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3 FOREWORD James Lewis

4 INTRODUCTION Ten years on

WilmerHale’s Gary Born and Wendy Miles look at the influence of the English Arbitration

Act 1996 on the choice of London as an arbitral seat

10 INDUSTRY SPECIALISMS Captains of industry

A generalist approach may work for straightforward disputes but, as Camilla Sutton

reports, for the more complex international arbitration cases clients now demand

specialist expertise, tailored to their particular sector

18 DISCLOSURE Conflict rules

Arbitrators are increasingly being challenged over conflicts of interest. There is some

concern that these challenges are a tactical tool used to derail proceedings. Herbert Smith

LLP’s Laurence Shore and Justin D’Agostino analyse the issues

22 FIONA TRUST JUDGMENT Why all the fuss?

Described as ‘fundamentally important’, Fiona Trust was the hot topic at the recent LCIA

European Users’ Council symposium in Madrid. Rowan Planterose and Steven Friel of

Davies Arnold Cooper explain why

26 DAMAGES Expert analysis

LECG’s James Nicholson and Mark Bezant outline the key considerations when engaging

damages experts

30 LITIGATION Caught in court

The advantages of arbitration could be undermined if disputes end up in court.

Wragge & Co’s Andrew Manning Cox considers the message the courts ought to give

when invited to adjudicate arbitration matters

34 CHINA AND RUSSIA Tipping the balance

These countries may offer seemingly limitless opportunities, but even in such fertile

investment climates it pays to be prepared for the worst. Chris Johnson navigates the pitfalls

continued overleaf �

CONTENTS �

Legal Business Arbitration Report 2007 1

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42 LATIN AMERICA Growth market

Rising foreign investment in Latin America has resulted in an increase in arbitration proceedings.

José Maria Alonso of Garrigues describes why this has encouraged many countries in the region to update

their laws in recent years

46 MULTIPLE PARTIES The third man

The involvement of third parties in arbitration continues to cause confusion. Guy Pendell and

Thomas Lennarz of CMS examine the issues

50 DAMAGES A certain calculation

As the ways in which damages are quantified in commercial and investment-treaty arbitrations

grow increasingly diverse, Philip Haberman and Vikki Wall of Ernst & Young present the case for a

universal method

54 DRAFTING Court support

Recent case law reveals that English courts are in favour of a liberal approach when construing

arbitration clauses. Norton Rose’s Steve Abraham and Anna Kirkpatrick highlight the importance of

clarity in drafting

58 ENFORCEMENT Reality bites

Little attention has been paid to the harsh commercial reality that arbitral awards are of no value

unless and until they can be turned into cash. DLA Piper’s Matthew Saunders and Claudia Salomon

explore what’s at stake

63 INTERNATIONAL REFERRALS

� CONTENTS

2 Legal Business Arbitration Report 2007

Editor

James Lewis

Reporters

Chris Johnson, Camilla Sutton

Production editor

Jennifer Ong

Sub-editors

Eleanor King, Laura Sharp,

Rachel Turner

Design

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Laura Sharp, Rachel Turner

Special reports manager

Helen Berwick

Senior sales executive

Raju Mann

Business development director

Claire Bostock

Editor-in-chief

John Pritchard

Legal Business Arbitration Report is

published in association with Legal Business

magazine. For subscription details, contact:

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AR07 p1-2 Contents 19/4/07 18:49 Page 2


FOREWORD �

clear just what can be at stake in the

commercial world and the important role

that arbitration has to play.

Nevertheless, as Clifford Chance’s Audley

Sheppard points out: ‘Arbitration is no

panacea as you cannot guarantee that

awards are going to be enforced.’ This is a

theme developed by DLA’s Matthew

Saunders and Claudia Salomon in the final

feature in the report, ‘Reality Bites’ (see p58).

As they point out, little attention has been

focused upon the harsh commercial reality

that arbitral awards are of little value unless and until they

can be turned into cash.

Of course, having emphasised the international

dimension to this year’s report, there remains a recognition

that London plays an increasingly central role in the

arbitration community. This is manifested in various

developments. Strategically, any successful, large

international arbitration practice needs to have a centre of

gravity in one of the major arbitral locations. Among the

American firms, for example, the focal point ofShearman’s

practice is Paris, where Gaillard is based. The centre of

gravity for Debevoise & Plimpton is New York, and for

WilmerHale it’s London. Recently, as reported in the April

edition of Legal Business, Freshfields Bruckhaus Deringer has

brought leading arbitration names from Paris, New York and

Amsterdam together in London. This has shifted the balance

of its practice somewhat – historically perceived to be

Paris-centric, due largely to the presence of Jan Paulsson in

the French capital – in favour of London.

Such strategic moves within the arbitration practices of

leading global law firms makes sense, not least because

London is growing in strength as an arbitral centre. In

addition, as various articles in this report reveal, much of the

concern about the role of the UK courts is being overcome:

all great news for arbitration in London. This is where

WilmerHale kicks off the report, with an introduction that

reviews the ten years since the English Arbitration Act and an

analysis of London’s unique place in the arbitration world. �

Going globalWelcome to the 2007 edition of the Legal BusinessArbitration Report. First things first: it’s been a

pleasure working with some of the leading

practitioners in the field again this year. Many

thanks to all those who contributed features, and

to those who helped our team with the extensive

research that has gone into producing this report.

We hope you enjoy it.

We also hope that – largely by tapping into this wealth

of knowledge and experience – we’ve produced a report

that is accessible, insightful and wide-ranging. Clearly, we

realise that space does not permit exhaustive coverage of

an area as diverse and complex as international

arbitration. Nevertheless, this year’s report has attempted

to go some way towards reflecting the inherently global

nature of the business community that the various

arbitration institutions and practitioners are serving.

With this in mind, the scope of the report has been

broadened. Last year’s (inaugural) edition was focused

largely – and with good reason – on the London market. In

this, the second edition of the report, we have made every

effort to play up the international dimension to arbitration.

Notable in this respect is a feature on Latin America

written by the managing partner of leading Spanish firm

Garrigues (see p42) and an excellent feature written by

Legal Business journalist Chris Johnson. In ‘Tipping the

balance’ (see p34), Chris provides an in-depth analysis of

the best way to avoid the pitfalls inherent in operating in

China and Russia – currently two of the business world’s

most exciting markets. As LB’s expert on these markets

(having travelled to both to undertake research in the last 12

months), he has garnered some telling insight from leading

figures in the world of arbitration who have cutting-edge

experience of matters arising from these countries.

Emmanuel Gaillard, the highly revered head of

Shearman & Sterling’s international arbitration practice is as

well placed as anyone. He is currently acting on the largest

ever investment arbitration: a claim by Group Menatep –

Mikhail Khodorkovsky’s holding company and majority

shareholder in Yukos – against the Russian state, the value

of which may exceed $50bn. ‘If your opponent is the state

then you don’t want to appear before the organs of that

state – by definition the local courts are an organ of the

state,’ he says. ‘In the local courts in Russia you have zero

chance, as we have seen – Yukos has litigated in local courts

and lost every time except for one, after which the judge

was sacked in the following months. It was a clear signal…

there is no independence.’ In a similar vain, Gaillard makes

James Lewis, editor

In this, the second edition of the report,

we have made every effort to play up the

international dimension to arbitration.

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� INTRODUCTION

4 Legal Business Arbitration Report 2007 Sponsored feature

London has long been a popular seat for

international arbitration. If anything, recent years

have seen that popularity increase. The trend has

been encouraged by the use of the English language,

as well as English law, in international commercial

and financial transactions; the growth of London as

Europe’s capital for legal and financial services; and

London’s development of a truly international

arbitration community. These trends are confirmed

both anecdotally and by research from Queen Mary

University, ranking London as the preferred

international arbitral ‘venue’ for corporate parties,

surpassing Switzerland, France and the United

States. The ICC’s statistics corroborate that, placing

London alongside Paris and Switzerland as the

preferred choice for parties in ICC arbitration

proceedings.

Given these developments, it is both timely and

pertinent to consider how influential the English

Arbitration Act (the 1996 Act) – now in its tenth year – has

been in decisions by commercial parties to select London

as the seat for their arbitral proceedings. Influencing such

decisions was, after all, one of the stated objectives of the

1996 Act, just as it was one of the reasons for the reform of

arbitration legislation in our European neighbours

Germany (1998), Austria (2006), Spain (2003), Sweden

(1999) and Denmark (2005).

There can be no doubt that, whatever the aspirations

of some practitioners for ‘a-national’ or ‘de-localised’

Ten years onThe English Arbitration Act 1996 has had a fundamental impact on the

arbitration world, making London an increasingly popular choice of arbitral situs.

WilmerHale’s Gary Born and Wendy Miles explain why

Gary Born and Wendy Miles are partners at WilmerHale

AR07 p4-8 Wilmer 19/4/07 18:39 Page 4

�

Sponsored feature

INTRODUCTION �


arbitrations, the content of national arbitration legislation

remains profoundly important to the arbitral process.

Seating an arbitration in a jurisdiction with archaic,

parochial or dysfunctional arbitration legislation – or

inadequate courts – can frustrate many of the purposes of

the parties’ agreement to arbitrate. Conversely, seating an

arbitration in a jurisdiction with workable arbitration

legislation can secure a non-intrusive, supportive legal

regime, leaving the procedural and substantive issues in

dispute to the tribunal.

The 1996 Act was drafted – in great measure

successfully – in order to provide just such a legal regime,

enabling England to compete on this score with UNCITRAL

Model Law states (France, Switzerland and the United

States) as a premier arbitral seat. The Act grants parties

very broad autonomy to agree upon the conduct of the

arbitral proceedings and, failing such agreement, grants

the arbitral tribunal broad discretion to conduct such

proceedings without interference from local courts.

Powers granted to English courtsUnlike predecessor English legislation, the 1996 Act greatly

limits the English courts’ supervisory powers over

international arbitral proceedings. Instead, the courts’

powers are limited to those that are specifically conferred

by statute. These include powers to remove arbitrators

(s24), to determine a preliminary point of jurisdiction (s32)

or law (s45), to make orders in relation to witnesses and

evidence (s44(1)), and to set aside or remit an award that is

made without jurisdiction (s67) or tainted by serious

irregularity (s68). In addition, unless otherwise agreed by

the parties, the 1996 Act grants the courts powers to

appoint, or set aside the appointment of, arbitrators (ss17

and 18), to enforce pre-emptory orders of the tribunal

(s42), and to consider an appeal by a party on a question

of law arising from the award (s69).

The powers granted to the English courts appear to be

significant, but are with a few exceptions consistent with

the UNCITRAL Model Law. The Model Law contemplates

court assistance in support of the arbitration, including, in

relation to formation of the tribunal, challenges to

arbitrators, determination of jurisdictional issues and the

taking of evidence. The Model Law also contemplates

annulment or setting aside of an award on the grounds

paralleling those set out in the New York Convention

(including where a tribunal has acted outside the scope of

its jurisdiction or where there has been a serious

procedural irregularity in the arbitration). The Model Law

does not, however, permit appeal to a national court on a

question of law or other review of the substance of the

tribunal’s award.

Whilst the scope of the powers granted to the English

courts by the 1996 Act is important, it is the manner in

which the courts exercise those powers that is ultimately

decisive. In that respect, three key aspects of the 1996 Act

are important.

Separability and competence-competenceFirst, the 1996 Act permits the English courts to determine

a preliminary point of jurisdiction or law (s32). These

determinations include questions relating to the existence,

validity or scope of the arbitration agreement and/or the

jurisdiction of the tribunal, which, under the terms of the

1996 Act, may be dealt with by the tribunal or the courts.

The Act provides a sound statutory framework for

handling jurisdictional issues. It incorporates two critical

principles: the separability doctrine (s7) and the principle

that a tribunal is competent to rule on its own jurisdiction

(s30). Based on these principles, most threshold issues on

jurisdiction are determined by tribunals (rather than

courts). Section 32 of the Act gives a party that participates

in arbitral proceedings a limited right to apply to the

English courts to determine a question of jurisdiction, but

only by consent of both parties or, with the permission of

the tribunal, where the court is satisfied that the

determination is likely to save costs, is made without delay

and there is good reason for the matter to be decided by it.

Conversely, s72 of the Act permits a party that does not

participate in the arbitration to obtain an immediate

judicial decision on most jurisdictional objections.

The effect of the separability doctrine was considered in

some detail in Vee Networks Ltd v Econet Wireless

International Ltd [2004] and Fiona Trust & Holding

Corporation & ors v Yuri Privalov & ors [2007]. (For a detailed

discussion see the article by Davies Arnold Cooper on p22). In

both cases, the applicant sought to challenge the tribunal’s

jurisdiction under the relevant arbitration agreement on the

basis that the underlying contract was void or voidable.

In Vee Networks, the court reiterated that the effect of

s7 was to confirm that arbitrators had jurisdiction

conclusively to determine issues as to whether a matrix

contract is void or voidable. The court affirmed that the

tribunal would not lose that jurisdiction if the underlying

matrix contract were void or voided:

Section 7 of the 1996 Act reflects this concept of

separability. Its effect in substance is to confirm that

arbitrators have jurisdiction conclusively to determine

issues on the voidness or voidability of the matrix

Unlike predecessor English legislation,

the 1996 Act greatly limits the English

courts’ supervisory powers over

international arbitral proceedings.

AR07 p4-8 Wilmer 19/4/07 18:39 Page 5


contract to the effect that they do not lose jurisdiction

by reason only that the matrix contract may be void or

voidable.

The court went on to observe that the arbitration

agreement itself must be valid and binding. If it were not

binding, for reasons other than that the matrix contract

was void, then the arbitrators would not retain conclusive

jurisdiction pursuant to s7. Instead, they would need to

determine, pursuant to s30, the scope of their own

substantive jurisdiction.

In Fiona Trust the English Court of Appeal again

confirmed and clarified the effect of the separability and

competence doctrines under English law. In response to

the argument that a contract procured by bribery is void

and that this would necessarily void the arbitration

agreement contained therein, the Court said:

It is not enough to say that the bribery impeaches the

whole contract unless there is some special reason for

saying that the bribery impeaches the arbitration

clause in particular.

Determining the circumstances in which a party has

identified a ‘special reason’ for impeaching the arbitration

clause ‘in particular’ remains to be defined; it will, however,

clearly be a limited set of cases akin to forgery of the

underlying contract or actions directed towards the

arbitration clause itself (eg, fraud regarding incorporated

documents, alteration of the arbitration clause and the like).

At the same time, the Court of Appeal settled (subject to

further appeal to the House of Lords) a long-standing

debate as to the scope of jurisdiction conferred by wording

in various arbitration clauses, stating that: ‘the time has

now come for a line of some sort to be drawn and a fresh

start made at any rate for cases arising in an international

commercial context.’ On this issue, the Court stated that:

As it seems to us, any jurisdiction or arbitration clause

in an international commercial contract should be

liberally construed. The words ‘arising out of’ should

cover ‘every dispute except a dispute as to whether

there was ever a contract at all’.

The Court explained the strong policy reasons in favour of a

liberal reading of arbitration agreements, pointing out that:

In the ten-year history of the 1996 Act,

there have been less than 100 reported

cases of appeals under s67.

�

� INTRODUCTION

One of the reasons given in the cases for a liberal

construction of an arbitration clause is the

presumption in favour of one-stop arbitration. It is not

to be expected that any commercial man would

knowingly create a system which required that the

court should first decide whether the contract should be

rectified or avoided or rescinded (as the case might be)

and then, if the contract is held to be valid, required the

arbitrator to resolve the issues that have arisen. This is

indeed a powerful reason for a liberal construction.

This interpretative rule parallels that in the United

States and, to a lesser extent, Switzerland, and promises to

reduce significantly the possibility of litigation over

jurisdictional objections based upon the scope of the

arbitration agreement.

Judicial assistance to arbitral proceedingsSecondly, English courts are granted the power to assist, in

defined ways, arbitral proceedings that are conducted in

England. Generally, the 1996 Act transfers any procedural

decisions in an arbitration to the tribunal, wherever

practicable, through ss38 to 43. The overriding principle of

the Act is that the courts shall not interfere in arbitral

proceedings and shall only act if or to the extent that the

tribunal has no power or is unable to do so.

Section 44, for example, gives the courts the power to

act in support of the arbitral proceedings if the case is one

of urgency, or on the application of a party with the

permission of the tribunal or agreement of the other

parties. In exercising that power in Cetelem SA v Roust

Holdings Ltd [2005], the court found that it only has

jurisdiction to make interim orders as it thinks necessary

for the purpose of preserving evidence or assets,

overruling earlier authority that it had broader powers to

grant orders pursuant to s44. Clarke LJ said that:

… it was intended to interfere as little as possible with

the arbitral process and to limit the power of the court

in urgent cases to the making of orders which it thinks

are necessary for the preservation of evidence or

assets.

Nonetheless, there are situations where judicial

assistance for the arbitrators can be desirable. These

include enforcing disclosure orders made by an arbitral

tribunal and enforcing orders for provisional relief. The

availability of such judicial support can make an arbitral

seat more attractive (although in many instances these

sorts of judicial assistance must for practical reasons be

sought from national courts outside the seat).

An issue of some practical importance, and current

interest, is the power of English courts to issue anti-suit

injunctions restraining parties from pursuing foreign

AR07 p4-8 Wilmer 19/4/07 18:39 Page 6

Legal Business Arbitration Report 2007 7Sponsored feature

proceedings in breach of an English arbitration

agreement. This is a power available in other common law

jurisdictions (including the United States), but generally

not found in civil law regimes.

In West Tankers Inc v RAS Riunione Adriatica di Sicurta

SpA & anor (the Front Comor) [2007], the House of Lords

considered the power of the English courts to restrain

foreign court proceedings in support of arbitration. It

pointed out that:

It is generally regarded as an important and valuable

weapon in the hands of a court exercising supervisory

jurisdiction over the arbitration. It promotes legal

certainty and reduces the possibility of conflict

between the arbitration award and the judgment of a

national court… [and] saves a party to an arbitration

agreement from having to keep a watchful eye upon

parallel court proceedings in another jurisdiction,

trying to steer a course between so much involvement

as will amount to a submission to the jurisdiction…

and so little as to lead to a default judgment. That is

just the kind of thing that the parties meant to avoid by

having an arbitration agreement.

In the course of its analysis, the House of Lords went on

to consider the effect of such court support on the decision

of parties to select London as an arbitral situs.

Whether the parties should submit themselves to such

a jurisdiction by choosing this country as the seat of

their arbitration is, in my opinion, entirely a matter for

them. The courts are there to serve the business

community rather than the other way round. No one is

obliged to choose London. The existence of the

jurisdiction to restrain proceedings in breach of an

arbitration agreement clearly does not deter parties to

commercial agreements. On the contrary, it may be

regarded as one of the advantages which the chosen

seat of arbitration has to offer.

Nonetheless, the House of Lords was concerned that the

case highlighted a question ‘of very considerable practical

importance on which different views have been expressed.’

The question: ‘Is it consistent with EC Regulation 44/2001

for a court of a member state to make an order to restrain a

person from commencing or continuing proceedings in

another member state on the ground that such proceedings

are in breach of an arbitration agreement?’ was therefore

referred to the ECJ for determination. It remains to be seen

whether or not the ECJ will concur with the English House of

Lords’ view that arbitration falls outside Regulation

44/2001, or take a contrary view and risk reversing years of

English precedent in support of anti-suit injunctions in

arbitration.

Applications to set award asideThirdly, the national courts in the arbitral seat are almost

always competent (and exclusively competent) to

entertain actions to vacate or set aside the arbitral award.

The scope of judicial review of an arbitral award is a

matter of national law that varies from country to country.

Under many developed national laws, an arbitral award is

subject to little or no review of the merits of the tribunal’s

decision and limited review of the arbitral procedures. In

contrast, the English Act – at least in theory – permits

reasonably extensive review of the merits of arbitral

awards. Awards rendered in England may be challenged

on the basis of the substantive jurisdiction of the tribunal

(s67), serious irregularity affecting the tribunal (s68), or

appealed on a point of law (s69).

It is important, however, to keep these provisions for

judicial review of arbitral awards in perspective. In the ten-

year history of the 1996 Act there have been less than 100

reported cases of appeals under s67. Only a handful of

those – approximately 13 –have been set aside on the

grounds that the tribunal lacked substantive jurisdiction,

which is little more than one successful appeal per year.

While statistics regarding the number of arbitrations

conducted annually in London are elusive, the rate of

successful appeals must be well below 0.05%.

Appeals pursuant to s68, on the grounds of serious

irregularity, are even less common. In order to succeed to

set aside an award on the basis of serious irregularity, an

applicant must show there to be an irregularity that the

court considers has caused or will cause substantial

injustice to the applicant. The types of irregularity envisaged

by the Act include the tribunal: failing to comply with its

general duty; exceeding powers (otherwise than by

exceeding substantive jurisdiction); failing to conduct the

proceedings in accordance with the agreed procedure; and

failing to deal with all the issues put to it. They also include:

any arbitral or other institution or person exceeding its

powers; uncertainty or ambiguity as to the effect of the

award; award obtained by fraud or procured contrary to

public policy; failure to comply with requirements as to

form; and any irregularity in the conduct of the proceedings

or in the award that is admitted by the tribunal or by any

arbitral or other institution or person vested by the parties

with powers in relation to the proceedings or the award.

Out of the 70-odd reported section 68 appeals since the

enactment of the 1996 Act, only 19 have been successful and

even fewer were found to have resulted in substantial

injustice. That said, as a challenge under ss67 or 68 can be

mounted as of right without leave, these now appear to

exceed in number applications for leave to appeal under s69.

In a display of pro-active support of arbitration, the

court recently provided some guidance to arbitrators in an

effort further to lower the number of appeals. Tomlinson J

in ABB AG v Hochtief Airport GmbH & anor [2006], said that:

INTRODUCTION �

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AR07 p4-8 Wilmer 19/4/07 18:39 Page 7

� INTRODUCTION


set aside as a whole. The general approach of the courts is

not to interfere with the decision of experienced

commercial arbitrators. This approach was illustrated by

the Court of Appeal when it overturned the first instance

decision in BMBF (No 12) Ltd v Harland and Wolff

Shipbuilding and Heavy Industries Ltd [2001] to set an

award aside. The Court of Appeal expressed its

unequivocal view that ‘it is not for the courts to substitute

its own view for that of experienced arbitrators on a

question such as this’.

Other factorsThere are two additional, important considerations for

parties to consider. First, the location of the arbitral seat

affects the law applicable to the arbitration agreement.

Articles II(3) and V(1)(a) of the New York Convention

contemplate that the validity of the parties’ arbitration

agreement will be determined 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.’ National law requirements on subjects such

as contract formation, validity and illegality, and

arbitrability can vary significantly, with the legal rules in

some jurisdictions disfavouring international arbitration

agreements. For their part, and as discussed above,

English courts have taken a broad approach to the

question of arbitrability.

Further, the arbitral seat is usually the place where the

arbitral award will be ‘made’ for purposes of the New York

Convention and other international agreements. This has

significant legal consequences for the enforceability of

arbitral awards outside the country where they are

rendered. The UK is party to the New York Convention and,

therefore, awards made within its territory are subject to

the Convention’s pro-enforcement rules in other

Convention parties (many signatories to the New York

Convention, including the United Kingdom, have adopted

‘reciprocity’ reservations and will only apply the

Convention to awards ‘made’ in another signatory state).

After legal considerations, parties often cite

convenience, neutrality and location as other factors

influencing the choice of arbitral situs. These factors

include ease of air travel, facilities and resources (including

counsel), language and culture – all of which position

London highly in the English-speaking world. Most

important, however, is the availability of a large number of

skilled arbitrators and arbitration counsel in the potential

arbitral seat. Where such a community exists, arbitrations

will follow. Equally, parties continue to return to a location

(and a formula) that has served them well in the past. All

of this points in the direction of continued growth of

international arbitration in London. The 1996 Act has

played an important, though by no means exclusive, role

in this cycle. �

Those who resort to and practise in international

commercial arbitration are rightly jealous of the

autonomy of the process, and the case law which has

developed in this field demonstrates that the court will

respect that autonomy… Whilst the court will never

dictate to arbitrators how their conclusions should be

expressed, it must be obvious that the giving of clearly

expressed reasons responsive to the issues as they

were debated before the arbitrators will reduce the

scope for the making of unmeritorious challenges, as

this ultimately has proved to be.

That leaves appeals on points of law. It is this final

category of review that distinguishes England from most

UNCITRAL Model Law jurisdictions, as well as France and

Switzerland, while broadly paralleling the ‘manifest

disregard of law’ standard of review applicable in the

United States. At the time of the 1996 Act’s enactment,

Saville LJ described the section as a ‘feature of our existing

law which has caused disquiet abroad and which is

regarded by many as detracting from arbitrating here [in

England]’.

Section 69 must be seen in context. The right to appeal

on a point of law is non-mandatory and the parties are

free to opt out of its application. By incorporation of the

rules of most leading arbitral institutions, many parties do

precisely that. This includes the LCIA Rules, which provide

that the parties ‘waive irrevocably their rights to any form

of appeal, review or recourse to any state court or other

judicial authority’ (Article 26.9) and the ICC Rules, which

provide that the parties ‘shall be deemed to have waived

their right to any form of recourse’ (Article 28(6)).

Consequently, appeals under the 1996 Act on a point of

law are relatively rare. In more than half of reported cases

of appeal (many of which included appeals pursuant to

ss67 and/or 68 as well), the award was upheld. In most

other cases, it was varied or remitted. It was only in a very

small proportion of cases, less than 10% (which equates to

substantially less than one per year), that the award was

ABB AG v Hochtief Airport GmbH & anor

[2006] EWHC 388 (Comm)

BMBF (No 12) Ltd v Harland and WolffShipbuilding and Heavy Industries Ltd

[2001] EWCA Civ 862

Cetelem SA v Roust Holdings Ltd

[2005] EWCA Civ 618

Fiona Trust & Holding Corporation & ors v Yuri Privalov & ors

[2007] EWCA Civ 20

Vee Networks Ltd v Econet Wireless International Ltd

[2004] EWHC 2909 (Comm)

West Tankers Inc v RAS Riunione Adriatica di Sicurta SpA & anor

[2007] UKHL 4

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AR07 p4-8 Wilmer 19/4/07 18:39 Page 8

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AR07 p9 19/4/07 16:30 Page 9

� INDUSTRY SPECIALISMS


Captains ofindustry

AR07 p10-17 Camilla 19/4/07 17:37 Page 10

These days, a generalist

approach to international

arbitration cases just won’t cut

it. Clients are demanding a

more sophisticated service,

with greater specialist knowledge

of the issues in dispute.

Camilla Sutton reports


INDUSTRY SPECIALISMS �

�

Many of the world’s top clients turn to the dispute

resolution group of their preferred firm, particularly

in what appears to be a straightforward dispute. But,

for international arbitrations, clients are increasingly

seeking out firms with the most honed specialist

expertise to deal with their specific problem. This is

especially the case for the really complex matters,

like Allen & Overy’s Energy Charter Treaty work; the

high-profile, such as Herbert Smith’s Eurotunnel

case; and the high-value pieces of work, for example

Debevoise & Plimpton’s successes on two of the

largest arbitration awards for CME and Occidental

Petroleum, or Shearman & Sterling’s instruction by

the Yukos investors in the $33bn expropriation case.

PricewaterhouseCooper’s 2006 report ‘International

arbitration: corporate attitudes and practices’ found that

instead of transnational litigation, 73% of in-house counsel

AR07 p10-17 Camilla 19/4/07 17:38 Page 11



matter of the transaction is not particularly important. In

those cases, it is arbitration and procedural skills that are

critical. Counsel needs to know how best to present their

case — to prepare the written submissions, obtain and

present the relevant documents and witness evidence,

and argue the law. Substantive knowledge will be less

important than procedural expertise in these situations.’

