Dispute

Resolution
 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
 MATERIALS
Compulsory reading materials
• UNCTAD, International Commercial Arbitration, UNCTAD’s
Modules of Course Dispute Settlement, Modules 5.1 – 5.9, available
at
http://unctad.org/en/Pages/DITC/DisputeSettlement/Courses.aspx
• Redfer/ Hunter, Law and Practice of International Commercial
Arbitration, 5th ed., Sweet & Maxwell 2009.
• UNICITRAL Model law on international commercial arbitration
1985, as revised in 2010.
• New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards 1958.
• Vietnam Law on Commercial Arbitration No. 54/2010/QH12.
 Supplementary reference materials

• Gary B. Born, International Commercial Arbitration

Law and Practice, Kluwer Law International
(November 21, 2012).
• Đỗ Văn Đại, Trần Hoàng Hải, Tuyển tập các bản án,
quyết định của tòa án Việt Nam về trọng tài thương
mại, Labour Publishing House, 2010.
• VIAC, 50 phán quyết trọng tài chọn lọc.
 LESSON 1: OVERVIEW OF COMMERCIAL
DISPUTES AND METHOD OF SETTLEMENT
Commercial dispute
• Conflict >< Dispute
• A serious disagreement or argument (Oxford
dictionary)
• A serious incompatibility between two or more
opinions, principles, or interests (Oxford dictionary)

• A disagreement or argument
• Disputes are short-term disagreements that
are relatively easy to resolve.

• Long-term, deep-rooted problems that involve

seemingly non-negotiable issues and are
resistant to resolution are what refered to
as conflicts.
• 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.
• 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 finalisation of projects
http://omnibridgeway.com/commercial-disputes/
Classification of Dispute – by subject matter

- Sale of goods
- Sale of services
- Investment disputes: both foreign direct and
indirect disputes
- IP disputes
Classification of Dispute – by Parties

- Between different states

- Between state and nationals of other states
- Between nationals of different states
 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
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
International Commercial Sales Transaction

4 main
contracts

Sales
Insurance Payment Carriage
Contract

Documentary Bill of
Incoterms
Credit Exchange
 Some Exporter Legal Risks
Customer does not pay-unpaid seller
Unable to recover /enforce rights in foreign country
Product liability-wrong item, quality, quantity,
unsafe, late, incomplete
Unable to produce/acquire-breach contract
Loss in transit-who bears loss?
Competition cheaper-buyer defaults so they can
take advantage of cheaper opportunity
 Some importer legal risks
Goods or services inappropriate, not what was
ordered-claim for compensation available?
Supply does not meet local standards/laws
Crime –bribing foreign officials
Tax, customs issues
Unfamiliar with particular free trade treaty
provisions
Unable to enforce rights /recover money in a foreign
country
Unable to sell items purchased
Vulnerability to local customers for problems
 Some manufacturing risks
Raw material problems
Machinery
Finance
Delivery
Quality/quantity issues
Damage to others
Failure to sell products
Title issues
©MNoonan2009
 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
 Prevention of commercial disputes

There is only one good kind of legal dispute

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.”

18
Cooperation and Problem Prevention Stage.
Dispute Control Stage.
Nonbinding Facilitated Resolution Stage.
Binding Resolution Stage.
 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.
 Litigation
vs.
Alternative Dispute Resolution
 Litigation refers to lawsuits; the process of
filing claims in court, and ultimately going to
trial.

 Alternative Dispute Resolution is any other

formal or informal process for settling disputes
without going to trial.

21
 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.

22
 Alternative Dispute Resolution
(less common forms)
 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

23
 Litigation
The Judiciary’s Role

Interpret the law Judicial review

Jurisdiction

Jurisdiction over Jurisdiction over Jurisdiction in

persons or property subject matter cyberspace

Venue Standing to sue

24
 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
 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
• No
dispute,
No
arbitration
History of international commercial arbitration

• Periods of the development of international commercial

arbitration
• Domestic arbitration → international arbitration
• From 1923 Geneva Protocol on Arbitral Clauses→ 1927
Convention for the Execution of Foreign Arbitral Awards
• 1923 ICC established the Court of Arbitration.
• International Law Association adopted the Amsterdam
Rules in its 1938 session
• New York convention on the Recognition and Enforcement
of Foreign Arbitral Awards → 1961 European Convention
• Model Law in 1985 → amended 2006
• ICSID 1965
 Definition of ICA: Meaning of commerce
• “Each Contracting State reserves the right to limit the
obligation mentioned above to contracts which are considered
as commercial under its national law.”
The 1923 Protocol on Arbitration Clauses

