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Alternative Dispute Resolution International Jurisprudence International Centre For Settlement of Investment Disputes (Icsid) What Is ICSID?
Alternative Dispute Resolution International Jurisprudence International Centre For Settlement of Investment Disputes (Icsid) What Is ICSID?
Alternative Dispute Resolution International Jurisprudence International Centre For Settlement of Investment Disputes (Icsid) What Is ICSID?
I n t e r n a ti o n a l J u r i s p r u d e n c e
INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT
DISPUTES (ICSID)
What is ICSID?
Purpose
The Convention:
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
1. creates the ICSID Administrative Council, Secretariat, Panels of
Arbitrators and of Conciliators, and the status, immunities and
privileges of the Centre (Chapter I);
2. establishes ICSID’s jurisdiction (Chapter II);
3. authorizes conciliation (Chapter III);
4. authorizes arbitration (Chapter IV);
5. addresses replacement and disqualification of conciliators and
arbitrators (Chapter V);
6. discusses the cost of proceedings (Chapter VI);
7. deals with the place of proceedings (Chapter VII);
8. provides for disputes between Contracting States (Chapter (VIII);
9. provides for an amendment procedure (Chapter IX); and
10. includes final provisions such as the processes for signature,
ratification, and denunciation of the Convention (Chapter X).
Structure
(1) Each Contracting State may designate to each Panel four persons who
may but need not be its nationals.
(2) The Chairman of the Administrative Council (Chairman) may designate
ten persons to each Panel. The persons so designated to a Panel shall
each have a different nationality.
Qualifications
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
on the Panels of the principal legal systems of the world and of the
main forms of economic activity
Jurisdiction
The jurisdiction of the ICSID extends to any legal dispute arising directly out
of an investment, between a Contracting State (or any constituent
subdivision or agency of a Contracting State designated to the Centre by
that State) and a national of another Contracting State, which the parties to
the dispute consent in writing to submit to the Centre. When the parties
have given their consent, no party may withdraw its consent unilaterally.
Arbitration
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
Request for Arbitration
The Tribunal shall be the judge of its own competence. Any objection by a
party to the dispute that that dispute is not within the jurisdiction of the
Centre, or for other reasons is not within the competence of the Tribunal,
shall be considered by the Tribunal which shall determine whether to deal
with it as a preliminary question or to join it to the merits of the dispute.
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
The Tribunal shall decide a dispute in accordance with such rules of law as
may be agreed by the parties. In the absence of such agreement, the
Tribunal shall apply the law of the Contracting State party to the dispute
(including its rules on the conflict of laws) and such rules of international
law as may be applicable.
The Tribunal may not bring in a finding of non liquet on the ground of
silence or obscurity of the law. But this shall not prejudice the power of
the Tribunal to decide a dispute ex aequo et bono if the parties so agree.
Except as the parties otherwise agree, the Tribunal may, if it deems it
necessary at any stage of the proceedings,
(a) call upon the parties to produce documents or other evidence, and
(b) visit the scene connected with the dispute, and conduct such
inquiries there as it may deem appropriate.
Any arbitration proceeding shall be conducted in accordance with the
provisions of the Convention and, except as the parties otherwise agree,
in accordance with the Arbitration Rules in effect on the date on which the
parties consented to arbitration. If any question of procedure arises which
is not covered by the Convention or the Arbitration Rules or any rules
agreed by the parties, the Tribunal shall decide the question.
The Award
(1) The Tribunal shall decide questions by a majority of the votes of all its
members.
(2) The award of the Tribunal shall be in writing and shall be signed by the
members of the Tribunal who voted for it.
(3) The award shall deal with every question submitted to the Tribunal,
and shall state the reasons upon which it is based.
(4) Any member of the Tribunal may attach his individual opinion to the
award, whether he dissents from the majority or not, or a statement of
his dissent.
(5) The Centre shall not publish the award without the consent of the
parties.
(6) The Secretary-General shall promptly dispatch certified copies of the
award to the parties. The award shall be deemed to have been
rendered on the date on which the certified copies were dispatched.
(7) The Tribunal upon the request of a party made within 45 days after
the date on which the award was rendered may after notice to the
other party decide any question which it had omitted to decide in the
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
award, and shall rectify any clerical, arithmetical or similar error in the
award.
The award shall be binding on the parties and shall not be subject to any
appeal or to any other remedy except those provided for in the
Convention.
