Volume 5, Issue 2 (January 2017)

TABLE OF CONTENTS

 

EDITORIAL

Do Arbitral Awards Constitute ‘Investment’?
Varun Mansinghka & Sanjana Srikumar
Can foreign investors invoke the protection of bilateral investment treaties against judicial interference with arbitral awards? This inquiry is occasioned at a unique intersection between commercial and investment treaty arbitration; it arises when a foreign investor holds an arbitral award against the host state. Judicial interference with such awards against the state i.e. failure to recognize and enforce or annulment, is not uncommon. From time to time, enterprising award creditor-investors have attempted to characterize such interference as expropriation or denial of justice, in violation of applicable investment protection treaties. For such a claim to be heard by an investment arbitration tribunal, it is necessary that the award be categorized as ‘investment’, to fulfil ratione materiae jurisdiction. While this inquiry has not figured prominently in academic debates, there is a developing, but divergent body of case law that addresses it. In this editorial, the authors offer a critical commentary on these divergent approaches and attempt to identify the future course of this development.

 

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ARTICLES

 

The 1958 New York Convention from an Unusual Perspective: Moving Forward by Parting with it
Marike R. P. Paulsson
The 1958 New York Convention has been described as one of the most successful treaties in the realm of international trade. It has been accepted by 157 States. The author discusses the lack of uniform application of the Convention and points to the flaws in its text. The author proposes an intellectual exercise of replacement of the Convention in order to answer pivotal questions such as: “Can this treaty be replaced” and “How should courts address current pitfalls such as public policy”. The author proposes a new Convention and aims to set out how this replacement would work and whether it is feasible or not.

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How Arbitrators Should Treat Prior Awards Rendered on the Same Contract
Philippe Pinsolle & Suhaib Al-Ali
Arbitral awards often address disputes as to the interpretation of contractual terms without ending the contractual relationship between the parties. This is particularly relevant to long-term contracts wherein a new dispute between the same parties and related to the same contract as the first arbitral award may arise. This article explores the significance of the first arbitral award and discusses how a tribunal can take that award under consideration. When an arbitral award adjudicates issues of contractual interpretation, this interpretation will have both a legal and a practical effect on the subsequent interpretation of that contract. An arbitral tribunal has different legal and practical tools at its disposal to give meaning to the first award. This article will explore these different tools from an efficiency and utility perspective. It becomes clear from this study that arbitral tribunals pay attention to the consistency of the positions adopted by the parties.

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Set-Off Defenses in Arbitration – Conclusions from a Swiss Civil Law Perspective
Simon Gabriel & Katalin Meier
Set-off situations are frequent in international arbitration and are treated differently in common law and civil law jurisdictions. The present article analyzes set-off from a Swiss civil law perspective and offers recommendations to international arbitration practitioners. The key findings are: (i) Set-off declarations may lead to the irrevocable acknowledgment of a countervailing claim. To avoid such a legal consequence, set-off must only be declared as defense in legal proceedings together with an explicit statement that it is only made as a subsidiary submission. (ii) The highest Swiss Court acknowledges a growing trend in international arbitration to generally accept arbitral jurisdiction for set-off defenses. (iii) It appears to be reasonable to ask from a respondent, who relies on procedural advantages in connection with a subsidiary set-off defense, to comply with the applicable procedural requirements (e.g.to pay an advance on costs).

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Recent Developments in the Law and Practice of Amicus Briefs in Investor-State Arbitration
Sophie Lamb, Daniel Harrison & Jonathan Hew
This article considers recent developments in treaties, arbitral rules and tribunal decisions in order to make certain observations about the law and practice of amicus briefs. The article concludes, inter alia, that there continues to be increasing receptiveness towards amicus briefs in investor-state arbitration, albeit that tribunals are actively balancing the desire for greater transparency with other important objectives including arbitral efficiency and proportionality. The article suggests that these developments are motivated by a desire to further enhance the legitimacy of investor-state arbitration.

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The Continuing Evolution of Investor-State Arbitration as a Dynamic and Resilient Form of Dispute Settlement
Carolyn B. Lamm & Karthik Nagarajan
In recent years, the investor-State dispute settlement (ISDS) system has faced a barrage of criticism from a variety of critics, including lawmakers from different countries, Non-Governmental Organizations, and sections of the general public. These critics generally allege that the ISDS system unfairly acts as a deterrent on the ability, and sovereign right of a State, to enact regulations and pursue policies that are in its public interest. Furthermore, these critics contend that the ISDS system is non-transparent and tilted in favor of the private investors, often large corporations, which bring claims against the sovereigns. While the scope of this article does not present a comprehensive rebuttal to all of these criticisms, it does explain that many of these criticisms are fundamentally misplaced and fail to take into account the historical context and rationale for the ISDS system. Furthermore, the article explains that critics of the ISDS system largely ignore or fail to appreciate that the ISDS system is dynamic, and allows sovereigns to recalibrate and tailor their international law obligations vis-à-vis foreign investors in response to developments. The article also shows that arbitrators have been at the forefront of driving many positive procedural changes to the ISDS system, often in response to feedback from the users and other affected parties, while also preserving the system’s emphasis on due process. In sum, the ISDS system is an effective form of dispute resolution that is capable of adapting itself to the needs of its users.

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Implications of the New Section 29A of the Amended Indian Arbitration and Conciliation Act, 1996
Manini Brar
There is a surprising dearth of literature on the potential implications of the new Section 29A of the Indian Arbitration and Conciliation Act, 1996, even though the provision has been in force for approximately a year now, effectively since October 23, 2015. This can probably be attributed to the lack of judicial decisions to guide such discourse. Once the twelve-month period for making awards stipulated under this Section expires for arbitrations commenced after October 23, 2015, one or more High Courts will probably be approached to extend this time limit. With the help of the decisions that follow, by the time this article is published, we will probably be all the wiser. In the meantime, as a tribute to the lyric, ‘whatever will be, will be’, the author chooses to seize the silence on the issue and examine what Section 29A could mean for arbitrations, particularly for institutional arbitrations, seated in India.

