Transcript DISPUTE RESOLUTION in the INTERNATIONAL OIL & GAS …

ENFORCEMENT of ARBITRAL AWARDS
under the NEW YORK CONVENTION
1958: RECENT ISSUES and EMERGING
TRENDS
a presentation by
HEW R. DUNDAS
Chartered Arbitrator DipICArb
International Arbitrator & Mediator
27th June 2007
OVERVIEW of PRESENTATION
Introduction
 Dispute Resolution in International Context
 International Commercial Arbitration
 New York Convention 1958
 Enforcement Issues
 Related Issues
 Conclusions

DISPUTE RESOLUTION OPTIONS

Litigation

Arbitration Domestic/International
 NB significant distinctions

Expert Determination

Adjudication

Mediation

Other ADR
 ENE/Mini-Trials/Med-Arb/Arb-Med etc
LITIGATION
Difficulties of Litigating
 Local Laws – are they adequate ?
 Courts – Good, Bad and Ugly
 Litigation against States
 Timescales - long and VERY long
 Finality
 Enforceability
 Costs

INTL. COMM. ARBITRATION (1)
OVERVIEW

What Is It ?
“International”
“Commercial”
“Arbitration”
Profusion of Relevant/Applicable Laws
 Institutions and Tribunals
 Finality
 Enforceability

INTL. COMM. ARBITRATION (2)
INSTITUTIONS
UNCITRAL
 ICSID/NAFTA/ECT
 ICC/LCIA
 Chartered Institute of Arbitrators
 Regional Institutions incl. CIETAC/AAA
 LMAA
 GAFTA/FOSFA/LME/RSA
 Other

INTL. COMM. ARBITRATION (3)
PROFUSION of LAWS
Law of the Contract (Lex Causae)
 Law of the Arbitration Agreement
 Law of the Arbitration (Lex Arbitri)
 Law governing Capacity of Parties
 Law of Seat (Lex Curiae)
 Law of Place of Enforcement
 Other Potentially Applicable Laws

INTL. COMM. ARBITRATION (4)
SOME KEY LEGAL ISSUES




Arbitrability
Capacity
Substantive vs Procedural Laws
Arbitrations against States
 State Immunity

Interface with Courts
 Appeals
 Enforcement

Protectionism
INTL. COMM. ARBITRATION (5)
AWARDS & ENFORCEMENT

Appeals
Jurisdiction
Procedural Failures
Issues of Law
Exequatur
 Enforcement
 New York Convention 1958

NEW YORK CONVENTION (1)
142 Contracting States @ 22/6/07
 Recent additions include Afghanistan,
Brazil, Gabon, Iceland, Iran, Liberia,
Montenegro, Pakistan, Qatar, UAE
 Non-parties - Ethiopia, Iraq, Libya, North
Korea, Yemen
 Taiwan cannot accede (not a State)

NEW YORK CONVENTION (2)


Recognition of Arbitration Agreements
Enforcement:
 Art. V(1)
Capacity/Invalidity
Failure of Due Process/other Procedural Failure
Outwith Jurisdiction
Award Not Binding/Set Aside at seat
 Art. V(2)
Dispute not Arbitrable
Award Contrary to Public Policy

Court MAY, not “shall”, refuse enforcement
NEW YORK CONVENTION (3)

Reservations
 Reciprocity
 Commerciality
 Vietnam

Applicability
 USA disapplies NYC to awards with US party
 E&W applies NYC to foreign domestic awards [see IPCo]

Enforcement other than via NYC58
NEW YORK CONVENTION (4)
Art. V(1)(a)


Common occurrence
Incapacity
 PRC + Russian cases
 Foreign Exchange Controls/Licenses/Permits

Arbitration Agreement Invalid
 Lex Causae
 Lex Arbitri

Examples
 Oral contract – enforcement refused in Germany
 “Arbitration Hamburg” [coffee case]
 Contradiction of previous conduct
 Form Requirements
NEW YORK CONVENTION (5)
Art. V(1)(b), (c) & (d)

Art. V(1))(b) (Due Process) – rare
 Generally high standards in international arbitration
 Failures in some jurisdictions (inexperience/ignorance)
 Effect of Institutional Rules
 Quality Counsel
 Fully-trained arbitrators e.g. CIArb’s “Chartered
Arbitrator”

Art. V(1)(c) (Jurisdiction) – common
 What was/was not submitted to arbitration
 Award of costs/interest in cases with US claimant
 Set-off Defences
NEW YORK CONVENTION (6)
Art. V(2)

Art. V(2)(a) cases rare
 India – technology transfer contracts
 IP Issues
 State entities/public bodies
 Matrimonial/family matters (NB Jewish Law)

Art. V(2)(b) – cases common (often last resort)
 “Fundamental notions and principles of justice”
 Wide/narrow definitions of public policy
 International vs domestic public policy
 Enforcement “injurious to public good”
 Enforcement “wholly offensive” to civilised values
 Westacre/Hilmarton cases
NEW YORK CONVENTION (7)
Art. V(2)(b) continued
Foreign perceptions of India/PRC/Vietnam
 Examples

PRC – “social and public interest”
Switzerland – breach of competition law
USA – award of legal costs
England – Westacre/Hilmarton
CURRENT ISSUES
AFFECTING ENFORCEMENT
The 8th and 9th Grounds
 Public policy/public interest
 State Immunity
 Form Requirements
 Success rates in certain countries

NEW YORK CONVENTION
th
th
8 /9 GROUNDS for REFUSAL

8th Ground – Jurisdiction
 USA – Court must have jurisdiction over person or
property [US Constitution]
 Attachment of ships/aircraft/cargoes

9th Ground – Manifest Disregard of the Law
 Argued as extension of “public policy” ground
 Differs from E&W/NZ Error of Law
 Court’s different result ≠ manifest disregard
 Luzon v Transfield (Philippines)
STATE IMMUNITY

Distinction between State/commercial assets
 Central Banks
 Embassy property
 Ships, Aircraft
 Exhibits at Trade Fair [Sedelmeyer]
 Art Collection [NOGA]


UK State Immunity Act 1978
Examples
 AIG v Kazakhstan
 Svenska v Lithuania

USA Foreign Sovereign Immunities Act 1976
 Dole v Patrickson
EMERGING TRENDS
Erroneous decisions by certain Courts
 NYC not always understood/recognised
 Manipulation of public policy exception


Bad losers losing badly

Effect of awards against States
CONCLUSIONS (1)

Relatively small number of contentious
cases

Overall state-of-play reasonably strong

NYC still a major success

One of the UN’s greatest success stories

10th June 2008 – the next 50 years
CONCLUSIONS (2)
THANK YOU for
your ATTENTION