Each Contracting State shall recognize an award rendered pursuant to the
ICSID Convention as binding and enforce the pecuniary obligations
imposed by that award within its territories as if it were a final judgment
of a court in that State.
A party seeking recognition or enforcement in the territories of a
Contracting State shall furnish to a competent court or other authority
which such State shall have designated for this purpose a copy of the
award certified by the Secretary-General.
Execution of the award shall be governed by the laws concerning the
execution of judgments in force in the State in whose territories such
execution is sought.
Place of Proceedings
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
FACTS:
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I n t e r n a ti o n a l J u r i s p r u d e n c e
jurisdiction raising objections to the jurisdiction of the tribunal on the basis
that it had not consented to submit the dispute to ICSID arbitration. In
particular, it argues that there was no investment in the Philippines as
required by the BIT and that the dispute is purely contractual in character as
such, the dispute are governed by a subsisting dispute resolution provision
in the CISS agreement requiring submission of all contractual disputes to the
courts of the Philippines.
SGS on the other hand argues that the jurisdictional requirements under
Article 25(1) of ICSID Convention are satisfied. First, the dispute is a legal
dispute as it concerns the failure by the Philippines to perform their
obligations to SGS under the BIT and the CISS Agreement. Second, the
dispute arises directly out of an investment. SGS’s activities under the CISS
Agreement clearly satisfied the investment requirements identified in ICSID
case law with regard to duration, regularity of profit and return and the
substantial commitment of human and financial resources in setting up the
pre-shipment inspection system and assisting with the modernisation of the
Philippines’ customs infrastructure, thus making a significant contribution to
the development of the Philippines.. third, there is no doubt that the dispute
is between Contracting State and a national of another contracting state.
Lastly, the parties have consented in writing to ICSID arbitration
RULING:
Article VIII of the BIT provides for settlement of disputes with respect
to investments between a Contracting Party and an investor of the other
Contracting Party. If a dispute is not resolved by consultations between the
parties pursuant to Article VIII(1), the investor may submit the dispute
either to the national jurisdiction of the Contracting Party in whose territory
the investment has been made or to international arbitration, and in the
latter case, at the investor’s option, to ICSID or UNCITRAL arbitration. Under
Article X(2) of the BIT, however, “Each contracting party shall observe any
obligation it has assumed with regard to specific investments in its territory
by investors of the other contracting party.” includes commitments or
obligations arising under contracts entered into by the host State. The basic
obligation on the State in this case is the obligation to pay what is due under
the contract, which is an obligation assumed with regard to the specific
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
investment. But this obligation does not mean that the determination of how
much money the Philippines is obliged to pay becomes a treaty manner. The
extent of the obligation is still governed by the contract and can only be
determined by reference to the terms of the contract. Article X(2) makes it a
breach of the BIT for the host State to fail to observe binding commitments,
including contractual commitments, which it has assumed with regard to
specific investments. But it does not convert the issue of the extent or
content of such obligations into an issue of international law. that issue is
still governed by the investment agreement.
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
IN THE MATTER OF THE SOUTH CHINA SEA ARBITRATION
FACTS:
The Parties to this arbitration are the Republic of the Philippines and the
People’s Republic of China. This arbitration concerns disputes between the
parties regarding the legal basis of maritime rights and entitlements in the
South China Sea, the status of certain geographic features in the South
China Sea, and the lawfulness of certain actions taken by China in the South
China Sea. The basis for this arbitration is the 1982 United Nations
Convention on the Law of the Sea (UNCLOS).
On July 12, 2013, the arbitral tribunal issued Administrative Directive No.
1, pursuant to which the Permanent Court of Arbitration (PCA) was
appointed as Registry.
(2) Even assuming some of the claims were concerned with the
interpretation and application of the UNCLOS, they would still be an integral
part of maritime delimitation, which has been excluded by China through its
2006 Declaration and consequently is not subject to compulsory arbitration.
(3) Given that China and the Philippines have agreed to settle their
disputes in the South China Sea through negotiation, the Philippines is
precluded from initiating arbitration unilaterally. (Legal basis: Under Art.
286 of the UNCLOS, compulsory arbitration may only apply “where no
settlement has been reached” between the disputants.)
