Legal issues covering the settlement of disputes in
international public contracts 1
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WHAT TO CONSIDER? Contract formation Review/Complaint Contract
execution Disputes/Judicial remedies/arbitration 2
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SUMMARY OF ISSUES Type of disputes arising in a contractual
context Type of dispute resolution Choice of Forum Applicable law
Strategy to avoid disputes? 3
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TYPE OF DISPUTES THAT MAY ARISE WITH AN INTERNATIONAL PUBLIC
CONTRACT Disputes between state-state Disputes between
state-investor Disputes between investors: private disputes
Disputes between State-contractor 4
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LEGAL REMEDIES FOR CONTRACTUAL DISPUTES BETWEEN THE STATE AND
THE CONTRACTOR Goal: when a dispute arises between the two
contractual parties, the goal is to find an equitable solution
without blocking the contracts performance. Interested parties:
contracting parties (Public entity and Contractor), potentially
third parties (users, subcontractors) Options: internal and non
judicial remedies/ arbitration/ judicial solution 5
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AGENDA (1) Overview of different means to settle contractual
disputes, including judicial, ADR, negotiation, mediation and
arbitration, (2) Arbitration : definition and legal framework
(3)Types of arbitrations (4) Procedural rules applicable in
arbitration 6
ALTERNATIVE DISPUTE RESOLUTION (ADR) Alternative Dispute
Resolution mechanisms are designed for the amicable settlement of
contractual disputes that arise during the implementation of a
procurement contract or for disputes related to the expiry or
termination of the contract. 8
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AMICABLE MEANS V. JUDICIAL/BINDING MEANS Non binding: Binding:
Non binding means : negociation, mediation and conciliation resort
to state courts, and Arbitration 9
JUDICIAL PROCEEDINGS Settlement of disputes could be mandatory
done by courts: In some countries, governmental agencies lack the
power to agree to ADR or arbitration, except under specific
circumstances, while in other legal systems the parties have the
freedom to choose between judicial and arbitral proceedings. The
efficiency of the national judicial system and the availability of
forms of judicial relief that are adequate to disputes that might
arise under the project agreement are additional factors to be
taken into account. 11
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ADR COVERS: Negotiation and amicable settlement Early warning
requires the claiming party to submit a quantified claim, along
with the necessary proof, within an established time period.
Facilitated negotiation with a facilitator appointed at the
beginning of the contract implementation Conciliation: in
conciliation, a third party is trying to bring together the
disputing parties to help them reach a mutually agreeable
settlement of the dispute (based, e.g., on a set of conciliation
rules such as the UNCITRAL Conciliation Rules) or its variant
adjudication. Mediation goes further by allowing the mediator to
suggest terms for the resolution of the dispute. However, the terms
(conciliation and mediation) are used interchangeably in practice.
E.g. the 2012 International Chamber of Commerce (ICC) ADR Rules,
will provide for mediation and other forms of amicable dispute
resolution. They coincide with the launch of the ICC International
Centre for ADR, previously informally known as the ICC "green
services". 13
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ADR (FOLLOW-UP) Non-binding arbitration, when it pertains to
the ADR mechanisms, it is conducted in the same manner as
arbitration, and the same rules may be used except that the
procedure ends with a recommendation. Non-binding expert appraisal
Mini or mock trial with 3 persons Dispute review boards: is an
ad-hoc forum established by the contracting parties to prevent and
handle contractual disputes. 14
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2. ARBITRATION : DEFINITION Necessity of consent The binding
character of the decision rendred by the arbitrator Arbitration v.