If the dispute emerges out of an M&A transaction, or a

joint venture, it doesn’t make any difference if it is in the

chemical industry or if it relates to hotels. Let’s face it – the

client will care more about your M&A or joint venture

experience. That said, if the dispute revolves around technical

aspects of a faulty pipeline, then specialist knowledge will be

required. ‘It depends on the sophistication of the client and

how often that industry sector has disputes that result in

arbitration,’ comments Freshfields Bruckhaus Deringer’s

Geoff Nicholas. ‘Our energy clients, like the major oil and gas

companies for example, have high expectations that not only

will we have arbitration specialisation, but that we will have

a thorough knowledge of their business area too.’

‘At big firms like ours, we can also rely on the sector

expertise of our transactional lawyers,’ says HerbertSmith’s

Larry Shore. Judith Gill at Allen & Overy adds: ‘Clients don’t

want to have to pay us to reinvent the wheel. While most of

the time we can meet their demands through our arbitration

and dispute resolution group, on other occasions we will

work with our non-contentious colleagues across our global

network to get the correct result.’

Building bridgesHaving the requisite background can be imperative in

large construction disputes. ‘Construction disputes can

be so technical,’ says Robert Volterra of Latham & Watkins.

‘Basically they can be engineering oriented, and you must

have a clear understanding of construction processes to

make sense of the documents. The technical aspects can

be a world unto themselves.’

White & Case is currently acting on a number of high-

value construction cases involving hotels, gas extraction

plants and hydroelectric projects. ‘You need to understand

everything from the client’s business to the different

contract forms. Only then can you see the project all the

way through, and provide a cradle-to-the-grave service,’

says White & Case partner John Bellhouse.

At Pinsent Masons, the disputes handled are far from

simple building disputes and usually involve substantial

infrastructure projects around the world. In 2006, the

firm advised on the successful defence of a $200m ICC

arbitration regarding a major power plant in South-East

Asia. It also acted on behalf of a Saudi Arabian contractor

in an ICC arbitration relating to the construction of a

power station in that country.

Phillip Capper of Lovells and David Brynmor Thomas

from Herbert Smith have amongst the strongest

‘prefer to use international arbitration either alone or in

combination with alternative dispute resolution mechanisms

in a multi-tiered dispute resolution process’. The reasons for

this? ‘Flexibility of procedure, the enforceability of awards, the

privacy afforded by the process and the ability of parties to

select the arbitrators’. No surprises there then.

What is significant, however, is that the report found that

‘75% of corporations retain specialist arbitration firms or

firms with a substantial arbitration practice rather than their

usual external litigation counsel.’Why? Because ‘corporations

seek a firm that specialises in international arbitration, is

experienced in the subject matter of the dispute, has access

to counsel in the place of the dispute to provide regional

expertise, and is a specialist in the applicable law.’

Understanding the relevant laws and procedures, getting

to grips with the strengths and weaknesses of the arbitrators

and appreciating the subtleties of forum shopping are

prerequisites to the job. Nowadays, firms have to add more

value. Successful firms must provide specialist industry

knowledge, whether in construction, shipping, commodities,

insurance/reinsurance or public international law.

‘The market has matured,’ says Clifford Chance

arbitration partner Audley Sheppard. ‘There was a

preliminary phase where the market, ie clients requiring

arbitration advice and other lawyers, needed to be

convinced by arbitration practitioners that arbitration

experience added value. It was challenging the view that

“if you can litigate, you can arbitrate”.’ The market was

convinced and publications such as The Legal 500 started to

include a separate international arbitration category. ‘The

second phase involved law firms seeking to persuade the

market that they had more international arbitration

experience than their competitors,’ Sheppard continues.

‘The third phase, which we have just entered, involves law

firms seeking to persuade the market that they have more

industry-specific experience than their competitors. The first

question clients often ask is: how many times have you

dealt with ICC or LCIA arbitrations? The real players can reel

off dozens, so that is no longer a measure that differentiates

the top firms. The next question is: what experience do you

have in this type of dispute? Clients want you to be in a

strong position to give advice on strategy and the likely

outcome using your arbitration experience. But they also

want familiarity with the type of contract in dispute, as well

as the relevant technology and industry practices.’

Commerce and industryWith the big-ticket commercial disputes, specialist

expertise depends on the nature of the dispute. ‘There are,

of course, many cases that require specialist knowledge,’

says Gary Born, head of WilmerHale’s arbitration practice,

‘but there are also more general commercial disputes.

Sometimes disputes focus entirely on language used in a

contract, or particular factual issues, where the subject

�

AR07 p10-17 Camilla 19/4/07 17:38 Page 12

Juliet Blanch of McDermott Will & Emery advises

investment banks and other clients involved in the energy

commodity trading sector. ‘An in-depth knowledge of the

sector specificity is essential,’ Blanch says. ‘Different

considerations apply depending upon whether you are

involved in a claim relating to an oil dispute arising in Central

Asia or a power dispute in western Europe. Quite different

levels of liberalisation and sophistication exist in these

markets that cannot just be picked up from a text book.’

Clifford Chance has expertise in commodities and

international trade, particularly in oil and oil products,

metals and sugar. Stephenson Harwood has recently acted

for an international trading company in various arbitrations

in respect of commodity disputes, including under The Grain

& Feed Trade Association and The Federation of Oils, Seeds

and Fats Associations. Taylor Wessing also has expertise in

this area. The firm is currently advising a Far Eastern

manufacturing company on a $120m London Metal

Exchange arbitration claim against a trading company for

contract default. At Reed Smith Richards Butler, partner

Mark Connoley has commodity arbitration experience.

Lawrence Graham and Hill Taylor Dickinson also have

partners who specialise in this field.

Dire straits‘Shipping law is complicated,’ says Whittaker, ‘and you need

someone with specialist knowledge; someone who will

know all about, say, the limitation of liability regime or the

environmental issues that could arise.’ At any one time, Clyde

reputations in high-value, complex construction-related

disputes in the City. Steve Abraham at Norton Rose, David

Howell at Fulbright & Jaworski and Stephen York at

Kilpatrick Stockton also have decades of impressive

experience in the construction and engineering sectors.

Other firms that excel in this sector include Allen &

Overy, which fields six arbitration partners from its

London office; Clifford Chance which deals with major

infrastructure projects around the world; and CMS

Cameron McKenna, which in 2006 was involved in arbitral

disputes involving sums in excess of $1bn. Shadbolt & Co

and Fenwick Elliott are smaller firms that boast extensive

construction expertise.

‘My particular view,’ says Bellhouse, ‘is if you’ve got

experience in the construction industry and arbitration,

it’s the best combination your client can get.’

Valuable commodityThe commodity arbitration market is small. Serious players

in this area include Diane Galloway at Reed Smith Richards

Butler, Paul Turner and John Whittaker at Clyde & Co and

Mike Pollen at DLA Piper. Mark Aspinal and Chris Jones at

Waterson Hicks deal with oil-related business.

‘Commodities is about common sense,’ says Nicola

Boulton at Byrne & Partners. ‘Clients want to know that

you understand their business, that you know the gossip,

and you’ve picked up on who’s screwed up recently.’

Byrne & Partners have expertise on trading structures

and how commodity dealers organise their businesses.

The firm is currently acting on disputes involving major oil

company interests and trade and capital financing.

‘We handle a lot of work in the oil, metal and sugar

sectors,’ says Clyde & Co’s John Whittaker. ‘ When you’re

dealing with commodities, it’s often necessary to have

industry knowledge. Although arbitration as a dispute

resolution skill is important, you need a lawyer who

understands how the markets work in practice.’



’Clients want to know that you understand

their business, that you know the gossip

and who’s screwed up recently.’

Nicola Boulton, Byrne & Partners

�

SEE YOU LATER ARBITRATOR

www.haavind.no

Leading l i t igators in Norway for more than a century.

AR07 p10-17 Camilla 19/4/07 17:38 Page 13



Maritime law is a core practice area for Hill Dickinson,

Taylor Wessing and Lawrence Graham.

Protect yourselfThere is an entire body of law dedicated to the insurance and

reinsurance markets that requires specialist knowledge. Clyde

& Co’s experience in this area is vast. The firm is currently

working on cases involving healthcare, product liability,

workers’ compensation and sports and medical businesses.

‘We have always been involved in international arbitration,’

says Jonathan Wood, a partner at the firm. ‘It’s the dispute

resolution forum of choice for our core clientele. We have one

of the largest insurance/reinsurance practices in London and

are always handling big ticket Bermuda form arbitrations.’

Clyde & Co is also a leading firm in political risk. ‘The

Export Credits Guarantee Department insures political risk

and expropriation’ explains Wood. ‘We’ve been

representing them for over 20 years.’ Ince & Co and Holman

Fenwick & Willan also have particular expertise in this field.

Guy Henderson and Richard Smith at Allen & Overy

are particularly recommended for complex insurance/

reinsurance work. At Taylor Wessing in 2006 James

Crabtree joined the group from Pinsent Masons, adding

insurance/reinsurance arbitration expertise as a new

dimension to the firm’s practice.

At Barlow Lyde & Gilbert, Colin Croly has particular

expertise in the insurance/reinsurance and international risk

sectors. Other partners specialising in this field include Stuart

Hall, John Hanson and Giles Kavanagh. At Hill Dickinson,

Rhys Clift takes on insurance work using ADR methods.

At CMS Cameron McKenna, John Hall and Andrew

Symons have been particularly active in 2006, dealing with

reinsurance arbitration matters, while Stephen Netherway

has been busy on insurance cases. At Morgan Lewis, Peter

Hardy has a strong reputation for his insurance and

reinsurance work, while at LeBoeuf, Lamb, Greene & Macrae,

Nik Rochez and Dean Hansell have recent experience dealing

with insurance/reinsurance arbitrations.

Media world‘Ours is first and foremost a sector-specific firm,’ says Bird &

Bird dispute resolution partner Jane Player. ‘We know about

our client’s businesses. We know their world and we can

compete with anyone else in our sector both in terms of

procedural and sectoral expertise.’ The firm specialises in

highly technical, industry-specific disputes, including the

firm’s core sectors of media, sport, IT, telecoms, life sciences,

IP and biotechnology. ‘We punch above our weight in our

sectors,’ says Player. ‘We’re not trying to take on every piece

of investment treaty work, just be the best at what we do.’

‘In IP disputes, our clients come to us for our IP

expertise,’ says Richard Marsh of Taylor Wessing, ‘and as

arbitrations within the IP world develop, they will still

come to us as market leaders.’

�& Co is involved in over 500 arbitration cases that involve its

core practice areas of shipping, insurance and reinsurance,

international trade and finance, energy and construction.

Holman Fenwick & Willan also has an impressive

shipbuilding litigation practice that lends itself to

international arbitration. Its shipping and insurance group

is currently dealing with a rig dispute valued at between

$50m and $60m. ‘You can lead as an arbitration specialist,’

says Guy Hardaker, a partner at the firm, ‘but you have to

have industry knowledge. Our firm grew from shipping.

Almost every charterparty contract has an arbitration

clause, so we are dealing with literally hundreds at a time.’

‘As a specialist firm, our sector knowledge is one of our

biggest selling points,’ says Peter Rogan, senior partner at

Ince & Co. ‘If you come to work at this firm, you live with the

industry. Our lawyers learn about shipping, trade, insurance

and reinsurance from the outset. It means they don’t apply

the law in a vacuum.’The firm’s shipping and international

trade expertise has made it one of the most frequent users

of the London Maritime Arbitrators’ Association.

Another specialist in this field is Norton Rose’s Chris

Hobbs. Recently returned from the firm’s office in Greece,

he now heads up the international arbitration group in

London. His expertise is impressive and includes

charterparty and bill of lading disputes, shipbuilding and

ship sale as well as purchase disputes. He has recently acted

on a series of arbitrations for the buyers of six bulk carrier

vessels constructed by a shipyard in Shanghai. It’s clear why

a specialist was needed – the dispute concerned coating

deficiencies and compliance with technical specifications.

At Clifford Chance, Alex Panayides was a partner in the

firm’s shipping group before transferring to the arbitration

group. Watson Farley Williams acts for many of the largest

ship owners/operators and banks in the world, including

Nordea, Mearsk and CMA-CGM.

At Stephenson Harwood, Duncan McDonald heads up

the firm’s shipping litigation group whilst at Barlow Lyde &

Gilbert, Richard Black has extensive maritime arbitration

expertise. At Reed Smith Richards Butler, Mark Connoley,

Stephen Kirkpatrick, Lindsay East and Andrew Taylor all

have impressive maritime arbitration experience.

MFB Solicitors is a ten-partner niche shipping and

insurance firm that specialises in dispute resolution.

’We’re not trying to take on

every piece of investment

treaty work, just be the best

at what we do.’

Jane Player, Bird & Bird

AR07 p10-17 Camilla 19/4/07 17:38 Page 14


Olswang also has experience in this sector. In

2006, Richard Bamforth continued to act for SIA

Kempmayer Media against Digital Latvian Radio &

Television Centre in an ICC arbitration concerning the

rollout of a digital terrestrial television network in the

Republic of Latvia. The firm provides international

arbitration services to the technology, media and tele-

coms sectors, whether in ICC, LCIA or ad hoc international

arbitrations.

At Herbert Smith, Paula Hodges has particular expertise

in telecoms disputes, whilst at Allen & Overy, Matt Gearing

specialises in telecoms and media cases.

Other firms that compete in the TMT sector in

international arbitration are Bristows, which has a

dedicated mediation group of four partners, DLA Piper,

a firm that has a leading reputation for handling IT and

telecoms disputes, and Clifford Chance. Last year at Clifford

Chance, Rob Lambert successfully obtained an award for

state-owned Digital Latvia Radio & Television Centre in ICC

proceedings in Stockholm.

Compact casesThe work involved in resolving investment treaty disputes

through arbitration requires specific knowledge, but it’s


Carlos Ignacio Suarez Anzorena

Suarez Anzorena is an Argentine-qualified lawyer who works for Clifford Chance in London. He previously worked for the Argentine

government defending ICSID claims.

Legal Business says: Suarez Anzorena has outstanding knowledge about arbitration and the Latin American market.

Franz Schwarz

Schwarz is an Austrian-qualified civil law practitioner at WilmerHale.

Legal Business says: He is analytically and academically superb. A partner for only a matter of months, Schwarz has already sat

as a sole arbitrator on a number of cases.

Matthew Weiniger

Weiniger has just secured an outstanding victory for Herbert Smith, successfully acting for Eurotunnel in its arbitration claim

against France and the UK.

Legal Business says: Weiniger is fantastic with clients.

Bruce Macaulay

Macaulay was previously Juliet Blanch’s protégé at Norton Rose but is now set to make a name for himself at Skadden, Arps,

Slate, Meagher & Flom. He has an industry focus on energy-related disputes.

Legal Business says: Macaulay is a definite arbitration star in the making.

Alejandro Escobar

Escobar was formerly senior counsel at International Centre for Settlement of Investment Disputes (ICSID) in Washington, DC,

where he handled more than a dozen of the first investor-state arbitration proceedings ever brought under BITs and multilateral

treaties for the protection of investment. Formerly at Herbert Smith, he is now practising at Latham & Watkins.

Legal Business says: Escobar is an academic superstar.

Sophie Lamb

Lamb began her legal career as a barrister at One Essex Court. She was then under Gary Born’s tutelage at WilmerHale for seven

years, before joining Bird & Bird as a partner in 2006.

Legal Business says: Lamb’s impressive pedigree will further propel Bird & Bird’s growing international arbitration practice.

Bright young things

�

AR07 p10-17 Camilla 19/4/07 17:38 Page 15

�



international principles applicable to such claims could

apply equally to telecoms or other forms of licences. ‘The

specialist knowledge in these cases relates to the law that

should be applied, rather than the industry sector that the

dispute evolved from. ‘It is principally because we’re

investment treaty specialists that firms like us, Freshfields

and Clifford Chance are currently picking up the best

energy-related treaty arbitration work,’ says Nairn.

not the industry sector that dominates. ‘Energy disputes

have been the big trend over the last three years, and that

broad industry category encompasses a range of disputes,’

says Skadden Arps’ Karyl Nairn. ‘In one case you can be

arguing about a joint venture, in another rights to the use

of a pipeline. Many of the treaty claims can be summarised

as being about the granting of rights by a government

that have been then taken away or diminished.’ The

Vienna

Wolf Theiss & Partners

Christoph Liebscher – general commercial international

arbitration including: construction; joint ventures;

intellectual property; distribution; and pharmaceuticals.

Hausmaninger Herbst

Christian Hausmaninger – capital markets and joint ventures.

Geneva

Schellenberg Wittmer

Gabrielle Kaufmann-Kohler – commercial, investment and

sports arbitrations.

Laurent Lévy – general commercial; competition; oil & gas;

finance; joint ventures; and consortia.

Lenz & Staehelin

Paolo Michele Patocchi – general commercial international

arbitration law; shareholders’ and/or joint venture agreements;

shipbuilding agreements and investment projects.

Lalive & Partners

Michael Schneider – general commercial arbitrations

including: construction engineering and public procurement;

international contracts; e-commerce; and telecoms.

Python Schifferli & Peter

Wolfgang Peter – mergers and acquisitions.

Zurich

Walder Wyss & Partners

Philipp Habegger – acted in over 50 international

arbitrations; deals with general commercial arbitrations.

Bär & Karrer

Michelle Sindler – an international arbitration specialist who

speaks English, French, Italian and Czech.

Brussels

Hanotiau & van den Berg

Albert Jan van den Berg – investment treaty arbitrations and

general international commercial arbitration.

Bernard Hanotiau – general international commercial

arbitrations including: TMT; construction; investment

treaties; oil & gas; pharmaceuticals; transport; banking; joint

venture; and multiparty disputes.

Stockholm

Mannheimer Swartling

Kaj Hobér – investment treaty arbitrations, with a focus on

China.

Vinge

Hans Bagner – general commercial and insurance arbitrations.

Paris

Freshfields Bruckhaus Deringer

Jan Paulsson – general commercial; investment treaties;

and sports arbitrations.

Shearman & Sterling

Emmanuel Gaillard – general commercial and investment

treaty arbitrations.

Milan

Bonelli Erede Pappalardo

Antonio Crivellaro – general international commercial

arbitration including: joint ventures; foreign investment;

and project finance.

European specialists

AR07 p10-17 Camilla 19/4/07 17:38 Page 16


The key to becoming an investment treaty specialist is

having a thorough understanding of public international

law. ‘BIT disputes are governed by public international law

in procedure and substance,’ says Robert Volterra, a

partner at Latham & Watkins. ‘It’s an entirely distinct area

of law.’ And one that shouldn’t be dabbled with unwisely.

‘The problem is,’ says one leading arbitrator, ‘that there are

people who think that because there is no governing body

for people who do public international law, anyone can

get away with it. I’ve seen one-hit wonders without the

necessary expertise trying to do BIT arbitrations and the

client always suffers.’

There are in fact relatively few law firms that have the

requisite experience to carry out the international

arbitration cases governed by public international law. ‘It

is a different way of litigating a case,’ remarks Peter Griffin,

a partner at Baker Botts. ‘There is actually a trend towards

a specialist ICSID bar. Very few firms worldwide have

actually done more than two to three ICSID cases; certainly

very few can claim they have had sufficient experience to

say they are expert.’

London does, however, boast a few such firms, which

have ample experience in this area. Allen & Overy is

representing the Republic ofSlovenia in a dispute under the

Energy CharterTreaty (ECT) with the national electricity

company of Croatia at the moment. In a second ECT case,

Stephen Jagusch and Judith Gill, from the same firm, are

representing the Republic of Azerbaijan in a highly politicised

dispute involving persons implicated in an alleged plot to

stage a coup d’etat.

At Clifford Chance, Audley Sheppard represented Oxus

Gold plc in 2006 in its ongoing arbitration against the

Kyrgyz Republic under the UK-Kyrgyz BIT.

Recently, Robert Volterra from Latham & Watkins acted

for the Republic of Ecuador in a bilateral investment dispute

at ICSID. The case involved an alleged expropriation of a US

investor’s electricity plants and their contracts for $1bn.

Debevoise & Plimpton won two of the four largest

arbitration awards for cases involving claims of breach of

BITs for its clients CME and Occidental Petroleum – $370m

and $75m respectively. The firm is currently handling BIT

arbitrations involving Ghana, Lithuania and the Congo.

Baker Botts continue to act for Hunt and ExxonMobil in

their dispute against the Republic of Yemen, and Helnan

Hotels in its ICSID claim against the Arab Republic of Egypt.

Other firms in London getting the lion’s share of this

kind of work include Freshfields, whose London office is

gaining Constantine Partasides, Nigel Rawding and Brian

King in spring 2007; SJ Berwin, which has particular expertise

in Russia-related disputes thanks to David Goldberg; and

WilmerHale, due to the stellar reputation of Gary Born.

Skadden Arps’ boasts the talents of Karyl Nairn, Paul Mitchard

and Bruce Macaulay, while McDermott’s investment treaty

arbitration capability is led by Juliet Blanch.

Very rarely do these firms instruct outside counsel.

More often than not they perform their own advocacy,

and apply their own experience, tactical judgement and

knowledge of arbitral practice and process.

Crystal ballsMore and more international arbitration groups are shifting

their focus to concentrate on core practice areas that are

either traditionally associated with their firms, or are a step

in a new direction. Trying to spot future trends is part of the

process. ‘Next year there will be more big corporates taking

on governments in ICSID claims,’ Lovells’ Phillip Capper

predicts. ‘Arbitration isn’t seen as just an exit strategy

anymore,’ Lovells’ Simon Nesbitt adds. ‘Investors are

becoming more aware of investment treaty claims and are

more willing to put pressure on unfriendly governments.’

Look to the future and tax disputes could become a

niche area for international arbitration specialists. ‘Think

about international tax treaty disputes,’ says Peter Griffin

of Baker Botts. ‘It’ll take a few years for the disputes to

filter through, but when they do, they will be enormous.

And it will be the big multinational companies that will

be fighting to get their overpayments back. In the future

there will be treaty provisions that will provide for

arbitration in case of tax disputes. It could be vast and a

new population of tax arbitration lawyers will emerge.’

‘What are and will be the main areas of industry focus?’

considers Audley Sheppard. ‘The major arbitration practices

will be focusing on energy and natural resources, telecoms,

and construction and engineering. Then there’s M&A and

post-completion disputes and more general intercorporate

cases such as manufacturing and joint venture disputes.

There will continue to be a concentration on BITs and

investment protection disputes. We will also be focusing on

Kyoto and climate disputes – carbon trading, for example.’

‘The era of the generalist has a fixed term,’ says Griffin.

‘Consider investment banking. They have product groups

and industry groups. In our industry, we are traditionally

viewed as product specialists in that the value we add

comes from choosing the right arbitrator, tailoring the

procedure and so on. It doesn’t much matter if the dispute

is about telephones, oil rigs or widgets, we work out the

matrix. But as our industry grows – and it is growing –

clients are expecting us to know about their business. We

have to become industry specialists.’ �


‘It’ll take a few years for the tax treaty

disputes to filter through, but when they

do, they will be enormous.’

Peter Griffin, Baker Botts

AR07 p10-17 Camilla 19/4/07 17:38 Page 17

� DISCLOSURE


The impartiality and independence of arbitrators is

a cornerstone of the arbitration process. Any

arbitrator who believes they are incapable of

acting in an impartial manner should refuse an

appointment, and additional safeguards exist – in

the form of disclosure and the ability to challenge

arbitrators – so as to ensure that impartiality and

independence are preserved.

However, the process of disclosure and the challenging of

arbitrators for conflicts of interest have been attracting

attention recently, due to a perceived rise in the number of

challenges being made. There is some concern that

challenges are becoming a tactical tool used to derail or

delay arbitration proceedings, or vacate an unfavourable

award. If recalcitrant challenges are perceived as an abuse of

process, many of the perceived advantages of arbitration

could be undermined. Equally, it is important that the

arbitration process continues to be seen to be fair and

impartial, and the ability to challenge arbitrators is a crucial

element of this.

This article considers (in light of three recent cases) two

particular situations where arbitrators have been challenged

recently for conflicts of interest. The first involves party-

based conflicts, where the impartiality of the arbitrator is

questioned due to their relationship with one of the parties

(or its representatives). The second involves issue-based

conflicts, where the ability of the arbitrator to take an

impartial view on a particular issue is questioned due to

current or previous involvement with that issue.

To disclose or notParty-based conflicts occur where the potential partiality

of an arbitrator relates to a link between them and one of

the parties (or counsel for one of the parties). Clearly,

Conflict rulesDifferentiating between genuine and questionable conflicts of interest is an

area of growing concern in international arbitration. Herbert Smith LLP

partners Laurence Shore and Justin D’Agostino analyse the issues

Laurence Shore (left) is a partner and head of international

arbitration and Justin D’Agostino is a partner at Herbert Smith LLP

AR07 p18-21 Herbert Smith 19/4/07 13:23 Page 18

�

Sponsored feature

DISCLOSURE�


arbitrators have a duty to disclose relationships with

parties, but the extent of that duty remains a contentious

issue. Does an arbitrator have to disclose every

relationship between them and those involved in the

dispute, or can an arbitrator decide that a relationship

does not warrant disclosure? If a relationship is not

disclosed, what are the consequences of non-disclosure if

a party later objects?

Recent examples

These issues arose in the case of Positive Software Solutions

Inc v New Century Mortgage Corp [2007], which was

decided by the US Court of Appeals for the Fifth Circuit. The

case involved an application to vacate an arbitral award

because of the failure of the arbitrator to disclose a previous

relationship with counsel for one of the parties. Positive

Software Solutions alleged that the award should be

vacated due to the appearance of bias, as the arbitrator

failed to disclose that, seven years earlier, he and his

former law firm had acted as co-counsel in a lengthy

litigation with the law firm (and one of the counsel)

representing one of the parties. Several law firms and

lawyers were involved in the previous litigation, and the

arbitrator had not worked with the particular counsel on

the case, although their names appeared together on some

pleadings. The Court held that the relationship was too

trivial to warrant vacating the award and that the fact of

non-disclosure was not, in itself, evidence of partiality.

Discussion of the case has revealed a concern that the

vacation of an award in cases of non-disclosure of an

insignificant relationship may lead to a situation where

losing parties conduct a rigorous post-award search for any

potential relationship that could be used to challenge it (this

point was also made by the Court). It may, therefore, create

an incentive not to investigate arbitrators before the hearing.

On the other hand, allowing arbitrators to decide when a

relationship is worth disclosing risks undermining

confidence in the disclosure regime and, consequently, in the

independence of the arbitration process itself.

The precedent on this issue in the US was set by the

Supreme Court ruling in Commonwealth Coatings Corp v

Continental Casualty Co [1968]. In that case, failure to

disclose a previous business relationship with one of the

parties led to the award being vacated. The relationship in

that case was more significant than that in Positive Software

Solutions, but the Court held that even the ‘impression of

possible bias’ must be avoided and that standards for

arbitrator disclosure should be, if anything, more rigorous

than those for judges. The Court in Positive Software

Solutions distinguished Commonwealth Coatings on the

facts, and also concluded that Black J’s opinion regarding

the ‘appearance of possible bias’ was a plurality decision

rather than a majority decision and, therefore, not binding

on lower courts.

A similar issue arose in Europe in the Eureko BV v Republic

of Poland arbitration. Poland challenged an arbitration

The general principle that arbitrators must be impartial and independent is well accepted, although the exact

formulation of this duty may vary among different institutional rules and national legislation. In the context of

challenging arbitrators, the test for bias or impartiality will also be jurisdiction-specific. Therefore, although the

overarching values remain the same, reference to the relevant provisions/tests will be required in each case.

It is worth briefly noting two recent regimes that have been instituted in respect of disclosure: the IBA Guidelines

and the new ICSID Rules of Procedure for Arbitration Proceedings.

IBA Guidelines

The Guidelines, while not binding, purport to provide international standards on disclosure and the challenging of

arbitrators that are useful across jurisdictions. They set out general principles and illustrate them with lists of

conflicts where an arbitrator should decline to act (the ‘red list’), potential conflicts that should be disclosed (the

‘orange list’), and circumstances where no conflict is likely to exist (the ‘green list’). The key to disclosure under the

Guidelines is a subjective test as to whether the parties might view a particular circumstance as creating a conflict.