As set out above, where a party does not appear before the arbitral
tribunal, Article 9 of Annex VII to the UNCLOS requires as condition that “the
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
arbitral tribunal must satisfy itself not only that it has jurisdiction over the
dispute but also that the claim is well founded in fact and law.”
Although China did not participate in the constitution of the tribunal, the
latter held that it had been properly constituted pursuant to the provisions of
Annex VII to the UNCLOS. The tribunal had taken steps to satisfy itself
regarding its jurisdiction, including through questions posed to the
Philippines and through its decision to bifurcate the proceedings by
convening a separate hearing to consider the matter of jurisdiction and
admissibility of the Philippines’ submissions. The tribunal also recalled the
steps it had taken to safeguard the procedural rights of both Parties in the
circumstances of China’s non-participation.
(Note: In connection with the foregoing, the tribunal earlier said that,
among others, the Philippines is merely seeking a declaration that China’s
rights and entitlements in the South China Sea must be based on the
UNCLOS and not on any claim to historic rights.)
With respect to China’s third argument, the tribunal held that the
preconditions under the UNCLOS before the application of compulsory
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
arbitration has been complied with. Under Art. 286 of the UNCLOS, any
dispute concerning the interpretation or application of the UNCLOS shall,
where no settlement has been reached by recourse to Section 1, be
submitted at the request of any party to the dispute to the court or tribunal
having jurisdiction under this section.
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
FEDERAL DEPOSIT INSURANCE CORPORATION VS. IIG CAPITAL
FACTS:
Specifically, IIG asserts that (a) it was unable to present its case before
an impartial arbitrator; (b) the composition of the arbitral authority was not
what IIG agreed to because IIG was not aware of Naon's contacts with
Astigarraga; and (3) recognizing the award of a biased arbitrator would be
contrary to United States public policy.
ISSUE:
Whether or not the IIG is entitled to evidentiary hearing and whether or not
the award by the district court should be awarded
RULING:
International arbitration awards such as the one in this case "are subject
only to minimal standards of domestic judicial review for basic fairness and
consistency with national public policy." An arbitral award must be confirmed
unless appellants can successfully assert one of the seven defenses against
enforcement of the award enumerated in Article V of the New York
Convention.
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
in his party's. And Naon, the arbitrator, was the director of the summer
program. As the party with the power to hire Astigarraga, Naon had no need
to gain Astigarraga's favor through the ruling. Therefore, Naon and
Astigarraga's contact through a professional organization in 2003, years
before the arbitration began, does not warrant an evidentiary hearing. Such
professional contact does not, in any manner, give Naon a motive for using
his decision to curry Astigarraga's favor.
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
RUSK RENOVATIONS INC. V. ROBERT DUNSWORTH, INGRID
DUNSWORTH, AND EUROPA STAIRWAYS INC.
FACTS:
The Dunsworths did not participate in the arbitration. Neither did Europa.
The arbitrator made an award against all three for the down payment and an
additional $12,000 described as "liquidated damages".
ISSUES:
RULING:
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
Article 4.1: To obtain the recognition and enforcement mentioned in the
preceding article, the party applying for recognition and enforcement shall,
at the time of the application, supply:
(a) The duly authenticated original award or a duly certified copy thereof;
The award against the Dunsworths is not an arbitral award under the
International Commercial Arbitration Act because the Dunsworths are not
parties to an arbitration agreement and did not consent to be joined. This is
a sufficient reason to dismiss the application without calling on the
Dunsworths to prove anything under Article 5 of the Convention.
Article 5.1(b): The party against whom the award is invoked was not
given proper notice of the appointment of the arbitrator or of the arbitration
proceedings or was otherwise unable to present his case.
Article 23(1) of the Model Law required Rusk to "state the facts
supporting [its] claim, the points at issue and the relief or remedy sought",
and Article 25(a) required the arbitrator to terminate the arbitration
proceedings if "the claimant fails to communicate his statement of claim".
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
the arbitration. The party filing a notice of demand for arbitration must
assert in the demand all claims then known to that party on which
arbitration is permitted to be demanded.
CONCLUSION:
Rusk Renovations Inc. will have costs against Europa Stairways Inc. of
$500 plus disbursements for the unopposed application.
Ingrid Dunsworth and Robert Dunsworth will have costs against Rusk
Renovations Inc. of $2,000 plus disbursements.