• New York Conventional 1958: The limitation applies only if a

State makes the necessary declaration.
• “to arbitration agreements concluded for the purpose of
settling disputes arising from international trade between … .”
• 1961 European Convention on ICA
• Commercial – a broad interpretation of commerciality should
be adopted: any international arbitration between companies
where the dispute is economic in character will be considered
to be commercial.
• Model Law 1985
 Vietnam
• Article 2. Arbitration's jurisdiction to settle disputes
• 1. Disputes among parties which arise from commercial
activities.
• 2. Disputes among parties at least one of whom conducts
commercial activities.
• 3. Other disputes among parties which are stipulated by law
to be settled by arbitration.
• Article 3. Commercial activity means activity for profit-making
purposes, comprising purchase and sale of goods, provision of
services, investment, commercial enhancement, and other
activities for profit-making purposes. (CLV)
 The meaning of international arbitration

International – an arbitration is international is:

1. the parties to an arbitration agreement have, at the time of the
conclusion of that agreement, their places of business in different States,
or
2. one of the following places is situated outside the State in which the
parties have their places of business: i) the place of arbitration if
determined in, or pursuant to, the arbitration agreement ii) any place
where a substantial part of the obligations of the commercial relationship
is to be performed or the place with which the subject-matter of the
dispute is most closely connected; or
3. the parties have expressly agreed that the subject matter of the
arbitration agreement relates to more than one country.

Model Law 1985

International Commercial Arbitration: optimal method

• The term is rarely defined in both national laws and

international law on arbitration
• Arbitration is a method of dispute resolution
involving one or more neutral third parties who are
usually agreed to by the disputing parties and
whose decision is binding.
• International commercial arbitration is the process
of resolving business disputes between or among
transnational parties through the use of one or
more arbitrators rather than through the courts.
 International commercial arbitration and
its characteristics
- 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
• “(1)If, during arbitral proceedings, the parties settle the
dispute, the arbitral tribunal shall terminate the proceedings
and, if requested by the parties and not objected to by the
arbitral tribunal, record the settlement in the form of an
arbitral award on agreed terms.
• (2)An award on agreed terms shall be made in accordance
with the provisions of article 31 and shall state that it is an
award. Such an award has the same status and effect as any
other award on the merits of the case.”
• Article 30 of the Model Law
 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
 Recognition and enforcement
• The 1958 New York Convention states as follows: “each contracting
state shall recognize an agreement in writing under which the
parties undertake to submit to arbitration all or any difference
which have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not, concerning a
subject matter capable of settlement by arbitration.”
• “Recognition and enforcement of an arbitral award may also be
refused if the competent authority in the country where
recognition and enforcement is sought finds that: 1) the subject
matter of the difference is not capable of settlement by arbitration
under the law of that country, or 2) the recognition or enforcement
of the ward would be of that country.” contrary to the public policy
• In France, Civil Code – “one can arbitrate with respect to
all rights of which one can dispose freely.” “one cannot
submit to arbitration questions of status and capacity of
persons, questions relative to divorce and separation, or
questions respecting controversies that concern public
entities or public establishments and more generally any
matter that concerns the public order. ”
• In china, according to the 1994 Arbitration Law,
contractual disputes between citizen of equal status,
legal persons and other economic organizations and
disputes arising from property rights may be put to
arbitration. And the following disputes can not be put to
arbitration : 1) disputes arising from marriage, adoption,
guardianship, bringing up of children and inheritance 2)
disputes that have been stipulated by law to be settled
by administrative organs.
 Arbitration and its disadvantage
• Less discovery may be generally viewed as an advantage
• The lack of ability to bring an appeal can be frustrating to a
party
- The parties have written into their arbitration agreements a right to a
judicial appeal on the merits of an arbitration award.
• Arbitrators have no coercive powers
• In multiparty disputes, an arbitral tribunal frequently does not
have the power to join all relevant parties
• The pool of experienced international arbitrators lacks both
gender and ethnic diversity
 Kind of International commercial arbitration

1. ad hoc arbitration

2. institutional arbitration
 Arbitration administration

• Institutional-established institutions with

rules, procedures etc.

• Ad hoc-the parties design it themselves.