ICSID Rules

It is interesting to note that the new ICSID Rules, which came into force in April 2006, set out a regime that requires

a high standard of disclosure. This standard includes disclosure of all previous relationships with the parties and

‘any other circumstance that might cause [the arbitrator’s] reliability for independent judgment to be questioned by

a party’ (Rule 6). The rigorous standard adopted in this rule is illustrative of the importance attached to full

disclosure in the arbitration process and the need for arbitrators to ensure that any potential conflict of interest is

disclosed, regardless of whether the arbitrator believes it may affect their impartiality.

Rules of disclosure



award on the grounds of a breach of impartiality due to the

relationship between the arbitrator and the law firm

representing Eureko, which was not initially disclosed by the

arbitrator. In particular, Poland claimed that the close

proximity of the offices of the law firm and the arbitrator, as

well as an article falsely claiming that they were acting as

co-counsel in an unrelated case against Poland, created an

appearance of partiality. However, the Belgian Court found

no evidence of partiality, noting that the mere fact that the

arbitrator’s office was in the same building as the law firm

was not sufficient grounds to order a recusal and that the

false claims made in the article had been rectified. The case

is currently on appeal.

ICSID Rules and IBA Guidelines

The debate around disclosure demonstrates the clash of

two competing policy objectives. There is clearly a need to

encourage disclosure and to ensure that arbitrators feel

compelled to disclose all relevant information to the

parties. However, there is also a need to discourage

challenges based on trivial connections being used as a

means of vacating unfavourable awards.

The position in the new ICSID Rules is that all prior

working relationships (with the parties) should be disclosed,

as well as any other factor that may affect impartiality. The

broadness of these provisions suggests that arbitrators

should err on the side of disclosure, even regarding small or

insignificant connections.

The IBA Guidelines, on the other hand, propose a regime

indicating that previous working relationships with counsel

would not generally require disclosure, while working

relationships with parties within the last three years may

require disclosure (although the test is subjective).

While there is a danger that, without reasonable limits,

spurious challenges could be made regarding insignificant

relationships, it is suggested that the balance should

generally favour disclosure, even regarding less significant

relationships. Moreover, when disclosure is made, an

arbitrator should be prepared to stand down if a party

raises reasonable objections on the basis of the

information disclosed. While the intention is not to force

disclosure of every trivial relationship, it is crucial that

arbitrators err on the side of disclosure on issues which

may affect the parties. It is suggested that, the more

thorough the initial disclosure, the less likely it is that a

The broadness of the ICSID provisions

suggests that arbitrators should err on

the side of disclosure, even regarding

small or insignificant connections.

�

� DISCLOSURE

party will be able to challenge an award after it has been

made. This is especially important as parties may try to

challenge an unfavourable award on a ground which, if

disclosed initially, would not have raised any objection

prior to the award being made.

Issue-based conflictsAnother situation where conflicts of interest have recently

attracted attention is where issue-based conflicts occur.

This type of conflict may arise where an arbitrator has

taken, or is taking, a particular view on an issue in another

capacity – such as when acting as counsel, or in an

academic context.

These perceived conflicts raise difficult issues, as

parties usually prefer to appoint an experienced

arbitration expert, and it may be difficult, if not impossible,

to find someone who has not previously argued a position

on a relevant issue. This is especially the case in

investment treaty arbitration, where arguments often

revolve around the interpretation of standard investment

treaty obligations. Commercial arbitration, on the other

hand, is more likely to be fact-specific and dependent on

specific contractual clauses.

It is often acknowledged that the key to an impartial

arbitrator in this context is someone with ‘an open but not

an empty mind’. Arbitrators will often have a history of

acting in arbitrations both as counsel and arbitrator, and

may have written articles on particular issues in an

academic capacity. This should not disqualify them from

acting as an arbitrator in a particular case, unless specific

circumstances suggest that there are additional reasons to

question their impartiality.

Recent cases

Such a reason may occur where the ‘conflict’ is seen as

concurrent. Issue conflicts have been highlighted recently

in situations where an arbitrator has been acting as

counsel in another simultaneous, but unconnected, case

on the same issue. In the Telekom Malaysia Berhad v

Government of the Republic of Ghana [2004] arbitration,

Ghana challenged the appointment of Professor

Emmanuel Gaillard in the Dutch courts. Ghana alleged that

Gaillard could not act impartially in the arbitration, as he

was acting as counsel in a concurrent case – seeking the

setting aside of an award on which Ghana sought to rely

in the present arbitration. The Dutch Court held that

Gaillard should withdraw as arbitrator unless he stood

down as counsel in the other case within ten days.

The Court found that, even if Gaillard could distance

himself from the arguments being made in the setting-

aside proceedings, there remained an appearance that he

might not be able to keep the two roles strictly separate.

This appearance was enough to justify a doubt as to

impartiality. As Gaillard stood down as counsel, no conflict



was then seen to exist and he remained as an arbitrator in

the Telekom Malaysia/Ghana arbitration.

Nonetheless, Ghana raised a subsequent challenge in

the Dutch courts, arguing that Gaillard should still be

removed as arbitrator due to his initial involvement in the

other case. This challenge was dismissed by the Court,

which held that:

It could easily happen in arbitrations that an arbitrator

has to decide on a question pertaining to which he has

previously, in another case, defended a point of view.

Save in exceptional circumstances, there is no reason to

assume however that such an arbitrator would decide

such a question less open-mindedly than if he had not

defended such a point of view before. (Para 11 of the

English translation.)

The key factor in the Court’s initial decision was,

therefore, that the proceedings involved were

simultaneous, and the generally accepted position is that

a previous view taken on an issue (regardless of the

capacity in which the arbitrator was acting) would not be

sufficient to mount a challenge against an arbitrator in

normal circumstances. It is also notable that the potential

conflict in this case concerned a very specific point – acting

simultaneously in unrelated cases that concerned the

same broad issue may not create the appearance of

partiality that was found here.

A similar issue reportedly arose in relation to the

Eureko case discussed above. It is understood that the

arbitrator in Eureko also acted as counsel in a separate,

ongoing arbitration against Argentina, in which he referred

to the Eureko award in support of his arguments. While

Argentina did not allege improper conduct, it raised an

objection to counsel relying on a case that he had just

decided as arbitrator.

Summary

Some commentators have suggested that a choice should

be made to practice as either counsel or arbitrator, but not

both. This view has been rejected by others on the

grounds that it would dilute the pool of talent if the most

experienced people could no longer act as counsel, and

would be impractical given the small number of specialists

in the area. Moreover, it would undermine one of the

advantages of arbitration, being the parties’ ability to

choose whomever they wish as the arbitrator. Proponents

of this latter view suggest that it is possible to distinguish a

professional stance taken on an issue as counsel from

personal convictions that might suggest a less open mind.

In all of the above cases, the arbitrators have

considered themselves capable of acting in an impartial

manner with respect to the case before them, and there

has been little assertion by parties that any overt bias

exists. However, courts have been cognisant of the

appearance of bias and the potential for ‘unconscious bias’

to occur. Given that many experienced arbitrators have

encountered most common issues before, parties must be

able to trust in the integrity and professionalism of

arbitrators to detach themselves from any personal view

and decide the dispute on its merits. If it were not so,

almost any arbitration award would be open to challenge

by the losing party.

As with party-based conflicts, it is essential that

arbitrators ensure that they disclose any potential issue-

based conflict as soon as they become aware of it, even if

they believe they can continue to act in an impartial

matter. It would be a shame, however, if arbitrators felt

disinclined to disclose what may seem minor or

insignificant issue conflicts for fear that parties may seize

on the opportunity to delay or derail the proceedings.

Therefore, the dismissal of the second Telekom

Malaysia/Ghana challenge is significant in showing the

limitation of this ground and, hopefully, discouraging

further challenges of this nature.

ConclusionWhile the encouragement of tactical challenges must be

avoided, it is important that arbitrators disclose any

potential conflicts of interest that may exist and be

prepared to stand down if a legitimate challenge is raised

by one of the parties. Full disclosure is crucial for

maintaining confidence in the arbitration process and

arbitrators should always favour disclosure if uncertain as

to whether an issue may be relevant to the parties.

Whether a potential conflict (disclosed or not)

constitutes sufficient grounds to remove an arbitrator will

always depend on the facts of the case and the governing

law. In issue-based conflicts there is clearly a trend towards

preventing situations of simultaneous conflicts, but this

does not extend to previous roles. Overall, the cases

discussed above generally indicate that courts will not

remove an arbitrator lightly and that challenges based on

tenuous grounds are unlikely to succeed. �

DISCLOSURE�

Commonwealth Coatings Corp v Continental Casualty Co

393 US 145 (1968)

Positive Software Solutions Inc v New Century Mortgage Corp

No 04-11432, 2007 WL 111343 (Fifth Circuit, 18 January 2007)

The Republic of Ghana v Telekom Malaysia Berhad

District Court of The Hague:

18 October 2004, Challenge No 13/2004, Petition No HA/RK 2004.667;

5 November 2004, Challenge No 17/2004, Petition No HA/RK 2004.788

The Republic of Poland v Eureko BV

Court of First Instance of Brussels (Fourth Chamber)

22 December 2006, RG 2006/1542/A


� FIONA TRUST JUDGMENT


Described by the President of the Chartered Institute

of Arbitrators as ‘fundamentally important’, FionaTrust & Holding Corporation & ors v Yuri Privalov &ors [2007] was raised for discussion by no fewer than

six separate arbitration practitioners, including

Steven Friel of Davies Arnold Cooper, at the recent

London Court of International Arbitration European

Users’ Council symposium in Madrid.

Is this case really a landmark for English arbitration? In

itself, probably not. However, coming as it did on the tenth

anniversary of the Arbitration Act 1996, a time of reflection

on the development of London as a centre for international

arbitration, the case provides an interesting focus on a

number of issues, including:

■ the increasing tendency for liberal construction of

arbitration clauses;

■ the judicial display of trust in arbitration as a ‘one-stop

shop’ for the resolution of disputes;

■ the coming-of-age of the doctrines of separability and

competence-competence; and

Why all the fuss?The recent Court of Appeal judgment in Fiona Trust & Holding Corporation

& ors has caused considerable excitement throughout the London and

international arbitration community. Rowan Planterose and Steven Friel of

Davies Arnold Cooper reveal why it has created such a stir

Rowan Planterose (left) is managing partner and Steven Friel is a

dispute resolution partner at Davies Arnold Cooper

AR07 p22-25 DAC 20/4/07 10:03 Page 22

Sponsored feature

FIONA TRUST JUDGMENT�


■ the ability of international arbitration to deal with

complicated allegations of fraud and bribery in

international disputes.

Fiona TrustFacts

A dispute arose out of a series of charterparties (the

charterparties) entered into between a Russian group of

shipowners (the owners) and a number of chartering

companies (the charterers). It was alleged by the owners

that the charterparties, and numerous other agreements

entered into by the parties, were procured by bribery. The

extent of the alleged bribery went far beyond the

charterparties, which formed only a small part of an

overall set of fraud allegations.

Court proceedings were commenced in England relating

to the fraud allegations on the whole. One of the claims

made in the English proceedings was that the charterparties

had been validly rescinded and that restitution of benefits

under the charterparties should be made.

The contracts contained a key ‘law and litigation’

clause, details of which can be seen in the box above. The

charterers commenced arbitration proceedings pursuant

to this clause. The owners therefore applied to the English

Commercial Court under s72 of the 1996 Act, seeking to

restrain the arbitration proceedings on the basis that the

charterparties, and the arbitration clauses contained

therein, had been validly rescinded. In turn, the charterers

made a cross-application under s9 of the 1996 Act for a

stay of the ongoing court proceedings for rescission.

First instance decision

At first instance, Morison J declined to stay the court claims

for rescission and restrained the arbitration proceedings

pending the trial of the court action. He held that the

question of whether the owners validly entered into the

charterparties could not be said to be a dispute that arose

out of the charterparties, and it certainly did not arise

‘under’ the charterparties. Further, he decided that the

arbitration clause was not severable from the matrix of

charterparties where rescission was an available remedy.

Accordingly, he ruled that the arbitrator did not have

jurisdiction to hear the dispute.

The charterers appealed. The Court of Appeal allowed

the appeal, based primarily on a wide construction of

the clause and a rigorous application of the doctrine

of severability.

The contracts contained a ‘law and litigation’ clause, which provided as follows:

41(a) This charter shall be construed and the relations between the parties determined in accordance with the laws of England.

(b) Any dispute arising under this charter shall be decided by the High Court in London to whose jurisdiction the parties hereby agree.

(c) Notwithstanding the foregoing, but without prejudice to any party’s right to arrest or maintain the arrest of any maritime

property, either party may, by giving written notice of election to the other party, elect to have any such dispute referred…

to arbitration in London…

(i) A party shall lose its right to make such an election only if:

(a) it receives from the other party a written notice of dispute which –

(1) states expressly that a dispute has arisen out of this charter;

(2) specifies the nature of the dispute; and

(3) refers expressly to this clause 41(c)

And

(b) it fails to give notice of election to have the dispute referred to arbitration not later than 30 days from the date of

receipt of such notice of dispute… [emphases added]

‘Law and litigation’ clause

�

AR07 p22-25 DAC 20/4/07 10:03 Page 23


Issues under considerationLiberal construction of the arbitration clause

The first question to be considered by the Court of Appeal

was whether the arbitration clause was wide enough to

cover allegations that bribery had induced the

charterparties. Counsel for the parties pursued arguments

based on the differences between arbitration clauses that

refer to disputes ‘arising under’ and disputes ‘arising out

of’ the relevant contract. After citing a large number of

authorities (from Heyman v Darwins Ltd [1942] to The

Delos [2001]) on the construction of arbitration clauses

and the subtle differences in language used therein,

Longmore LJ held that the arbitration clause was wide

enough to allow the arbitral tribunal jurisdiction to decide

the bribery allegations. He stated:

… the time has now come for a line of some sort to be

drawn and a fresh start made at any rate for cases in an

international commercial context… If businessmen go

to the trouble of agreeing that their disputes be heard…

by a tribunal of their choice they do not expect (at any

rate when they are making the contract in the first place)

that time and expense will be taken in lengthy argument

about… whether any particular cause of action comes

within the meaning of the particular phrase that they

have chosen in their arbitration clause. If any business

man did want to exclude disputes about the validity of a

contract, it would be comparatively simple to say so…

It seems to us that any jurisdiction or arbitration clause

should be liberally construed.

This statement has been welcomed by many. It is

widely considered that one of the main threats to the

flexibility of London arbitration and to the success of the

1996 Act is the increasingly litigious nature of the process

and the tendency by unwilling parties to arbitration to

engage in lengthy jurisdictional arguments based on

semantic readings of the arbitration clauses in question.

The Court of Appeal has, to large extent, now put a lid on

these arguments and sent the very clear message that if

you refer to arbitration, then arbitration you shall have.

One-stop arbitration

The Court of Appeal judgment can be viewed as

particularly supportive to arbitration if we consider two

In Fiona Trust, Longmore LJ held that the

arbitration clause was wide enough to

allow the arbitral tribunal jurisdiction to

decide the bribery allegations.

�

� FIONA TRUST JUDGMENT

competing considerations that the court had to take into

account:

■ On the one hand, there was the fact that, if the

arbitration was allowed to proceed, it would almost

certainly do so concurrently with the High Court

litigation, in which the fraud allegations were being

considered in a wider context.

■ On the other, there was what Longmore LJ described as

the presumption in favour of ‘one-stop arbitration’, by

which he meant that, rather than a court deciding on

whether a contract should be rectified, avoided or

rescinded, followed by an arbitration on the merits of

the dispute, it was to be presumed that the arbitrators

should decide on all the relevant issues.

That the presumption in favour of one-stop arbitration

was not rebutted by the resultant concurrency of

procedures (High Court litigation and arbitration) shows

how far the English courts have come from the days when

a presumption in favour of arbitration was readily

rebutted. In this context of supporting arbitration,

Longmore LJ’s judgment in Fiona Trust can be seen as

following a path taken by Lord Steyn in Lesotho Highlands

Development Authority v Impregilo SpA & ors [2006].

Separability

It has long been accepted in English law that an

arbitration clause is a separate agreement that survives

the destruction (or other termination) of the parent

contract. The principle is that the arbitration agreement

gives rise to a distinct legal obligation and is not

conditional on the rest of the contract. This principle is

given statutory form by s7 of the 1996 Act, which states:

Unless otherwise agreed by the parties, an arbitration

agreement which forms or was intended to form part

of another agreement (whether or not in writing) shall

not be regarded as invalid, non-existent or ineffective

because that other agreement is invalid, or did not

come into existence or has become ineffective, and it

shall for that purpose be treated as a distinct

agreement.

In Fiona Trust, the limits of the doctrine of separability

were tested. The evidence before the court was that the

owners would not have entered into the charterparties at

all if they had been aware that their employees had been

bribed. With no contract, the argument went, there could

have been no arbitration agreement.

Longmore LJ posed the question of ‘whether the

assertion of invalidity goes to the validity of the arbitration

clause, as opposed to the validity of the charterparties as a

AR07 p22-25 DAC 20/4/07 10:03 Page 24


whole of which the arbitration agreements are a part.’ In

answering this question, he stated:

It is not enough to say that the bribery impeaches the

whole contract unless there is some special reason for

saying that the bribery impeaches the arbitration

clause in particular. There is no such reason here.

The separability doctrine is, of course, not peculiar to

English law. Many jurisdictions have adopted Article 16 of the

UNCITRAL Model Law on International Commercial

Arbitration, which provides that ‘an arbitration clause which

forms part of a contract shall be treated as an agreement

independent of the other terms of the contract’. See, for

example, s1040(1) of the German Code of Civil Procedure and

s13B of the Hong Kong Arbitration Ordinance.

Despite its almost universal acceptance, the doctrine of

separability has been under attack. Many arbitrators will

be comforted, however, by the knowledge that the English

Court of Appeal is not the only important domestic court to

vigorously defend it. In the 2006 case of Buckeye Check

Cashing Inc v John Cardegna et al, the US Supreme Court,

by a majority of 7-1, reaffirmed that the doctrine applies in

the US. In overturning a decision of the Florida Supreme

Court, which had held that Florida state law did not allow

parts of an illegal and void contract to be severable, the US

Supreme Court established that the landmark 1967

decision in Prima Paint Corp v Flood & Conklin Mfg Co

continued to hold good.

Competence-competence principle

Although not referred to in terms by the Court of Appeal,

the Fiona Trust case provides further support in England

for the principle of competence-competence and takes us

further away from the pre-1996 days, when it was

generally thought that arbitrators could do no more than

express a view as to whether they had jurisdiction – the

ultimate decision always being reserved for the courts.

The question of whether England should more fully

embrace the principle of competence-competence was

raised recently by a body set up to review the 1996 Act on

its tenth anniversary. As it stands, a tribunal’s decision on

jurisdiction is open to challenge under s67. Further, when

considering the challenge, an English court is entitled to

consider the question of jurisdiction de novo and is in no

way bound by the tribunal’s findings of fact or law.

Although the review committee concluded that it was not

yet time to amend this position in English law, the

committee did state that further research was necessary

on the question whether the current English position has a

detrimental effect on London arbitration – are

international parties wary of arbitrating in London due to

the risk of English courts rehearing and re-deciding

jurisdictional issues? This is a research task that Davies

Arnold Cooper has decided to undertake and we hope to

publish our findings by the end of this year.

Complex international frauds

In the context of the Fiona Trust case, it has been asked

whether London arbitration is best equipped to deal with

multi-jurisdictional fraud allegations. Can an arbitral tribunal

move quickly enough, and does it have the requisite powers

of subpoena, investigation and preservation of assets to

ensure that justice is done in these cases? Many would say

that, together with the assistance and supervisory

jurisdiction of the English High Court, there is no reason why

London arbitration cannot handle these cases effectively.

However, would an alleged victim of a complex international

fraud, who is forced to arbitration despite the allegations of

fraud, necessarily agree?

ConclusionFiona Trust provides Court of Appeal authority that

arbitration clauses in international commercial contracts

should be construed in a liberal and expansive fashion.

The Court has drawn a line under previous case law, which

had laboured on the precise forms of wording of dispute

resolution clauses, and has set a precedent that the

English courts should no longer scrutinise the minutiae of

the wording. In doing so, the Court has further

strengthened England’s status as an arbitration-friendly

jurisdiction, where commercial parties will benefit from

greater certainty that arbitration clauses will be upheld.

In addition, this case has upheld the all-embracing

doctrine of severability and confirmed that it applies to

contracts where it has been alleged that the contract in

question has been procured by bribery. The Court of

Appeal has reiterated that, under s7 of the 1996 Act, an

arbitration clause that forms part of a contract will be

treated as an agreement independent of the other terms

of the contract and that it is possible to arbitrate disputes

as to the illegality of a contract, including circumstances

where there has been alleged bribery. �

FIONA TRUST JUDGMENT�

Buckeye Check Cashing Inc v John Cardegna et al

126 S Ct 1204 (No. 04-1264, February 21 2006)


[2007] EWCA Civ 20

Heyman v Darwins Ltd

[1942] AC 356

Lesotho Highlands Development Authority v Impregilo SpA & ors

[2006] 1 AC 221

Prima Paint Corp v Flood & Conklin Mfg Co

[1967] 388 US 395

The Delos

[2001] 1 Lloyds Rep 703

AR07 p22-25 DAC 20/4/07 10:03 Page 25

� DAMAGES


It’s 10am on Monday morning and expert reports

were due for exchange the previous Friday. You’ve

just seen the latest draft from your damages expert

– who has been working all weekend – and you

still have some concerns. You ignore your ringing

phone in case it’s the other side calling, again, to

demand an explanation. As you take a deep breath,

you ask yourself what went wrong.

Based on our experience, we will describe some of the

things that could have gone wrong, and some of the things

you can do when engaging damages experts to help things

go right. We discuss the potential roles for an expert in

international arbitration, before taking you through the

steps of a damages expert’s involvement in a complex

international arbitration, from the initial decision to engage

an expert through the analysis and quantification of loss, to

the production of a written report and the delivery of oral

testimony.

The role of an expertThe usual role for a damages expert is as an independent

expert witness, presenting expert reports and oral

testimony to assist a tribunal. The duties of an expert

witness may be less formally defined in international

arbitration than in the national court, but typically such an

expert will perform their work on the understanding that

their opinions are objective and independent – that

although the client pays the piper, the tribunal calls the

tune. At LECG, we fulfil the duties of an expert by analogy

Expert analysisThe use of experts in assessing complex damages can be an important aspect of

international arbitration. LECG’s James Nicholson and Mark Bezant provide an

insider’s perspective

James Nicholson (left) is a principal at LECG Paris and Mark Bezant is

a managing director at LECG London. They are part of LECG’s team

specialising in complex damages matters in high-value international

arbitration cases

AR07 p26-29 LECG 19/4/07 18:44 Page 26

Sponsored feature

DAMAGES �


to the role in the court systems of England and Wales

and/or the United States, but such a presumption

should be explicitly understood between the legal team

and the expert.

Selecting an expertExperts come from a variety of disciplines and

backgrounds, suiting different cases. A utility

expropriation case might lend itself to an experienced

economist, while an auditor might be unfamiliar with

modelling market and price evolution; a commercial

dispute over control of a joint venture would require

finance and valuation skills that may not be the

economist’s forte; an accountant might be the right

person to perform a complex review of costs incurred in

making an investment. Anticipating the issues of the case

and matching the right expert or team of experts is key.

We often receive enquiries that are industry-specific: ‘We

need an accountant with significant experience in

Norwegian retailing/Asian direct marketing/the

construction of hydro-electric dams.’ Our response is

generally the same. Such combinations are hard to find in

the same individual, and it is typically not worth

compromising on the essential skills in damages assessment

and experience of the arbitration process and expert

testimony to find an expert with discrete industry

experience.

Communicating technical concepts clearly and

persuasively is also a core requirement for experts. An

expert with the right damages assessment skills (economics,

accounting, valuation, regulation etc) and experience in

expert-witness work will find out what they need to about

the industry, perhaps with additional help from client

personnel or a supporting industry expert. An industry

expert lacking the right damages skills or experience may

misunderstand their role and fail to deliver credible, robust

expert testimony, either written or oral. In one recent case,

an industry expert with little damages experience –

appointed by the other party, we hasten to add – withdrew

his evidence and advised the tribunal to accept the evidence

the LECG expert was putting forward. The outcome is

typically not so dramatic, but the fact remains that it is

critical to use an expert with extensive experience in

damages analysis.

A related point is that, from a damages expert’s point of

view, the forum or arbitral rules do not generally affect the

basis of our opinion or approach. Whether a case is heard

in front of, say, the ICC or LCIA makes little difference to our

analysis. An ICSID matter is somewhat different, as bilateral

investment treaty cases typically raise slightly different

issues, but there are no significant procedural differences

from an expert’s point of view.

An expert is typically supported by a team drawn from

their firm, with varying degrees of experience. The legal

team and the client need to be comfortable that the team

put forward by the expert can deliver, and that the expert

will give compelling oral testimony. The expert must be

prepared to be involved at each stage in the work. The

depth of understanding required of a case to give effective

oral testimony can only be generated through such

involvement, and to do otherwise would risk the expert

being asked to give testimony on points in the report with

which they do not agree.

Difficulties can arise when clients are not sufficiently

involved in expert selection, or do not fully understand the

role of the expert, particularly if the expert has clear views

over what they are prepared to say, which may not accord

with the client’s case.

When to engage an expertThere are advantages to engaging an expert as early as

possible. They can help advise on the principal issues

affecting damages, including providing an initial damages

assessment that may affect the legal strategy. An expert’s

experience of similar matters means they can often help

identify critical information, documents and witnesses

relevant to assessing damages, and bring key issues to the

surface at an early stage. An expert can also advise on

potential outcomes from arbitration in considering

settlement proposals.

Independent experts can give guidance on disclosure

issues, including advising on which documents to request

It is typically not worth compromising on

the essential skills in damages assessment

and expert testimony to find an expert

with discrete industry experience.

�

AR07 p26-29 LECG 19/4/07 18:45 Page 27


from the other party, and pointing out disclosure-related

issues that the other party may raise. In a recent post-

acquisition dispute, based on our input, counsel for the

other party was forced to admit to the tribunal that key

board documents relating to the proposed price of the

acquisition had not been disclosed. His explanation that

there were several versions, and that his client was not

sure which one to disclose, left the tribunal in no doubt as

to the true significance of this omission. An experienced

expert, engaged sufficiently early, can alert the client to

such lines of enquiry and the potential damaging effect.

Managing the process Importantly, experts need time to do their work. Being an

expert is hard – there are extensive materials to master,

damages frameworks and scenarios to develop, logic-flows

to think through, alternative views to anticipate, existing

analysis to interpret and new analysis to plan and execute.

One’s reputation is permanently on the line when signing a

report or giving oral evidence. Doing all this well takes time.

Time can also promote efficiency. It is much more efficient to

do the analysis once the disclosure and witness statements

are largely complete, and to write the report once the

analysis is largely complete, rather than doing these in

parallel. Early involvement should not necessarily mean the

expert or their team is working full-time from that point, but

will avoid the pitfalls of time pressure.

A vital first step is to ensure that the relevant issues are

correctly framed. A damages expert will typically bring a

different perspective to the quantum issues of a case than

those anticipated by the legal team – and often needs

clarity on the precise basis of damages that they are being

asked to assess, which is typically achieved through

discussion with the legal team. Generating that clarity at

an early stage is very important. Needless to say, regular

update meetings and teleconferences are vital.

It is also essential, in our experience, to discuss the nature

of the required output early, including the outline of the final

report. This is a key means of forcing issues into the open

that might otherwise remain hidden, and of promoting

efficiency in developing hypotheses and the report itself.