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A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
LW INFRASTRUCTURE PTE LTD vs LIM CHIN SAN CONTRACTORS PTE
LTD
FACTS:
LCSC had been LWI’s subcontractor for a building project. However, it
failed to complete certain works by the completion date. As a result, a
dispute arose between the parties and LWI commenced arbitration against
LCSC on 22 June 2004. A final award was eventually rendered by the
Arbitrator in favour of LWI on 29 June 2010. Pursuant to the Singapore
Arbitration Act, both parties appealed that final award to the High Court on
questions of law arising out of the award. LCSC’s appeal was dismissed
but LWI’s appeal was substantially allowed. The final award was
remitted to the Arbitrator for reconsideration.
The Arbitrator subsequently rendered his “Second Supplementary
Award” on 21 September 2011 which increased the quantum of damages
awarded to LWI due to liquidated damages but it only dealt with post-
award interest. The awards were silent on pre-award interest.
Accordingly, on 17 October 2011, LWI’s solicitors wrote to the
Arbitrator and requested that he render an additional award for pre-
award interest. LWI cited section 43(4) of the Arbitration Act which
provided that, “Unless otherwise agreed by parties, a party may, within 30
days of receipt of the award and upon notice to the other party, request the
arbitral tribunal to make an additional award as to claims presented
during the arbitration proceedings but omitted from the award”.
The Arbitrator responded 3 days later on 20 October 2011 with the
Additional Award which awarded pre-award interest. LCSC’s solicitors
protested against the Additional Award on the same day it was rendered and
argued that LCSC had been deprived of an opportunity to make
submissions. In any event, LCSC had also argued that the Arbitrator
was functus officio and therefore had no power to make the
Additional Award.
The High Court had set aside the Additional Award on the basis that
there had been a breach of natural justice by the Arbitrator. However,
the High Court refused to make a declaration that the Additional
Award was a nullity.
As a result, LWI appealed against the setting aside of the
Additional Award while LCSC appealed against the refusal of the
High Court to grant a declaration that the Additional Award was a
nullity.
ISSUE/S:
1. WON the high court erred in refusing to declare the award a nullity
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2. WON the additional award out to be set aside for breach of natural
justice
RULING:
1. NO. The courts have no power except those expressly provided
for in the Arbitration Act.
LCSC also sought to argue that the Arbitration Act did not exclude the
power of the Singapore courts to grant a declaratory judgment in an
arbitration. This was on the basis that the court retained supervisory
jurisdiction over the arbitral tribunal through the grant of a declaratory
order. Pursuant to the legislative history of the Arbitration Act, a concurrent
supervisory jurisdiction would be contrary to the underlying doctrine of
minimal curial intervention in arbitration. The certainty of when court
intervention would be permitted would be “significantly
undermined” if the court could exercise the grant of declaratory
orders, where such a power was not expressly provided for in the
Arbitration Act.
The Court cited the DOCTRINE OF MINIMAL CURIAL
INTERVENTION as found in Article 5 of the Model Law and held that its
effect was “to confine the power of the Court to intervene in an
arbitration to those instances which were provided for in the Model
Law and to “exclude any general or residual powers” arising from
sources other than the Model Law.”
The Court further held that section 47 of the Arbitration Act was
comparable to Article 5 of the Model Law and should be construed in a
manner that was consistent with the intent underlying Article 5 of the Model
Law. Section 47 provided that “No judicial review of award. The Court shall
not have jurisdiction to confirm, vary, set aside or remit an award on an
arbitration agreement except where so provided in this Act”.
2. YES.
Section 48(1)(a)(vii) governs the setting aside of an award for a
breach of natural justice. “An award may be set aside by the Court — (a) if
the party who applies to the Court to set aside the award proves to the
satisfaction of the Court that (vii) a breach of the rules of natural justice
occurred in connection with the making of the award by which the
rights of any party have been prejudiced;”
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I n t e r n a ti o n a l J u r i s p r u d e n c e
(c) in what way the breach was connected to the making of the award; and
(d) how the breach had prejudiced the party’s rights.
In relation to the issue of prejudice, the Court explained that not every
breach of natural justice will amount to the required prejudice to attract
curial intervention it must be established that the breach of the rules of
natural justice must, at the very least, have actually altered the final
outcome of the arbitral proceedings in some meaningful way. If, on
the other hand, the same result could or would ultimately have been
attained, or if it can be shown that the complainant could not have
presented any ground-breaking evidence and/or submissions
regardless, the bare fact that the arbitrator might have inadvertently
denied one or both parties some technical aspect of a fair hearing
would almost invariably be insufficient to set aside the award.