 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
 Institutions
Advantages
Pre established and tested rules, guidelines and
practices
Established format which has proved workable
Neutral entity to collect and hold fees, deposits
List of experienced arbitrators, often by expertise
Efficient with trained and experienced staff
Physical facilities..rooms etc
Neutral and independent
 Specialist forms of Arbitration
London Maritime Arbitrators Association-maritime
disputes between commercial parties
Court of Arbitration for Sport-Lausanne, NY and Sydney
World Intellectual Property Organisation (WIPO)
Geneva
International Centre for Settlement of Investment
Disputes-involves states
WTO
 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
 Legal regime governing international
commercial arbitration

• New York Convention

• National law
• Arbitration rules
• Arbitration practice
 International treaty
International arbitration practice
National Laws
Arbitration Rules

Arbitration agreement
 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
 Session 3: The agreement to arbitrate
Agreement in contract → Basis for the arbitral tribunal’s
jurisdiction
Submission Agreement → much less common than
arbitration clauses in contracts
Function and purpose
Empowers independent arbitrator(s) to determine issues
and disputes
Enables parties to choose arbitrator, language, rules,
jurisdiction governing procedural issues and merits
Makes decision binding
Is enforceable under UN Convention on the Recognition and
Enforcement of Foreign Arbitral Awards 1958 (NY
Convention 1958)
• 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.
 Arbitration clause examples
• “All disputes arising in connection with the present
agreement shall be submitted in the first instance to
arbitration. The arbitrator shall be well-known of
commerce… designated by mutual agreement between
buyer and seller.”
• All disputes shall be resolved by arbitration. In the event
of any claims arising between the parties, the matter
shall be referred to the Arbitration Court of London or
Paris.”
• “Any difference between the parties, including with
respect to interpretation, which they cannot resolve by
agreement, shall be amicably resolved by international
arbitration under the English Supreme Court.”
• “Any disputes arise cannot be settled by amicable
negotiation will be transferred to VIAC at Ho Chi
Minh City, Vietnam for final decision”

• All dispute if any to be settled by Vietnam International

Center at Chamber of Commerce and Industry of
Vietnam

• If the two parties fail to resolve such a dispute or

difference by mutual negotiation, the dispute shall be
finally settled under the Rules of Conciliation and
Arbitration of the Court of Arbitration in Vietnam
• Mọi tranh chấp phát sinh từ Hợp đồng sẽ được giải quyết bằng
thương lượng. Nếu tranh chấp không thể giải quyết được bằng
thương lượng giữa hai Bên thì tranh chấp sẽ được đưa ra Phòng
Thương mại và Công nghiệp Việt Nam để giải quyết.
• “…Nếu không thỏa thuận được hai bên sẽ viện dẫn đến trọng tài
kinh tế Thành phố Hà Nội, quyết định của trọng tài kinh tế sẽ là
quyết định cuối cùng và bắt buộc hai bên phải thi hành…”
• “Mọi tranh chấp phát sinh từ hay có liên quan đến hợp đồng này sẽ
được giải quyết tại… Nếu một bên không đồng ý với phán quyết của
trọng tài thì có quyền kiện ra Tòa án nước bị đơn”

55
 The hybrid institutional clauses
• Recently upheld by the Singapore Court of Appeal in Insigma Technology
Co Ltd v Alstom Technology Ltd [2009] SGCA 24

✓ Arbitration clause specified ICC Rules administered by SIAC

✓ Attempt to set aside the award on the grounds that the Tribunal lacked
jurisdiction and arbitration agreement inoperative for uncertainty
✓ Singapore High Court rejected application and Court of Appeal rejected
appeal:
“where the parties have evinced a clear intention to settle any dispute by
arbitration, the court should give effect to such intention, even if certain
aspects of the agreement may be ambiguous, inconsistent, incomplete or
lacking in particulars…”
The arbitration clause: some good examples
Example 1: SIAC

“Any dispute arising out of or in connection with this contract, including

any question regarding its existence, validity or termination, shall be
referred to and finally resolved by arbitration in Singapore in accordance
with the Arbitration Rules of the Singapore International Arbitration
Centre ("SIAC Rules") for the time being in force, which rules are deemed
to be incorporated by reference in this clause

The Tribunal shall consist of [one / three]* arbitrator(s) to be appointed

by the Chairman of the SIAC.

The language of the arbitration shall be ________________.”

• Example 2: ICC

“All disputes arising out of or in connection with the present contract

shall be finally settled under the Rules of Arbitration of the International
Chamber of Commerce by one or more arbitrators appointed in
accordance with the said Rules.”
 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.
 Recognition and effects
• New York Convention Article II
1. Each Contracting State shall recognize an agreement […] under which the parties
undertake to submit to arbitration all or any differences which have arisen or which
may arise between them in respect of a defined legal relationship, whether
contractual or not, concerning a subject matter capable of settlement by arbitration.
3. The court of a Contracting State, when seized of an action in a matter in respect of
which the parties have made an agreement within the meaning of this article, shall,
at the request of one of the parties, refer the parties to arbitration, unless it finds
that the said agreement is null and void, inoperative or incapable of being
performed.