A barrier to completing an expert report often arises

from delays over disclosure. When information is

forthcoming, several iterations are sometimes still required

before the information is clear and complete. In one

It is essential to discuss the nature of the

required output early. This is a key means

of forcing issues into the open that might

otherwise remain hidden.

�

� DAMAGES

arbitration, the client CEO and CFO based themselves at our

offices in the week before our deadline, furiously discussing

issues amongst themselves before suggesting yet another

potential set of disclosure. When that disclosure came, it was

late and contradictory, and was hard for us to use. Delayed

disclosure of important documents can create as many

difficulties for an expert as being brought late into a project.

It is also important to manage any tensions between the

client and the expert. This is helped by the client having a

clear understanding of the role of the independent expert at

the start of the project. Tensions can also arise within the

team. One relatively inexperienced manager returned from a

meeting with counsel that the expert was unable to attend

and showed the expert a redrafted report – to be met with

howls of laughter. ‘As soon as the other side see this,’ the

expert explained, ‘they’ll know it was written by counsel. The

tribunal will pick up on that too.’The offending drafting was

removed, but the helpful review points were incorporated.

Particularly on long and complex projects, it may help

for the expert to produce interim ‘issue papers’ on topics

relevant to the case. In one arbitration, producing such a

paper revealed a number of issues on which the client and

the legal team had differing understandings, and aided

resolution of those issues. Significant elements of such

documents can readily be incorporated into formal

reports that are produced for tribunals.

We have extensive experience working on investment

treaty arbitrations that often revolve around disputed

investments in utilities or infrastructure projects, and we are

familiar with such industries. Where this is not the case,

however, we need assistance to understand an industry or

project. In such a situation, where possible and appropriate,

a site visit by the expert is valuable. Such visits typically

clarify our thinking and deepen our understanding of the

issues involved in a matter. We also find, in giving oral

testimony, that being able to state that we are familiar with

the relevant industries and have visited the relevant sites

can in some cases add authority to our testimony.

OutputReport generation is very time-consuming. Even when the

issues are framed and detailed analysis has been

performed, it takes some time to draft a clear and careful

report. The difficulty of report generation is one major

reason why costs can climb above expectations. Any

uncertainty, unexpected disclosure, or significant late

changes to instructions adds rapidly to the cost and delay,

so it is essential to work hard to minimise such issues. If

you have already chosen the right expert and kept close to

their work and the report outline, this will help

considerably in minimising surprises in the nature as well

as the cost of the expert’s opinion.

The report is one of the expert’s key outputs. Experts

should aim for high-quality, zero-defect reports. This

AR07 p26-29 LECG 19/4/07 18:45 Page 28


means, ideally, that there is a final draft comfortably

before the deadline, and a preliminary draft well before

that – otherwise there is insufficient time for checking,

reconsidering and clarifying the opinion rendered. The

legal team needs to encourage such timeframes.

Moreover, experts benefit considerably from the external

review of the legal team and client. However experienced

experts are in preparing such reports, the legal team

and client can give a sense of how effective a report is to

a lay reader.

Sequential exchange of reports, in our experience,

supports more efficient working. We know what we are

responding to, and we know that the other expert will be

scrutinising and responding to our opinions. Simultaneous

exchange runs the risk that the experts will have addressed

different questions, and it can take further reports before

the experts’ views on all of the issues are fully articulated.

Expert meetings are a feature of many arbitral

processes. These can help to narrow the issues between

experts, with the experts meeting without lawyers present

and on a without-prejudice basis in an attempt to

understand the causes of any differences between them

and to identify matters on which they agree and disagree.

Such meetings are useful for focusing the experts on the

points of agreement between them, points that might

otherwise be under-emphasised. Moreover, the setting out

of the matters not agreed between the experts can help

identify where differences of opinion arise as a result of the

experts’ instructions or understanding of the facts. They can

also help expose poorly supported conclusions on the part

of one expert or another – an expert who has done their job

properly will be comfortable with this, whereas one who

has not thought their views through will be less so.

Another benefit of the flexibility of international

arbitration is that it often allows more direct questioning

of experts during the hearing. Having given evidence

individually, one LECG expert recently participated in

witness conferencing before a tribunal under UNCITRAL

Rules. The tribunal – which was up-to-speed on the

relevant issues – was hearing conflicting evidence from

the two parties and was finding it difficult to get to the

root of these differences. By interrogating both experts

simultaneously, the tribunal was able to pursue the

individual points underlying each expert’s views, and

reach a better-informed judgement than would otherwise

have been possible.

A different LECG expert, under recent direct

questioning from the tribunal, knew that he had got his

point across when the lead arbitrator asked: ‘Are you

saying, in essence, that…?’ ‘That’s exactly what I’m

saying,’ the expert was able to reply, knowing also that the

transcript would admit no doubt of his opinions.

Experts generally welcome such forms of examination,

as they allow tribunals to get more quickly and directly to

the relevant issues. In general, the more robust an

expert’s views, and the better-prepared the expert, the

easier it will be to put their points of view across in such

a situation.

An occasional frustration for us as experts is the time

allotted to expert evidence. Despite large amounts of

money spent on expert reports, as well as legal fees, and

extensive differences of opinion on matters of quantum,

hearings sometimes allocate very short periods of time for

examination of experts. This gives very little time for key

issues to emerge. We recognise that there are many

important issues to resolve in any hearing, and that we

deal with only one dimension of a dispute, but we would

recommend that due consideration is given to the length

of time required for an expert’s views to be fully explored.

Back to Monday…So, it’s Monday evening. You read your expert’s report with

satisfaction a week ago and discussed a few late-emerging

minor points, giving you time to amend your accompanying

submissions. Thanks, in part, to an article you read a few

months ago, all went smoothly – on your side – but you

exchanged late on Monday morning rather than last Friday,

due to the other side’s inexplicable delays. You reflect on the

obvious poor quality of the other side’s expert’s report and

the lack of integration between the expert’s views and

opposing counsel’s submissions. If only they had a better

idea of how to work with their expert, they could have done

a better job for their client. �

DAMAGES �

In some cases, there is a role for an expert adviser or shadow expert

as well as an expert witness, as sometimes seen in large litigations.

Such an adviser might provide input to the case on matters that are

important, but do not require expert testimony. On operational details

of the relevant industry, for example. An adviser may be able to act

as a sounding board for counsel or as devil’s advocate to test the

expert’s views.

The boundaries of such a role, and its distinction from the role of

the testifying expert, are subtle, and these subtleties are increased by

the more fluid nature of the function of the expert in arbitration as

opposed to litigation.

Where a single expert is to be retained by a party, an experienced

expert will be sure to be clear about the capacity in which they are

providing advice or opinion, and will be sensitive to the implications

of an actual or possible migration of their role over the course of an

engagement. These issues are particularly relevant in cases where

quantum is heavily disputed. In such situations, the expert is often

playing an important role in the overall case, and advising on key

issues affecting it, and must do this with care if they are also to fulfil

their role as an independent expert.

An alternative role for an expert

AR07 p26-29 LECG 19/4/07 18:45 Page 29

� LITIGATION


In today’s global economy, companies have been

increasingly choosing arbitration as the preferred

method of dispute resolution in commercial

agreements. International trading partners may

find an arbitration clause more palatable than a

High Court jurisdiction clause. Often, the parties

will prefer to incorporate the rules of

internationally recognised and accepted arbitration

bodies, even if they will accept an English law

clause – indeed, one issue is regularly traded off

against the other at the drafting stage.

London is a leading centre of excellence for

international arbitration and English law is regularly

chosen as the applicable law in international contracts.

Both of these factors contribute to the invisible earnings of

London and, indeed, the UK. They will, however, come

under pressure if parties see that a future dispute stands a

realistic chance of ending up in court. Although the parties

may have freely chosen arbitration as their dispute

resolution mechanism, recent case law continues to

demonstrate that they may still find themselves litigating

issues in court. This may be to the considerable surprise of

one or more of the parties and could give rise to a lack of

confidence in the credibility of arbitration and its

perceived advantages, leading them to consider choosing

another applicable law/jurisdiction.

Caught in courtArbitration disputes are increasingly ending up in court, raising questions as to

whether this pays proper regard to the wishes of the parties. Wragge & Co’s

Andrew Manning Cox considers the message the courts ought to give when

invited to adjudicate arbitration issues

Andrew Manning Cox is a partner at Wragge & Co,

where he is head of international arbitration

AR07 p30-33 Wragge & Co 19/4/07 17:59 Page 30

�

Sponsored feature

LITIGATION �


So why choose arbitration?Confidentiality

Arbitration decisions are not reported – pleadings, directions

and awards are confidential. Hearings take place privately. In

contrast, hearings in court are almost always in public.

Recent (and controversial) changes to the Civil Procedure

Rules 1998 in England mean that all court pleadings are

publicly available as soon as they are served, unless the court

has ordered otherwise. This is proving to be a fertile source

of information for journalists. It is increasingly being used as

a tactic by litigants, actual or potential, and is having the

effect of discouraging some litigation. This change alone

gives a boost to arbitration and is certainly now a factor in

favour of agreeing to arbitrate rather than litigate.

Greater control

Parties to arbitration have more control over the dispute

resolution process than parties in court proceedings,

especially since the introduction of the CPR. These Rules

require active case management by the court and the wishes

of the parties are no longer necessarily paramount.

Relative and predictable speed

This is a hot topic for debate. The relative speed of resolution

by means of arbitration and certainty of timetable as

compared to court litigation will vary with the circumstances.

Convenience of seat and hearing location

The parties choose the law to apply to the dispute and

where in the world hearings are to take place.

Particular expertise

With the specific commercial context in mind, the parties

may wish to stipulate the qualifications and expertise of

the arbitrator/s to ensure that they are confident that the

eventual decision-maker will be appropriately skilled. In

the High Court a judge will be allotted to hear and

manage the case. The assignment of a judge to a case is

normally made as an administrative exercise, based on

a judge’s availability, with particular expertise a

secondary consideration.

More than one decision-maker

Often, a party will feel that a fairer decision will be reached

if made by an arbitral tribunal of three rather than by one

person sitting alone. Parties can stipulate in their contract

that decisions must be reached by any number of decision-

makers, whereas in the High Court first instance decisions

are reached by a judge sitting alone.

Finality

There are only limited rights of appeal under the

Arbitration Act 1996. This provides another of the benefits

of arbitration: better costs predictability. The right of

appeal is more extensive in court proceedings and

therefore it is more difficult to assess the likely costs to be

incurred to get to a final decision.

No precedent established

Because arbitration awards are not reported, arbitrators

are not bound to reach a decision based on the precedent

made in an earlier decision. By contrast, judges are often

restricted when reaching their decisions, as they must

follow (or, of course, distinguish) precedent.

Interference or justified intervention? Despite the fact that parties to a contract have made the

choice to arbitrate rather than litigate, arbitrations have a

tendency to sneak into the courtroom. This is an increasing

trend and brings with it the danger of creating a parallel

universe of satellite litigation. Typically, a party will go to

court either to raise a particular discrete issue in the

arbitration or to complain that the ultimate award is unfair.

There may be times where the intervention of the court is

necessary during an arbitration to ensure it is properly

conducted. For example, it may be necessary to ask the court

to assist in taking evidence, to make an order for the

preservation of property, or to prevent the disappearance of

assets. But is it right that, as Donaldson LJ suggested in

Babanaft International Co SA v Avant Petroleum Inc [1982],

the parties or arbitrator should be able to ‘nip down the road

to pick the brains of one of Her Majesty’s judges and, thus

enlightened, resume the arbitration’?

If court intervention is not restricted to very limited

circumstances, it encourages the litigation of arbitration

and brings with it the danger of a dilution of the benefits

of the arbitral process.

Although one of the general principles of the 1996 Act is to

restrict intervention by the court, it does provide for judicial

intervention in certain circumstances. For example, the losing

party may challenge an award on the basis that the tribunal

exceeded its jurisdiction, there was a substantial miscarriage

of justice or on some other legally recognised ground. The

position under the Act is certainly not unique. The UNCITRAL

Model Law on International Commercial Arbitration adopts a

similar approach. Although Article 5 seeks to exclude the

involvement of the courts as far as possible, the Model Law

does not exclude their participation in ‘certain functions of

arbitration assistance and supervision’.

In the majority of cases, the litigation of arbitration

starts after an award has been made and involves an

If court intervention is not restricted to

very limited circumstances, it encourages

the litigation of arbitration.



attempt to overturn aspects of the award. If the last 15

months of reported cases are anything to go by, this is a

growing phenomenon (see box opposite).

It’s not fairRecent case law shows that attempts to persuade the

English courts to reverse a decision of an arbitral tribunal are

largely failing. However, that has not stopped the courts

getting involved and it demonstrates a growing trend of

parties to arbitration being prepared to litigate if they

perceive that there may be an advantage in doing so. In the

immediate aftermath of the 1996 Act, there were few

challenges which reached the courts. That has now changed.

This trend means that the assumptions the parties had

(and which no doubt underpinned their original decision to

select arbitration as the agreed method of dispute

resolution) are being undermined. This results in the

perceived advantages of arbitration being substantially

reduced, if not in some cases removed entirely, and leads to

extra cost, time and uncertainty of outcome. It also means

that the fact (if not the detail) of a dispute comes into the

public domain, rather than remaining confidential. The

ability of one party to make use of that fact tactically, and the

corresponding concern of another party to preserve

confidentiality, may lead to inappropriate attempts to involve

the courts in private arbitrations. These are precisely the

Recent cases show that attempts to

persuade the English courts to reverse

arbitral tribunal decisions are largely failing.

�

� LITIGATION

problems that arbitration, as a method of dispute resolution,

should be addressing and that form the basis of many

decisions to opt for an arbitration, as opposed to a High

Court jurisdiction clause.

Donaldson LJ’s dictum about ‘nipping down the road’

was, no doubt, never intended to encompass unwarranted

attempts by unsuccessful parties to avoid being bound by

an arbitral award. If contracting parties do not have

confidence that stipulating arbitration as the dispute

resolution forum provides any certainty of benefit, they

simply will not use arbitration. If they believe there is a real

possibility that any issue arising in the arbitration or the

decision itself will end up in the English courts, even if they

agree to the principle of arbitration, they may refuse to

agree to it being subject to English law.

In this context it is pleasing to see the recent and robust

decision of the Court of Appeal in Fiona Trust & Holding

Corporation v Yuri Privalov [2007], holding that any

jurisdiction or arbitration clause in an international

commercial contract should be liberally construed. If the

original intention was to refer disputes to arbitration then

neither party should be allowed to avoid that

consequence through legal niceties. In giving judgment,

Longmore LJ said:

… if businessmen go to the trouble of agreeing that their

disputes be heard… by a tribunal of their choice they do

not expect… that time and expense will be taken in

lengthy argument about the nature of particular causes

of action and whether any particular cause of action

comes within the meaning of the particular phrase that

they have chosen in their arbitration clause.

This principle – on the facts of this case it was relevant to

the proper interpretation of an arbitration clause – could and

should also be applied to issues arising once the arbitration

has commenced or when the decision is reached.

Balancing actThe litigation of arbitration is unlikely ever to disappear

entirely, nor should it. Arbitration cannot exist in aspic. As the

1996 Act recognised, there will always be a need for the

potential of court support and intervention when the agreed

machinery has broken down. That machinery will have been

agreed between the parties at a time when they were co-

operating to achieve a commercial goal and a dispute was a

far and distant prospect (if contemplated at all).

However, there must be a balance. While there is a place

for the courts to become involved, the circumstances in

which they do so should be limited – the scope for such

involvement allowed by the 1996 Act should be construed

narrowly. Otherwise, the perceived advantages of

arbitration as a method of resolving disputes, English law

and jurisdiction, and indeed the reputation of London and

ASM Shipping Ltd of India v TTMI Ltd of England

[2006] EWCA Civ 1341

Babanaft International Co SA v Avant Petroleum Inc

[1982] 3 All ER 344

CGU International Insurance plc & ors v AstraZeneca Insurance Co Ltd

[2006] EWCA Civ 1340

Chaim Kohn v Sheva Wagschal & ors

[2006] EWHC 3356 (Comm)

Elektrim SA v Vivendi Universal SA & ors

[2007] EWHC 571 (Comm)


[2007] EWCA Civ 20

Lesotho Highlands Development Authority v Impregilo SpA & ors

[2005] UKHL 43

Sinclair v Woods of Winchester Ltd & anor

[2006] EWHC 3003 (TCC)

Sumukan Ltd v The Commonwealth Secretariat

[2007] EWCA Civ 243



the UK as a centre of excellence for international arbitration,

will be damaged.

It is to be hoped that the recent guidance set out in Fiona

Trust will be followed by further robust court decisions

extending to challenges during the arbitration process.

Additionally, it is hoped that attempts to undermine the

agreed dispute resolution forum simply in an attempt to

avoid liability under an award will be strongly discouraged

and we will in future see far fewer reported decisions

arising from the litigation of international arbitration. �

LITIGATION �

Sumukan Ltd v The Commonwealth Secretariat [2007]

The claimant sought leave to appeal the decision of the tribunal

on a point of law. The Court held that, on the wording of the

arbitration clause, the parties had agreed for the purposes of

s69 of the 1996 Act to exclude the jurisdiction of the Court. The

claimant argued that such an exclusion infringed its rights

under Article 6 of the European Convention on Human Rights

1950 (ECHR): the right to a fair hearing before an impartial

tribunal. The Court of Appeal held that the 1996 Act permitted

the incorporation by reference of an agreement excluding the

right of appeal and that such incorporation was not contrary to

the ECHR. Earlier this year, the Court also refused the claimant’s

subsequent challenge to the award on the grounds that the

arbitral tribunal lacked substantive jurisdiction and there had

been serious irregularity in the form of bias.

Elektrim SA v Vivendi Universal SA & ors [2007]

The applicant issued court proceedings to set aside a partial

arbitration award, alleging that the actions of the respondent

amounted to fraud. Under the 1996 Act an award is

unenforceable if obtained by fraud. The Court held there was no

link between the alleged fraudulent actions of the respondent and

the award. It could not be said that the award was obtained by

fraud and so the Court refused to set the award aside.

Chaim Kohn v Sheva Wagschal & ors [2006]

The Court refused to set aside an order enforcing the award of

an arbitrator, finding that the objections to the enforcement

were specious. The applicants alleged that to enforce the award

would be to enforce an arrangement tainted with illegality, that

an agreement that the award would not be enforced had been

made which superseded the award, and also raised

jurisdictional objections. The Court found no evidence of

illegality and no binding agreement. The applicants’

jurisdictional arguments were also rejected. The Court found

there was no basis for objecting to the award. However, in

dealing with the applications the Court had to look at the detail

of the dispute and it was recorded in the judgment.

Sinclair v Woods of Winchester Ltd & anor [2006]

The applicants tried on two separate occasions to challenge an

arbitration. First, they applied to the Court to remove the

arbitrator and to set aside his first award for serious irregularity

under s68 of the 1996 Act. The attempt failed. Over a year later

the applicant sought permission to appeal the arbitrator’s third

award. That too failed but only after the judge considered some

underlying facts – thereby removing the confidentiality of the

dispute, at least in relation to these issues.

CGU International Insurance plc & ors v AstraZeneca Insurance Co Ltd [2006]

A partial arbitration award on a preliminary issue ended up in

the Court of Appeal. On 1 December 2005, the judge refused an

application under s69(8) of the 1996 Act for permission to

appeal the award. The applicant, AstraZeneca, alleged that

refusal was unfair. The Court of Appeal delivered its judgment

in October 2006, 18 months after the original award,

confirming there was no unfairness in the judge’s decision.

ASM Shipping Ltd of India v TTMI Ltd of England [2006]

Another decision from the Court of Appeal and, again, another

refusal to grant relief to a party dissatisfied with an arbitration

award. As in Sumukan, the dissatisfied party attempted to rely

on the ECHR to avoid being bound by the award. The judge at

first instance dismissed a challenge to an award on the ground

of serious irregularity for apparent bias. On appeal the

applicant argued that the judge’s decision contravened Article 6

of the ECHR. The Court of Appeal refused the application for

leave to appeal on the grounds that they lacked jurisdiction

because there was no realistic argument that the judge’s

decision contravened the ECHR.

Lesotho Highlands Development Authority v Impregilo SpA & ors [2005]

This case involved the power of the arbitral tribunal to decide

the currency in which to make their award and the power to

award interest. The House of Lords decided that the erroneous

exercise of an available power could not by itself amount to an

excess of power under s68(2)(b) of the 1996 Act and neither

could a mere error of law. Lord Steyn stated:

I am glad to have arrived at this conclusion. It is consistentwith the legislative purpose of the 1996 Act, which isintended to promote one-stop adjudication. If the contraryview of the Court of Appeal had prevailed it would haveopened up many opportunities for challenging awards onthe basis that the tribunal exceeded its powers on ruling onthe currency of the award.

Recent cases illustrating the view taken by the English courts


� CHINA AND RUSSIA


Gazing across Shanghai’s ever-changing cityscape,

with its endless sea of skyscrapers, it’s impossible

not to be filled with a sense of all-conquering

optimism. Meanwhile, Russia’s novye bogaty –

among whom the oligarchs reign supreme – pass

their time washing down Beluga caviar with

imported vodka, driving around the streets of

Moscow in luxurious European saloons and

contemplating their next mega-merger. The

opportunities, as they say, are without limits. But

even in such fertile investment climates, it pays to

be prepared for the worst.

Shortly after 5am on 23 October 2003, the private jet of

Mikhail Khodorkovsky – head of the oil company Yukos

and then Russia’s richest man – touched down at a

Siberian airport. The scheduled stop was part of a tour of

Yukos and Sibneft (now Gazprom Neft) production

facilities. Little did Khodorkovsky know that he was flying

straight into a trap. Two vans of FSB (successor to the KGB)

operatives, sped across the tarmac. The heavily armed

operatives then stormed the plane and arrested

Khodorkovsky at gunpoint. Subsequent charges of tax

evasion were to have drastic consequences for Yukos and

Khodorkovsky. The government froze the company’s

shares eight days after the arrest, and the proposed

merger with Sibneft fell through. On 31 May 2005,

Khodorkovsky was sentenced to nine years in prison,

where he still languishes.

Tipping the balanceWhile China and Russia’s rapidly growing

economies present enormously attractive

investment opportunities, they are also

notoriously difficult markets to operate in.

Chris Johnson navigates the pitfalls

AR07 p34-41 Johnson 19/4/07 18:08 Page 34


CHINA AND RUSSIA �

AR07 p34-41 Johnson 19/4/07 18:09 Page 35



some clients who might prefer dealing with a firm that was

not involved in such cases,’ Goldberg warns.

The arbitration is based on the offer to arbitrate that is

found in the Energy Charter Treaty (ECT), which gives

substantive protection against issues such as

expropriation and governmental interference, and

ensures that parties receive fair and equitable treatment in

any subsequent disputes.

‘With Yukos, there is a clear violation of the treaty – you

should not expropriate without proper compensation,’

suggests Gaillard. ‘It is a violation of fair and equitable

treatment, and it is hard to deny that this was politically

motivated.’

The main point of contention is whether Russia is

actually bound by the ECT. While the Russian Federation

became a signatory state of the treaty in 1994, it has

not yet ratified. This, it claims, renders it exempt, as

signing is just a declaration of intent and therefore has

no legal value.

Gaillard sees no such uncertainty, however. His

argument centres on Article 45 of the ECT, which states

that the treaty is immediately applicable upon signing,

unless the country specifically opts out. Some countries,

such as Norway, did make such a declaration when

signing. Russia did not. ‘Therefore it technically is binding,

so we have started an arbitration with an initial claim of

$33bn as compensation for the 60% stake of Yukos,’ says

Gaillard (see ‘Pensions crisis’ box below).

A 2005 Resolution by the Council of Europe’s

Parliamentary Assembly was scathing in its assessment of

the arrest. It says: ‘the interest of the state’s action goes

beyond the mere pursuit of criminal justice, and includes

elements such as the weakening of an outspoken political

opponent, the intimidation of other wealthy individuals

and the regaining of control of strategic economic assets.’

Heavyweight claimThis has given rise to the largest-ever investment

arbitration: a claim against the Russian state by the majority

shareholders of Yukos, the value of which could exceed

$50bn. It is understood that several firms passed on the

chance to represent Yukos in this landmark dispute. ‘This

case has a strong political flavour, which drove many firms

away from it,’ says David Goldberg, co-head of SJ Berwin’s

international arbitration group. ‘Doing business in Russia,

one would generally consider whether to take on a case

which is so politicised.’

However, he suggests that, rather than any threat to

personal safety (‘those days are gone,’ he says), taking such

a case is potentially damaging to your business.

Emmanuel Gaillard, head ofShearman & Sterling’s

international arbitration practice, accepted the instruction to

advise Group Menatep – Khodorkovsky’s holding company

and majority shareholder in Yukos. ‘Shearman & Sterling

doesn't operate in Russia now. While I don't think taking this

case would affect its ability to open an office, it may deter

�

There are some parties for which arbitration is not even a possibility. American pension funds, which accounted for

a significant proportion of Yukos’ capital (Gaillard estimates it to be in the region of 20%), are not covered by the

ECT as the US – which prefers to negotiate on a bilateral, rather than multilateral basis – is not a signatory member.

‘The bondholders were screwed – basically the US pension funds lost $20bn for the US not having even signed the

ECT,’ Gaillard explains.

Pensions crisis

Treasury shares

Veteran Petroleum Trust

Other individual and

institutional shareholders

Shares available to back UBS

exchangeable bonds

American Depository

Receipt holders

Group Menatep

60.5%10.6%

10%

12.8%2.5%

3.6%

YUKOS capital structure (as of 31 December 2002)

AR07 p34-41 Johnson 19/4/07 18:09 Page 36


The jurisdictional hearing is set for June, the outcome of

which will settle the debate over Russia’s obligations of

ECT adherence and, ultimately, whether an option to

arbitrate is available to the shareholders.

Skating on thin iceGaillard is all too aware of the importance of this decision,

as a ruling in favour of Russia would force the case into the

local courts. He is in no doubt as to what the result would

be. ‘We’d be dead,’ he says emphatically. ‘If your opponent

is the state then you don’t want to appear before the

organs of that state – by definition the local courts are an

organ of the state. In the local courts in Russia you have

zero chance, as we have seen – Yukos has litigated in local

courts and lost every time except for one, after which the

judge was sacked in the following months. It was a clear

signal. Judges understand in Russia. There is no

independence,’ he adds.

The judge he refers to is Natalya Cheburashkina, who

agreed to acceptYukos’ appeal against the tax authorities,

thereby suspending fulfilment of the tax bill while the case

was considered. This stance was seen as too sympathetic by

theTax Ministry, whose request that the judge be removed

was agreed to by the Moscow arbitration court . An official

statement by the court claimed that Cheburashkina ‘has an

interest in the outcome and is biased against theTax Ministry’.

This is no isolated incident. JudgeVlada Bliznets lost her

job after twice making favourable decisions relating to

structures closely connected with Yukos. The termination

followed specific requests by Federal Tax Service deputy chief

Boris Korol. A number of independent lawyers acting for

Yukos in criminal cases have also been imprisoned. Nor are

such problems exclusive to Russia: ‘The Chinese courts are still

not completely independent, put it that way,’ Gaillard adds.

Keeping a finger on the scalesThis lack of independence is made startlingly apparent by

guidance distributed by the Ministry of Justice-controlled

All China Lawyers Association in March 2006. It clearly

states that lawyers who handle cases of ‘a mass nature’

(ten or more people serving as one party to the matter)

‘shall accept supervision and guidance by judicial

administration departments’, and must ‘promptly and

fully communicate with the relevant justice bureau’.

This is in direct contravention to the ‘Basic Principles on

the Role of Lawyers’, as adopted by the United Nations

General Assembly in 1990, which demands that

governments ensure lawyers are able to perform their

professional functions ‘without intimidation, hindrance,

harassment or improper interference’.

Unsurprisingly, then, companies with dealings in China

and Russia are increasingly insisting that arbitration clauses

are written into commercial contracts, in an attempt to avoid

exposure to such third-party influence in any disputes.

