Volume 6, Issue 1 (July 2017)

TABLE OF CONTENTS

 

EDITORIAL

Of ‘Dressed-Up Petitions’ and ‘Fragmentation Along Remedial Lines’: Can Claims of Minority Shareholder Oppression be Resolved through Arbitration?

J. Martin Hunter and Deepaloke Chatterjee

The courts in Singapore have recently considered whether claims of minority oppression can be resolved through arbitration. Some key policy concerns were raised before the courts including that permitting such claims to be resolved through arbitration would lead to fragmentation of the dispute resolution process. The authors discuss the decisions of the courts in Singapore and their conclusions. The authors then contrast these conclusions with those arrived at by the courts in India. Given the increasing emphasis placed by the Government of India on promoting the use of arbitration as a method of dispute resolution, it will be interesting to observe whether courts in India continue to adopt the same position.

 

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ARTICLES

 

The Importance of Being Independent: Laws of Arbitration, Rules, Guidelines – and a Disastrous Award

Alan Redfern

Under most modern laws and rules of arbitration, whether domestic or international, an arbitrator is required to be ‘independent’ and ‘impartial’; and he or she is required to remain so throughout the arbitral proceedings.  To emphasise that these requirements of both ‘independence’ and ‘impartiality’ are not mere catchphrases but are meant to be taken seriously, national laws (following the lead of the UNCITRAL Model Law) and modern rules of arbitration (such as the UNCITRAL Arbitration Rules) require disclosure of any relationship or connection between an arbitrator (or a prospective arbitrator) and a party or its counsel. To assist parties and prospective arbitrators in deciding what kind of relationships or connections should be disclosed, the International Bar Association has developed and published ‘Guidelines on Conflicts of Interest in International Arbitration’ (revised in 2014) which are now well established and used in both international and domestic arbitrations. Failure to make a proper disclosure is likely to have a disastrous effect on the arbitral proceedings, with the risk that the Tribunal’s award may be set aside – possibly with dramatic repercussions, as happened in France in the recent ‘Tapie Affair’.

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Provisional Measures in Investment Arbitration: Wading through the Murky Waters of Enforcement

Benoit Le Bars & Tejas Shiroor

Provisional measures can secure a party’s rights pending final disposal of the arbitration. They can be especially important in investment arbitration proceedings, which are often lengthy, complex, and costly. Parties may approach arbitral tribunals or national courts for provisional relief. National courts are particularly useful, before a tribunal has been constituted, or for relief outside the scope of a tribunal’s power, such as ex parte relief. In practice, the enforcement of provisional measures can be problematic, notwithstanding that international jurisprudence generally considers such measures to be binding on the parties. Arbitral tribunals lack powers of coercion, and thus have a limited ability to enforce provisional measures. Tribunals can only draw adverse inferences against parties which do not comply with provisional measures for document production; or impose costs for non-compliance with other measures. Provisional measures granted by national courts would be enforced according to the domestic regime for the enforcement of court orders. However, national courts may be hesitant to enforce provisional relief granted by arbitral tribunals because of the form in which it is granted (for example if the provisional relief is an “order”), or on the premise that the provisional relief lacks the requisite finality to constitute an award.

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Allegations of Illegality in Investor-State Arbitration and the Presumption of Innocence

Dany Khayat & William Ahern

Allegations of illegality are raised relatively frequently in investor-State arbitrations, often as efforts by respondent States to have claims dismissed, either for lack of jurisdiction or on the merits. On other occasions the claims of illegality are made against State officials, either by the State itself in an attempt to, for example, have a transaction declared void, or by the investor as part of its merits claims. These accusations of illegality are often of a serious criminal nature and made where there has been no conviction, sometimes while criminal proceedings are ongoing. Under international law (applicable in most investor-State disputes), however, State officials are prohibited from giving the impression that they consider a person guilty of a crime prior to any conviction. This apparent conflict has been dealt with by a handful of investor-State tribunals. The prevailing response has been that where the cause of action in the domestic proceedings (domestic criminal law) is different to that in the investor-State proceedings (an “illegality” clause in an investment treaty, for instance), no issue arises. This article, making significant reference to decisions of the European Court of Human Rights, examines whether that response satisfactorily disposes of the issue.

