Volume 10, Issue 1 (July 2021)

TABLE OF CONTENTS

 

Editorial

 

Towards a Harmonized Theory of the Law Governing the Arbitration Agreement

Maxi Scherer & Ole Jensen

The agreement to arbitrate is foundational to the arbitral process. At the gateway to arbitral proceedings, a myriad of questions can arise as to the arbitration agreement’s validity, scope and effects. These questions must be answered based on the law(s) governing the arbitration agreement. For decades, the question how those laws should be determined has engaged courts and scholars around the world. It continues to do so. World-wide, four main approaches have developed, whereby the arbitration agreement may be governed by: (i) an “a-national” rule of substantive law that is solely based on the parties’ intent; (ii) any relevant law that confirms the validity of the arbitration agreement; (iii) the law governing the merits of the dispute; or (iv) the law of the seat of the arbitration. Globally, the latter two approaches appear to dominate. Although, by and large, they are based on the same legal principles across jurisdictions, results diverge. Taking the Indian approach as an example, this editorial reviews where and why such divergence occurs, including whether the parties’ choice of law for the main contract applies to the arbitration agreement and to which law the arbitration agreement is most closely connected. It is submitted that a stronger focus on objective criteria in answering these questions increases legal certainty and promotes a more harmonised approach across jurisdictions.

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Articles

 

The UAE Federal Arbitration Law: Taking Stock on Its Third Anniversary

Gordon Blanke

The present article takes stock of the United Arab Emirates [“UAE”] Federal Arbitration Law [“FAL”] after its first three years in operation. In doing so, it focuses on areas of relevance that have emerged from case law of the UAE courts in interpreting the provisions of the FAL, such as the arbitration agreement, the arbitration defence, the principle of kompetenz-kompetenz and the waiver provision. An initial analysis will show that the UAE courts continue to take guidance from the case law that originated from the former UAE Arbitration Chapter, which was repealed by the FAL with effect from June 16, 2018. The UAE courts have pursued an arbitration-friendly interpretation of the FAL without losing any of the continuity that has followed on from the previous regime under the former UAE Arbitration Chapter. That said, it is regrettable that some of the shortcomings of the new law, such as the limited powers of a tribunal to award costs or the continued qualification of arbitration as an exceptional means of dispute resolution requiring a special authority for representation, are attributable to conservative law- making by the draftsmen of the new law. Nevertheless, the FAL sends distinctly positive signals in the promotion of the electronic conduct arbitration proceedings.

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The Use of Interim Declarations in International Commercial Arbitration: An Excellent Remedy

Hamish Lal, Brendan Casey & Tania Iakovenko-Grässer

An arbitral tribunal can make a declaratory award, simply setting forth the respective rights and obligations of the parties. Declaratory relief is efficient on many levels, and especially so where facts are undisputed or agreed or not needed to decide a legal right or obligation. The real issue is whether arbitral tribunals can and ought to issue declaratory awards at early or interim stages. This article advocates that interim declarations serve a fundamental purpose and should naturally be explored more often than the current empirical data indicates. Further, the “push” from arbitral institutions to increase efficiency, the significant increase in the number of “working groups” to address efficiency and user satisfaction in arbitration and reform of institutional rules, and the increased use of “soft law” ignore an obvious procedural tool with an inherent ability to escalate efficiency—the interim declaration. Declarations at an interim stage have potential energy to unlock key legal issues in dispute early in the proceedings, thereby reducing the need for extensive document production and expert technical evidence, and can even be a catalyst to amicable resolution or a more streamlined arbitral procedure. This article examines the contours and avenues available for parties to seek declarations in international commercial arbitration, including the possibility of obtaining emergency declaratory relief. Recent updates to the arbitral rules mean that the interim declaration in international arbitration is ready, able, and waiting to be embraced.

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Conflict of Laws and Arbitral Jurisdiction—A Structural and Comparative Analysis

Johannes Landbrecht

The conflict of laws analyses required in the context of determining arbitral jurisdiction, and the laws applicable to it, are often complicated enough. But they are rendered even more difficult by the lack of a clear and universally accepted legal framework and terminology. This article seeks to give guidance in that respect, without, however, prejudging the outcome of such analysis. The general structure and overall legal effects of arbitration agreements are similar to those of choice of court agreements. When determining the laws related to arbitral jurisdiction, i.e., the competence of a tribunal to decide on the merits, the structure of the analysis is therefore similar to the analysis undertaken in view of choice of court agreements. This analysis encompasses three distinct categories, each requiring a different mindset, with sub-issues. An applicable law must be determined for each category separately. The starting point is a determination of whether an arbitration agreement is admissible in principle, i.e., whether the difference allegedly covered is, in theory, capable of settlement by arbitration. Second, the validity of the individual arbitration agreement invoked must be determined. Third, it must be assessed whether the specific claim raised falls within this agreement’s scope.