Audley Sheppard, an international disputes partner

based in Clifford Chance’s London office, explains: ‘I think

anyone who is involved in commercial contracts with

parties outside of Europe is conscious that arbitration gives

enforcement options that may not exist with court

judgments.’

This was certainly the case when, on 30 April 1984,

Occidental Petroleum Corporation entered into a joint

venture with China National Coal Development – the

Chinese ministry’s development subsidiary – to establish a

major open-pit coal mine in Shanxi province. Disagreements

over issues such as financing caused the project to collapse,

with the subsequent dispute falling back on a Stockholm

arbitration clause contained within the agreement.

‘That clause was enormously helpful,’ says Michael

Moser, head of O’Melveny & Myers’ Asia practice. ‘It was

extremely high pressure, but the proceedings in Stockholm

finally pushed the parties to a settlement. If that had been

a Chinese arbitration clause then I don’t think the Chinese

parties would have settled. It would’ve been very difficult,

and ultimately the foreign party could have lost.’

A risky gameAmong clients’ primary concerns over arbitral awards are

recognition and enforceability. ‘Arbitration is no panacea,’


�

‘In the local courts in Russia

you have zero chance, as we

have seen with Yukos.’

Emmanuel Gaillard, Shearman & Sterling

Level 1: 82 federal arbitration courts of the subjects of the Russian

Federation

• Hear cases as courts of first instance

Level 2: 20 arbitration appellate courts

• Fully re-examine cases on appeals against decisions that have not yet

come into force

Level 3: ten federal district arbitration courts

• Function as courts of cassation and assess legality of decisions

passed by arbitration courts in their districts

Level 4: the Supreme Arbitration Court of the Russian Federation

• Superior judicial body of state authority – supervises all arbitral courts

Russia’s arbitration system

AR07 p34-41 Johnson 19/4/07 18:09 Page 37


of proceedings – not least the multibillion-dollar

Yukos/Menatep arbitration – I don’t expect they’re

in any hurry to give effect to any international

instruments that make enforcement of foreign

arbitral awards any easier.’ Goldberg believes that

the boot is firmly on the other foot. ‘I think it is

easier for the International Monetary Fund or

World Trade Organisation to force a country to

ratify something when that country is in need of

help – the way that Russia is placed now

financially, they don’t need help from anyone.’

The courts in both jurisdictions have reputations

for not being the most reliable upholders of arbitral

awards. The Russian courts have been known to refuse

enforcement on the slightest technicality. For example,

on the grounds that the arbitration institutions have not

been named precisely in the agreements. In November 2003,

a Moscow federal court refused to enforce an agreement

because the institution was listed as the ‘Arbitration Court of

the Chamber of Commerce and Industry of the Russian

Federation’, rather than the ‘International Commercial

Arbitration Court at the Chamber of Commerce and Industry

of the Russian Federation’.

In China, the Court of First Instance can decide not to

enforce a foreign-related award. In such instances the

decision must then be referred to the court at the next level,

and ultimately to the Supreme People’s Court for approval.

Sheppard believes that Chinese courts are ‘generally

supportive of arbitration’, but that there are ‘isolated

incidents, which still give people some cause for concern.’

Home advantageThe main arbitration centre in Russia is the International

Commercial Arbitration Court (ICAC) at the Chamber of

Commerce and Industry of the Russian Federation (see

‘Russia’s arbitration system’ on p37). In China, it’s the

China International Economic and Trade Arbitration

Commission (CIETAC).

Both hold themselves out as leading international

institutions. Nevertheless, many westerners are reluctant

to use them due to questions over neutrality,

enforceability and proficiency. The finality of award –

usually considered one of the main advantages of

arbitration – also gives cause for concern. Finality is the

last thing parties on the wrong side of an unfair or

incorrect award would want.

But, as Gaillard explains, the proficiency of an arbitral

institution is not the only consideration. As when buying a

property, it’s location, location, location. ‘It’s quite

dangerous when you’re a foreigner and you enter into a

contract in China, with Chinese parties – often a state

owned party – to rely on CIETAC. I am not critical of the

CIETAC system per se – the arbitration phase will be akin to

the LCIA, SCC or ICC. You can choose the arbitrators you

says Sheppard, ‘as you cannot guarantee that awards are

going to be enforced.’

While both China and Russia are signatory states to the

New York Convention, when it comes to the Washington

Convention – a mechanism that applies to awards that have

been issued by the International Centre for Settlement of

Investment Disputes, and only has jurisdiction in respect of

disputes between an investor and a state – Russia has

signed but not yet ratified.

‘I’m sure [Russia] will be encouraged to,’Sheppard

suggests, ‘but given that they are the defendant in a number

�

The Hong Kong International Arbitration Centre (HKIAC) has risen to

prominence in recent years. It is often used as a compromise venue

for Chinese disputes where CIETAC has been rejected as an arbitral

forum by the non-Chinese party.

Michael Moser, who, it should be noted, currently resides as HKIAC

vice chairperson and is to be instated as chairman on 1 March 2007,

explains the appeal. ‘Hong Kong has become particularly attractive

because, even after 1997, it’s still an English-based legal system and it

is independent from China. But yet, territorially, and from a ‘face’

perspective, it has been part of China since 1997. It is a good

compromise of east and west, for both sides.’

He also suggests that its increasing popularity is helped by a

number of perceived cons to the more renowned international

venues. ‘Many Chinese companies are disadvantaged going to a place

like Stockholm to arbitrate. They have to spend a lot of money, often

with foreign lawyers, and they don’t really understand the

proceedings. It will often be held in English, whereas in China it will all

be in Chinese,’ he explains.

Despite this, the number of Chinese disputes held at the ICC has

increased steadily over the last five years, in stark contrast to the

centre’s Russian dispute caseload (see graph on p41).

Look East


AR07 p34-41 Johnson 19/4/07 18:09 Page 38


want, so the arbitration would take place in a neutral way

and would be fair. What worries me is that the award would

be rendered in China and will therefore be subject to an

annulment proceeding in China, which puts you back

before the courts. That in itself gives competence to the local

courts to review the award. In fairness, they should review

the merit, review on the violation of public policy, the extent

of the arbitration agreement – but there’s always a chance

that they’ll refuse the award for something stupid.’

Gaillard recalls a case where the courts declared an ICC

clause void, as they would only recognise CIETAC

arbitrations. He also stresses the importance of the

chairman’s nationality. ‘Parties have to be very careful to

say in the clause that the chairman should be selected

from a certain given number of countries, so that it is not

the Chinese, for the same reasons of neutrality,’ he says.

A senior figure in China’s arbitration community says

CIETAC is ‘fine for everyday commodity and trading

disputes’, but that for more complex investment disputes

‘you are much better to go elsewhere’.

Sheppard rather mutedly suggests that CIETAC is

‘satisfactory’ and feels that ICAC’s rules could do with a

review. ‘They are a bit out of date – they don’t reflect the

provisions in many of the more modern arbitral rules.’

Goldberg believes that, while ICAC is set up to allow for fair

and effective arbitrations, it suffers from a lack of

independence and the gross inefficiency of the secretariat. ‘It

is not an independent institution, as it is heavily dependent

on the Russian Chamber of Commerce and there is a great

deal of red tape and bureaucracy there,’ he says. ‘The ICC, LCIA

and theStockholm Arbitration Institute are extremely

efficient. ICAC, on the other hand, has a long way to go before

it is able to provide a comparable service. At the moment it is

highly unsatisfactory, both from the point of view of an

arbitrator and a user or a party representative.

Communications sent to it get lost, documents are not

returned – it is an administrative mess. The biggest challenge

that ICAC faces, if it is to survive as an arbitral institution, is

pulling its act together in terms of the secretariat's efficiency.’

This, Goldberg suggests, explains the steady decline in

the volume of cases handled at ICAC (see graph below).

‘The way that it is structured doesn’t help. Also, every

other institution not only promotes themselves but also

promotes arbitration – ICAC doesn’t. Though it is still much

better than the state institutions, for major Russian

disputes the tendency is still to go to the West,’ he says.

Sheppard feels that the decision on whether to

arbitrate in a domestic or international venue is down to

the nature and value of the dispute. ‘The more high-value

or serious the dispute, the more concerns people will have

about even a possibility of interference. A neutral venue

becomes more important if it’s a state or state entity as a

respondent. The courts are well aware if a respondent is a

major employer in that area and could well be paying

taxes towards the judge’s salary,’ he says.

Despite a belief that China is finally beginning to tackle

the issue of corruption, there is clearly much work still to


‘For major Russian disputes the tendency

is still to go to the West.’

David Goldberg, SJ Berwin

2000 2001 2002 2003 2004 2005

Tota

l num

ber o

f dis

pute

s (m

illio

ns)

Year

634,363

745,626

854,748

951,778

1,340,699

210

162

148

Tota

l num

ber o

f dis

pute

s

100

150

200

250

0.5

1

1.5

2

1,626,133

Russian litigation

ICAC arbitration

While the total number of

disputes at ICAC dropped

in each of the three years

running up to 2005, the

number of disputes

involving non-Russian

parties practically doubled

(9 in 2002, 17 in 2003 and

30 in 2004).

Russian disputes – the fall of ICAC

�

AR07 p34-41 Johnson 19/4/07 18:09 Page 39

As Table 1 shows, the LCIA handles far more Russian and Eastern European disputes than Chinese disputes, thanks

in part to a sustained marketing campaign in the region. Its relatively low level of Chinese disputes is a result of a

perception by the Chinese that the LCIA is ‘not international enough’. Russia’s 17 cases in 2006 made it the country

with the most disputes handled in the SCC other than Sweden (which had 102 out of the total 141, including

domestic disputes), with Germany coming in third with 12.

Table 1: number of international arbitrations by volume

Table 2: Chinese alternatives

Statistics



Shenzhen, home to China’s domestic stock exchange,

presents the most shocking example of just how

widespread a problem corruption is. Following a series of

raids between June and October last year, five senior

judges – including three court presidents – were arrested

on charges of corruption and bribery. 20 further judges in

the region were also implicated in what amounts to the

city’s largest ever judicial corruption case.

Redressing the balanceChange is afoot, however, with the domestic institutions of

both countries currently undergoing a process of reform,

designed to bring procedures into compliance with

international norms and standards.

The new CIETAC rules, which came into effect on 1 May

2005, have been described as ‘the most significant update

of CIETAC rules in the past twenty years’. The most notable

be done. Zhang Decai, a lawyer at Beijing-based firm

Zhonglun Jintong, was suspended and ‘severely

reprimanded’ last February for conducting secret meetings

with arbitration officials overseeing a dispute between

Fuji Xerox and the firm’s client, Tianjin Guangyin Real

Estate. Then Wang Shengchang, the secretary general of

CIETAC, was arrested in March 2006 under charges of

‘illegally distributing state assets to staff’. The charges, for

which he could face up to seven years in jail, relate to ‘case

handling fees’ paid to commission employees.

‘Nobody is really quite sure what the situation is,’ the

senior figure in China says. ‘One of the allegations against

Mr Wang is that he made a decision in a Stockholm

arbitration that went against very powerful interests in a

Chinese company. There are concerns over this

politicisation and corruption. The independence of the

judiciary continues to raise questions.’

LCIA SCC ICC AAA

Year2000

2001

2002

2003

2004

2005

2006

TOTAL

87

71

88

104

87

118

133

PRC

1

1

2

3

5

2

1

RUS

–

–

–

–

–

5

14

TOTAL

73

74

55

82

50

56

74

PRC

12

8

13

8

2

5

5

RUS

18

13

9

19

4

4

17

TOTAL

541

566

593

580

561

521

593

PRC

14

7

10

15

24

26

–

RUS

5

26

18

13

7

7

–

TOTAL

510

649

672

646

614

580

586

PRC

2

2

4

5

8

17

22

RUS

0

0

2

6

4

2

1

HKIAC SIAC

Year2000

2001

2002

2003

2004

2005

2006

TOTAL

298

307

320

287

280

281

394

PRC

–

–

–

44

66

79

100

TOTAL

41

44

38

35

48

45

–

PRC

22

11

12

13

21

17

–

NB: Data for Chinese parties does not include Hong

Kong. The statistics for Russian-related disputes are,

to some extent, misleading. Because of the way

business is conducted in Russia, assets are often

held by foreign parties, and businesses are often

registered abroad. Millhouse Capital, Abramovich’s

holding company, for instance, is registered in the

UK. Goldberg gives an example: ‘I’ve just finished a

very large case where one party is French and the

other party is English. All the evidence was given in

Russian,’ he says with a knowing smile.

�

AR07 p34-41 Johnson 19/4/07 18:09 Page 40


amendment is the scope for parties to appoint arbitrators

of any nationality from outside the CIETAC panel.

Previously ad hoc selection was not permitted. ICAC

procedures have also undergone a substantial review,

with new rules designed to increase transparency and

accountability coming into force in March 2006. Rather

worryingly, the amendments include a requirement for

ICAC arbitrators to sign a form indicating consent to

comply with ICAC rules.The state court systems in both

China and Russia have also promulgated a series of new

regulations.

But Goldberg feels that, after an impressive start, the

reform of the Russian courts lost momentum. ‘The reforms

stopped far from where they needed to go,’ he says. ‘It looked

very impressive when the reforms started, as new procedural

rules were introduced – the arbitrazh procedural code, for

example – which are very good. But this, unfortunately, is as

far as it went. The administration was charged with other

duties, so legal reform was, in effect, abandoned.’

He feels that the main issue is the standard of judges’

training, but that establishing a reliable system is a

mammoth task. ‘Uniformity is important, but in order to

achieve uniformity you need to have appropriate training.

There is a programme of training, but it is not good enough,’

he says. ‘Even in London, where the legal profession is well-

developed and sophisticated, there are difficult issues to

resolve – imagine how difficult it is with a system of courts

that is bigger than the entire western European system.’

That said, the Russian state courts have experienced a

sustained increase in the number of cases since 2000 (see

graph on p39).

Go WestAlthough both Russia and China’s economies are

developing rapidly, the jurisdictional infrastructure has

failed to progress at the same rate.

While some feel that the domestic arbitral institutions

are acceptable for lower-level disputes, questions over

proficiency and neutrality remain. Major corporates

doing business in either region would be well advised to

insist that an arbitration clause be written into commercial

agreements – one which ideally allows for any arbitration

to be held in a neutral venue outside the host nation. If this

is not possible (there is still particular pressure in China to

hold arbitrations within the country), it is important to

specify in the clause that the presiding arbitrator should

be selected from a list of countries neutral to the dispute.

CIETAC’s new rules state that it will honour such clauses.

And as for the local courts – will they, in time, reach a

standard where international firms and their clients are

comfortable engaging in litigation against a domestic

entity? This is a point, it seems, on which opinions are

united. Ask a lawyer, foreign or domestic, and the response

is identical: laughter, a wry smile, and ‘not in my lifetime’. �


‘A neutral venue becomes

more important if it’s a state or

state entity as a respondent.’

Audley Sheppard, Clifford Chance

2001 2002 2003 2004 2005

% o

f to

tal d

ispu

tes

0

1

3

4

Russian

Chinese

2

Year

The ICC’s proportionally

high level of Chinese

disputes can be explained

by a strong presence in

Asia – there is an ICC

National Committee in

Hong Kong and it has a

consultant in Kuala

Lumpur. Its profile in Russia

has ‘disappeared’,

according to leading

arbitration specialists.

ICC – proportion of Chinese and Russian disputes

AR07 p34-41 Johnson 19/4/07 18:09 Page 41

� LATIN AMERICA


World trade in recent decades has been marked by

a considerable increase in international investment

flows between countries in differing phases of

development. Spanish enterprises have not

remained on the sidelines and most have

channelled their international investments towards

the Latin American market. Steady growth in

commercial transactions has also been seen among

Latin American countries, bolstered by the climate

of ever-diminishing economic protectionism and by

the signing and implementation of transnational

agreements to promote international transactions.

This growth in international trade has been

accompanied by a veritable boom in international

arbitration as an ADR method, to the detriment of local

courts. The reasons for the boom include greater neutrality

than in the jurisdictions of the parties’ respective

countries, speed, the expertise of arbitrators, the freedom

that the parties have to tailor the rules of procedure to

their needs, and confidentiality.

Changing viewpoints In Latin America, international arbitration was often

viewed in the past as an alien institution. The factors that,

historically, contributed to a sometimes distant perception

of this private form of ADR in the context of international

disputes included the absence of a proper legal

Growth marketForeign investment in Latin America, particularly from the US and Spain, has

resulted in an increase in arbitration in the region. José Maria Alonso of Garrigues

examines how countries in the region have developed common ground on

international arbitration, and suggests how they can continue to improve

José Maria Alonso is managing partner of Garrigues and

responsible for the firm’s international arbitration team

AR07 p42-45 Garrigues 19/4/07 13:46 Page 42

Commercial Arbitration, better known as the Panama

Convention, in 1975. Today, the Panama Convention has

been ratified by 18 countries. Cuba and Jamaica have not

signed. The Dominican Republic has signed, but not

ratified it.

While there are certain differences between the New

York and Panama Conventions, their methodology and

structure are fairly similar. Generally speaking, both �

Sponsored feature

LATIN AMERICA �


framework to regulate arbitration, scepticism over the

benefits of arbitration versus those yielded by classical

judicial dispute resolution mechanisms, and the reluctance

of governments to resolve disputes with foreign investors

in a forum other than that of their own state jurisdictions.

The last few decades in Latin America have, however,

seen rather hostile attitudes gradually soften and become

more respectful towards arbitration in general and

towards international arbitration in particular. The

ratification of international treaties on arbitration,

including, most notably, the multilateral New York and

Panama Conventions, and the ICSID Convention in the area

of investment protection, and the progressive

modernisation of national laws on arbitration by most

Latin American countries (see boxout, right), not to

mention the proliferation of initiatives by Latin American

civil society to increase the use of arbitration and other

ADR methods, are good examples of the significant

progress made by Latin America in becoming a major

player in the global economy. This is something which, by

right, it undoubtedly deserves.

New York and Panama ConventionsA prominent feature of this evolution in Latin America

towards arbitration can be seen in the recognition of

foreign arbitral awards. The New York Convention, the

50th anniversary of which we will be celebrating next

year, has been ratified by virtually all Latin American

countries.

The widespread acceptance across the globe of the

New York Convention has proved essential for meeting the

international need for arbitral awards to be truly effective.

Before the Convention came along, the recognition and

enforcement of foreign arbitral awards depended

exclusively on the national laws of each state, something

that resulted in a large diversity of methods and

techniques for recognition and enforcement and,

therefore, in a high degree of uncertainty. The

contribution by the Convention to the goal of making the

system of recognition and enforcement of arbitral awards

more uniform has been decisive, since it removed the

obstacles posed by having different systems in different

countries and thus ensured greater legal certainty in

international trade.

When the New York Convention was adopted in 1958,

few Latin American countries ratified it immediately.

However, as arbitration began to be considered a strategic

instrument in international commercial dealings, the need

to have a multilateral convention for recognising and

enforcing awards grew too. Progressive accession to the

New York Convention by Latin American countries paved

the way for a regional multilateral convention on

international commercial arbitration, culminating in the

signing of the Inter-American Convention on International

In the past two decades, virtually all of the countries in Latin America

have been busy overhauling their legislation on arbitration:

■ Bolivia (Arbitration and Conciliation Law 1770/97)

■ Brazil (Arbitration Law 9307/96)

■ Chile (2000 Procedural Code, Articles 242-251 and 628-644, and

International Arbitration Law 19971/04)

■ Colombia (Decree no. 1818/98 is a revised version of the arbitration and

conciliation rules previously contained in different pieces of legislation)

■ Costa Rica (Decree Law 7727/97, which contains the Law for ADR

Methods and the Promotion of Peace)

■ Ecuador (Arbitration and Conciliation Law, Official Register no. 145/97)

■ El Salvador (Arbitration and Conciliation Law – Decree 914/02)

■ Guatemala (Arbitration Law – Decree 67/95)

■ Honduras (Arbitration and Conciliation Law – Decree 161/00)

■ Mexico (by making substantive changes to the Mexican Commercial

Code, Articles 1415-1463; to the Civil Procedure Federal Code; and to

the Civil Procedure Code of the Federal District and Territories)

■ Panama (Arbitration Law – Decree 5/99)

■ Paraguay (Arbitration and Conciliation Law no. 1879/02)

■ Peru (General Arbitration Law no. 26572/96)

■ Venezuela (Commercial Arbitration Law, Official Gazette no. 36.43/98)

The two main exceptions to this modernising trend are Argentina

and Uruguay. In the case of Argentina, which regulates arbitration in

BookVI of the Civil and Commercial Procedural Code, an arbitration Bill is

currently before the Upper House of the Argentine Parliament (executive

message no. 1594/99, file no. PEN 840/99) although its passage through

the House is not expected to be delayed for much longer. Thus far,

Uruguay has not updated its scant legislation on arbitration, which is

currently contained in its Procedural Code (Law 15982/88).

In retrospect, the modernisation of arbitration laws in Latin America

has undoubtedly been a positive development, even if progress has been

slower in some countries than in others. Leaving aside idiosyncrasies,

which are not always beneficial, in general it is fair to say that the core

tenets of international arbitration – such as the competence-competence

principle, the respect of arbitration agreements by state courts, the

freedom of the parties to appoint arbitrators and organise the rules of

procedure, the requirements of arbitrator independence and impartiality,

and the limited possibility of having arbitral awards set aside – are,

nowadays, a legislative reality in Latin America.

Adaptation of national laws



impose an obligation on local courts to respect the validity

of arbitral decisions and to recognise and enforce foreign

arbitral awards, thereby limiting the possibility of refusal

to recognise or enforce an arbitral award to a number of

strictly defined cases. These relate to the incapacity of any

of the parties, the denial of due process, the making of

ultra vires awards, a breach of the agreement on

appointment of arbitrators or on the arbitration

procedure, the non-arbitrability of the dispute, and

contravention of public policy.

ICSID Convention and BITsIn the area of investment protection in Latin America,

recognition should be given to the decisive role played

by the Convention on the Settlement of Investment

Disputes between States and Nationals of Other States (the

ICSID Convention), signed in Washington on 18 March

1965 and ratified by Spain in 1994.

The International Centre for Settlement of Investment

Disputes, which was set up under the auspices of the ICSID

Convention, has played and continues to play a crucial role

in the field of dispute resolution between Latin American

countries and foreign investors, basically through

arbitration. ICSID is an institution attached to the World

Bank and came into being partly due to the need to free

the President of the World Bank and its staff from having

to frequently become involved in disputes

between investors and the states receiving their

investment. It was also set up to create a climate of trust

between states and foreign investors and thereby

encourage access by developing countries to international

capital. Nowadays, ICSID facilitates investment dispute

resolution between contracting states and nationals of

other contracting states through conciliation and

arbitration proceedings.

Arbitrations at ICSID generally begin under bilateral

investment treaties or arbitration agreements – mostly

taking the form of clauses in agreements signed by the

states and investors.

At present, there are nearly 2,000 BITs signed all over

the world. Although there is no pre-defined format for

treaties of this type, the structure and terms of many are

very similar. The protection afforded by each party to

investments made by the other party in its territory

usually includes:

Modern BITs expressly provide for the

possibility of investors submitting their

disputes with the host state to

international arbitration.

�

� LATIN AMERICA

(i) the right to fair and equitable treatment;

(ii) the right to receive the same treatment as domestic

investors;

(iii)the right to be compensated in the event of

expropriation, including indirect expropriation;

(iv)the right to transfer funds related to investments

without restrictions; and

(v) the right to receive the ‘most favoured nation’

treatment.

An important contribution by modern BITs is that they

expressly provide for the possibility of investors

(individuals or legal entities) submitting their disputes with

the host state to international arbitration. Most BITs

envisage recourse to arbitration as an ADR method for any

disputes arising from them. The terms of their provisions

usually vary – some BITs allow the parties to choose

between various sets of arbitration rules, while others

directly refer to certain specific arbitration rules. Most

commonly, they allow the investor to choose between

various types of arbitration. Apart from ICSID arbitration,

the investor may be able to choose between, say, an ad

hoc arbitration subject to the United Nations Commission

on International Trade Law Arbitration Rules, or an

arbitration administered by the International Court of

Arbitration of the International Chamber of Commerce .

The Spanish state has signed BITs with most Latin

American states. Colombia has signed a BIT with Spain,

but it has yet to enter into force.

At present, over 150 countries have signed the ICSID

Convention, and most of the Latin American states are

among the 143 that have ratified it. However, there are

countries that have an indisputable weight in the region,

such as Brazil, Mexico and Cuba, that have not yet ratified

the Convention.

Looking aheadThe still relatively recent crisis in the Argentine economy,

and the policy of nationalisation now being pursued in

Bolivia and in other Latin American countries, seem to

have introduced an element of uncertainty into the region

of late. However, I believe that there are good reasons for

remaining upbeat on the future development of

international arbitration and, more generally, of ADR

methods in the Latin American arena.

There has been positive convergence of Latin American

countries towards ‘common ground’ on international

arbitration, both in the area of international treaties and in

the area of their respective national laws. The great

challenge of the future for these countries is to achieve



some similarity in the approaches taken by their respective

state courts. This would create an increasingly uniform and

predictable body of case law on international arbitration.

Role of judges

In Spain, it is fair to say that for years (even before the

enactment of the current Spanish Arbitration Act of 2003)

judges have often shown that they understand that

arbitration – and, more particularly, international

arbitration – needs and deserves their respect and

protection. The recognition and enforcement of foreign

arbitral awards in Spain is a good example of this.

If we take a look at the decisions of the Spanish Supreme

Court from 1981 to 2003 (until the Arbitration Law of

2003, it was for the Supreme Court to decide on requests

for exequatur), approximately nine out of ten requests

for exequatur of foreign arbitral awards were upheld.

Latin American judges have a crucial role to play in

consolidating the achievement of modernising arbitration

laws in the region, and should be aware that they have

two functions in relation to arbitration: support

(appointment of arbitrators, assistance with the taking of

evidence, adoption of interim measures, enforcement of

the award and exequatur of foreign arbitral awards) and

control (hearing applications to set aside awards). In

relation to the latter function, a uniform approach by the

state courts to the negative effect of arbitration

agreements, which prevent state courts from hearing

disputes already submitted to arbitration, and to the

principle of minimum intervention, which prevents judges

from intervening in arbitration unless the law so provides,

is decisive.

To fulfil the aim of achieving a growing and more

predictable body of Latin American case law on

arbitration, mainly for foreign parties, the training of

judges on arbitral matters is essential in the coming years.

In Spain, the Spanish Arbitration Club has entered into an

agreement with the General Council of the Judiciary –

reflecting the commitment from both institutions to co-

operate in training judges on arbitral matters. It would be

desirable to combine similar initiatives already in place in

Latin America with further measures to encourage a more

widespread use of arbitration in the future.

Defining ‘public policy’

One specific field that is especially sensitive to this need for

the approximation of national bodies of case law on

arbitration is that of public policy. Taking into account that

the New York Convention allows recognition of an award

to be refused where it contravenes the public policy of the

country in which recognition and enforcement of the

award is sought, it would be desirable for there to be a

common notion of public policy, or rather ‘international

public policy’.

‘Public policy’ has different meanings in different legal

traditions. In the English-speaking, common law tradition,

public policy has a relatively narrow scope – addressing

‘matters of public morals, health, safety, welfare, and the

like’ – and is distinguishable from matters relating to due

process. In the continental European tradition, public policy

refers to a wider range of judicial concerns, which would

encompass breaches of procedural justice. In the context

and tradition of international arbitration practice, the most

accepted meaning of ‘public policy’ is the broader one.

Indeed, the report from UNCITRAL on the Model Law on

International Commercial Arbitration stated that:

… the term ‘public policy’, which was used in the

1958 New York Convention and many other treaties,

covered fundamental principles of law and justice in

substantive as well as procedural respects.

To define a transnational notion of public policy, both

substantive and procedural, would be advisable, although

such a definition may be fraught with difficulties, mainly

from the substantive standpoint. I believe that the

arbitration community should focus on defining a

common notion of procedural public policy as a first step.

