot
sufficientlyprotectedagainstunauthorizedaccess);circumstances
inwhichconfidentialinformationmaybedisclosedinpartorin
whole(e.g.inthecontextofdisclosuresofinformationinthepublic
domain,orifrequiredbylaworaregulatorybody).”

166. The distinctive Nature of Arbitration as
a Form of Dispute Resolution…
•… and its relevance for the legal framework of
the arbitral proceedings
→Distinctive feature: flexibility
→Discuss: benefits/desirability?

168. Enforcement of an Arbitral Award
which Has Been Set Aside at the
Seat of Arbitration

169. Can an award set aside at the seat be
enforced in other countries?
•The host country may have influence over its judiciary.
•The investor may negotiate to avoid litigation and
choose arbitration.
•The host country may negotiate to nominate itself as
the seat.
•If the award is unfavourable to the host, the court of
the seat may set it aside.
•The investor may still wish to enforce it elsewhere.

170. Policy Arguments: against enforcement
•Anawardisacreatureoftheseat.
•Thechoiceoftheseatmayhavebeen
madeinexchangeforreciprocal
concessions.Theattendantriskhasbeen
assumedbytheinvestor.
•Endlessattemptstoenforceavacated
awardinanumberofcountriesshouldnot
beallowed.

171. Policy Arguments: in favour of
enforcement
•An award is stateless.
•The courts of the seat may set aside an
award on capricious grounds.
•The country of enforcement, where the
assets are seized, has a greater interest in
reviewing the award.

172. Setting aside awards at the seat
•New York Convention sets forth no grounds.
•Model Law, Article 34(2), allows setting aside
on such grounds as nullity of arbitration
agreement, procedural deficiencies, and
public policy.
•Model Law does not allow the review of the
merits but the laws of some countries do.

173. Enforcement of a vacated award?
•Article V(1)of the New York Convention
Recognition and enforcement of the award
may be refused ... only if …:
…
e. The award … has been set aside or
suspended by a competent authority of the
country in which, or under the law of which,
that award was made.
•Article 36(1)(a)(v) of the Model Law

174. Interpretation of those provisions
•Explanatory Note on the UNCITRAL Model Law
“[t]he setting aside of an award at the place of origin
prevents enforcement of that award in all other
countries by virtue of Article V(1)(e) of the 1958 New
York Convention and Article 36(1)(a)(v) of the Model
Law,”
•The words “may be refused” confer discretion.
•Restrictive reading: limiting to the setting aside on
internationally recognised grounds, e.g. those listed
in Article 34 of the Model Law

175. 1961 European Convention on International
Commercial Arbitration
Article IX
•(1) “The setting aside in a Contracting State of an arbitral
award covered by this Convention shall only constitute a
ground for the refusal of recognition or enforcement in
another Contracting State where such setting aside took place
in a State in which, or under the law of which, the award has
been made and for one of the following reasons:
[a list replicating Article 34(2) of the Model Law save grounds of non-
arbitrability and public policy]
•(2) In relations between Contracting States that are also
parties to the New York Convention …, paragraph 1 of this
Article limits the application of Article V(1)(e) of the New York
Convention solely to the cases of setting aside set out under
paragraph 1 above.

176. “more-favorable-right” provision
•Article VII(1) of the New York Convention:
The provisions of the present Convention shall not …
deprive any interested party of any right he may have
to avail himself of an arbitral award in the manner
and to the extent allowed by the law or the treaties
of the country where such award is sought to be
relied upon.
•e.g. Article 1502 of le Code de procédure civile of
France does not contain an equivalentof Article
V(1)(e) of the New York Convention.

177. Res judicataeffect of the foreign
annulment decision
•Always give res judicataeffect.
•Give res judicataeffect only if the foreign decision was based
on an internationally recognised ground.
•Give res judicataeffect only if to do so would not contravene
the public policy of promoting circulation of awards.
“The test of public policy cannot be simply whether the courts of a
secondary State would set aside an arbitration award if the award had
been made and enforcement had been sought within its jurisdiction. …
the Convention contemplates that different Contracting States may
have different grounds for setting aside arbitration awards.” TermoRio
v. Electranta(D.C.Cir.,2007)
•Never give res judicataeffect.

178. French case law
•Article VII of the New York Convention and
Article 1502 of le Code de procédure civile.
•The enforcement of vacated awards is not
refused, irrespective of the grounds of setting
aside.
•Possible exception: awards on matters purely
internal to the seat.

179. Société Hilmarton v. OTV
(23 March 1994, Cass. 1re civ.)
•Arbitration in Geneva between an English company
and a French company concerning the procurement
of a government contract in Algeria. The Swiss courts
set aside the award by reviewing the merits.
•The French Cour de cassation: the award in question
was “an international award which was not
integrated into the legal order of [Switzerland], so
that its existence continued despite its being set
aside ….”
•See also Putrabali (29 June 2007, Cass. 1re civile ).