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What does the Future Hold for Foreign Pharmaceutical Companies in India? Investment Arbitration for Pharmaceutical Companies in the Indian Context

Boris Kasolowsky & Stuti Gadodia

Recently, India has witnessed a number of controversial measures affecting intellectual property rights. These measures have particularly impacted the pharmaceutical sector. In one high-profile instance, the Indian authorities granted a compulsory licence of a patented cancer drug to an Indian pharmaceutical company. In another instance, the Indian patent authorities, and subsequently the Indian courts, rejected an application for the grant of a patent in what appeared to be, at least to foreign investors, surprising circumstances. While these measures may well appear justified on grounds of Indian public policy, they may nevertheless run counter to India’s international obligations under its international investment agreements. Against this backdrop, it is possible that investors in the pharmaceutical sector will, in the near future, commence investment treaty arbitration proceedings against India. This article examines some of the key issues that are likely to arise in investment arbitrations between investors in the Indian pharmaceutical sector and the Indian State, and considers some of the most relevant changes in the protection afforded to foreign investments in the sector.

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The SIAC IA Rules: A New Player in the Investment Arbitration Market

Christopher Boog & Philip Wimalasena

With the entering into force of the Investment Arbitration Rules of the Singapore International Arbitration Centre (SIAC) on January 1, 2017, a new player has emerged in the investment arbitration market. Asia’s continued rise as one of the world’s fastest-growing and most dynamic markets, Singapore’s determination to consolidate its position as a leading hub for international dispute resolution services and SIAC’s profound arbitration expertise form the commercial, political and legal framework for SIAC’s Investment Arbitration Rules. The new Rules address – and present balanced solutions to the most pressing issues facing international investment arbitration, drawing on its experiences from the application of the SIAC Commercial Arbitration Rules as well as international best practice in investment arbitration. They foster efficiency, speed and transparency and offer a competitive cost regime. At the same time, the new Rules provide an innovative approach to issues such as third-party funding, amicus curiae submissions and frivolous claims. While it remains to be seen how many of those provisions will be administered in practice and whether the Rules will gain acceptance in the investment arbitration community, this article posits that the new Rules offer a viable alternative for investment arbitration both in Asia and beyond.

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India and Brazil: Recent Steps Towards Host State Control in the Investment Treaty Dispute Resolution Paradigm

Robert G. Volterra & Giorgio Francesco Mandelli

Over the past five years, two of the ten largest economies in the world, India and Brazil, have undertaken significant reforms of their bilateral investment treaty frameworks. While India’s motivation for reform has been largely reactive, responding to its losing a spate of investor-State arbitrations, Brazil’s motivations – as a State that has never ratified any of the international investment agreements it has signed – have been more preventive. The reform processes undertaken by both India and Brazil have resulted in the issuance of a revised Model BIT and new Agreements on Cooperation and Facilitation of Investments, respectively. Interestingly, in late 2016, India and Brazil signed a new bilateral investment treaty that reportedly does not contain any investor-State dispute settlement provisions. This article examines these two States’ recent model agreements and considers whether these developments are evidence of a trend by developing States, inter alia, to remove from their terms the possibility of direct recourse by foreign investors to binding third-party international dispute resolution procedures against a host State. Given that this was the singular aspect of investment treaties that made them particularly relevant, it will be interesting to contemplate what might be their possible utility in its absence. Finally, the article considers whether this could have an impact on treaty-making practice more broadly, particularly in light of the recent protectionist rhetoric of developed States.

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From the Jay Treaty Commissions Towards a Multilateral Investment Court: Addressing the Enforcement Dilemma

Richard Happ & Sebastian Wuschka

The proposed turn from settling investment disputes through arbitration to establishing a multilateral investment court system is a remarkable step. The EU Commission’s proposal, coupled with UNCITRAL’s recent reform initiative, could bring about a significant change in the area of investor-State dispute settlement. Yet, as this article explains, one of the major benefits of the current system of investment arbitration is its strong enforcement mechanism. Even though the EU Commission’s proposal for the investment court system in CETA and the EU-Vietnam Free Trade Agreement strives to also employ this mechanism for the enforcement of investment court decisions, the authors raise concerns as to the outcome of this approach. This article therefore addresses the enforcement dilemma which the establishment of a multilateral investment court or other improvements of the system could entail. The authors conclude that, in case the way forward for investment dispute settlement will indeed be the establishment of a multilateral court, its decisions could best be enforced through a provision similar to the ICSID Convention’s Article 54. For this, such a court must attract a sufficiently large number of member States, as enforcement in third States that do not participate in the project is impossible without additional agreements.