UNCITRAL 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, if a party so requests not later than when submitting his
first statement on the substance of the dispute, refer the parties to arbitration unless
it finds that the agreement is null and void, inoperative or incapable of being
performed.
 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
 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;
 Formal validity

• New York Convention article II

1. Each Contracting State shall recognize an agreement

in writing […]
2. The term "agreement in writing" shall include an
arbitral clause in a contract or an arbitration
agreement, signed by the parties or contained in an
exchange of letters or telegrams.
 Example
• Assume that parties reach an oral agreement
by telephone. One of the parties sends a
written confirmation, which contains an
arbitration clause. The other party performs
under the contract, for example, it ships
goods, but it never sends a written response
to the first party’s written confirmation. Does
it have a Arbitration clause?
 UNCITRAL Recommendation of 7.7.06
on the interpretation of article II(2)
1.Recommends that article II, paragraph 2, of the
Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, done in New York, 10 June
1958, be applied recognizing that the circumstances
described therein are not exhaustive;
 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 defence in 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.
 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.
 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
 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.
 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
• In Heyman v. Darwins Ltd [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’s Rederi A/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
 Example
• A supplier decided to terminate an international
distribution agreement. Without the knowledge
of the distributor, the supplier hired some of the
distributor’s key employees to work for a new
distribution company that would be owned by
the supplier. The termination of the distribution
agreement would not take place for a few
months, and during that time, the key employees
continued to work for the first company, but
solicited customers of that company to switch to
the new company once it would be in operation.
 Narrow Clauses

• All disputes, controversies, or differences

which may arise out of or in relation to the
calculation of the royalties due under clause
___ of this contract shall be settled by
arbitration * * *.
Fiona Trust & Holding Corporation and others v Privalov
and others [2008] 1 Lloyd’s L Rep 254
• Christopher Butcher QC – Arbitration – Charter party
providing that “Any dispute arising under this charter”
should be referred to London arbitration – Ship owners
bringing court proceedings claiming rescission of charter
parties for bribery and fraud – Whether arbitration clause
covered dispute – Whether charterers entitled to stay of
proceedings under Arbitration Act 1996, section 9.
• 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
• If the parties wish to have issues as to the validity of their contract
decided by one tribunal and issues as to its meaning or
performance decided by another, they must say so expressly
 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
 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
Negotiation, Conciliation or Mediation
Before Arbitration.
• In the event of any dispute, claim, question, or
disagreement arising out of or relating to this
Agreement or the breach thereof, the parties hereto
shall use their best efforts to settle such disputes,
claims, questions, or disagreement. To this effect,
upon the written request of any party, they shall
consult and negotiate with each other, in good faith
in an attempt to reach a just and equitable solution
satisfactory to both parties. If they do not reach such
solution within a period of 60 days...
 How Many Arbitrators?
• a. Costs
• b. Independence
• c. Scheduling
• d. Reasoned award
• e. Enforcement considerations
• f. Comfort level for foreign companies
 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.
 Arbitration clause
• Sufficiently precise to permit identifying the
scope of the dispute and the type of
arbitration
 Separability
• UNCITRAL Model Law art 16
(1) For [the] purpose [of determining
jurisdiction], an arbitration clause which
forms part of a contract shall be treated as an
agreement independent of the other terms
of the contract
The arbitration agreement is not affected if the
main contract is void, terminated, illegal etc.
 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 […];
 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
 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
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
 BINDING NONSIGNATORIES

• whether a particular party – a nonsignatory –

can be required to arbitrate, or whether a
non-signatory can compel arbitration with a
signatory. ?
 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
 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 […]
 An illustration
Taken from a Clayton Utz update 7/5/2012
Traxys was a Luxembourg company which provided
financial, marketing and distribution services to the mining
industry. Balaji was an Indian company which imported coal
and coke but failed to pay for a shipment in 2009. Traxys
resold the coke and commenced arbitration in London (as
per agreement) claiming AUD3m. However, Balaji did not
have any assets in the UK or Europe. Balaji commenced
proceedings in the Indian Court to have award set aside or
stayed and obtained an injunction. Traxys took no part in
Indian proceedings, but took proceedings in Australia to
enforce award against some shares Balaji owned in an
Australian Company. The approach of the Indian courts and
Balaji’s blatant breach of contract in taking those
proceedings made it complicated and costly for Traxys.
• 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.
 Case: Hung Cuong Vs Betal Company
Betal company, open sale apartment, invited customers to buy. Le Ha,
an employee of the company, introduced discount programs to buy
the products in the event.
Hung Cuong, a customer, decided to buy and sign the contract of the
company issued by Le Ha, but did not pay attention to the discount
terms which is different with Le Ha said to him before.
Hung Cuong paid sum of money in advance.
In the afternoon, Hung Cuong changed his mind and returned to the
company to cancel his contract.
Le Ha announced that the contract had been transferred to her
superiors and she is not currently holding.
Hung Cuong and Le Ha made a written confirmation of this issue.
After 1 month, Hung Cuong received the contract signed by the
company.
Hung Cuong said that the contract was not available, and requested a
refund.
Betal does not agree and does not pay back money..
Hung Cuong brings the case to VIAC. Discuss the competence of VIAC
in that case.
 II. Practical Exercises
The Validity of Arbitration Clauses
International Commercial Arbitration