Litigation Arbitration v. Negotiation Arbitration v. Mediation
Arbitration v. Conciliation 15
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ADVANTAGES OF ARBITRATION : Impartiality and Expertise of the
arbitrator Rapidity: Availability of the arbitrator Lack of formal
proceedings Confidentiality Exceptions to confidentiality in some
cases 16
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COST AND EXPENSES Arbitrator must be paid Ideas about the cost
of arbitration Comparaison between ad hoc arbitration and
institutional arbitration Cost of lawyer Cost of the institution
that administers the arbitration 17
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ARBITRATION : THE NECESSARY LEGAL FRAMEWORK Contractual clause
on arbitration Procurement law Law on arbitration 18
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CLARIFICATION A clear separation of roles between the Judiciary
and the arbitral tribunal should be established, A clear separation
between the contractual clause on arbitration and the national law
on arbitration in accordance with the national procurement law
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LAW ON ARBITRATION/ CONTRACTUAL CLAUSE ON ARBITRATION The
clause on arbitration in the contract itself should mirror the
Arbitration Law, with mention of the specific arbitral forum, the
applicable arbitration rules and the applicable law for
interpreting the contract that will governs the issue in case one
of the parties is a foreign company. 20
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THE UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION
1985 revised 2006 It covers all stages of the arbitral process from
the arbitration agreement, the composition and jurisdiction of the
arbitral tribunal and the extent of court intervention through to
the recognition and enforcement of the arbitral award. It reflects
worldwide consensus on key aspects of international arbitration
practice having been accepted by States of all regions and the
different legal or economic systems of the world. 21
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3. TYPES OF ARBITRATION Traditional (or commercial) arbitration
v. Investment Arbitration Domestic v. international Arbitration
Institutional arbitration v. Ad hoc Arbitration 22
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TYPE OF ARBITRATION: COMMERCIAL ARBITRATION/ INVESTMENT
ARBITRATION Specificity of investment arbitration Models clauses
that provides for the consent of the state in investment treaties
ICSID : Investment arbitration 23
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Government contract with a foreign company Investment
arbitration based on an investment treaty Commercial arbitration
based on the arbitration law or contractual clause 24
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INTERNATIONAL/DOMESTIC ARBITRATION Often, the national
procurement law is essentially aligned with the United Nations
Commission on International Trade Law (UNCITRAL) Model law on
International Commercial Arbitration. The Country should be a
member of the Convention on the recognition and enforcement of
foreign arbitral awards (New York, June 10, 1958), to recognize and
to enforce on its territory arbitral awards rendered in other
countries. 25
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WB SBD FOR WORKS (2010) GCC 20.6 (a) For contracts with foreign
contractors, international arbitration with proceedings
administered by the institution appointed in the Contract Data,
conducted in accordance with the rules of arbitration of the
appointed institution, if any, or in accordance with UNCITRAL
arbitration rules, at the choice of the appointed institution, (b)
the place of arbitration shall be the city where the headquarters
of the appointed arbitration institution is located, (c) the
arbitration shall be conducted in the language for communications
defined in Sub-Clause 1.4 [Law and Language], and (d) For contracts
with domestic contractors, arbitration with proceedings conducted
in accordance with the laws of the Employers country. 26
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PROCEDURES 27
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BIT ARBITRATION IN IRAQ BIT negotiations for investment
agreements are underway with the following countries: Egypt France
Germany Italy Jordan Lebanon Oman Romania Syria Turkey United
Kingdom 28 Steps in commercial arbitration
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TYPE OF ARBITRATION Ad Hoc arbitrationInstitutional arbitration
29 The parties determine freely the arbitration rules Appointment
of members of the arbitral Tribunal Number of Arbitrators
Independence and impartiality Replacement and Disqualification of
Arbitrators Fees and Expenses Arbitration and Domestic Courts Role
of courts Non interference, Arbitration Centers: (e.g.) ICC CRCICA,
ICSID
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"CRCICA The Cairo Regional Centre for International Commercial
Arbitration (the "CRCICA" or the "Centre") is an independent
non-profit international organization established in 1979 under the
auspices of the Asian African Legal Consultative Organization
("AALCO"), in pursuance of AALCO's decision taken at the Doha
Session in 1978 to establish regional centres for international
commercial arbitration in Asia and Africa. 30
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RULES OF PROCEDURE Reference to specific arbitration rules that
will apply to the process of the dispute, such as the Arbitration
Rules formulated by UNCITRAL is recognized as a best practice in
particular for international contracts. Venue of arbitration,
Language, Terms of Reference, Statements of claim(s) and defense,
including counter claim, Submission of documents Role of host
government and its agencies 31
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UNCITRAL ARBITRATION RULES REVISED IN 2010 The UNCITRAL
Arbitration Rules, as revised, have been effective since 15 August
2010. They include provisions dealing with, amongst others,
multiple parties arbitration and joinder, liability, and a
procedure to object to experts appointed by the arbitral tribunal.