The applicant is not required to “demonstrate affirmatively that a
different outcome would have ensued but for the breach of natural justice”
or that his application was not “bound to fail if there was a possibility that
the same result might have been arrived at even if the breach of natural
justice had not occurred” The test is whether “there had been some
actual or real prejudice caused by the alleged breach.”
It is never in the interest of the Court, much less its role, to assume
the function of the arbitral tribunal. To say that the Court must be
satisfied that a different result would definitely ensue before
prejudice can be said to have been demonstrated would be incorrect
in principle because it would require the Court to put itself in the
position of the arbitrator and to consider the merits of the issue with
the benefit of materials that had not in the event been placed before
the arbitrator. The real inquiry was whether the breach of natural
justice was merely technical and inconsequential or whether as a
result of the breach, the arbitrator had been denied the benefit of
arguments or evidence that had a real as opposed to a fanciful
chance of making a difference to his deliberations. The issue was
whether the material could reasonably have made a difference to the
arbitrator; rather than whether it would necessarily have done so. Where it
was evident that there was no prospect whatsoever that the material if
presented would have made any difference because it wholly lacked any
legal or factual weight, then it could not seriously be said that the
complainant had suffered actual or real prejudice in not having had
the opportunity to present this to the arbitrator”
(I) The jurisdiction question and the substantive question
The Court considered that there were actually two different issues to which
LCSC was entitled to be heard on in respect of the Additional Award (a)
firstly, whether the requirements of s 43(4) of the Act were met – ie,
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whether pre-award interest was a presented claim that had been omitted
from the Second Supplementary Award (“the jurisdictional question”); and
(b) secondly, if the requirements of s 43(4) of the Act were met, whether
pre-award interest should be awarded, and if so, to what extent (“the
substantive question”).
The Court considered that the High Court had only directed its mind to
the jurisdictional question and as a result, the arguments on appeal were
mostly directed to that issue.
(II) Lack of express provision does not remove right to be heard
The Court held that the Arbitrator should have given LCSC the right to
be heard on the applicability of section 43(4) prior to his decision.
This is so, notwithstanding the absence of the express words “giving
the parties a reasonable opportunity to be heard” in the section.
The Court held that the notice requirement “was included on the
premise that embedded within it was the requirement that “the
other party” be afforded the opportunity to respond to the
requesting party’s request for an additional award”
LWI had cited the Analytical Commentary on Draft Texts of a Model
produced by the UNCITRAL (“Analytical Commentary”), which commented
on Article 33(3) as follows: “The third possible measure was to make an
additional award as to any claim presented in the arbitral proceedings but
omitted from the award (e.g. claimed interest was erroneously not
awarded). If the arbitral tribunal consider[ed] the request, not necessarily
the omitted claim, to be justified, it shall make an additional award,
irrespective of whether any further hearing or taking of evidence is required
for that purpose”
However, as the Court explained, a variant of the phrase “whether
any further hearing or taking of evidence is required” i.e. “can be
rectified without any further hearings or evidence” had been
included in the early drafts of Article 33(3), but was subsequently
deleted.
Finally, the Court explained that the sentence in the Analytical Commentary
i.e. “shall make an additional award whether any further hearing or taking of
evidence is required for that purpose” had been misunderstood and
actually referred to the substantive question and not the
jurisdictional question.
They simply meant that once the tribunal had decided that a
claim had been omitted, it must make an additional award to deal
with that omitted claim and it must proceed to do so whether
additional evidence is required or not. Nothing in the Analytical
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Commentary excluded the opportunity for evidence to be led or hearings to
be held if the tribunal deemed that this was necessary.
As to the Breach
The Court held that the Arbitrator had breached the rules of natural
justice by rendering the Additional Award just three days after LWI’s
application and even before LCSC had been given a chance to
respond on whether section 43(4) was applicable. The Court held that
the short timeframe was unreasonable unless the Arbitrator had taken
the initiative to inquire if LCSC had intended to object to LWI’s
application.