The article begins by outlining the scope of Section 29A, by comparing it to a similar provision that existed under the previous Arbitration Act of 1940 as well as the jurisprudence that existed before the enactment of the Indian Arbitration and Conciliation (Amendment) Act 2015. It then highlights the uniqueness of Section 29A – its mandatory nature and the restriction it imposes on party autonomy – in comparison to arbitration statutes of some other countries which contain time limits for making the final award. In the penultimate and final sections of the article, the resultant procedural complexities likely to arise for arbitrations seated in India, with a particular emphasis on institutional arbitrations, are discussed. The author ends by recommending that a liberal interpretation of this provision by Indian Courts is the only way to overcome these hurdles.

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The SIAC Rules 2016: New Features
Elodie Dulac & Alex Lo
The revised rules of arbitration of the Singapore International Arbitration Centre  came into effect on August 1, 2016. Among the notable revisions are the expanded joinder provisions, the new provisions on consolidation and multiple contracts, and the introduction of an early dismissal procedure. Some of the revised provisions share similarities with the latest version of the ICC Rules and HKIAC Rules, while other revisions go well beyond. In this article, the authors address the main new features of the 2016 Rules and compare them to other rules of arbitration.

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The Appearance of Justice: Independence and Impartiality of Arbitrators Under Indian and Canadian Law
Michael D. Schafler, Deepshikha Dutt & Alexander Eckler
This article explores the topic of independence and impartiality of arbitrators from Indian and Canadian perspectives. The authors compare and contrast the law on this issue in both countries along with international arbitration standards. A review of the law in India and Canada illustrates that the legal positions of both countries on conflicts of interest in arbitration are, today, largely consonant with international standards, such as the UNCITRAL Model Law and the IBA Guidelines on Conflicts of Interest in International Arbitration. Canada’s legal position is relatively settled. As such, the provisions of domestic law in Canada govern conflicts of interest in arbitration with significant deference by courts to the choice of the parties and the arbitrators they appoint. Conversely, the law in India continues to develop. Courts played a significantly larger role, until recently, in reviewing the appointment process of arbitrators to ensure that arbitrators were impartial and independent. Notwithstanding these differences, it is clear from Canadian and Indian legislations and jurisprudence that ensuring arbitral independence and impartiality remains vital.

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NOTES

 

The Conflicting Landscape Relating to Costs in Investor-State Arbitration
Kabir Duggal & Dr. Gerrit Niehoff
Cost, speed and efficiency are commonly perceived as major advantages of arbitration compared to litigation. Practice, however, shows that legal fees in international arbitrations may add up to millions of dollars for the parties. For the users of the system, costs therefore are a pivotal issue. Against this background, it is surprising that cost allocation neither plays a key role in the institutional arbitration rules nor in the decisions on costs, which arbitral tribunals render on the basis of these rules. It is hoped that arbitral institutions and arbitrators will devote more attention and time to developing rules of costs to ensure that justice is done in a fair and efficient manner.

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Assignee’s Right and Obligation to Arbitrate Under Singapore Law: A Missed Opportunity by the Court of Appeal?
Oomen Mathew & Alvin Yap
Is an assignee entitled to rely on and be bound by an arbitration agreement in the underlying assigned contract under Singapore law? This question was deliberately left open by the Singapore Court of Appeal in its recent decision of Rals International Pte Ltd v. Cassa di Risparmio di Parma e Piacenza S.p.A. Its approach is in stark contrast to the decision of the Court below, which answered the question with a definitive ‘yes’. In this note, the authors discuss whether the Court of Appeal’s hesitation to express a definitive view on this question was driven by sound juridical considerations. In particular, the authors discuss whether (i) the lack of consent by the assignee and (ii) the long-standing rule that assignments cannot convey burdens, generate such conceptual difficulties as to warrant deferring a decision on the question to a later time. In addition, the authors also consider the practical implications of having this question left unanswered under Singapore law.

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Mandatory Time Limit for Rendering Awards Under Indian Law: How Good Intentions can Lead to Bad Outcomes
Andrew de Lotbinière McDougall, Dipen Sabharwal and Manu Thadikkaran
One of the notable features of the recent amendments to the Arbitration Act, 1996 is the introduction of mandatory time limits for rendering an award when the arbitration is seated in India. Although this change has the laudable objective of trying to reduce the time taken to complete arbitral proceedings in India, it poses certain conceptual and practical disadvantages. It adopts a “one-size-fits-all” approach to all arbitrations, without accounting for the complexities of individual cases. Moreover, the only remedy to overcome this mandatory time limit is for the parties to approach the Indian Courts, which will likely result in increased judicial intervention in arbitral proceedings and in associated delays. This change presents a setback to the principle of party autonomy, which is the bedrock of arbitration. Therefore, while the intention of the legislature is a good one, the form adopted in the Indian legislation could potentially be counter-productive, leading to further disadvantages for conducting arbitration in India.

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Rules of Reason: U.S. Courts Grapple with the Requirements for a Reasoned Award
James E. Berger & Charlene C. Sun
This note discusses the “reasoned award” requirement, and the standards set forth by U.S. courts governing when an arbitral award is sufficiently “reasoned” where such a requirement applies. The case law in this area is still developing, and U.S. courts, in their respective efforts to refine the governing legal standards, have developed slightly different tests for determining what must be included in a sufficiently “reasoned” award. The most recent decisions addressing this issue are analyzed below.

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