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Some Reflections on the Willem C. Vis and Vis East International Commercial Arbitration Moots: Negotiating and Bridging the Civil-Common Divide

Chen Siyuan, Bethel Chan Ruiyi & Eden Li Yiling

This article draws from the co-authors’ personal experiences of competing in the Willem C. Vis and Vis East International Commercial Arbitration Moots and highlights the importance of awareness of diversity in legal traditions. The article focuses on points of divergence between the civil and common law jurisdictions in three main aspects: substantive law, procedural rules and advocacy techniques. Specifically, the article discusses the doctrine of good faith in the United Nations Convention on Contracts for the International Sale of Goods, the group of companies doctrine, and the concept of discovery and disclosure in the International Bar Association Rules on the Taking of Evidence in International Arbitration. The latter two topics featured prominently in the 22nd and 23rd Vis moot problems respectively. The article illustrates how Vis moot participants can develop and present their arguments in a manner that gains traction with civil law and common law arbitrators alike by appealing to concepts and terminology that are familiar to them. The article also explores how international commercial arbitration provides scope for borrowing concepts from a wide range of legal traditions, so long as the applicability of these concepts is grounded in the parties’ common intentions and expectations as reasonable businessmen.

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Current Arbitration Trends in Latin America

Hernando Diaz-Candia

This article provides a descriptive, qualitative overview of recent developments and the social direction of arbitration as a legal institution in Latin America, together with a critical analysis of possible causes and effects of current trends in the key, defining aspects of this alternative dispute resolution mechanism. The seemingly rapid growth in the use of arbitration is examined in order to find common ground in issues like Kompetenz-Kompetenz and the autonomy of lex arbitri, to conclude that arbitration seems to be at a crossroad in which a desirable balance between autonomy and flexibility, one on hand, and the expansion of arbitrability in matters involving public policy (orden público) beyond strictly commercial matters, on the other hand, is trying to find legal and social footing. One of the conclusions is the emergence of a transnational lex arbitri, grounded in customary practices, which deals with and affects procedural and substantive legal issues.

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Dispute Resolution Proceedings in World Trade Organization and International Commercial Arbitration: A Comparison

François Dessemontet

The immense growth of arbitration proceedings in the last few decades has disseminated extensive knowledge about the general practice of international commercial arbitration. However, certain specific dispute settlement proceedings remain less known to the public at large. Among them the World Trade Organization (WTO) Dispute Settlement system deserves to be presented, as it incorporates original features designed to ensure compliance by Member States with the international trade-related treaties and arrangements within the framework of the WTO. The establishment of a specific Dispute Settlement Body, the possibility of review by an Appellate Body, the opportunity given to third parties, themselves Member States, to intervene in the proceedings from the preliminary steps of the procedure until the first hearings, and the support of an efficient Secretariat at all stages are among the characteristics that are most noticeable. Other features are shared to some extent with international commercial arbitration, and the present article highlights some of them.

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NOTES

 

Not Hot Enough: Cooling-Off Periods and the Recent Developments under the Energy Charter Treaty

Crina Baltag

Cooling-off provisions in international investment agreements guarantee that investors and host States resolve their disputes in the most efficient manner. Aimed at offering the parties the opportunity to amicably settle their differences, cooling-off provisions remain a controversial issue in the jurisprudence on international arbitral tribunals. Arbitral tribunals are still split between considering the cooling-off provision as a procedural requirement or as an admissibility or jurisdictional requirement. Each of these positions triggers different practical consequences, with serious outcomes for the arbitral process. This note addresses the latest developments concerning the cooling-off provision under one international investment agreement – the Energy Charter Treaty.

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The Public Policy Exception in International Arbitration: A Snapshot from France

Pierre Pic & Asha Rajan

The public policy exception for setting aside an arbitral award has long been the source of debate in jurisdictions far and wide. France is no stranger to this debate. Long having occupied the centre-stage in international arbitration, France has among the most modern laws on arbitration, and a rich body of jurisprudence, having dealt with a wide range of issues in the field. Nevertheless, it is witnessing further changes, not the least on the issue of resistance to the recognition and enforcement of awards on grounds of violation of public policy. This article looks at the manner in which this aspect has evolved in French jurisprudence, how the courts are grappling with changes in the nature of international commerce, and the ensuing impact on their approach, and finally it further speculates how this might evolve further.

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Insolvent Respondents and Separability of Counterclaims in Institutional Arbitrations: A CAM Case Manager Perspective

Lucio Pinto

Payment of funds in arbitration proceedings has always been a topic of debate. One of the advantages of opting for administered arbitration is the guarantee of having an institution which manages the financial aspects of the proceedings. Institutions usually request the parties to submit advance payments in order to ensure that the professionals involved are adequately remunerated. The aim of this article is to analyse the problems which may arise from the lack of payment of such advance on costs requests, especially when there is partial insolvency and the insolvent respondent has filed a counterclaim. When this situation occurs, many institutions, including the Chamber of Arbitration of Milan provide that the values of the parties’ claims may be separated, but the decision on separability sometimes is very sensitive, as it may have very significant implications on the whole proceedings.

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