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The Arbitrability Doctrine and Tribulations of Tribunalisation

Harshad Pathak & Pratyush Panjwani

Commercial arbitration frequently places the principle of party autonomy in conflict with a state’s public policy considerations. The arbitrability doctrine is one such manifestation of this tendency. While many acknowledge the notion of arbitrability as a dying breed, India has remained immune to this apparent process of decay. However, while arbitrability continues to be a robust limitation to party autonomy in India, it is undergoing a gradual evolution. Under the garb of arbitrability, Indian courts now also assess if the establishment of special tribunals, either expressly or impliedly, ousts an otherwise private dispute from the purview of arbitration. The authors question this extension of the arbitrability doctrine in India and argue in favour of disassociating it from the process of tribunalisation of justice.

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Emergency Arbitration and India—A Long Overdue Friendship

Akash Srivastava

Recent years have seen the rise of international arbitration as a robust tool for dispute resolution. Emergency arbitration was introduced to combat one of its few weaknesses—the inability to provide interim relief prior to the constitution of the arbitral tribunal. However, despite its extensive utilisation and many advantages, issues with regard to enforcement of the emergency arbitrator’s decisions have thwarted emergency arbitration from being enthroned as the preferred forum for parties seeking interim relief prior to the tribunal’s constitution; this is the case in India as well. In view of this, the purpose of this article is two-fold. First, to examine the status of an emergency arbitrator and enforceability of its decisions. Second, to make a case for providing statutory recognition to the procedure and its resulting decisions in India.

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The Doctrine of Separability: Through the Lens of Darwinism

Karan Rukhana & Saisha Bacha

The doctrine of separability is a cardinal principle of arbitration. It allows an arbitration agreement to be treated independently of the contract that contains it. Traditionally, the arbitration agreement was viewed as divorced from the underlying contract only for the purpose of its existence and validity; however, over time, an evolved understanding of separability has allowed an arbitration agreement to be treated as separate for other purposes as well. For instance, as can be seen from English and Singapore decisions, arbitration agreements are treated as separate to determine the law governing the arbitration agreement as well. This article, in its limited scope, dissects separability in recent decisions to gain an updated understanding of the doctrine; it compares the present view with the traditional view in order to examine a possible evolution of the doctrine.

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The Advisability of Appellate Arbitration: Proposing an Efficient Institutional Framework

Ojaswa Pathak

The juridical roots of arbitration lie in freedom of contract. Yet, the existing scholarship, while opposing the appellate review of the arbitral awards, cites arbitral finality and efficiency to oppose a review on the substantive merits of the final award. This mechanism has already seen an increased demand among the business community owing to the pressing need of correcting substantive errors of the award, which cannot qualify as procedural improprieties to set aside the award. This article aims at settling this debate of the viability of appellate arbitration by reasoning and stressing the importance of an appellate mechanism in any dispute resolution mechanism, and then weighing the pros and cons with the adoption of appeals in arbitration. This cogitation would allude that contrary to popular beliefs, adoption of arbitral appeal mechanism would lead to increased finality and enforcement of arbitral awards. After establishing the desirability of appellate review of awards, the article will assess the existing appellate mechanism offered by arbitral institutions and proposed mechanisms by the existing scholarship. It will then propose a unique variant appellate framework which will be efficient and economical for parties to opt for.

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Between the Scylla and Charybdis: Tax Carve-outs and Tribunal Jurisprudence

Colin Cherian

Can tribunals overlook a tax carve-out? Succinctly put, the answer is in the affirmative. However, in light of how sparingly, tribunals have done so, there is room for discussion on this view. When interpreting carve-outs, the tribunal is often faced with a predicament. Despite a carve-out exclusion, if a tribunal were to rule on the claims, it may overstep its competence. On the other hand, the reluctance of the tribunal to hold the State accountable for usurping the investors’ properties by taxes maybe an abdication of justice. This article, in light of this predicament, deliberates on three questions—tribunals’ interpretation of carve-outs, the effectiveness of such carve-outs and finally, those instances when a tribunal would likely overlook a carve-out.

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Notes

 

Due Process Considerations in Expedited Arbitrations  

Peter J. Pettibone

Arbitration is a preferred method for resolving international commercial disputes. However, it has been criticized as being too lengthy and costly for the efficient resolution of these disputes. To address these concerns, a number of leading arbitration institutions have adopted expedited procedures to shorten the process and make it more efficient. However, the concern is that by shortening the process, these rules may prevent parties from presenting their cases fully and thus deny them due process. This note looks at the due process considerations in four recently adopted or drafted expedited arbitration rules and examines how the due process concerns may be addressed.

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