Natural Justice – Prejudice
LCSC had been deprived of a right to argue that the claim for
pre-award interest had in fact “not [been] omitted” and therefore
the Second Supplementary Award had in fact been final and the
Arbitrator had no right reconsider and vary such a final award. This
was the prejudice that LCSC had suffered as “it could reasonably have made
a difference to the outcome of the case had [the argument] been
presented”. This prejudice sufficed for the Additional Award to be set
aside
(e) Breach of natural justice – the substantive question
There had been at the very least an issue of fact which the Arbitrator
should have heard parties on i.e. whether the pre-award interest should
have had been reduced as LWI had taken nearly three and a half years to
confirm the Arbitrator’s appointment after it had served its notice of
arbitration on LCSC.
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3S - Dalidig, Domingo, Limpot, Marañon, Orcullo, Somera, Taduran
A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
OKTAY MAHMUTI VS. GALATASARAY SPOR KULUBU DERNEGI
FACTS:
On January 11, 2018, Mr. Oktay Mahmuti (Oktay) was engaged by
Galatasaray Spor Kulubu Dernegi (the Club), a team competing in the
Turkish professional basketball league as their coach for the remainder of
the 2017-2018 season with a salary of USD 400,000 and the following
season with a salary of USD 800,000 on installment basis. Article 6 of the
Agreement provides that shall the Club fails to pay such salary within 45
days from the date it becomes due, Oktay shall send a written notice to the
club giving it 15 days to make the payment. It also gives the power to Oktay
to terminate the agreement unilaterally and to accelerate all future
payments required under the Agreement.
The Club failed to pay Oktay’s salary from March to June 2018. Oktay
sent a warning letter to the Club on May 31, 2018 asking it to pay within 5
days. On July 2, 2018, Oktay’s counsel sent another letter terminating the
Agreement. The parties submitted the case to Basketball Arbitration Tribunal
(BAT) for arbitration pursuant to the arbitration clause in Article 9 of the
Agreement. Oktay seeks payment of the unpaid salary and interest of 5%
per annum. The Club, on the other hand, while admitting that it failed to
comply with its obligation of paying in installment the salary of Oktay, claims
that the termination was invalid since (a) it has not received the May 31,
2018 letter, (b) that the letter is in violation of Article 6 since it only gives
the Club 5 days and not 15 days to pay and (c) that Oktay should mitigate
the damages since he intentionally refused to sign a new contract of
employment with Karsiyaka, another Turkish basketball team and that it
would be unfair and unjust for it to pay the entire salary given that Oktay
rendered work for only less than four months.
ISSUE: Whether or not Oktay complied with Article 6 and thus is entitled to
the unpaid salary with interest of 5% per annum
RULING:
Yes. Pursuant to the BAT Rules, the seat of BAT shall be Geneva,
Switzerland. It also presupposes the existence of a valid written arbitration
agreement. The Agreement complied with the following requirements. It is
also provided under the Agreement that the arbitrator shall decide the
dispute ex aequo et bono or applying general considerations of justice and
fairness without reference to any particular national or international law.
The arbitrator, from an ex aequo et bono perspective, considers that
Oktay validly terminated the Agreement. It found that Oktay established
that it has sent the May 31 letter showing a photo of his email “sent box”
which was unrefuted by the Club. The termination letter is also valid since
the termination notice was sent more than 15 days from the first notice, in
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3S - Dalidig, Domingo, Limpot, Marañon, Orcullo, Somera, Taduran
A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
accordance with Article 6, even though the first notice requests for payment
within 5 days only. Furthermore, the Arbitrator denies the claim for
mitigation on the reason that it would be unequitable for it to pay the entire
amount since Oktay worked for less than four months as this was not
proven.
As to the ground that Oktay intentionally refused to sign with
Karsiyaka, the arbitrator rejected Oktay’s defense he did so due to the
“general financial situation in Turkey”. The arbitrator considers the fact that
the Coach received the offer on 6 February 2019, i.e. after more than six
months of unemployment and at a time during the season where subsequent
offers were becoming more and more unlikely. Hence, the Coach’s claim for
salaries in the 2018-19 season must be reduced by the amount of USD
125,000 that he could have earned with Karsiyaka BC. Lastly, as to the
interest being claimed by Oktay, there is nothing in the Agreement which
provided for the payment of interest in case of non-payment of salaries.
However, in accordance with well-established BAT jurisprudence and on an
ex aequo et bono basis, such interest can nevertheless be awarded at a rate
of 5% per annum.
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3S - Dalidig, Domingo, Limpot, Marañon, Orcullo, Somera, Taduran