In this regard, we can say that the basic principles that

govern transnational procedural public policy in

international arbitration may be subsumed under two

main categories: the right to equal treatment and a full

opportunity to present one’s case.

Future prospectsFrom the standpoint of a foreign investor or party to a

contract, the current situation and the prospects for

international arbitration in Latin America can generally be

viewed as being good. Most Latin American countries

have ratified the New York, Panama and ICSID Conventions

and have signed BITs with a variety of countries, including

Spain. Furthermore, virtually all of the Latin American

states have made major progress in the necessary task of

attuning their arbitration laws to the demands of

international trade today.

Consequently, I have every confidence that Latin

American governments and state courts are fully aware of

the requirements of international arbitration and will do

their utmost to achieve that goal. �

LATIN AMERICA �

The New York Convention allows

recognition of an award to be refused

where it contravenes the public policy of

the country in which recognition is sought.


� MULTIPLE PARTIES


Many questions surround the involvement of third

parties in arbitration. What do we mean by third

parties in arbitration? A third party is not a

claimant or a respondent that is a party to the

arbitration agreement or to the arbitral

proceedings since its commencement, nor is it any

member of the tribunal or its appointed experts. A

third party in arbitration is a party that, for a

variety of reasons, might be joined into the

proceedings in some capacity. Whilst the joinder of

such parties to proceedings in court is common,

that is not the case in arbitration.

Part one of this article considers the factors that give

rise to the problems of third parties in arbitration: privity

of contract and the formation of the tribunal. Part two

discusses the issue of consent and how joinder and

consolidation operate in allowing a third party to join an

arbitration when all parties, including the third party,

have consented. Part three examines the circumstances in

which a party to the arbitration agreement might

subsequently be joined to an arbitration between other

members of the same agreement (a contractual third

party). Part four considers the limited circumstances

where third parties, which are not party to any arbitration

agreement, can be joined to arbitral proceedings (a

non-party).

Part onePrivity of contract

A commercial arbitration, and the tribunal’s powers in

that arbitration, derive from the arbitration agreement. A

tribunal, unlike a court, cannot require a third party to

become party to the proceedings. Even where the

claimant or respondent might want the third party to join

the proceedings, absent agreement between the parties

(including the third party), that will not occur.

The third man The role of third parties in international arbitration remains unclear. Guy Pendell and

Thomas Lennarz of CMS shed some light on the area

Guy Pendell (left) is a litigation and arbitration partner at CMS Cameron

McKenna and Thomas Lennarz is a lawyer at CMS Hasche Sigle

AR07 p46-49 Camerons 19/4/07 16:55 Page 46

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MULTIPLE PARTIES �


Formation of the tribunal

In many arbitrations with a tribunal of three (or occasionally

more) arbitrators, each party will usually have given itself

the right to appoint or nominate its own arbitrator. In

arbitrations with a single arbitrator, it is common for the

parties to attempt to agree upon that arbitrator. Any party

that has not been able to participate in the appointment

process would understandably be aggrieved if it was not

afforded equal rights. Indeed, should this arise, there is

every chance that the aggrieved party might challenge any

subsequent award if made against it.

If there are multiple claimants or multiple respondents,

the claimants (collectively) or respondents (collectively)

ideally should agree on their party-appointed arbitrators.

If one side is unable to reach agreement on a common

arbitrator, the competent arbitration institution (where

applicable) will bypass the appointment process and

appoint all the arbitrators.

This appointing procedure has its origins in the well-

known Ducto decision of the French Cour de Cassation. In

1992 the Cour de Cassation decided that the principle of

equal treatment of the parties must lead to them both

being able to have the same amount of influence on the

composition of the tribunal. The Court said that the principle

of equal treatment is breached if one side can appoint its

arbitrator but on the other side several parties have to

accept an arbitrator appointed by the arbitral institution.

Procedures to ensure fairness in the appointment process

are now embodied in Article 10.2 of the ICC Rules, Article 8.5

of the Swiss Rules, Article 8 of the LCIA Rules and section

13.2 of the DIS Rules.

In a three-member tribunal, each party will nominate or

appoint its arbitrator and those arbitrators or the institution

will go on to appoint the chairman. If multiple parties are

involved from the outset (as claimants and/or as

respondents), the arbitral tribunal must be formed in a way

that is fair and observes the rights of all of the parties. A third

party joining the proceedings later will not have been able to

participate in the formation of the tribunal and might have

any number of objections to its constitution. For example, an

existing member of the tribunal might find themselves in a

potential conflict of interests that would at the time of

formation have led the third party to object to the

arbitrator's appointment. (See HerbertSmith’s article on p18

for discussion of genuine and questionable conflicts.) Thus,

the arbitration institutions and the legislator are confronted

with a dilemma: how can third parties properly be joined

into arbitration proceedings?

Part twoConsent, joinder and consolidation

Where consent is given by both parties to an arbitration and

any third party seeking to participate in the proceedings,

there is no reason why the third party cannot be joined. In

contrast, without the consent of the parties, joinder of third

parties is only possible in exceptional cases.

Only two of the main institutions have any provisions

dealing with the joinder of a third party. These provisions

allow the arbitral tribunal to involve third parties in the

arbitration after ‘consultation’ with the parties but not

requiring their consent. Article 4.2 of the Swiss Rules

states:

Where a third party requests to participate in arbitral

proceedings already pending under these Rules or where

a party to arbitral proceedings under these Rules intends

to cause a third party to participate in the arbitration, the

arbitral tribunal shall decide on such request, after

consulting with all parties, taking into account all

circumstances it deems relevant and applicable.

Meanwhile, Article 22.1(h) of the LCIA Rules says:

… the Arbitral tribunal shall have the power,… after

giving the parties a reasonable opportunity to state their

views… to allow, only upon the application of a party,

one or more third persons to be joined in the arbitration

as a party provided any such third person and the

applicant party have consented thereto in writing…

The Swiss Rules and the LCIA Rules envisage that the third

party will agree to be joined. There are limited circumstances,

however, where a third party will willingly join an

arbitration. The most likely situation would be where a third

party has claims to make against the claimant or respondent

and wishes them to be made together with the claimant’s or

respondent’s claims. The Swiss Rules also envisage that an

existing party to the arbitration ‘intends to cause a third

party to participate in the arbitration’. No guidance is

provided as to how the third party will participate. Any

arbitrator confronted with an application to join a third party

will need to consider the effect of the joinder on the

enforceability of their ultimate award against all of the

parties (including the third party).

Another mechanism for the joining of third parties to

an arbitration involves the consolidation of proceedings.

In order to understand the possibilities of consolidation

between different parties, it is helpful to consider it

involving the same parties.

Where consent is given by both parties

and any third party seeking to participate,

there is no reason why the third party

cannot be joined to proceedings.



Consolidation may arise where two (or more) separate

arbitrations exist and one or more parties to those

arbitrations wish the proceedings to be brought together.

Consolidation of proceedings between the same parties in

relation to disputes arising under a single agreement should,

at first glance, cause no problems and does not result in

third parties being joined. In many cases it will be economic

for all such disputes to be determined in a single arbitration,

and the risk of inconsistent decisions will be avoided.

Consolidation may not be practical where one arbitration is

significantly more advanced than the other, and if separate

arbitral proceedings have been commenced, this may

indicate that one or both parties have a reason for the

separation of those proceedings. If the claimant has

multiple claims, ordinarily one would expect those claims to

be brought in the same proceedings.

If the same tribunal presides over both proceedings,

consolidation may be brought about through the skill and

guidance of the arbitrators. Where the proceedings are

presided over by different tribunals, consolidation is

unlikely. First, for consolidation to occur, one of the

tribunals would have to step down (which, for various

reasons, it may be reluctant to do). Secondly, each tribunal

has no power over the other (absent agreement between

the parties) to order consolidation.

Consolidation is recognised and available under some

institutional rules. Article 4.6 of the ICC Rules expressly

provides for the possibility, on request of oneparty

(without the consent of the other party), for arbitrations to

be consolidated. It is only available where the terms of

reference (for the arbitration) have not been signed or

approved by the ICC. The Swiss Rules have a similar

provision at Article 4.1, although there is no time limit on

the application of that rule.

Consolidation between different parties

The circumstances in which arbitral proceedings involving

different parties can be consolidated are limited and such

consolidation will not occur unless the parties have

consented (even where all parties to the arbitral proceedings

are parties to the same arbitration agreement). Article 4.1 of

the Swiss Rules is the only provision in all the main rules that

expressly envisages consolidation of proceedings between

different parties. Again, the difficulty will be the rights of the

parties in relation to the formation of the tribunal; Article 4.1

Parties are becoming more sophisticated

in their choice of arbitration agreements

to attempt to confer on tribunals powers

to order consolidation where necessary.

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� MULTIPLE PARTIES

avoids this by deeming the waiver of such rights where a

new case is referred to an existing arbitral tribunal.

Parties are becoming more sophisticated in their choice

of arbitration agreements to attempt to confer on

institutions and tribunals wide powers to introduce new

parties to arbitral proceedings and to order consolidation

where necessary. Such agreements are becoming common

in complex multi-party, multi-contract projects and banking

transactions. However, even in these transactions, where

possible, all parties to the various agreements will usually

be party to a ‘master agreement’ that will incorporate

detailed consolidation and joinder provisions that will apply

to all transaction documents. The intent behind such

provisions is that all parties consent to the possibility that

they might be joined to existing arbitrations or that their

disputes under one or more transactional document might

be consolidated with any other related dispute. The

agreements often incorporate a waiver of each party’s right

to nominate an arbitrator and set down guidance on the

factors to be taken into consideration when deciding

whether to join or consolidate. The agreements also explain

the procedures for consolidation and joinder, if ordered.

Part threeContractual third parties

When can a contractual third party be joined? The

contractual third party might want to join with the claimant

or respondent for the purpose of supporting it (third-party

intervention). Conversely, the claimant or the respondent

might have a legal interest in a contractual third party being

bound by the award, or at least by the facts determined by

the tribunal. If the contractual third party cannot be joined,

the respondent may face the current arbitration and then

have to commence separate proceedings against this third

party, and risk contradictory decisions.

Counterclaims

Most arbitral rules provide for the possibility of

counterclaims. A precondition is that the subject of the

counterclaim falls within the scope of the arbitration

agreement. The counterclaim will be directed at the

claimant, but the respondent might also wish to pursue,

with the counterclaim, a claim against a contractual third

party. In theory, Article 4.2 of the Swiss Rules and Article

22.1(h) of the LCIA Rules could permit such a third party to

be joined for the purposes of a counterclaim. However,

given that the LCIA Rules require consent of the third party,

it is difficult to envisage many situations where a

contractual third party might willingly consent to be joined

in proceedings in order for claims to be made against it.

Thus, the respondent may not be able to join the

contractual third party. This raises the question of whether

the arbitral process, therefore, favours the claimant, as only

the claimant can effectively choose the parties to the



arbitration by identifying itself, other claimants and any

respondents in the request for arbitration.

In circumstances where the formation of the tribunal has

been left to an independent entity (for example, the relevant

institution or an appointing authority), there may be

situations in which a contractual third party could fairly be

joined to the proceedings against its will. Indeed, a number

of awards suggest this is possible. However, in cases where

the tribunal has been nominated by the parties, that is likely

to be precluded, unless the third party consents or has

waived its rights relating to nomination or appointment.

Part fourInvolvement of a non-party

Absent consent from all the parties, participation by a non-

party is unlikely to occur. (In many cases, confidentiality

alone will prevent a non-party from participating.) This

situation is not, however, entirely different to litigation

where individuals or groups affected by a dispute to which

they are not a party are normally without a remedy or

route to participate. It is here where the amicus curiae plays

its part. The role of the amicus curiae is emerging in the

field of investment treaty arbitration.

Before considering the amicus curiae, it is worth noting

some limited circumstances where non-signatories to the

arbitration agreement might be party to an arbitration.

Assignment, the English Contract (Rights of Third Parties)

Act 1999 and the ‘group of companies’ doctrine all operate

to permit non-signatories to participate in arbitrations

that would normally only arise between the contracting

parties. What is common in all these circumstances is that

the non-party has usually participated in the contractual

relationship in some way. In these circumstances the non-

party is likely to be a willing participant in the arbitration.

This is not always the case with the group of companies

doctrine. However, the doctrine is not universally accepted

and is not, by way of example, recognised under English

law. Circumstances might also arise where it could be

argued that a potential respondent to an arbitration could

be estopped from denying it is a party to the arbitration

agreement by its conduct.

The amicus curiaeIn line with its translation as a ‘friend of the court’, the

traditional role of amicus curiae is someone who, from a

position of impartiality, provides the court with an

argument or information to supplement a legal argument,

by the court’s invitation. Current usage of the amicus

curaie device has worked to ‘fill in the cracks’ of English

litigation by providing an opportunity for a non-party to

be represented and to have some influence on the court’s

decision.

Non-party involvement in arbitration has emerged as a

topical issue with the involvement of amicus curiae in

investment treaty arbitrations. Investment treaty

arbitrations, as distinct from traditional commercial

arbitrations, involve a private investor and a state. They have

become increasingly common in recent years through the

many treaties entered into across the world that confer

rights on foreign investors. The treaties permit investors to

claim for damages against a state where the state is alleged

to breach the standards enshrined in the treaty. One

striking difference between investment treaty arbitrations

and commercial arbitrations is that they are not confidential

and, by their nature, stray into matters of public law.

Recent investment arbitration cases in the US have

permitted non-party participation in proceedings by

agreeing to accept submissions of ‘amicus curiae briefs’.

This is largely because of the public interest that is

considered to lie in the outcome of such proceedings

involving states, due to the significant consequences of the

tribunal’s decision on the state budget and the welfare of

the people. Non-parties can seek to participate through

written or oral submissions, and gain access to hearings,

documents, submissions and awards. However, their

precise role in the arbitration will be open to question. They

certainly will not be expected to participate as a full party

and are highly unlikely to bear any of the burden of the

arbitral process (for example, the costs of the arbitral

process other than their own costs).

Recognising this trend, ICSID recently amended Article

41 of its Arbitration (Additional Facility) Rules, which now

openly contemplates non-party participation, requiring the

tribunal only to consult rather than secure the consent of

the parties. Draft amendments to the ICSID Rules (Articles 32

and 37), which contemplate transparency in relation to

awards and expressly allow for amicus submissions, have

now been adopted by the ICSID Administrative Council. The

UNCITRAL Rules (which are also commonly used for

investment treaty arbitrations) contain no such provisions

at present, but the UNCITRAL Working Group has under

consideration amendments that will provide for greater

transparency for such arbitrations, including the

introduction of amicus curiae briefs. The revision process,

however, is not expected to be completed until 2008 and

the amendments are likely to be debated at length.

ConclusionProblems with third parties will remain whilst users and

practitioners in arbitration continue to look for ways to

avoid them. Where the involvement of a third party is a real

prospect, the only practical remedy is to seek to deal with it

in the arbitration agreement. �

MULTIPLE PARTIES �

BKMI Industrieanlagen GmbH v Ducto Co (Pty) Ltd

[1994] ADRLJ 36


� DAMAGES


With the growing number of commercial and

investment-treaty disputes being dealt with by

international arbitration, it is perhaps surprising

that there remain many different ways of

quantifying the damages awarded. It seems as

though tribunals are sometimes unhappy that what

appears to be theoretically sound does not accord

with their commercial ‘feel’ for an appropriate

award. To an accountant, these concerns are

understandable, but they should not stand in the

way of reaching a conclusion that is both

theoretically sound and commercially reasonable.

From a legal perspective, the first sources to examine

when considering damages are the contract or treaty

concerned and past practice. Our experience suggests that

it is very unusual for a contract to specify an approach to

the calculation of damages, and we are not aware of any

investment treaties that go into such level of detail. None of

the commonly encountered arbitral institutions, such as ICC,

ICSID and UNCITRAL, provides rules or guidance on the

quantification or the valuation of damages. Moreover, with

the limited publication of awards (especially in commercial

arbitrations) and the willingness of tribunals to reconsider

matters rather than follow precedent, past practice can only

be of limited assistance, but it is nevertheless interesting.

Winning awardsA wide range of awards have been granted in recent years

within investment-treaty and similar disputes, based on a

wide range of calculation methodologies. These range

from quantification based solely on the cost of investment

to complex calculations involving projections for many

years into the future to capture the loss of future profits.

A certain calculationThere are widely differing ways of quantifying the damages awarded in

commercial and investment-treaty arbitrations. Philip Haberman and Vikki Wall

of Ernst & Young consider the issues

Philip Haberman is a partner and Vikki Wall is an assistant director in

Fraud Investigation & Dispute Services at Ernst & Young in London

AR07 p50-53 E&Y 19/4/07 17:00 Page 50

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DAMAGES �


Damages based on the cost of investment appear to be

preferred by tribunals where a contract or business is

stopped at an early stage, or when profits are deemed to be

too speculative, such as when an enterprise has not

operated for a sufficiently long time to establish a

performance record or has so far failed to achieve a profit

(for example Metalclad Corporation and Tecnicas

Medioambientales Tecmed SA, see boxes below and on p52).

In our view, an award of this nature compensates the

claimant for the cost of the lost investment, but not for the

benefits that would have been obtained from that

investment. It therefore runs the risk of confusing the cost

of an investment with the value of that investment.

At the other extreme lie those cases (for example the

Turkish electricity industry and CMS Gas Transmission

Company, see boxes on p52 and p53) where there is more

certainty of the profit stream, such as when an

established contract is interrupted. Then tribunals seem

happy to consider the value of the lost future profits in

determining the appropriate level of damages. They do so

using the well-established economic basis for estimating

the commercial value of a company or investment, the

discounted cash flow (DCF) method. This method requires

future cash flows to be predicted and then discounted

back to the relevant date to reach a ‘present value’.

Discounting in this sense is something like reverse interest:

it recognises that money to be received in the future is

worth less than money now. But it also recognises that

money that is likely to be received in the future is not

certain to be received (the eventual receipt might be

greater or less than the amount assumed), and that

uncertainty needs to be taken into account. It is that

uncertainty that is described in economic terms as the

‘risk’ associated with future cash flow.

Whilst the DCF method is the standard approach used

by financial and economic specialists, for example in

international finance to estimate the value of a business or

its assets, other methods (such as price/earnings ratio) are

also used. That will usually be because the detail required

for a DCF valuation is not available, or because there are

rules of thumb that can be used to simplify the valuation –

but those other methods are themselves based on DCF.

Certain uncertaintyIt seems to us unsatisfactory for there to be an unknown

point of time between too much uncertainty (leading to a

‘cost of investment’ approach) and sufficient certainty

(leading to a conventional DCF approach). We believe that,

despite the reluctance of tribunals to use it in all

circumstances, the DCF method can be used to calculate

the fair value of all going concerns, both new and

established ventures, and hence to evaluate damages in

all cases. The increased risk of start-up projects, or projects

where future cash flows are particularly uncertain, can

and should be accounted for through the discount rate

used in the DCF calculation.

As we have explained, the discount rate takes account

of both the changing value of money over time and the

risks that future cash flow either will not crystallise or will

do so at amounts different from those predicted. A simple

example will give some idea of how important the

discount rate is: if we predict a steady annual cash flow for

20 years, its value is 12.5 times the annual cash flow at a

discount rate of 5%, but reduces to 8.5 times at a discount

rate of 10%, 6 times at a rate of 15%, 5 times at a rate of

20%, and only 4 times at a rate of 25%.

Clearly, it is important to get the discount rate right, or

as close to ‘right’ as possible, by taking account of all the

appropriate risks and uncertainties inherent in the

projections of future cash flow. A way of looking at this is

to consider three components of the discount rate – the

time value of money, the relevant external economic

factors, and the relevant operational factors.

Metalclad alleged that Mexico, through local governments, interfered

with its development and operation of a hazardous-waste landfill.

Metalclad claimed that this interference was a violation of the Chapter

Eleven investment provisions of NAFTA. In its award, dated 30 August

2000, the tribunal found that Metalclad had lost its entire investment.

Metalclad proposed two alternative methods for calculating

damages: first a discounted cash flow analysis of future profits to

establish the fair market value of the investment (approximately

$90m); and, secondly, to value Metalclad’s actual investment in the

landfill (approximately $20-25m), as well as additional claims for

alleged negative impact on its other business operations.

The arbitral tribunal stated that:

Normally, the fair market value of a going concern which has ahistory of profitable operation may be based on an estimate offuture profits subject to a discounted cash flow analysis… However,where the enterprise has not operated for a sufficiently long time toestablish a performance record or where it has failed to make aprofit, future profits cannot be used to determine going concern orfair market value… The Tribunal agrees with Mexico that adiscounted cash flow analysis is inappropriate in the present casebecause the landfill was never operative and any award based onfuture profits would be wholly speculative… Rather, the Tribunalagrees with the parties that fair market value is best arrived at inthis case by reference to Metalclad’s actual investment in the project.

The tribunal accordingly awarded an amount reflecting Metalclad’s

investment in the project, which, after certain deductions, totalled

$16.6m (interest was added).

Metalclad Corporation vThe United Mexican States [2000]

AR07 p50-53 E&Y 19/4/07 17:00 Page 51


The time value of money is conceptually easy – it is

reflected in the return available on government securities

in the relevant currency issued by the relevant

government. This assumes that the lowest risk in a given

country’s environment is that of the government. The

external economic factors, such as inflation, economic

growth and the wider environment, will be reflected in the

return anticipated by the local stock market.

Operational factors can themselves be divided into

two: those that are common to all businesses operating in

the same sector, such as competitive pressures, and those

that are unique to the entity itself.

These different factors are captured in the usual

theoretical basis for arriving at a discount rate, the capital

asset pricing model (CAPM), which is based on the theory

that a higher return is required on a riskier investment. The

basic CAPM begins with the appropriate ‘risk-free’ rate

(taken from quoted prices on government securities) and

adds an amount that comprises the market-risk premium.

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� DAMAGES

This is the additional return expected to be generated by

the market as a whole, reflecting the economy-wide

external factors multiplied by the ‘beta’ (a measure of how

similar entities’ share prices move in relation to the market

as a whole, reflecting other external and some operational

factors). Entities that have reliable cash flows, and whose

share prices therefore do not fluctuate in line with the

market as a whole, such as utilities, tend to have betas of

less than one. Entities whose cash flow fluctuates more

than the market as a whole, such as software and computer

services companies, tend to have betas greater than one.

The CAPM is also commonly modified to reflect

empirical factors such as size – in practice, smaller entities

are widely regarded as riskier than larger entities, and

hence require a higher discount rate, even though there is

no theoretical basis for a difference.

Finally, it is then possible to adjust the result to take

account of specific risks that are not otherwise reflected.

For example, if comparable entities are well-established

and one is dealing with a start-up, an additional factor

might need to be included.

Start againUltimately, it is important to recognise that the choice of an

appropriate discount rate to use in a DCF calculation is not

wholly scientific. It is a matter of experience and judgement

to reach a discount rate that takes account of all relevant

factors and is appropriate for the levels of risk present in the

estimates of future cash flow. Each case must be considered

on its own merits and its own individual circumstances –

there is no general rate to use as a starting point.

Tecnicas brought a claim for its investment in land, buildings and other

assets relating to a controlled landfill of hazardous industrial waste. In

its award, dated 29 May 2003, the tribunal found that Mexico had

breached its obligations under the provisions of the Spain-Mexico BIT.

The tribunal noted:

… both the remarkable disparity between the estimates of the twoexpert witnesses upheld throughout the examination directed by theparties and the arbitral tribunal at the hearing held on 20 to 24 May2002 and also the considerable difference in the amount paid underthe tender offer for the assets related to the landfill – $4m – and therelief sought by the claimant, amounting to $52m, likely to beinconsistent with the legitimate and genuine estimates of return onthe claimant’s investment at the time of making the investment.

The tribunal disregarded DCF in determining the damages, due to:

… [the] non-relevance of the brief history of operation of thelandfill by Cytrar – a little more than two years – and thedifficulties in obtaining objective data allowing for application ofthe discounted cash flow method on the basis of estimates for aprotracted future, not less than 15 years, together with the factthat such future cash flow also depends upon investments to bemade – building of seven additional cells – in the long term.

The tribunal, on the basis of its own valuation, awarded

approximately $5.6m plus interest to Tecnicas. It took into account the

landfill’s market value at acquisition, the investments made thereafter,

and profits for two years of operation.

Tecnicas Medioambientales Tecmed SA vThe United Mexican States [2003]

Turkish electricity industry

Some years ago, parts of the Turkish electricity industry

(both generation and distribution) were to be privatised

through a series of concessions that were awarded, but

were subsequently cancelled before they began

operations. Several of these cancellations led to private

law arbitrations, with claimants seeking damages for the

early and wrongful termination of their contracts, based

in all cases on the future profits lost as a result of the

cancellation. Many of these cases have reached a

conclusion and we are aware of cases resulting in

damages limited to the refund of wasted expenditure, as

well as others where damages were awarded on the

basis of profit projections for future periods.

In an arbitration where we provided expert evidence,

the award was based on profits projected for 30 years

into the future, largely using assumptions that formed

the basis for the original tender. The damages were

calculated on a DCF basis, using a discount rate based on

the capital asset pricing model.

AR07 p50-53 E&Y 19/4/07 17:00 Page 52


Having nailed our colours firmly to the DCF mast, with

what we regard as its sound theoretical basis and its

widespread commercial use, where does this leave the

‘cost of investment’ approach?

We believe that the concern of tribunals over

uncertainty, which leads them to reject the DCF approach

in some cases, can be reconciled with DCF through a two-

step process: the use of ‘modified cost’ and a proper

consideration of the discount rate.

Modified cost is an approach to estimating the value of

a business or assets, which is based on the underlying

cost of the assets. It works by taking the actual historical

cost of the assets and then adjusting it to bring that cost to

a current equivalent. Adjustments are made for inflation

(to reflect the fact that an equivalent current investment

may cost more), depreciation (to reflect the past usage of

the assets, which may no longer have a full lifetime

ahead), and development expenditure (which may have

been written off in accounting terms but is a part of the

investment necessary to achieve value from it).

Development expenditure might include, for example,

exploration costs for a resources company or research and

development costs for a technology company.

The result is likely to be reliable and well-supported,

and gives an indication of the replacement cost of the

investment (rather than its original cost). In some specific

circumstances, in particular where the investment has

recently been acquired through a market transaction,

modified cost may turn out to be a reasonable

representation of market value. In general, though,

modified cost is not the same as the value of the

investment, as it does not capture the benefits likely to be

gained from the investment, especially the future profits

to be generated, but it is a better starting point than pure

historical cost.

Risky businessThe second step to reconciling ‘cost of investment’ and

DCF is to re-examine the discount rate. By modelling the

expected future cash flows at different discount rates, it is

possible to identify the discount rate that results in the DCF

method giving a result equal to modified cost. That

‘modified-cost-equivalent’ discount rate, which might be

much higher than would normally be used to value the

business, can be interpreted as giving an indication of the

riskiness of the underlying investment. If it appears that

the true risk inherent in the business is lower than the

‘modified-cost-equivalent’ rate, that would be an

indication that the value of the investment is higher than

the modified cost. If, on the other hand, it appears that

the ‘modified-cost-equivalent’ rate is a realistic

assessment of the riskiness of the investment, this

would indicate that modified cost is a fair basis for

assessing value.

The preference of tribunals for cost-based valuations of

some investments rather than DCF valuations suggests

that those tribunals were uncomfortable with the discount

rate being put forward by the claimants. In effect, they felt

that the risks inherent in the businesses were higher than

had been suggested, but had not rationalised their

thoughts in this way.