Topic 4: The arbitral tribunal

 Types of disputes
• Sale of good contract
• Banking and finance
• Transportation and logistic

- Accessing the VIAC Arbitrator list to chose the

suitable arbitral tribunal.
 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
 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
 Three Arbitrators
• Rules:
• The ICC Rules provide that parties may each select one arbitrator,
but unless the parties have agreed otherwise, the third arbitrator,
who will be the presiding arbitrator, will be selected by the ICC
Court of Arbitration
• In the Court of International Arbitration attached to the Chamber of
Commerce and Industry of Romania, if the parties did not agree
upon a selection process, then each party will appoint its arbitrator,
and the two arbitrators will select the presiding arbitrator, but must
make the selection from a list provided by the Court of Arbitration
• CIETAC, the major arbitral institution in China, provided for the first
time that parties can nominate arbitrators outside of the list of
arbitrators maintained by CIETAC, so long as the parties agree, and
the Chairman of CIETAC approves the appointment
 Three Arbitrators
• Practise
Choosing the Party-Appointed Arbitrators (Coarbitrators):
• Should we choose an arbitrator who is “the flavor of the
month.”?
• Who will be the best for their particular case?
• Some of the strategy involves weighing the merits of the
prospective arbitrator against those of the other party’s
arbitrator
• The final choice of an arbitrator may involve some
negotiation between client and counsel
• Arbitrator is not supposed to have any biases in favor of
that party
• Assume the claimant is from Austria, and the law applicable to the
merits is Swiss law. Should claimant now appoint a Swiss arbitrator
or perhaps an Austrian arbitrator? If claimant decides to appoint an
Austrian arbitrator, the other side may well appoint a Swiss
arbitrator. At this point, claimant may be concerned about whether
the chair should be Swiss, because it might not want the chair and
the other arbitrator to be too close on the legal questions.
However, if the chair is well-known, and highly respected for both
his knowledge of Swiss law and the strength of his character and
personality, then it would not really matter if the chair is also Swiss.
Depending on the case, knowledge of the applicable law may not
be as important as other qualities, such as understanding pertinent
industry practices, technical matters or other elements in dispute
Claudia K¨alin-Nauer
Switzerland
 Choosing the Presiding Arbitrator (The
Chair of the Tribunal).
• Two co-arbitrators make this choice in
consultation with the parties who appointed
them.
• Party-appointed arbitrators choose the chair will
work more smoothly than having parties make
the choice
• The party-appointed arbitrator will not agree on
anyone proposed by the other side.
• The arbitrator is chosen by the ICC, as “ICC
roulette
• I was a co-arbitrator in a case where the other co-arbitrator (who had
never been involved in any arbitration before) asked me how we should
proceed to select a chair. I suggested five names of prospective
arbitrators. He asked me if I knew any of them. I replied that I knew them
all, on a first name basis. He then said, “I don’t want them, if you know
them.” I said, “Look. Why don’t you consider it for a couple of days and
consult your appointor, and then get back to me?” Two days later he
agreed on one of the five I had suggested (a leading English Qc with along
track record as an international arbitrator, particularly as Chairman),
having found out in the interim (a) that my knowing the Chairman
professionally in no way put him or his appointor at any disadvantage in
the tribunal, and (b) my personal assurance of the proposed chairman’s
qualities was in itself of value and greatly preferable to picking unknowns
off a list.
Hew Dunda
London
 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
 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?
• The arbitral institution will choose the sole
arbitrator
 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
 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
 THE INTERVIEW DILEMMA