180. U.S. case law
Chromalloy AeroServices v. Egypt
(939 F. Supp. 907 (D.D.C. 1996))
•Arbitration between a U.S. company and Egypt in
Cairo. The award unfavourable to Egypt was set aside
by the Egyptian court on the ground of a mistake of
the application of Egyptian law.
•The U.S. District Court allowed enforcement.
–Article V(1)(e) granted discretion.
–Via Article VII, Chapter 1 of the Federal Arbitration Act (9
U.S.C.10), which set forth grounds for setting aside
domestic awards, does not permit review of merits.
–Public policy grounds to deny res judicataeffect to the
Egyptian court’s decision.

181. U.S. case law
Baker Marine (Nig.) Ltd. v. Chevron (Nig.) Ltd.
(191 F.3d 194 (2d Cir. 1999))
Spier v. Calzaturificio Tecnica S.p.A.
(71 F. Supp. 2d 279 (S.D.N.Y. 1999))
The U.S. Court of Appeals and the District
Court refused to enforce vacated foreign
awards.
–Enforcement under Chapter 1 of the FAA was not
allowed.
–Article V(1)(e). The discretion was exercised
against enforcing the awards.
–There was “no adequate reason for refusing to
recognize the judgment of the [foreign] court.”

182. When will the U.S. courts enforce vacated
foreign awards? 1
When there is a breach of “no recourse”
clause, i.e.an explicit promise not to appeal
the award?
•Chromalloy: the party who moved in Egypt for the
setting aside of the award had “repudiate[d] its
solemn promise.” cf. Baker Marine and Spier.
•No-recourse clauses are prevalent, e.g. in rules of
arbitral institutions.
•Its effect is, according to the law of the seat, usually
restricted to barring an appeal on the merits.

183. When will the U.S. courts enforce vacated
foreign awards? 2
When the U.S. law is chosen as the law governing the
procedure?
•cf. Baker Marine “[n]othing suggests that the parties intended
United States domestic arbitration law to govern their
disputes” (cited inSpier).
•Then, Chapter 1 of the FAA applicable to set aside the award?
•In practice, it is unusual for an arbitration agreement to
choose the U.S. law as the governing law of the procedure
while specifying another country as the seat.

184. Further reading
•Dana H. FREYER “United States Recognition and Enforcement
of Annulled Foreign Arbitral Awards -The Aftermath of the
Chromalloy Case” Journal of International Arbitration 2000
•David W. Rivkin “The Enforcement of Awards Nullified in the
Country of Origin: The American Experience” ICCA Congress
Series1999 Paris (no. 9)
•Emmanuel Gaillard “Enforcement of Awards Set Aside in the
Country of Origin: The French Experience” ICCA Congress
Series, 1999 Paris (no. 9)
•Felix Weinacht ”Enforcement of Annulled Foreign Arbitral
Awards in Germany” Journal of International Arbitration 2002

185. Applicable Laws and Rules
•A. IMPORTANCE OF THE LAW
•How important is the law in ICA?

186. Applicable law in Int’ Arb
•Applicable law for arbitration agreement
•Applicable law for arbitration procedure
•Applicable law for merits of the case

187. Applicable law for arbitration agreement
•Contract between the parties to settle their
dispute by arbitration.
•Principles of private international law or
conflict of law rules in national law

188. General Principles of Private Int’ Law
•Parties’ autonomy
•Closest relationship with the contract
•Compulsory application of particular law in
different countries

189. Development in the Field
•The national court should make the
international arbitration agreement effect as
possible as it can
•Art 187 of Swiss PL: an arbitration agreement
is valid if it conforms either to the law chosen
by the parties, or to the law governing the
subject matter of the dispute, in particular the
main contractor to Swiss Law.

190. Applicable law of the arb. procedure
•Whether the parties may select to apply
procedure law of other country?
•Process to negotiate NYC
•Nationality of the award

191. Deciding Authority
•Arbitration institution
•Arbitration tribunal
•National court

192. Conclusion of AL in procedure
•The seat decided the AL for arbitration
procedure
•The seat could be decided by the parties, and
by the arbitration institution or the court in
the absence of the agreement between the
parties

193. AL for International arbitration Agreement
•NYC has no provision
•National law decides the issues

194. B. DELOCALIZATION V. TERRITORIALITY
•Denationalized arbitration
•International award has no relation with the
legal order of any country
•Such award is floating until it is enforced

195. AL for merits of the case
•What law should be applied to decide the
merits of the case?
•Proper law (applicable law) of the contract

196. Basic principles
•Parties’ autonomy
•Closest relationship with the contract
•General principles of law, law merchant, lex
mecartoris

197. Harmonization of the applicable law
International contract
•CISG
•PICC