We would suggest that, when they are asked to consider

alternatives to DCF valuations, tribunals would benefit from

assessments of modified cost and the ‘modified-cost-

equivalent’ discount rate. They would then have the

materials with which to reach a decision on value that is

both commercially reasonable and theoretically sound. �

DAMAGES �

CMS Gas Transmission Company v The Argentine Republic

ICSID Case No ARB/01/8 Award 12 May 2005

Metalclad Corporation v The United Mexican States

ICSID Case No ARB (AF)/97/1 Award 30 August 2000

Tecnicas Medioambientales Tecmed SA v The United Mexican States

ICSID Case No ARB (AF)/00/2 Award 29 May 2003

CMS claimed for its investment under the provisions of the US-Argentina

BIT following the alleged suspension by Argentina of a tariff adjustment

formula for gas transportation.

In its award of 12 May 2005, the tribunal sets out its thinking on

the appropriate compensation in some detail. First, it notes:

The Treaty offers no guidance as to the appropriate measure ofdamages or compensation relating to fair and equitable treatmentand other breaches of the standards laid down… This is a problemcommon to most bilateral investment treaties and otheragreements such as NAFTA. The tribunal must accordingly exerciseits discretion to identify the standard best attending to the natureof the breaches found.

The tribunal considers various valuation methodologies to

calculate the fair market value of the investment and concludes that

the DCF method:

… is the most appropriate in this case. TGN was and is a goingconcern; DCF techniques have been universally adopted, includingby numerous arbitral tribunals, as an appropriate method forvaluing business assets… Finally, there is adequate data to make arational DCF valuation.

On this basis, the tribunal awarded damages, based on a DCF loss

valuation, of $133.2m, in addition to a share transfer and interest.

CMS Gas Transmission Company vThe Argentine Republic [2005]

AR07 p50-53 E&Y 19/4/07 17:00 Page 53

� DRAFTING


In a series of recent cases, the English courts have

considered some difficult questions regarding the

interpretation and effect of arbitration clauses. At

all levels of the English judicial system, the courts

have striven to uphold parties’ choice to arbitrate

their disputes. They have provided additional

certainty for contract draftsmen and sought to limit

damaging satellite litigation by emphasising the

importance of one-stop arbitration. This article

analyses the judgments and gives practical guidance

on drafting arbitration clauses. Lord Hoffmann’s

statement (in the Front Comor) captured the theme

common to all three cases: ’The courts are there to

serve the business community rather than the other

way around.’

While these cases highlight certain benefits of choosing

England as the seat of arbitration, one of the cases (in the

House of Lords) has resulted in a reference to the

European Court of Justice on the issue of the availability of

anti-suit injunctions in arbitration. It remains to be seen

whether the ECJ will be as supportive of the arbitration

process as the House of Lords.

Drafting arbitration clauses widelyIn an increasingly international business environment, the

importance of controlling the forum of any potential

disputes between contracting parties is paramount.

Parties are increasingly relying on arbitration to resolve

their disputes. Contractual provisions stipulating

arbitration are often open to interpretation.

To ensure that a potential dispute will be resolved by

arbitration rather than by some other means, parties often

Court supportSeveral recent cases have shown that the English courts promote arbitration both

domestically and in Europe, but the need for clarity in contracts remains paramount.

Steve Abraham and Anna Kirkpatrick of Norton Rose look at why this is the case

Steve Abraham is a senior associate and Anna Kirkpatrick is an

associate at Norton Rose

AR07 p54-57 Norton Rose 19/4/07 17:04 Page 54

�

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DRAFTING �


seek to draft their arbitration clauses as widely as possible

– hence the common use of familiar (and, perhaps on the

face of it, benign) phrases such as ‘disputes arising out of’

and ‘disputes arising under’ the contract. However,

numerous English court cases have queried the meaning

of these phrases, finding, in some cases, that a dispute

should be litigated rather than arbitrated. Helpfully, in

Fiona Trust & Holding Corporation & ors v Yuri Privalov &

ors [2007], the Court of Appeal has resolved the long-

running uncertainty over the meaning of such wording.

The case concerned eight charterparties (contracts for

the hire of ships) entered into by companies from the

Russian Sovcomflot group of companies acting as owners

of seagoing vessels (Fiona Trust) and three companies as

charterers (Yuri Privalov). Each of the charters allowed for

‘any dispute arising under this charter’ to be decided by the

English courts. However, either party could alternatively

elect to have a dispute, which had ‘arisen out of this

charter’, referred to arbitration (a so-called ‘split clause’).

The owners brought claims in court for rescission of the

charterparties. They claimed that the charterparties were

invalid, having been procured through bribery. The

charterers sought to enforce their rights in arbitration. The

owners applied to the English High Court under s72 of the

Arbitration Act 1996 (the Act), seeking to restrain the

arbitration proceedings on the basis that the

charterparties and the arbitration agreements contained

within them had been rescinded as a consequence of the

bribery and that no arbitration was permissible. The

charterers sought a stay of the court action under s9 of the

Act, which allows the court to stay court proceedings

where a valid and operative arbitration agreement already

covers the dispute in question.

At first instance, finding for the owners, Morison J

declined the stay and suspended the arbitration

proceedings on an interlocutory basis. The charterers

successfully appealed. The owners’ attempts to side step

the arbitration agreement failed, as did their court claims

for rescission. Throughout the case, the Court focused on

giving effect to the arbitration clause, and supporting the

arbitration process.

Liberal construction of the arbitration clauseOn the difference in meaning between ‘arising out of’ and

‘arising under’, the Court of Appeal reviewed the key case

law and called for a ‘fresh start’ founded on a more

commercial approach:

Ordinary businessmen would be surprised at the nice

distinctions drawn in the cases and the time taken up

by argument in debating whether a particular case

falls within one set of words or another very similar set

of words. If businessmen go to the trouble of agreeing

that their disputes be heard in the courts of a

particular country or by a tribunal of their choice they

do not expect (at any rate when they are making the

contract in the first place) that time and expense will

be taken in lengthy argument about the nature of

particular causes of action and whether any particular

cause of action comes within the meaning of the

particular phrase they have chosen in their arbitration

clause. If any businessman did want to exclude disputes

about the validity of a contract, it would be

comparatively simple to say so.

In particular, in international commercial contracts ‘any

jurisdiction or arbitration clause should be liberally

construed.’ This means construing clauses liberally and

dismissing any nuances of meaning between the phrases

‘arising out of’ and ‘arising under’. In the Court’s view,

having used such words, its jurisdiction is limited to

disputes concerning the formation of the contract itself.

The effect of this approach on the facts was that the

dispute as to whether the contract had been rescinded for

bribery was capable of arbitration under the clause.

Separability remains keyThe Court reiterated the principle (codified in s7 of the Act

and s16(1) of the UNCITRAL Model Law) that an arbitration

clause is a separate contract that can survive the invalidity or

termination of the underlying contract in which it is

contained. There is an unjustified leap of faith in assuming

that the impeachment of the underlying contract necessarily

results in the impeachment of the arbitration agreement. As

a result, an arbitral tribunal has jurisdiction to determine the

issue of the alleged invalidity of a contract. The courts will

only step in where the validity of the arbitration agreement

itself is (separately) brought into question.

On the facts, the Court of Appeal found that there was a

valid arbitration agreement that was separable from the

main agreement. The alleged bribery behind the

formation of the underlying contract could not be said to

affect the validity of the arbitration agreement.

Accordingly whether the underlying contract was to be

rescinded was a matter for the tribunal.

On the more procedural issue concerning potentially

conflicting applications under ss9 and 72, the Court again

applied a liberal approach holding that, on the facts, the

section 9 application was to be heard first. In cases such

There is an unjustified leap of faith in

assuming that the impeachment of the

contract results in the impeachment of

the arbitration agreement.



as these an application to stay court proceedings was the

primary matter to be decided.

The judgment is commercially astute and pragmatic,

offering clarity concerning the scope of the arbitration

clause and providing welcome support for the arbitration

process under English law. There is now less scope for

argument as to the effect of common forms of wording in

arbitration clauses, given the clear line drawn by the Court

of Appeal.

Liberal approach under threat?National courts play an important role in supporting the

arbitration process. Parties generally choose the seat of

arbitration in the jurisdiction that is most suitable for

them, choosing a location that promotes the parties’

choice to arbitrate. One advantage of England as a forum

is that the courts have a long history of granting anti-suit

injunctions to restrain court proceedings in England,

Europe and further afield. An anti-suit injunction is a

mechanism by which one state makes an order restraining

a party from commencing or continuing court

proceedings in another state on the grounds that such

proceedings are in breach of a court jurisdiction clause.

�

� DRAFTING

The ECJ ruled in 2004 that it is no longer possible for

such injunctions to be used within the EU. The ECJ held

that such injunctions interfere unjustifiably with the

business of the courts and, further, that they were

inconsistent with EU Regulation 44/2001 (the Brussels I

Regulation), which regulates the allocation of jurisdiction

between EU states. However, whether or not it is still

possible to use anti-suit injunctions to prevent proceedings

brought in breach of an arbitration agreement is unclear.

This was the question before the House of Lords in West

Tankers Inc v RAS Riunione Adriatica di Sicurta SpA & anor

(the Front Comor) [2007].

In August 2000 Front Comor hit a jetty in Sicily. The

charterparty was governed by English law and provided

for arbitration in London. The charterer claimed for its

uninsured losses against the owners in arbitration (which

is still underway) and recovered its insured losses from

Italian insurers. The insurers sought to recover these

amounts from the owners in the Italian courts.

The owners were granted a temporary anti-suit

injunction in the Commercial Court, London, to stay the

insurers’ action in Italy in favour of the arbitration. The

insurers sought a discharge of this injunction.

It is not only when dealing with foreign or less familiar

countries that care should be taken when drafting dispute

resolution clauses. The facts of Film Finance Inc v The RoyalBank of Scotland [2007] serve as a reminder of difficult

questions of forum that can arise even when dealing with a

familiar jurisdiction such as England.

Where parties draft complex clauses, there is a risk that

additional complexity leads to reduced clarity. In such cases,

parties that believe they have agreed to arbitration may find

themselves in satellite litigation to determine the appropriate

forum to hear the dispute. This is distracting and often costly.

In this case, RBS provided €4.8m to Film Finance Inc (FFI) to

finance a film. FFI guaranteed the completion and the delivery

of the film under a completion guarantee in favour of RBS.

Under clause 14 of the guarantee:

… in the event of a dispute relating to delivery hereunder, theprovisions for arbitration specified in Schedule III… shall apply.Any dispute other than a dispute relating to delivery shall besubmitted to the jurisdiction to the courts of law of England.

Schedule III set out provisions relating to delivery disputes

between FFI and the distributors of the film (and not to delivery

disputes between RBS and FFI). The film was neither completed

nor delivered on time, and RBS sought to enforce its right to

payment under the completion guarantee in court. FFI

commenced arbitration proceedings and sought a declaration

under s32 of the Act that this particular dispute should be

resolved by arbitration under clause 14 of the guarantee. FFI

argued that this was a ‘dispute relating to delivery’ as referred

to in the first sentence of clause 14. RBS argued for a far

narrower reading of clause 14.

In keeping with the spirit of Fiona Trust, Andrew Smith J

promoted a liberal approach to the interpretation of such

clauses. When considering the nature of dual regimes, the judge

recognised that where the parties choose that some disputes

should be referred to arbitration and some to litigation, there

was ‘always a risk that the parties might have to resort to both’.

This problem was exacerbated by unduly narrow interpretations

of such clauses. He rejected such narrow interpretations on the

basis that the parties cannot have intended ‘to make an

arbitration agreement that would result in [the] fragmentation of

the resolution of their disputes’. He applied a wide interpretation

that avoided the problem of multi-jurisdiction dispute resolution,

and gave effect to the parties’ intentions. This was an approach

that provided ‘one-stop arbitration’ for the parties.

On the facts, the judge found that the word ‘delivery’ had an

ordinary, rather than a technical, meaning. This dispute should

be arbitrated under clause 14 of the completion guarantee.

Insofar as schedule III was inconsistent with the arbitration

clause, the wording of schedule III should be construed to give

effect to the arbitration clause.

Drafting complex clauses



Colman J found that, as the insurers were claiming

against the owners by right of subrogation, they were

bound to resolve their claims against the owners through

arbitration in accordance with the charterparty. Further, in

accordance with the Court of Appeal decision in Through

Transport Mutual Insurance Association (Eurasia) Ltd v New

India Assurance Co Ltd [2005], the Court had authority to

grant an injunction against the insurers to prevent further

action in the Italian courts.

Accordingly, he granted an injunction against the

insurers, staying the action in Italy. However, he referred

three questions to the House of Lords. The most significant

question concerned the interface between anti-suit

injunctions and the Brussels I Regulation in relation to

arbitration agreements. Despite being of the opinion that the

courts of EU states should retain the right to issue anti-suit

injunctions to protect the arbitration process, the House of

Lords recognised that the question should be referred to the

ECJ. In so doing, the House of Lords set out strong arguments

to advance its opinion, providing further illustration of the

English courts’ support for the arbitration process.

It remains to be seen whether the ECJ will follow the

House of Lords’ steer, although any decision from the ECJ is

likely to be two years away.

The case for anti-suit injunctionsLord Hoffmann referred to express provisions of the Brussels

I Regulation that exclude arbitration from its scope. He

argued that it would, therefore, be illogical for the Regulation

to apply to arbitration agreements. An arbitration

agreement is a contractual mechanism between commercial

parties that have specifically chosen not to have their affairs

regulated by court procedures. As Lord Hoffmann put it:

… perhaps the most important consideration is the

practical reality of arbitration as a method of resolving

commercial disputes. People engaged in commerce

choose arbitration in order to be outside the

procedures of any national court.

As such, and applying recent ECJ case law, the ban on

anti-suit injunctions set out in recent law does not apply to

arbitration. Court proceedings where the subject matter is

arbitration are also excluded.

Lord Hoffmann referred to England’s history of issuing

anti-suit injunctions. He argued that this power promotes

legal certainty and ‘reduces the possibility of conflict

between the arbitration and the judgment of a national

court’. When choosing a seat of arbitration, the court’s

ability to restrain court proceedings commenced in breach

of an arbitration agreement is viewed as an attractive

feature of English arbitration.

Lord Hoffmann did not address the arguments against

granting anti-suit injunctions in arbitration. However, it

should be noted that anti-suit injunctions are not available

in every EU country, and are seen as contentious. The

arguments for and against anti-suit injunctions are finely

balanced and it is not possible to predict what the

response of the ECJ will be.

Consequences of the ECJ’s rulingA ruling that anti-suit injunctions cannot be used to support

the arbitration process would have important

consequences for arbitration in the EU. The apparent effect

would be that arbitration agreements may be undermined

at any time by litigation being commenced in the courts of

another EU state with jurisdiction under the Brussels I

Regulation to hear the dispute. The courts’ power to grant

anti-suit injunctions to stay proceedings outside the EU

(both in relation to court proceedings and arbitration) will,

of course, be unaffected by the ECJ’s decision.

Lord Hoffmann warned that if the ECJ were to limit the

courts’ power to issue these injunctions, the European

Union would be imposing an unnecessary handicap on

itself. Other jurisdictions such as New York, Bermuda and

Singapore, which continue to offer this mechanism, would

seem far more attractive by comparison.

Concluding remarksThe English courts have shown that they are in favour of a

liberal approach when construing arbitration clauses. All

three cases discussed here serve to highlight the

desirability of clear, and not unduly complex, drafting. For

instance, would the arguments in Fiona Trust ever have

arisen had the arbitration clause specified that any

disputes as to the existence, validity or termination of the

charterparty would be subject to arbitration?

One commonly used approach is to state that: ‘Any

dispute arising out of or in connection with this agreement,

including any question regarding its existence, validity or

termination’ should be referred to arbitration. Where parties

are drafting complex dispute resolution mechanisms, advice

should be sought. The cases also highlight the danger of

limiting the courts’ discretion to assist the arbitration

process. The arbitration community will watch the ECJ with

interest over the next few years. �

DRAFTING �

Film Finance Inc v The Royal Bank of Scotland

[2007] EWHC 195 (Comm)


[2007] EWCA Civ 20

Through Transport Mutual Insurance Association (Eurasia) Ltd v

New India Assurance Co Ltd

[2005] 1 Lloyd’s Rep 67

West Tankers Inc v RAS Riunione Adriatica di Sicurta SpA & anor

[2007] UKHL 4


� ENFORCEMENT


Any observer of the international arbitration scene

cannot fail to be struck by the alacrity with which

the leading players have developed significant

practices founded on the resolution of investment

disputes under bilateral and multilateral investment

treaties. Much attention has rightly been focused on

such an intellectually stimulating and rewarding

area of practice, but little attention has been paid to

the harsh commercial reality that arbitral awards

issued by even the most august of international

arbitration tribunals are of little value unless and

until they can be turned into cash.

It is at the later stage – where the award creditor moves

from the refined atmosphere of public international law

tribunals into the domestic arenas of enforcement and

execution of the award – that reality is increasingly likely to

hit. Because of the time and expense that can be involved in

enforcement and execution, and the uncertainty (which can

be accentuated by the sometimes unpredictable exercise of

discretion by domestic judges), would-be BIT claimants

would be wise to invest in finding out just what may be

involved in collecting on an award. This requires

understanding an area of law comprising international

treaties and a web of domestic laws on state and sovereign

immunity mixed with issues of public policy. This article will

consider some of the issues that may be encountered.

ICSID ConventionThe ICSID Convention provides an international regime for

arbitration of investment disputes. There are 143 parties to

the ICSID Convention, under which legal disputes between

states and foreign investors are submitted to binding

Reality bitesOnly when arbitrations reach the enforcement stage does commercial reality kick

in for successful claimants, who realise how tricky it can be to achieve execution

of their award. DLA Piper’s Matthew Saunders and Claudia Salomon explain

Matthew Saunders and Claudia Salomon are co-leaders of the

international arbitration practice of DLA Piper

AR07 p58-61 DLA 19/4/07 14:00 Page 58

�

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arbitration administered by the International Centre for

the Settlement of Investment Disputes. The ICSID

Convention provides a comprehensive procedure for

investment arbitrations, and excludes the application of

national arbitration law. Enforcement of an ICSID award is

governed by the ICSID Convention, whereas enforcement

of other investment treaty awards (such as those rendered

in UNCITRAL Rules arbitrations) is governed by the New

York Convention.

Article 54 of the ICSID Convention requires contracting

states to enforce an ICSID award ‘as if it were a final

judgment of a court in that state.’ There are no grounds for

refusal of enforcement, although Article 55 makes clear that

the Convention does not derogate from the law in force in

any contracting state relating to immunity of the state from

execution. Thus, the minefield that is domestic law on the

issue of sovereign immunity remains to be negotiated.

Sovereign immunityImmunity from execution arises when execution

measures (following the court’s recognition and

enforcement of an arbitral award) are to be taken against

a state’s assets. States continue to apply such immunity,

with the consequence that a successful ICSID claimant

may suffer a pyrrhic victory unless assets owned by the

state but not immune from enforcement/execution

(commonly those in use for commercial purposes) can be

identified. Having gone to the significant costs of

obtaining an ICSID award, and leave to enforce the award

(pursuant to Article 54(2)), the claimant may find itself

unable to obtain satisfaction thereunder.

There is an apparent contradiction in a state’s waiver of

immunity from jurisdiction under Article 54 (thereby

enabling the successful party to obtain leave to enforce the

award) but not from execution (pursuant to Article 55). This

incongruity may be resolved by considering that the failure

to waive immunity from execution does not imply that the

successful party cannot execute against any of the state’s

assets. It is simply that such execution is subject to laws on

immunity restricting the categories of state assets which

may be executed against. Of course the practical reality is

that there are very few state assets which will not fall under

the protective cloak of immunity.

Key cases

The case of AIG Capital Partners Inc & anor v Republic of

Kazakhstan & ors [2005], before the English High Court, is

an example of the broad protection that sovereign

immunity affords states. The claimants brought a claim

against the Republic of Kazakhstan (ROK) under the

bilateral investment treaty between the US and the ROK, in

relation to the cancellation by the ROK of a project to

develop a housing complex and expropriation of land

without compensation. The ICSID award recorded that the

ROK’s actions amounted to expropriation, were arbitrary,

in wilful disregard of due process of law and ‘were

shocking to “all sense of judicial propriety”’.

The ROK failed to comply with the award and the

claimants sought to enforce it against securities and cash

held by third parties in London on behalf of the National

Bank of Kazakhstan. The claimants contended that these

assets were intended for use for commercial purposes,

therefore falling outside the protections of the UK State

Immunity Act 1978 (SIA). The SIA provides that property of

a state is immune from enforcement unless it is intended

for use for commercial purposes. It also provides that the

property of a state’s central bank should not be regarded

as intended for such purposes. The Court held in favour of

the ROK – pursuant to the SIA, all property of a central

bank was found to enjoy complete immunity from

enforcement, regardless of whether the property is used

for commercial purposes.

While this decision does not depart from previously

established principles of sovereign immunity – nor indeed

Article 55 of the ICSID Convention, which echoes those

principles – it underlines the risk that a defaulting state

may be immune from execution against an ICSID award.

Similarly, in Svenska Petroleum Exploration AB v

Government of the Republic of Lithuania and anor [2006]

(a case concerning the enforcement in London of an

arbitration award obtained in International Chamber of

Commerce proceedings in Denmark), the English Court of

Appeal noted that the waiver of sovereign immunity

contained in s9 of the SIA regarding enforcement of

arbitration awards extended to both domestic and foreign

awards. The Court concluded that, in order to dispose of

the appeal, it did not need to decide the question of

whether the relevant transaction (to do with the

exploitation of mineral resources) should properly be

characterised as a ‘commercial transaction’ or an exercise

of sovereign authority, within the meaning of s3 of the SIA:

‘In the circumstances we prefer to express no concluded

opinion on the question.’ It is to be expected that courts –

as here – will seek wherever possible to avoid founding

decisions on the public/private divide.

In the US, the Foreign Sovereign Immunities Act (FSIA)

similarly allows execution on property of the state,

provided that the property is ‘used for a commercial

activity in the United States’ (FSIA s1610(a)). In the case of

Liberian Eastern Timber Corp (LETCO) v Government of the

Republic of Liberia [1986], the US District Court for the

Execution is subject to laws on immunity

restricting the categories of state assets

which may be executed against.

AR07 p58-61 DLA 19/4/07 14:00 Page 59


Southern District of New York granted enforcement of an

ICSID award against Liberia, but refused execution against

fees and taxes payable by shipowners in the US to Liberia.

The award arose from an ICSID claim by LETCO against

Liberia for the termination of a concession to harvest and

exploit Liberian timber.

Following LETCO’s initiation of arbitration proceedings,

Liberia refused to participate in the arbitration and

commenced an action in the Liberian courts. Nonetheless,

the arbitral tribunal proceeded to enter an award against

LETCO for over $9m. Liberia opposed a Writ of Execution

issued to the US Marshal for the Southern District of New

York, on the basis that execution against its property

would contravene the FSIA. Liberia argued that by

entering into the forestry concession contract with LETCO

it had not waived its sovereign immunity to enforcement

or execution. The District Court disagreed. It was held that

Liberia, as a signatory to the ICSID Convention, had waived

its sovereign immunity in America with respect to

enforcement of the arbitral award. However, Liberia was

not found to have waived its sovereign immunity to

execution against its assets. The collection of taxes by the

government of Liberia constituted the exercise of a

sovereign power, and not a ‘commercial activity’ within

the exception provided for in s1610(a) of the FSIA, and

therefore, such taxes were immune from execution.

In a subsequent application to the US District Court for

the District of Columbia, the Court refused execution against

bank accounts of the Embassy of Liberia on the grounds of

diplomatic immunity, pursuant to Article 25 of the Vienna

Convention on Diplomatic Relations 1961 and sovereign

immunity under s1609 of the FSIA, and an account of the

central bank of Liberia on the ground of sovereign

immunity. The Court stated that ‘… the concept of

“commercial activity” should be defined narrowly because

sovereign immunity remains the rule rather than the

exception.’

A practical solution to the issue of sovereign immunity

is inclusion, in the relevant contract or treaty with the

state, of a clause expressly waiving immunity from

execution. ICSID recommends the following model clause

(Clause 15) for that purpose:

The host state hereby waives any right of sovereign

immunity as to it and its property in respect of the

A practical solution to the issue of

sovereign immunity is inclusion in the

relevant contract of a clause expressly

waiving immunity from execution.

�

� ENFORCEMENT

enforcement and execution of any award rendered by an

Arbitral Tribunal constituted pursuant to this Agreement.

However, even such clauses will not necessarily lead to

the full panoply of execution processes being available – for

example, processes of committal and fining will not be

available where the sovereign defendant has failed to

comply with an order as to the disclosure of assets.

Public policyCourts may refuse recognition and enforcement of an

arbitral award if it would be contrary to the public policy

(or ‘ordre public’) of the country in which it is sought. The

scope of the public policy exception is defined by the

domestic law of the country of enforcement and there is

no public international law definition of the concept. Due

to the lack of certainty as to the remit of the public policy

exception, this argument may be raised by an

unsuccessful respondent state in order to delay or avoid

enforcement. While this is not a defence exclusively

available to states, there is clearly scope for arguments

concerning bribery and corruption of government officials

in relation to the procurement of contracts with states.

However, the public policy grounds for refusing

enforcement are narrow, and such challenges rarely

successful. For example, an award requiring payment under

a contract for assistance in obtaining a government contract

in Algeria was enforced by the English Commercial Court,

notwithstanding that the contract breached Algerian law

(see Omnium de Traitement et de Valorisation SA v Hilmarton

Ltd [1999]). The English Court found that there were no public

policy grounds on which enforcement of the award could be

refused, because the Swiss arbitral tribunal’s express finding

that there had been no bribery or corrupt practice was

‘unchallengeable’. The Court considered that while a tribunal

applying English law might have arrived at a different

conclusion, ‘as a matter of policy of the upholding of

international arbitral awards’ the award should be enforced.

The Court relied in this regard on the Court of Appeal’s

statement, in Westacre Investments Inc v Jugoimport-SDRP

Holding Co Ltd [1999], that if an arbitral tribunal determines

to enforce a contract that does not offend the domestic

public policy under the proper law of the contract or the

curial law, the arbitral award should be enforced,

notwithstanding that English domestic public policy may

have taken a different view. In Westacre, the Court of Appeal

permitted enforcement of an award arising from a contract

that was for the purchase of personal influence from Kuwait

government officials in relation to arms contracts. On the

face of the award, performance of the contract was not

contrary to its proper law and the curial law, or the law of

the place of performance. While a contract for the purchase

of personal influence was contrary to English public policy, it

did not infringe a rule of English public policy so serious that

AR07 p58-61 DLA 19/4/07 14:00 Page 60


the Court would not enforce it whatever its proper law or

place of performance (as would be the case for bribery, for

instance). As a result, the public policy of finality and

enforcing awards outweighed the public policy of not

enforcing illegal contracts.

However, in Soleimany v Soleimany [1999], the Court of

Appeal refused to enforce an award concerned with an

illegal contract for the smuggling of carpets out of Iran. In

that case the Court considered that it would be contrary to

public policy to enforce an award which, on the face of it,

related to a contract contrary to the law of the place of

performance. This is in distinction to Westacre, in which, at

least on the face of the arbitral award, the contract was not

contrary to the law of Kuwait, the place of performance.

Unless there is good reason for the English courts to

doubt the reliability of an arbitral award, they will not embark

on an inquiry into the issue of illegality. It is clear that,

consistent with the English courts’ non-interventionist

approach to arbitration proceedings generally (as recognised

by s1(c) of the Arbitration Act 1996), the courts are resistant to

attempts by defendants subject to enforcement proceedings

to reopen facts found by arbitrators.

The US courts have taken a similar pro-enforcement

approach, and declared that ‘the [New York Convention’s]

public policy defence should be construed narrowly’ (see

Parsons & Whittemore Overseas Co v Société Générale de

l’Industrie du Papier (RAKTA) & anor [1974]). In the US,

‘enforcement of foreign arbitral awards may be denied on

this basis only where enforcement could violate the forum

state’s most basic notions of morality and justice‘. The public

policy defence is rarely invoked successfully in the US courts.

