When You Think INTERNATIONAL ARBITRATION,

Think Fulbright.TM

Catina Haynes & Kinan Romman

November 17, 2008

Recent Developments in International Arbitration

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I. Fifth Annual Fulbright Litigation Trends Survey

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Fifth Annual Fulbright Litigation Trends Survey: Background

Fifth consecutive year Fulbright has commissioned an independent survey of senior corporate counsel on litigation trends.

Largest survey of its kind. 358 respondents participated in the survey, including

251 in the U.S. and 100 in the U.K.

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Fifth Annual Fulbright Litigation Trends Survey: Costs

With the downturn of economy, the volume of litigation is expected to increase.

One of every ten companies spends $10 million or more on litigation annually (excluding settlements and judgments).

On average, U.K. companies spend $2.8 million on litigation.

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Fifth Annual Fulbright Litigation Trends Survey: Case Types

Investigations, Regulatory, and FCPA Actions● 7% of all respondents and 11% of those with international

facilities have engaged outside counsel in the past year regarding corruption or bribery investigations such as alleged FCPA violations.

● U.K. businesses are seeing more regulatory activity from overseas regulators, such as the SEC, DOJ, and EU Commission, rather than OFT or FSA.

● 13% of companies, including one-quarter of the energy industry, admit they still allow small direct payments to foreign governments in certain specific situations.

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Fifth Annual Fulbright Litigation Trends Survey: Case Types

Subprime-Related Matters● 4% of public companies have already engaged outside

counsel for subprime-related matters and 7% foresee involvement in subprime matters in the next 12 months.

● 22% of financial services and 15% of insurer respondents anticipate more subprime suits or investigations.

Labor/Employment and Contracts are the most active areas of litigation in the U.S.

Contracts and Labor/Employment are the most active areas of litigation in the U.K.

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II. Recent Developments in the United Arab Emirates

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The Dubai International Financial Centre (“DIFC”) Amended its Arbitration Law

DIFC became an autonomous jurisdiction within the UAE in 2004.

UAE acceded to N.Y. Convention on the Recognition and Enforcement of Arbitral Awards on June 13, 2006.

DIFC-LCIA Arbitration Centre was established February 17, 2008 as a joint venture with the LCIA court.

Similar to the Dubai International Arbitration Centre (“DIAC”) arbitration rules, based on the UNCITRAL, ICC, LCIA, WIPO, and AAA arbitration rules, the DIFC Arbitration Law follows the UNCITRAL Model Law on International Commercial Arbitration and a slightly modified version of LCIA’s arbitration rules.

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Selected Provisions from the DIFC Arbitration Law

The DIFC amended its Arbitration Law on September 1, 2008 to allow all parties, irrespective of any connection with the DIFC, to choose the DIFC as their seat of arbitration.

Article 10 states: “In matters governed by this Law, no DIFC Court shall intervene except to the extent so provided in this Law.”

Unless the parties agree otherwise, the default number of arbitrators is one. (Article 16).

Under Article 14, “Unless otherwise agreed by the parties, all information relating to the arbitral proceedings shall be kept confidential, except where disclosure is required by an order of the DIFC Court.”

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Selected Provisions from the DIFC Arbitration Law

Article 15 confirms that it is not inconsistent with an arbitration agreement for parties to apply to the DIFC courts for interim measures of protection before or during arbitration proceedings.

Article 24(1)(a) mirrors Article 25.1 of the LCIA Arbitration Rules, which gives the tribunal the power to order a party to provide security for the interim measure.

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Amendments to Provisions Dealing with Arbitration Agreements

An arbitration agreement may be in an arbitration clause or a separate contract, and the requirement for an arbitration agreement to be in writing can be met by an electronic communication. (Article 12)

However, arbitration agreements in employment contracts will not be enforceable except where the employee gives written consent after the dispute arises or submits to arbitration proceedings under the arbitration agreement. (Article 12)

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III. Proposed U.S. Arbitration Legislation

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Recent Consumer Bills & Int’l Arbitration

Unintended Consequences for International/ Business-to-Business Arbitrations?

Bills Intended to Address Due Process Concerns

● Consumer/Employment Disputes – Contracts of Adhesion

Would Materially Amend the FAA.

Several Bills Pending in the House and Senate

● Three Were Approved by a Subcommittee of the House Judiciary Committee on July 15, 2008.*

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The Bills

Arbitration Fairness Act of 2007*

The Fair Arbitration Act of 2007

The Fairness in Nursing Home Arbitration Act*

Automobile Arbitration Fairness Act of 2008*

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Arbitration Fairness Act of 2007

Amends § 2 of Chapter 1 of the FAA – “Validity and Enforcement.”

Adds subsections (b) and (c) to § 2

● (b) No pre-dispute arbitration agreement would be valid or enforceable if it requires arbitration of:

Employment, Consumer, or Franchise Disputes.

Disputes Arising Under Statutes Regulating Contracts Between Parties of Unequal Bargaining Power/Civil Rights Statutes.

● (c) Validity/Enforcement questions must be determined by a court, not the arbitrator, for all arbitrations.

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The Fair Arbitration Act of 2007

Adds § 17 to Chapter 1 of the FAA – Would Make The Following Applicable to all Arbitrations:

● Consumer Protection Text Required in Arbitration Clauses.

● Arbitrator Must be a Member of the State Bar Where Seat Located.

● Arbitrations Must Be Administered by an Institution.

● Choice of law Principles = State of the Non-Drafter.

● Respondent Must Answer within 30 Days - Hearing 90 days later.

● Depositions “shall be available to each party”.

● And others (U.S. Ethics Rules, Party-Appointed Arbitrators only).

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Why?

Overbroad Drafting.

Lack of Awareness in the Consumer Advocacy Community.

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IV. Anti-Suit Injunctions in the EU

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Regulation 44/2001 and West Tankers

ECJ Advocate General Disagreed with the House of Lords West Tankers Decision in a September 2008 Opinion.

Advocate General Found that Anti-Suit Injunctions in Support of an Arbitration Agreement Are Inconsistent with Council Regulation (EC) No. 44/2001.

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Regulation 44/2001 and West Tankers

Council Regulation (EC) No. 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Brussels I Regulation)

● Lis pendens - Jurisdiction Between Courts of EU Member States Decided on “first seised” Basis (Article 27).

● Regulation Not Applicable to Arbitration (Article 1(2)(d)).

Allianz SpA v. West Tankers (2007)

● Involved ship collision in Italian waters.

● Arbitration governed by English Law – London Seat.

● Claimant pursued related tort claims in Italy.

● English High Court Issued an Anti-Suit Injunction.

● House of Lords Affirmed - Ruled that Injunction was Consistent with Council Regulation (EC) No. 44/2001.

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Regulation 44/2001 and West Tankers

AG Says that Article 1(2)(d) Was Not Applicable to West Tankers.

● Subject matter of “arbitration anti-suit injunctions” relates to the underlying substantive dispute between the parties and not the arbitration agreement (i.e., the claims brought in Italy).

● Questions of arbitration agreement validity are also not exclusively related to “arbitration” according to AG – a foreign court first seized, not the tribunal or a court at the seat, would rule.

Threatens Kompetenz- Kompetenz Doctrine in Europe?

ECJ Likely to Adopt the AG Opinion.

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When You Think INTERNATIONAL ARBITRATION,

Think Fulbright.TM

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