RF QC International CommercialArbitrationl.ppt

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1. INTERNATIONAL COMMERCIAL
ARBITRATION –
HOW DOES IT WORK IN
PRACTICE?
Richard Fernyhough QC,
Keating Chambers
Tuesday 23 November 2010

2. Confucius (12:13)
“Inhearinglitigation,Iamno
differentfromanyother
man.Butifyouinsistona
difference,itis,perhaps,that
Itrytogetthepartiesnotto
resorttolitigationinthefirst
place.”

3. Introduction
How International Commercial
Arbitration works
The qualities to look for in an
arbitrator
How arbitrators reach their
decisions

4. The raison d’etre of
International Arbitration
Role of international trade
“Home advantage”
Declining jurisdiction
Arbitration as supra-national
Party autonomy

5. Party Autonomy
Governing law
Procedural rules
Language of the arbitration
Legal seat (and venue)
Number of arbitrators
Identity of an arbitrator

6. Governing Law
Fear of “home advantage”
Choice influenced by:
•Perceived neutrality and
impartiality
•Appropriateness
•Parties’ familiarity with the law

7. Popular Choice
2010InternationalArbitration
Survey:ChoicesinInternational
Arbitration
•40 percent of respondents use
English Law
•17 percent use New York Law

8. Procedural Rules of the Arbitration
Proceduralrulesofthestate
UNCITRAL ModelLawonInternational
CommercialArbitration1985
OR
International Arbitral Institutions
•International Chamber of Commerce in Paris
•London Court of International Arbitration in
London
•Beijing Arbitration Commission in Beijing

9. Choosing an International Arbitral
Institution
Corporations look for:
•Neutrality
•Internationalism
•Reputation
•Recognition
2010 International Arbitration Survey:
•50 percent of respondents cited the ICC as
their preferred choice

10. China
Chinese institutions are the most
common choice
•CIETAC
•BAC
•SAC
Advantages:
•Generally less costly
•Role of trade associations

11. Language of the Arbitration
Parties are often nationals of states
speaking different languages
Preference:
•English as the “lingua franca” of
international trade
Parties will often use same language in
the arbitration as used in the
agreement

12. Seat of the Arbitration
Not usually discussed by parties
Agree on ‘venue’ instead
Consequences of failure to specify
‘seat’
•Bound by procedural rules where venue
located
•Failure to anticipate consequences of
different procedural rules

13. Factors Influencing Choice of Seat
Formal legal infrastructure
•National arbitration law
•Record of enforcement
•Neutrality and Impartiality
Law governing the contract
Convenience
2010 International Arbitration Survey:
•London as the preferred seat
•Followed closely by Geneva

14. Identity of the Arbitral Panel
Parties can agree on composition
of the panel:
•Number of arbitrators
•How arbitrators are appointed
•Qualifications
•Professional body to appoint

15. One or Three Arbitrators?
Preference for three arbitrators
2010 International Arbitration
Survey:
•87 percent of respondents preferred
three arbitrators
Greater Neutrality
Less risk of a poor decision
More balanced award

16. Advantages of One Arbitrator
Expense
•Cheaper to pay fees of one arbitrator
•Low sums of money at stake
Speed
•Concluded more quickly
Clear cut decision
•On merits of claims and costs and
expenses

17. Advantages of Three Arbitrators
Complexity of the dispute
•Legally, factually or technically
•Burden too much for one arbitrator
•Divide work
•Combined experience
Partiality
•Fallacy of appointing “their own man” to a
panel

18. Qualities in an Arbitrator
Reputation
•Within a legal or arbitral community
•Carry weight in tribunal
Open mindedness / fairness
•2010 International Arbitration Survey:
68 percent of respondents ranked this as the
most important factor
Integrity
•Honest and reliable

19. Experience
•In a number of different fields:
Industry or type of dispute
Legal system
Arbitration experience
Cultural or ethnic aspects
•2010 International Arbitration Survey:
58 percent of respondents ranked this as the second
most important factor
Strength of character
Power of persuasion

20. The Role of the Party-Appointed
Arbitrator
The same as all arbitrators
Role is to
•Consider the evidence
•Consider the arguments
•Apply their own view of the law
•To reach a JUSTresult

21. The Role of the Chairman
Pre-Hearing Phase
•Initiate procedural steps
•Powers of Chairman
The Hearing
•Conduct proceedings efficiently, fairly
and transparently
•No special authority

22. The Formal Deliberations
Will commence:
•Once the hearing is concluded (post
submissions)
•At meetings chaired by the chairman
Dependent on personalities of the
arbitrators and approach of chairman
•Views of co-arbitrators usually sought first
•Chairman as umpire
•Chairman listens to views and forms own
conclusions

23. The role of compromise
“Settlement of differences by mutual
concession or the partial waiving of
views for the sake of reaching a
settlement”
Limits on compromise:
•What is the nature of the issue in
question?
•How deeply held are the views?

24. Dissents
The following options are open to the
dissenting arbitrator:
1.Doing nothing
2.Un-motivated dissent
3.Motivated dissent
4.Publishing a dissenting opinion
5.Not signing the award
To dissent or not to dissent?

25. Drafting the Award
All relevant decisions should be taken
beforethe award is drafted
Chairman decides the procedure by
which all issues are to be decided
Award drafted by chairman and / or
co-arbitrators

26. A Successful Conclusion?
An award enforceableunder the New
York Convention
Addressed allissues raised
Tenableand reasonableconclusions
Parties given a fair opportunityto
advance their case
“Justice is to be done and also it is to be
seen to be done”

27. Payment of Costs
An appropriate costs order
•General rule:
Losing party to pay legal costs and expenses
of successful party
•Who is the successful party?
Amount of costs
•Whole of legal costs?
•Reduction?

28. International Commercial
Arbitration as a growth industry
•High levels of satisfaction
•Growth of international trade
•New centres for International
Arbitrations

29. ASIA
China and Hong Kong overtaken the
ICC in volume of new cases
•2008: international cases by CIETAC
and BAC reached 607 cases
Growth of arbitration:
•Growth of Asian economies
•Prominence in field of dispute resolution
More expedient
Less formal
Privacy and confidentiality

30. Conclusions
Success attributable to:
•Efficacy of institutions
•Arbitral rules
•Quality and experience of arbitrators

31. THE END