In Parsons, the Court made clear that ‘national policy’ of

the US government could not be equated with ‘public policy’

for the purposes of resisting enforcement of an arbitral

award. The award, arising from an American engineering

firm’s failure to complete an Egyptian construction project in

the wake of the Six Days War in 1967, when Egypt severed

relations with the US, was held not to contravene public

policy. The Court commented, ‘To read the public policy

defense as a parochial device protective of national political

interests would seriously undermine the [New York

Convention’s] utility’. The Court stated that considerations of

reciprocity counselled against an expansive reading of the

defence as foreign courts may otherwise frequently rely on it

to refuse to enforce arbitral awards rendered in America.

In another case, a public policy defence to enforcement

of an arbitral award arising from a contract alleged by a

Russian airline to violate the US’s foreign policy with

respect to Iran was disallowed on the basis that it was not

established that the contract violated the US’s most basic

notions of morality and justice (see MGM Productions Group

Inc v Aeroflot Russian Airlines [2004]).

The US courts have also rejected attempts to resist

enforcement of foreign arbitral awards on the grounds of

claims that an award conflicted with federal law (eg

Brandeis Intsel Ltd v Calabrian Chemicals Corp [1987])

or that a party to the relevant agreement committed fraud

(eg Indocomex Fibres Pte Ltd v Cotton Co International

Inc [1996]).

ConclusionAs the number of awards obtained against states rises, it

may be increasingly necessary for award creditors to seek

to enforce those awards pursuant to the ICSID Convention

(or the New York Convention where the ICSID process is

not followed) and onward into the minefield of sovereign

immunity and public policy under domestic law. While the

public policy exception to enforcement is very narrow in

scope, domestic rules on sovereign immunity place real

restrictions on the ability to enforce an arbitral award. It

may be expected that the politically contentious projects

underlying BIT proceedings may provoke controversy

where enforcement proceedings give rise to opportunities

to cast international award creditors in a negative light.

This can often be the case with significant infrastructure

projects in poverty-stricken countries, perhaps where

newly elected democratic governments face awards

arising from the ‘misbehaviour’ of predecessor

governments. Overall, it is clear that those who set off

down the BIT path without a full appreciation of the

challenges and uncertainties they may face in turning an

award into cash, do so at their peril. �

ENFORCEMENT�

AIG Capital Partners Inc & anor v Republic of Kazakhstan & ors

[2005] All ER (D) 223 (Oct)

Brandeis Intsel Ltd v Calabrian Chemicals Corp

656 F Supp 160 (SDNY 1987)

Indocomex Fibres Pte Ltd v Cotton Co International Inc

916 F Supp 721 (WD Tenn 1996)

Liberian Eastern Timber Corporation (LETCO) v

Government of the Republic of Liberia

650 F Supp 73 (SDNY 1986); ICSID case no ARB/83/2;

659 F Supp 606 (DCDC 1987)

MGM Productions Group Inc v Aeroflot Russian Airlines

91 Fed Appx 716 (2nd Circuit 2004)

Omnium de Traitement et de Valorisation SA v Hilmarton Ltd

[1999] 2 All ER (Comm) 146

Parsons & Whittemore Overseas Co Inc v

Société Générale de l’Industrie du Papier (RAKTA) & anor

508 F 2d 974 (2nd Circuit 1974)

Soleimany v Soleimany

[1999] QB 785

Svenska Petroleum Exploration AB v Government of the Republic of Lithuania

[2006] EWHC Civ 1529

Westacre Investments Inc v Jugoimport-SDRP Holding Co Ltd

[1998] 4 All ER 570

AR07 p58-61 DLA 19/4/07 14:00 Page 61

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AR07 p62 19/4/07 13:12 Page 62


CONTENTS �

64 Portugal

Checklists

INTERNATIONAL REFERRALS

Sweden 66

68 Greece

69 Japan

69-70 Portugal

Directories

Romania 70-71

Switzerland 71

United Kingdom 72

AR07 Directory contents 19/4/07 13:16 Page 63

� JURISDICTIONAL CHECKLISTS


Portugal Abreu Advogados

The Portuguese business world is experiencing an increasing

amount of litigation. In fact, most cases handled by our firm

during the last year relate to corporate matters. Clients tend to

see litigation as one of the ways to achieve their goals. Indeed,

last year our firm ensured the takeover of one of the largest cable

TV companies and one of the largest five-star hotels in Lisbon

through an aggressive litigation strategy encompassed by a

complex funding structure set in place by the firm’s M&A team.

We usually set up teams for each assignment, which include

members of the litigation team, even before legal proceedings

have begun. This allows the team to anticipate the consequences

of legal proceedings in case of disputes and helps to outline an

adequate contractual or corporate structure in view of the client’s

needs. But does the Portuguese legal system favour this

business-driven approach?

The Portuguese legal systemThe main problem with the Portuguese court system is its lack of

timely response. Besides the obvious lack of efficient resources,

Portuguese judges tend to have a strict formal approach to all

procedural matters. Although most of the decisions are right and

fair, the proceedings are rather formal and distract judges from

what should require their main attention: serving justice.

However, we have strong expectations regarding the changes in

procedural law announced by the government.

Changes in civil procedural law Towards the end of June, the amendments to the rules on civil

appeals will be approved, as will the replacement of the Código das

Custas Judiciais (Court Fees Code) by a new Regulamento das

Custas Processuais (Court Fees Regulation). Given the range of

these amendments, we will only refer below to the ones we deem

to be the main changes. As to the rules concerning civil appeals,

the amounts that define the court jurisdiction (alçada) will be

updated. The amounts of the courts of first instance will be

increased from €3,740.98 to €5,000, and Tribunais da Relação

(which are normally the courts of second instance) from

€14,963.94 to €30,000. It is estimated that the number of appeals

to the Supreme Court of Justice (SCJ) may decrease by about half.

The two stages of submission – the appeal and the written

representations – will be pooled into one single stage, as well as

the court decisions relating to the admission of the appeal and

its remittance to the superior court. This will help to decrease the

time spent during the appeals procedures.

Ordinary appeals in the courts of first and second instance

will be merged, as will the extraordinary appeals. A system of

dupla conforme, similar to the one used in penal procedure, will

be introduced. This means that there will be no appeal against a

judgment of the court of second instance that confirms the

judgment of the court of first instance without a dissenting

opinion, even if on different grounds. The dissent is of one of the

judges of the court of second instance, as the decision may be

taken by a majority of the judges of the court of second instance,

instead of being unanimous.

As compensation, the possibility of appealing against any

decision that contradicts the established case law will be

introduced. This is a new concept in civil law. There will be

established case law when the SCJ, within the same legislation

and point of law, delivers three consecutive judgments in the

same direction, without further dissenting judgment. A new

extraordinary appeal against SCJ judgments that contradict

established or unified case law will also be created.

The new Court Fees Regulation will gather all the procedural

rules on this subject, having as the main objective the simplification

of the existing system. Therefore, the court fees will be paid through

a single charge that will vary according not only to the value of the

legal action, but also to its complexity. The expenses due at the end

of the action will reflect the real costs of the procedure.

The liability of the winning party may be aggravated if the

plaintiff could have used a type of procedure simpler than the one

they used (for example, if they could have used an injunction, but,

instead, they used the common civil procedure).

ConclusionAccording to the available data, we believe that these amendments

will have a positive impact on the simplification of the procedures

and the time spent on the proceedings. Still, arbitration will remain

common in construction works, IT services and specific industries

that involve complex contractual arrangements. Arbitrations take

place mostly under the rules of the Portuguese Arbitration Act or

the ICC. Our experience shows that more and more clients are

resorting to arbitration, mostly in matters that require specific

know-how (such as IT). A successful arbitration lawyer has to mix

strong procedural knowledge with an effective business-driven

approach to client matters. Most of the disputes relate to complex

specific economic and industry sectors that require solid in-depth

awareness and experience from both advisers to parties or

arbitrators – precisely the kind of qualities one will have difficulty

finding in civil court judges.

Abreu Advogados

Av. das Forças Armadas 125-12

1600-079 Lisbon, Portugal

www.abreuadvogados.com • Tel: +351 21 723 1800

Fax: +351 21 723 1899 • Contact: Miguel Castro Pereira

[email protected]

AR07 p64-65 Abreu checklist 19/4/07 12:55 Page 64

AR07 p64-65 Abreu checklist 19/4/07 12:55 Page 65

� JURISDICTIONAL CHECKLISTS


Sweden Hammarskiöld & Co

New SCC RulesSweden has long been a preferred place for hosting

international commercial arbitration. The Arbitration Institute of

the Stockholm Chamber of Commerce (the SCC Institute) was

established in 1917 and quickly became one of the world’s

leading centres for international commercial arbitration. The

SCC Institute has long since had arbitration rules that are

applicable in the situation where the parties have agreed on

them. On 1 April 1999, a new Swedish Arbitration Act (the Act)

came into force, replacing the old act from 1927. The Act provides

a modern framework for both domestic and international

commercial arbitration in Sweden and is influenced by the

UNCITRAL Model Law. On the same date, the SCC Institute

adopted new arbitration rules, which have been considered

to be very suitable for both national and international

commercial arbitrations.

In 2006 the SCC Institute decided to update its rules to take

into account the latest trends in the field of international

commercial arbitration. In making such a revision, the SCC

Institute also modified some provisions to remove previous

uncertainty regarding their interpretation. The rules of the other

leading arbitration institutes, as well as the existing UNCITRAL

Rules, were considered when revising the SCC Rules.

The new SCC Rules entered into force on 1 January 2007 and will

be applied to any SCC arbitration commencing on or after 1 January

2007, unless otherwise agreed by the parties.

Salient features of the new SCC RulesWe will below account for some of the new features of the new

SCC Rules.

Provisions on evidence elaborated

One of the changes to the new SCC Rules is amended provisions

on evidence, which now state, inter alia, that the arbitral tribunal

may determine the admissibility, relevance, materiality and

weight of the evidence. In addition, following a request from

one of the parties, the arbitral tribunal may also order the other

party to produce any documents or other evidence that may be

relevant to the outcome of the case.

Consolidation permitted

Another new major feature of the new SCC Rules is that, upon

submission of a request for arbitration concerning a legal

relationship in respect of which an arbitration between the

same parties is already pending under the SCC Rules, the SCC

Board may, at the request of a party, decide to include the claims

contained in the request for arbitration in the pending

proceedings. The possibility to consolidate two cases is

completely new compared to the old SCC Rules. It should be

noted that a decision to include new claims in a pending

proceeding between the same parties will only be made after

consulting the parties and the arbitral tribunal.

The seat of arbitration

According to the new SCC Rules, the term ‘place of arbitration’

has been changed to ‘seat of arbitration’. The change is partly a

consequence of a highly criticised ruling by the Svea Court of

Appeal (Titan v Alcatel, case no T 1038-05) where the Court held

that if the place of arbitration is Sweden, the proceedings must

to a certain extent be held in Sweden in order for a court to

consider the dispute to be of a Swedish interest, in case any of

the parties wish to challenge the arbitral award. According to

the criticism, sufficient connection should exist regardless of

where the proceedings are held, provided that the parties have

designated Sweden as the place of arbitration (observations by

Patricia Shaughnessy, Stockholm International Arbitration

Review 2005:2, page 274). The term ‘seat of arbitration’ can be

found in other institutional rules and is not merely a geographic

location, but a technical legal term.

The arbitrators can grant interim measures

The SCC Institute has further implemented the UNCITRAL Rules

regarding interim measures in the new SCC Rules. For the

purpose of supporting enforceability of interim measures,

the new SCC Rules allow the arbitral tribunal to grant any

interim measure it deems appropriate in the form of an order

or an award.

Separate award on advance on costs possible

According to both the old and new SCC Rules, the Institute will

give a party the opportunity to pay the other party’s advance

on costs if the other party fails to make such required payment

in time. If the failing party’s advance on costs is not paid by

the opposing party, the SCC Institute will dismiss the claim. In

order to avoid dismissal, such payment is often made by the

opposing party.

According to the old SCC Rules, the party, having made such

payment for its counterparty, could not obtain a separate award

obliging the other party to pay compensation for the advance

paid. The new SCC Rules state that the arbitral tribunal may, at

the request of the party that makes such payment, make a

separate award for reimbursement of such payment from the

counterparty. The amendment is a consequence of the Swedish

Supreme Court ruling in 3s v Sky Park (case report of the Swedish

Supreme Court, NJA 2000, page 773 also reported in Stockholm

Arbitration Report 2001:2, page 75) where (in an ad hoc

arbitration) it ruled that a separate award could not be obtained

unless the parties had specifically agreed thereupon.

AR07 p66-67 Hammarskiold 19/4/07 13:07 Page 66


JURISDICTIONAL CHECKLISTS �

Sweden Hammarskiöld & Co

ConclusionsThe new SCC Rules provide a comprehensive and efficient body

of rules for settling disputes in a neutral, fast, independent and

cost-efficient manner. According to information from the SCC

Institute, more than half of the SCC arbitration cases are

international. During the period from 1999 to 2006, parties from

more than 50 countries participated in arbitrations handled by

the SCC Institute. Many of the cases did not even involve

Swedish parties.

The new SCC Rules will clearly contribute to enhance the SCC

Institute’s reputation as a preferred venue for international

commercial arbitration. In addition, the 1999 Act provides a

flexible, modern and business-friendly approach that conforms to

internationally accepted principles of arbitration. The possibilities

to challenge an arbitral award under the Act are limited and

Swedish courts are very reluctant to set aside arbitral awards. The

Swedish courts have in case law emphasised the final and binding

effect of arbitral awards. An arbitral award can be set aside by the

Court of Appeal in challenge proceedings, but only on very limited

grounds related merely to form; this means that the courts cannot

retry the case on its merits. Moreover, only in exceptional cases will

the Court of Appeal grant the losing party the opportunity to

appeal to the Supreme Court, so challenge proceedings are

therefore normally tried only by the Court of Appeal. The chances

of having a court set aside an arbitral award are very slim, and any

court proceedings initiated for that purpose will be both limited

and fairly swift.

Hammarskiöld & Co

Skeppsbron 42

P.O. Box 2278, SE-103 17 Stockholm

www.hammarskiold.com

Tel: +46 8 578 450 00 • Fax: +46 8 578 450 99

Contacts: Per Sundin, Lars Ulrichs or Erik Wernberg

Hammarskiöld & Co is an independent business law firm. The firm’s lawyers have broad experience across the range of legal issues that

companies can expect to confront. The firm has substantial expertise in advising on and handling the international implications of busi-

ness law issues and has a strong international practice. In order to meet the clients’ needs, the firm has formed a number of specialist

groups focusing on different practice areas. At the same time, the full resources of the firm are always available to clients to ensure that

their needs are met. The main areas are mergers and acquisitions, banking and finance, litigation and arbitration, EU and competition law,

TMT and intellectual property. The firm is a true partnership and is committed to providing the highest quality legal services.

Hammarskiöld & Co’s litigation and arbitration practice group specialises in commercial litigation and arbitration, both domestic and

international. The lawyers within the group have vast experience in both domestic and international arbitration. The lawyers frequently

participate in arbitrations under the Rules of the International Chamber of Commerce and the Stockholm Chamber of Commerce. The

practice group also handle other institutional and ad hoc arbitration proceedings. The members of the practice group also act as arbitra-

tors. The litigation lawyers are further active in district, appellate and supreme courts in large commercial disputes, which often involve

international aspects. The lawyers are used to participate in disputes involving application of foreign law and are experienced in obtaining

injunctions and enforcements in support of foreign proceedings.

The practice group place special focus on client service and on the client’s commercial interests. Where expertise in special areas is

required, the group works closely together with the firm’s other specialist groups to ensure that the clients’ needs are met with optimum

efficiency. The practice group has extensive contacts with well-regarded international law firms specialising within the field of litigation

and arbitration.

Skeppsbron 42, P.O. Box 2278 SE-10317 Stockholm Sweden

Website: http://www.hammarskiold.se, telephone: +46 8 578 450 00

Contacts: Per Sundin, e-mail: [email protected]

Lars Ulrichs, e-mail: [email protected]

Erik Wernberg, e-mail: [email protected]

AR07 p66-67 Hammarskiold 19/4/07 13:07 Page 67

� LEGAL SERVICES DIRECTORY


GR

EEC

E Kyriakides Georgopoulos & Daniolos Issaias Law Firm

• Corporate and commercial

• Mergers and acquisitions

• Banking and finance

• Intellectual/industrial property

• Competition law

• Public works and procurement

• Litigation, arbitration

and mediation

• Employment law

• Energy law

• Pharmaceutical law

• Telecommunications

• Aviation law

• Maritime law

• Securities and regulations

• Administrative law

• Taxation

• Information technology

Athens – Head office

268, Kifissias Ave, 152 32 Halandri, Greece

Phone: +30 210 817 1500 Fax: +30 210 685 6657/8


Piraeus – Branch office

Alassia Building, 13, Defteras Merarchias Str, 185 35 Piraeus, Greece

Phone: +30 210 413 8800 Fax: +30 210 413 8809


Thessalonica – Branch office

17, Ethnikis Antistasseos Str, 551 34 Thessalonica, Greece

Phone: +30 231 047 8640 Fax: +30 231 045 5126


Website: www.kgdi.gr

Languages spoken: English, French,

German, Italian, Russian and Spanish

Number of lawyers: 79

Number of lawyers in Athens: 53

Other offices:

Thessalonica, Piraeus

Contacts:

Anthony B Hadjioannou, John C Kyriakides

In April 2006 two long-established and

renowned Greek law firms, Kyriakides –

Georgopoulos Law Firm (established in 1933)

and Daniolos, Issaias & Partners Law Firm

(established in 1923), decided to merge and

form Greece’s largest multidisciplinary law

firm in order to cover the needs of their

respective clients in all fields of legal

practice.

Kyriakides Georgopoulos & Daniolos

Issaias Law Firm has offices in Athens,

Piraeus and Thessalonica through which the

firm’s attorneys offer their legal services and

expertise to high-profile Greek and

international clients.

Our objective and commitment is to

provide high-quality legal services and to

meet the evolving demands of legal practice,

endeavouring to be effective, reliable and

consistent. The successful handling of our

clients’ affairs is attributed to our

professionalism, efficiency and expertise,

qualities that our firm constantly

demonstrates.

The firm’s attorneys, in addition to their

specialisation in various fields of law, are

fluent in English and a considerable number

of other languages including French,

German, Italian, Russian and Spanish.

About the firm

AR07 Directories p68-72 19/4/07 15:40 Page 68

Nagashima Ohno & Tsunematsu

Nagashima Ohno & Tsunematsu is Japan’s foremost provider of international and

commercial legal services. The firm’s practice areas include arbitration and litigation;

multimedia, technology and intellectual property; real estate; capital and debt markets;

mergers & acquisitions and new ventures; financial services; corporate and commercial;

energy; taxation; and construction. Our arbitration and litigation practice includes:

Kioicho Building, 3-12, Kioicho, Chiyoda-ku, Tokyo 102-0094, Japan

Phone: +81 3 3288 7000 Fax: +81 3 5213 7800

E-mail: [email protected] Website: www.noandt.com

Languages spoken:

Japanese, English, French, German, Chinese


Contacts:

Hisashi Hara,

Ms Yuko Tamai

(Dai-ichi Tokyo Bar Association)

• Antitrust litigation

• Commercial litigation

• Banking and insurance litigation

• Employment and labour litigation

• Intellectual property litigation

• Products liability litigation

• Real estate litigation

• Tax litigation


LEGAL SERVICES DIRECTORY�JA

PA

NP

OR

TU

GA

L

Miranda Correia Amendoeira & Associados

• Litigation and arbitration

• General corporate business and

commercial law


• Project finance and PPPs

• Privatisations and public tenders

• Energy and natural resources

• Banking and finance

• Oil and gas

• Shipping

• Real estate

• Employment

• Taxation

• Agency and distribution

• Intellectual property and IT

• Environment

• Administrative

• EU and competition

Rua Soeiro P. Gomes, L 1, 2nd Floor, 1600-196 Lisbon, Portugal

Phone: +351 21 781 4800 Fax: +351 21 781 4802

Website: www.mirandalawfirm.com

Languages spoken:

Portuguese, English, French and Spanish

Number of partners: 13

Number of fee-earners: 80

Contact partner:

Agostinho Pereira de Miranda

Chairman and head of arbitration

practice group

[email protected]

Direct line: +351 21 781 4811

Miranda Correia Amendoeira & Associados

(Miranda) is a Portuguese full-service firm,

which counts among its clients a significant

number of Fortune 500 and FT 100companies.

Working mainly with foreign corporate

clients, Miranda has developed extensive

expertise in arbitration and litigation, related

to a wide range of legal areas.

The firm’s arbitration practice is headed

by Mr Agostinho Pereira de Miranda, a

member of the Steering Committee of the

Portuguese Arbitration Association and

chairman of its Ethics Council.

The firm is a member of Miranda Alliance

– an international association of independent

lawyers and law firms, currently covering

nine countries: Angola, Cape Verde,

Equatorial Guinea, Guinea-Bissau, US

(Houston, TX), Macao (China), Mozambique,

Portugal and São Tomé e Príncipe. In addition

to its Portuguese practice, the opportunities

created by the Miranda Alliance network

have allowed Miranda to act in a number of

arbitration cases related to the

aforementioned jurisdictions.

For more information on Miranda and

its international arbitration and litigation

practice, please visit:

www.mirandalawfirm.com

About the firm




Sérvulo Correia & Associados

• Administrative law and

public procurement

• ADR and litigation


• Finance

• Tax

• Real estate, construction

and environmental

• Criminal

• Regulatory and competition

Rua Artilharia UM 79-5, 1250-038 Lisbon, Portugal

Phone: +351 21 383 6900 Fax: +351 21 383 6901

E-mail: [email protected] Website: www.servulo.com

Languages spoken: Danish, English, French,

German, Italian, Portuguese, Spanish



Contacts:

Rui Medeiros, Bernardo Diniz de Ayala

Member: Legalink

Sérvulo Correia & Associados has broad

experience of arbitration and alternative

dispute resolution, providing a full range of

quality and effective services,

complementing its capabilities in other areas

of litigation. Constantly alert not only to its

clients’ needs, but also to substantive and

procedural changes in the legal system, the

firm acts regularly in high-profile arbitration

and alternative dispute resolution

procedures. According to the area of

practice, the firm’s lawyers will either

represent one of the parties or act as

arbitrators.

Although Sérvulo Correia & Associados is

qualified to intervene in arbitration in most

legal areas, and boasts acknowledged

expertise in the field of international

arbitration, it is particularly well

recommended for representing its clients in

the fields of public works contracts and

concessions and public procurement.

About the firm

Musat & Asociatii

Litigation/arbitration is a substantial

practice of Musat & Asociatii.

The litigation department is organised

along departmental lines and has acquired

the expertise and ability to offer litigation

capabilities on large complex matters. It is

comprised of 20 lawyers, all of whom are

top litigators with a business-oriented

approach to the assessment and conduct of

litigation cases on behalf of our clients. Our

litigation team has successfully represented

governmental bodies, major privately-held

companies, as well as leading banks in

multi-million-dollar cases in national and

international arbitration (ICSID, ICC and

UNCITRAL procedures).

43, Aviatorilor Boulevard 1st District 011853, Bucharest, Romania

Phone: +40 21 202 5900 Fax: +40 21 223 3957

E-mail: [email protected] Website: www.musat.ro


Number of associates: 66

Number of counsel: 35

Contacts:

Gheorghe Musat, managing partner

[email protected]

Ion Dragne, partner

[email protected]

RO

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LEGAL SERVICES DIRECTORY�SW

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Tuca Zbârcea & Asociatii

Our litigation/arbitration practice group has over 25 lawyers dedicating 100% of their time to

handling all aspects of litigation and arbitration procedures.

The firm has represented clients at all levels of the local judicial system, from the lower

courts to the High Court of Justice, and in special proceedings in the Constitutional Court

with relation to a broad range of complex cases. The group also acts successfully in public

international law arbitration and has in-depth knowledge of ICC, UNCITRAL and ICSID

arbitration procedural rules. We have successfully assisted both investors and state bodies in

disputes flowing from breaches of bilateral investment protection treaties.

Victoriei Square, 4-8 Nicolae Titulescu Ave, America House, West Wing, 8th Floor, Sector 1,

Bucharest 011141, Romania

Phone: +40 21 204 8890 Fax: +40 21 204 8899

E-mail: [email protected] Website: www.tuca.ro


Number of associates: 53

Number of counsel: 30

Contacts:

Robert Rosu, partner and head of firm’s

litigation/arbitration practice group


Cornel Popa, partner


5

, ,

Bär & Karrer

• Banking, financing and

regulatory matters

• Capital markets

• Competition law

• General corporate and

commercial matters

• Intellectual property

and technology

• International arbitration

• Listed companies

• Litigation

• Media, entertainment and sports


and transactions

• Notarial services

• Private clients and trusts and estates

• Reorganisation and insolvency

• Tax

Brandschenkestrasse 90, 8027 Zürich, Switzerland

Phone: +41 58 261 5000 Fax: +41 58 261 5001

E-mail: [email protected] Website: www.baerkarrer.ch

Languages spoken:

English, French, German, Italian


At this office: 80

Contacts:

Dr Felix R Ehrat

Eric Stupp

Other offices:

Geneva, Lugano,

Zug, London

Walder Wyss & Partners


• Litigation, international legal

assistance

• Banking

• Capital markets

• Structured financial products

• Insurance

• M&A, business reorganisation


• EU, competition, environment,

energy and utilities

• Healthcare, life sciences

• IT, multimedia and telecommunications

• Arts, sports and entertainment

• Intellectual property,

copyright and advertising

• Venture capital and private equity

• Insolvency and restructuring

Seefeldstrasse 123, PO Box 1236, CH-8034 Zürich, Switzerland

Phone: +41 44 498 9898 Fax: +41 44 498 9899

E-mail: [email protected] Website: www.wwp.ch

Languages spoken:

English, French, German, Hebrew,

Italian, Spanish


Contacts:

Daniel R Wyss, Peter A Straub, Philipp

Habegger, Dieter Hofmann, Marc D Veit




UN

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SJ Berwin LLP


• Alternative dispute resolution

• Commercial litigation

• Mediation

• Commerce and technology

• Corporate finance

• Employment and pensions

• EU and competition

• Finance

• Financial services

• Intellectual property

• Investment funds

• Media and communications

• Real estate

• Reconstruction and insolvency

• Tax

10 Queen Street Place, London EC4R 1BE, UK

Phone: +44 (0)20 7111 2222 Fax: +44 (0)20 7111 2000

Email: [email protected] Website: www.sjberwin.com

Languages spoken:

Arabic, Chinese, English, French, German,

Hebrew, Italian, Russian, Spanish, Swedish


Contacts:

David Goldberg

[email protected]

Tim Taylor

[email protected]

The SJ Berwin international arbitration group

draws together an array of skills and

experience especially attuned to the shifting

demands of complex, commercial international

arbitral disputes.

Our group has a wide global reach and a

vast array of industry-specific experience. We

have an understanding of different national

laws, and a broad range of technical and

linguistic skills.

Our team is jointly led by Tim Taylor and

David Goldberg and, together with our new

partner Justin Michaelson and consultant Per

Runeland, we have a dedicated team of

three partners, seven associates and a team

of specialist counsel in a variety of different

jurisdictions.

We are involved in some of the leading

international arbitration cases and offer

flexible solutions to resolving disputes on

neutral ground, under agreed rules and with

sole arbitrators or a panel. We are proactive

problem-solvers and pride ourselves on

challenging orthodox and traditional

thinking.

We have a wealth of experience in

resolving disputes (both advocating for

clients and sitting as arbitrators) throughout

the world’s leading arbitration institutions

and in ‘ad hoc’ international commercial

arbitrations. We act for commercial concerns,

governments and government agencies.

In addition to our international

arbitration group, SJ Berwin also has

specialist dispute teams for public law,

employment, reconstruction and insolvency,

IT and telecoms, property, financial markets,

and complex fraud.

About the international arbitration group


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Documents

Arbitration Report