• ...I generally don’t submit to interviews where the

party is a U.S. or multinational company. However, I do
bend my prohibition in the situation of a foreign party
that is relatively unfamiliar with the international
arbitral process. In that event, I will meet with a party
representative and counsel for a half-hour
meeting...with only counsel asking questions. However,
my ground rules prohibit discussion of detail or merits
of the case.
Gerald Aksen
United States
 OBLIGATIONS OF ARBITRATORS
1. Independence and Impartiality:
- The arbitrator is not biased because of any preconceived
notions about the issues
- Any reason to favor one party over another
- No financial interest in the case or its outcome
- does not have a close business or professional relationship
with one of the parties.
- Model Law requires an arbitrator disclose without delay
any circumstances likely to give rise to justifiable doubts as
to her impartiality or independence
- Some institution issued the guidelines: The IBA Guidelines
on Conflicts of Interest
 The IBA Guidelines on Conflicts of Interest
Red List – Non-Waivable
1.3 The arbitrator is a manager, director or
member of the supervisory board, or has a
similar controlling influence in one of the
parties.
Red List – Waivable
2.1.2 The arbitrator has previous involvement in
the case.
 Orange List
• 3.1.2 The arbitrator has within the past three
years served as counsel for one of the parties or
an affiliate of one of the parties...in an unrelated
matter, but the arbitrator and the party or the
affiliate of the party have no ongoing
relationship.
Green List
• 4.4.2 The arbitrator and counsel for one of the
parties or another arbitrator have previously
served together as arbitrators or as co-counsel.
 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
• Specific duties imposed by an arbitral
institution or by the arbitration rules,
 Legal framework
• Arbitration agreement
• (Arbitration rules)
• Arbitration law
• Conventions
• Soft law
 CHALLENGES TO THE ARBITRATOR
• A conflict of interest - improper conduct
• “justifiable doubts as to his impartiality or independence,”
or if he “becomes unable or unfit to act.”
• If a party intends to challenge an arbitrator, it must do so
promptly or risk being deemed to have waived any
objection
• If the challenge is not successful, in many jurisdictions the
party that brought the challenge may take the issue to a
court
• If the arbitration is ad hoc - local law will determine
whether or not a party has the right to challenge an
arbitrator prior to the rendering of a final award.
 EXAMPLE OF A CHALLENGE THAT FAILED
• In an arbitration in Australia arising out of a contract for sale
of offshore natural gas, plaintiff buyer sought to remove an
arbitrator at the beginning of the arbitration. The grounds
were as follows:
• 1. The arbitrator had decided technical issues in favor of the
sellers in another arbitration, and the buyer asserted those
issues were similar to the issues in the instant case.
• 2. The arbitrator had been lead counsel for some producers in
a prior arbitration concerning on-shore natural gas, and had
made submissions criticizing expert witnesses who were
expected to be called in the instant case.
• 3. The arbitrator had failed to disclose pertinent information
concerning his participation in the earlier arbitrations.
 FLAWED CONDUCT OF ARBITRATORS
• Arbitrators do not move the proceedings
along efficiently, and do not provide an award
in a timely manner.
• The Arbitrator is a law unto himself, and there
are little or no controls on his conduct.
→ There are proposals for fines and reductions
in fees for arbitrators who do not perform as
they should
• In Caracas, the Chamber of Commerce has a
list of arbitrators. Parties are free to choose
someone not on the list, but generally they
tend to choose from the list. The list is revised
every two years, and individuals can be
removed from the list for various reasons,
including improper conduct.
Diana Droulers
Venezuela
 REPLACEMENT OF ARBITRATORS
• Institutional rules will provide the method for
replacement
• An ad hoc arbitration - the court at the situs of
the arbitration can be called upon to make an
appointment.
• It may be the case that an arbitrator resigns at
or near the end of the arbitration
proceedings?
 ARBITRATOR IMMUNITY
• Discuss about should the tribunal has
immunity?
• different legal systems take different
approaches to arbitral immunity. In all
systems, however, arbitrators are not immune
from criminal liability.
• In common law countries, courts tend to provide
immunity to arbitrators when they are acting in aquasi-
judicial function.
• The United States probably takes the most protective
stance toward arbitrators, providing almost absolute
immunity to an arbitrator acting in a decision-making
capacity. Some state seven provide for immunity by
statute.
• The Australian International Arbitration Act of 1984
provides that arbitrators are not liable for negligence, but
can be liable for fraud, in respect to any of their duties.
• In England, an arbitrator may be liable for acting in bad
faith and also if a court determines that she withdrew
from the arbitration without good reason.
In civil law countries, there is no absolute
immunity, but in some cases there appears to be
qualified or implied immunity.