A number of innovative features contained in the Rules aim to
enhance procedural efficiency, including revised procedures for the
replacement of an arbitrator, the requirement for reasonableness of
costs, and a review mechanism regarding the costs of arbitration.
They also include more detailed provisions on interim measures. It
is expected that the Rules, as revised, will continue to contribute
to the development of harmonious international economic relations.
32
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ICC RULES http://www.iccwbo.org http://www.iccwbo.org ICC
arbitration is respected worldwide. It is supervised by the ICC
Court and administered by the Court's Secretariat. The Court which
numbers business specialists as well as international lawyers was
created in 1923 and tracks the progress of each case and reviews
the awards in order to facilitate their enforcement ever since.
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THE ICC 2012 RULES OF ARBITRATION The Rules of Arbitration of
the International Chamber of Commerce ("the Rules") govern the
conduct of ICC arbitration proceedings from start to finish. They
regulate the filing of claims, the constitution of arbitral
tribunals, the conduct of proceedings, the rendering of decisions
and the determination of costs. While offering security and
predictability, the ICC Rules also accommodate any preferences
parties in dispute might have with respect to certain aspects of
the proceedings, such as the choice of arbitrators, the place, and
the language of arbitration. In all matters that are not expressly
provided for in the ICC Rules, the ICC International Court of
Arbitration and Arbitral Tribunal act in the spirit of the Rules
and make every effort to have an enforceable Award. Arbitration
proceedings introduced after the 1 January 2012 will be submitted
to the ICC Rules of Arbitration entered into force on 1 January
2012, unless the parties have agreed to submit to the Rules in
effect on the date of their arbitration agreement. 34
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NEW CRCICA ARBITRATION RULES (2011) Since its establishment,
CRCICA adopted, with minor modifications, the Arbitration Rules of
the United Nations Commission on International Trade Law (the
"UNCITRAL"), approved by the General Assembly of the United Nations
by resolution No. 31/98 on December 15, 1976. CRCICA has amended
its Arbitration Rules in 1998, 2000, 2002 and 2007 to ensure that
they continue to meet the needs of their users, reflecting best
practice in the field of international institutional arbitration.
The present CRCICA Arbitration Rules are based upon the new
UNCITRAL Arbitration Rules as revised in 2010, with minor
modifications emanating mainly from the Centre's role as an
arbitral institution and an appointing authority. They have entered
into force as from 1 March 2011 and shall apply to arbitral
proceedings that have commenced after this date. 35
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MODEL CLAUSE 36
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SELECTION OF THE APPLICABLE LAW ON THE MERITS Parties agreement
If not, The arbitral tribunal shall apply the rules of law
designated by the parties as applicable to the substance of the
dispute. Failing such designation by the parties, the arbitral
tribunal shall apply the law which it determines to be appropriate.
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APPLICABLE LAW IN ICSID CONVENTION Article 42 1. The Tribunal
shall decide a dispute in accordance with such rules of law as may
be agreed by the parties. In the absence of such agreement, the
Tribunal shall apply the law of the Contracting State party to the
dispute (including its rules on the conflict of laws) and such
rules of international law as may be applicable. 2. The Tribunal
may not bring in a Finding of non liquet on the ground of silence
or obscurity of the law. 3. The provisions of paragraphs (1) and
(2) shall not prejudice the power of the Tribunal to decide a
dispute ex aequo et bono if the parties so agree. 38
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CONDUCT OF ARBITRATION PROCEEDINGS Notification Response
Hearings, Testimony of witnesses, Expert evidence Failure to
Present Case and Discontinuance of Proceedings 39
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CONTAIN OF THE NOTIFICATION The notice of arbitration shall
include the following: (a) A demand that the dispute be referred to
arbitration; (b) The names and contact details of the parties; (c)
Identification of the arbitration agreement that is invoked; (d)
Identification of any contract or other legal instrument out of or
in relation to which the dispute arises or, in the absence of such
contract or instrument, a brief description of the relevant
relationship; (e) A brief description of the claim and an
indication of the amount involved, if any; (f) The relief or remedy
sought; (g) A proposal as to the number of arbitrators, language
and place of arbitration, if the parties have not previously agreed
thereon. The notice of arbitration may also include: (a) A proposal
for the designation of an appointing authority (b) A proposal for
the appointment of a sole arbitrator (c) Notification of the
appointment of an arbitrator 40
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THE DEFENDANT ANSWER :RESPONSE TO THE NOTICE OF ARBITRATION The
respondent shall communicate to the claimant a response to the
notice of arbitration, which shall include: (a) The name and
contact details of each respondent; (b) A response to the
information set forth in the notice of arbitration, 2. The response
to the notice of arbitration may also include: (a) A proposal for
the appointment of a sole arbitrator referred (b) A brief
description of counterclaims or claims for the purpose of a
set-off, if any, including where relevant, an indication of the
amounts involved, and the relief or remedy sought; 41
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AMENDMENTS TO THE CLAIM OR DEFENCE During the course of the
arbitral proceedings, a party may amend or supplement its claim or
defence, including a counterclaim or a claim for the purpose of a
set-off, unless the arbitral tribunal considers it inappropriate to
allow such amendment or supplement having regard to the delay in
making it or prejudice to other parties or any other circumstances.