• The arbitrators are not going to be found

liable for negligence, but only for gross
negligence or intentional conduct. Liability is
usually determined on the basis of contract or
tort
 COSTS AND FEES
• The arbitrators’ fees are usually determined by the
arbitral institution
• In ad hoc arbitrations, on the other hand, where fees
may be discussed, all parties should participate in
discussions with all arbitrators about their fees
• Parties are expected to pay some initial fees and costs
in advance. If the respondent refuses to pay its share,
the arbitration will not go forward unless the claimant
pays the respondent’s share. Although this initially
burdens the claimant, the payments may be allocated
against the respondent in the final award.
 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
 Arbitration law, conventions, soft law

• Fully applicable to ad hoc arbitration

 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
 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

–…
 Legal framework
• Arbitration agreement
• Arbitration rules
• Arbitration law
• Conventions
• Soft law
 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
 Arbitration law, conventions, soft law

• Fully applicable to institutional arbitration

 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)
 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
 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)
 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
 Composition of the arbitral tribunal

• Arbitration agreement
• Arbitration rules
• Arbitration law
 Number of arbitrators
• Three arbitrators
• Sole arbitrator
 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
 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
 Appointmenet of arbitral tribunal
• Arbitration agreement
• Arbitration rules
• Arbitration law
 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 nominates one, Court of Arbitration appoints chairman
– Failure: Court of Arbitration
 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
 Requirements
• Independence and impartiality
• Availability
• Qualifications

• Challenge
Topic 5: The Arbitral Proceeding
 BEGINNING THE ARBITRATION

• The first step for counsel is to read the

arbitration agreement, then read and follow the
rules chosen by the parties in that agreement.
• How the time of commencement of an
arbitration is determined? → a statute of
limitations or by the parties’ own contract.
• Some arbitration laws provide that if the parties
have not agreed otherwise, the arbitration is not
commenced until appointment is accepted by the
arbitrator or the request to appoint an arbitrator
has been served.
 II. The hearing
• 1. Chair Can Decide Procedural Issues

In a three-arbitrator proceeding, parties will

often agree that the chair alone can make
decisions about procedural issues

• 2. Scheduling the Hearings

 Arrange the room for meeting
Witness lawyer party

• Arbitrators {table}
{space} lawyer party

Arbitrators

{table}
Party Party
 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.
 5. Local Bar Requirements
• In Portugal, for example, it appears that to
represent a party in an international
arbitration, one must be admitted as a lawyer
in Portugal, although there is apparently no
court decision on the subject
• 6. Closed Hearings
• Because arbitrations are private matters, a
hearing is not open like a courtroom. Although
parties have a right to be present at a hearing,
any witness can be excluded whenever he or
she is not testifying
• 7. Record of Proceedings
• 8. Technology
 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?
 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
 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.
 Evidence

• The tribunal generally has the power to

determine the admissibility and the weight of the
evidence.
• IBA in 1999 adopted Rules on the Taking of
Evidence in International Commercial Arbitration
(“IBA Rules of Evidence”. The IBA Rules of
Evidence have contributed to harmonizing the
approach used in many international arbitrations
for the taking of evidence.
 Hearsay Evidence

• Tribunals will generally admit all documents

• Hearsay evidence is considered not reliable
but will assert that it will be given appropriate
weight.
 Authentication
• Documents are generally assumed to be
authentic unless objected to.
• If the party is unable to do so, the document may
be rejected.
• if some justification is given for the missing
original, the document could be admitted (unless
patently fraudulent), with a caveat by the tribunal
that it will give the document appropriate weight,
presumably less than if its authenticity were not
at issue.
 Document Requests
• Parties are charged with providing to the tribunal and the other
party all documents they intend to rely on to support their claims
or defenses
• In practice, however, requests for documents must be specific.
• In order to obtain documents from an opposing party, the
requesting party has a relatively heavy burden of establishing the
existence of the documents as well as their importance to the
outcome of the case.
• what happens if some of the desired documents are in the hands
of nonparties? USA → subpoena power
• But what about a recalcitrant party? What happens when a party
has been ordered by the tribunal to produce documents and has
simply refused?
 Arbitrator Discretion
• As a general rule, arbitrators are going to
admit any evidence they believe will help
establish the facts of the case.
• They have the power, however, to refuse to
admit evidence that is irrelevant, duplicative,
defamatory, unduly burdensome, or otherwise
inappropriate.
 4. Fact Witnesses
• a. Testimony Prior to the Hearing
• Common law lawyers tend to take lengthy depositions in
order to learn what information witnesses for the opposing
side possess that may form the basis of their testimony
• For civil law lawyers, on the other hand, fact witnesses are
generally not considered very important
• In an international arbitration, the treatment of witness
testimony prior to the hearing tends to follow a hybrid law
model.
• Depositions are almost never allowed, unless both parties
agree to them. Even then, they are likely to be few in
number and limited in time.
 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
 c. Who Can Testify
• Any person may testify at the hearing,
including a party
d. Meeting with Witnesses
it is generally expected in international
arbitrations that witnesses will be
interviewed
 e. Examining Witnesses
• In civil law, the system for examining witnesses is called
“inquisitorial,” which means that most of the
questioning is done by the judge or arbitrator.
• In common law, the lawyers do most of the
questioning by direct examination and cross
examination, followed by redirect examination, the
system is referred to as “adversarial.”
• In international arbitration, the common law system of
examination and cross-examination is frequently used,
although arbitrators may intervene from time to time
to question a witness, and, as will be discussed below,
direct examination is frequently eliminated.
 f. Arbitrator Intervention
• Arbitrators need to be discreet and even-
handed when they intervene. But they should
be willing to tell parties if there are certain
matters that they think are important for
them to know. For example, the tribunal might
say to the parties, “We need to know about X.
What can you tell us about X?
 g. Availability of Witnesses
• According to the IBA Rules of Evidence, a
witness who has provided a statement must
be available to testify at the hearing, unless
the parties have agreed otherwise. If the
witness does not show up for the hearings,
and there is no valid reason, then the tribunal
will disregard the witness statement, unless
there are exceptional circumstances
 h. Compelling Witness Testimony
• The IBA Rules of Evidence also state that if a
party wants to call a witness who will not
appear voluntarily, the party may ask the
tribunal to take whatever steps are legally
available
 5. Expert Witnesses
• When an expert is needed, the parties generally decide whether
each side will call an expert, or whether they prefer that the
tribunal choose an expert.
• If the tribunal is appointing an expert, it is likely to first consult with
the parties, and invite them to agree on the choice of expert.
• One of the concerns when a tribunal has appointed an expert is
whether it is simply delegating its decision-making authority to the
expert.
• Parties generally have the right not only to examine an expert’s
report and submit a response in writing prepared by the party or by
a party-appointed expert, but also to examine any of the
documents, goods, or other information on which the expert based
the report.
 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.
 Confidentiality and privacy