42
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INTERIM MEASURES The arbitral tribunal may, at the request of a
party, grant interim measures. An interim measure is any temporary
measure by which, at any time prior to the issuance of the award by
which the dispute is finally decided, the arbitral tribunal orders
a party, for example and without limitation, to: (a) Maintain or
restore the status quo pending determination of the dispute; (b)
Take action that would prevent, or refrain from taking action that
is likely to cause, (i) current or imminent harm or (ii) prejudice
to the arbitral process itself; (c) Provide a means of preserving
assets out of which a subsequent award may be satisfied; or (d)
Preserve evidence that may be relevant and material to the
resolution of the dispute. 43
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HEARINGS In the event of an oral hearing, the arbitral tribunal
shall give the parties adequate advance notice of the date, time
and place thereof. Role of Hearings Organization of Hearings
44
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ENFORCEMENT OF AWARDS Types of awards, Contents, reasons,
Method of challenge, Grounds for challenge, Enforcement,
international and Regional Conventions, Waiver of sovereign
immunity, 45
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RECOGNITION AND ENFORCEMENT UNDER NEW YORK CONVENTION
Recognizing the growing importance of international arbitration as
a means of settling international commercial disputes, the
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (the Convention) seeks to provide common legislative
standards for the recognition of arbitration agreements and court
recognition and enforcement of foreign and non-domestic arbitral
awards. The term "non-domestic" appears to embrace awards which,
although made in the state of enforcement, are treated as "foreign"
under its law because of some foreign element in the proceedings,
e.g. another State's procedural laws are applied. The Convention's
principal aim is that foreign and non-domestic arbitral awards will
not be discriminated against and it obliges Parties to ensure such
awards are recognized and generally capable of enforcement in their
jurisdiction in the same way as domestic awards. An ancillary aim
of the Convention is to require courts of Parties to give full
effect to arbitration agreements by requiring courts to deny the
parties access to court in contravention of their agreement to
refer the matter to an arbitral tribunal. 46
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INTERPRETATION OF THE AWARD a party, with notice to the other
parties, may request that the arbitral tribunal give an
interpretation of the award. Interpretation isnt a resubmission of
the case. 47
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CORRECTION OF THE AWARD a party, with notice to the other
parties, may request the arbitral tribunal to correct in the award
any error in computation, any clerical or typographical error, or
any error or omission of a similar nature. If the arbitral tribunal
considers that the request is justified, 48
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ADDITIONAL AWARD a party, with notice to the other parties, may
request the arbitral tribunal to make an award or an additional
award as to claims presented in the arbitral proceedings but not
decided by the arbitral tribunal. 49
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RECOURSE AGAINST THE AWARD Annulment recourse or setting aside
recourse Recognition and enforcement of awards : Exequatur 50
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SETTING ASIDE : THE UNCITRAL MODEL LAW 51
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SETTLEMENT OR OTHER GROUNDS FOR TERMINATION OF THE ARBITRATION
If the parties agree on a settlement of the dispute, the arbitral
tribunal shall either issue an order for the termination of the
arbitral proceedings or, if requested by the parties and accepted
by the arbitral tribunal, record the settlement in the form of an
arbitral award on agreed terms. The arbitral tribunal is not
obliged to give reasons for such an award 52