• .It is widely viewed that confidentiality is one of the advantageous

and helpful features of arbitration. Nevertheless, there is no
uniform answer in national laws as to the extent to which the
participants in an arbitration are under the duty to observe the
confidentiality of information relating to the case.
• Moreover, parties that have agreed on arbitration rules or other
provisions that do not expressly address the issue of confidentiality
cannot assume that all jurisdictions would recognize an implied
commitment to confidentiality.
• Furthermore, the participants in an arbitration might not have the
same understanding as regards the extent of confidentiality that is
expected. Therefore, the arbitral tribunal might wish to discuss that
with the parties and, if considered appropriate, record any agreed
principles on the duty of confidentiality
 Confidentiality and privacy

• An agreement on confidentiality might cover, for example, one or

more of the following matters: the material or information that is
to be kept confidential (e.g. pieces of evidence, written and oral
arguments, the fact that the arbitration is taking place, identity of
the arbitrators, content of the award); measures for maintaining
confidentiality of such information and hearings; whether any
special procedures should be employed for maintaining the
confidentiality of information transmitted by electronic means (e.g.
because communication equipment is shared by several users, or
because electronic mail over public networks is considered not
sufficiently protected against unauthorized access); circumstances
in which confidential information may be disclosed in part or in
whole (e.g. in the context of disclosures of information in the public
domain, or if required by law or a regulatory body).”
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?
Enforcement of an Arbitral Award
which Has Been Set Aside at the
Seat of Arbitration
 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.
 Policy Arguments: against enforcement

• An award is a creature of the seat.

• The choice of the seat may have been
made in exchange for reciprocal
concessions. The attendant risk has been
assumed by the investor.
• Endless attempts to enforce a vacated
award in a number of countries should not
be allowed.
 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.
 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.
 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
 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
 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.
 “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 equivalent of Article
V(1)(e) of the New York Convention.
 Res judicata effect of the foreign
annulment decision
• Always give res judicata effect.
• Give res judicata effect only if the foreign decision was based
on an internationally recognised ground.
• Give res judicata effect 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 judicata effect.
 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.
 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 ).
 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 judicata effect to the
Egyptian court’s decision.
 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.”
 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.
 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 in Spier).
• 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.
 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
 Applicable Laws and Rules
• A. IMPORTANCE OF THE LAW

• How important is the law in ICA?

 Applicable law in Int’ Arb
• Applicable law for arbitration agreement

• Applicable law for arbitration procedure

• Applicable law for merits of the case

 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
 General Principles of Private Int’ Law
• Parties’ autonomy

• Closest relationship with the contract

• Compulsory application of particular law in

different countries
 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 contract or to Swiss Law.
 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
 Deciding Authority
• Arbitration institution
• Arbitration tribunal
• National court
 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
AL for International arbitration Agreement

• NYC has no provision

• National law decides the issues
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
 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
 Basic principles
• Parties’ autonomy
• Closest relationship with the contract
• General principles of law, law merchant, lex
mecartoris
 Harmonization of the applicable law
International contract
• CISG
• PICC