Month: April 2015

by Jack Wright Nelson (Chinese University of Hong Kong)

 

Enforceability has long been arbitration’s trump card. When debating litigation vis-à-vis arbitration, proponents of the latter could simply cite the New York Convention – and its list of 154 contracting states – as proof that, for international business, arbitration was “the only game in town.” By the end of this year, however, litigators will have their own convention: the Hague Convention on Choice of Court Agreements.

 

The Hague Convention seeks to replicate the New York Convention by ensuring both the effectiveness of choice-of-court agreements, and the enforceability of judgments resulting from such agreements. It achieves this through three basic rules. Courts in contracting states must first, assume jurisdiction if named in a choice-of-court agreement; second, refuse jurisdiction if not named in a choice-of-court agreement; and third, recognise and enforce any judgment issued by a court in a contracting state that assumed jurisdiction under a choice-of court-agreement. The court assuming jurisdiction under the first rule is referred to as the chosen court. The jurisdiction in which enforcement is sought pursuant to the third rule is called the requested State.

Continue reading The Hague Convention on Choice of Court Agreements: Return of the Litigators?

By Mostafa A. Hagras (Advocate, Egypt)

 

1. Summary And Update
   1. This post updates my previous post on anti-arbitration injunctions entitled “The Egyptian Arbitration Law and Anti-Arbitration Injunctions Due to Expiry the Time Limit for the Final Award – Case Study”, posted on 3 February 2015. The post introduced the position of the Egyptian arbitration law and of some Arab Middle Eastern laws, whereby state courts are conferred the authority to terminate an ongoing arbitration if the time limit for rendering the final award has expired.
   2. The post, inter alia, remarked this position as an anti-arbitration injunction, which is one of the pervasive problems of international arbitration in some Arab Middle Eastern countries. The post also presented a study for the ICC Case No. 14695/EC/ND. This case was terminated by an injunction granted by the chief judge of the Cairo Court of Appeal on 7 July 2008 on the ground that the time limit for the final award had expired without the statement of claim having been filed.
   3. The injunction (injunction no. 19/125) was granted under article 45 (2) of the Egyptian Arbitration Act, which provides that if the contractual or statutory time limit expires without the final award having being rendered, each party to the arbitration may request the chief judge of the competent court^[[1]] to fix a new time limit or terminate the arbitration.
   4. The claimants appealed the injunction, but their appeal was dismissed and the injunction was confirmed by injunction no. 23/125 dated 24 March 2009.
   5. The sole arbitrator, notwithstanding, refused to comply with the injunction and declared that the arbitral proceedings must resume, irrespective the injunction.
   6. The respondent filed a court action against the sole arbitrator claiming damages, which were allegedly caused by the sole arbitrator’s decision to continue the proceedings irrespective of the injunction.
   7. The sole arbitrator, consequently, resigned and suspended the proceedings until receiving the decision of the ICC Court in this respect. On 13 August 2009, the ICC Court appointed a new sole arbitrator pursuant to Article 12 (4) of the ICC Rules.
   8. Although the respondent added the new sole arbitrator as an additional respondent in the court action for damages, the new sole arbitrator rendered an award on jurisdiction on 17 November 2009. In the award, the sole arbitrator declared his refusal to recognize the injunction. He considered that Egypt is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). As a result, Egypt is bound by Article II of the New York Convention to recognize the agreement to arbitrate and enforce it by referring the parties to arbitration, unless it finds that the arbitration agreement is null and void, inoperative, or incapable of being performed. The Egyptian Arbitration Act provides for the same in Article 13. It further provides for the ‘Competence-Competence’ principle in Article 22.
   9. The new sole arbitrator concluded that neither the New York Convention nor the Egyptian Arbitration Act confer the power on state courts to terminate the arbitration. The court’s act therefore runs contrary to the obligation under the New York Convention. The new sole arbitrator proceeded to hear the merits of the case and rendered the final award on 26 January 2011.
   10. On 2 May 2011, the respondent initiated a court action before the Cairo Court of Appeal to set aside the award. The respondent asserted that, due to the injunction, the new sole arbitrator lacked jurisdiction to render an award.
   11. On 7 April 2013, the Cairo Court of Appeal dismissed the respondent’s case on the ground that the parties had agreed to refer their dispute to arbitration under the 1998 ICC Arbitration Rules. Therefore, these rules shall apply and the Egyptian Arbitration Act shall cease to apply. Hence, the rules governing the arbitral process including the time limit for the final award and a termination of the arbitration fall within the exclusive jurisdiction of the ICC Court. The Egyptian courts have no jurisdiction to terminate the ICC proceedings. The injunction is, therefore, frustrated and has no sanctity or power under the Egyptian law. ^[[2]]
   12. The respondent challenged the judgment of the Cairo Court of Appeal before the Cassation Court of Egypt on the ground that the Cairo Court of Appeal is precluded from reviewing the injunction because it was final and had res judicata value. The Cassation Court, on 10 March 2015 upheld the decision of the Cairo Court of Appeal and declined to recognize the injunction.
   13. The Cassation Court concluded that, under the joint-venture agreement dated 10 August 2001, the parties agreed to arbitrate their disputes under the ICC Arbitration Rules. Therefore, the arbitration shall be governed by the procedural rules of the ICC and the provisions of the Egyptian Arbitration Act shall cease to apply, except those provisions relating to public order. Specifically, Article 24 of the ICC Rules applies, whereby the ICC Court may extend the time limit to render the final award at the request of the arbitral tribunal or on its own initiative if it finds it necessary. Thus, the injunction terminating the ICC arbitration violated the parties’ agreement.
   14. Furthermore, the Cassation Court found that the injunction granted under Article 45 (2) of the Egyptian Arbitration Act, in general, is an interim inunction in nature. Thus, its binding effect expires when the subject matter of the dispute is finally decided. Therefore, the Cairo Court of Appeal was correct when it refused to recognize the injunction.
   15. The Cassation Court confirmed that the time periods and extensions as provided under the ICC Rules should have been applied instead of the time periods provided for in the Egyptian Arbitration Act. Therefore, the Cassation Court upheld the decision of Cairo Court of Appeal and declined to recognize the injunction. ^[[3]]

Continue reading Update: Cassation Court of Egypt Declined to Recognize Anti-Arbitration Injunction against Ongoing ICC Arbitration

by Aracelly López

 

When Costa Rica requested El Salvador to honor the customs benefits -tariff reduction program- agreed under the CAFTA-DR Treaty for goods originated in Costa Rica, including those produced under special exportation regimes (such as corporations operating under a Free Trade Zone Regime), El Salvador argued that these benefits applied only to the United States of America since, for Central American countries, the General Treaty on Central American Economic Integration (The Guatemala Protocol) applied, and refused Costa Rica’s request.

Continue reading Costa Rica v. El Salvador: Outcome of the First Treaty Arbitration under CAFTA-DR

by Jennifer Bryant

 

Beijing vs. Shanghai: CIETAC Arbitration-Dispute settled?

The China International Economic and Trade Arbitration Commission (CIETAC) located in Beijing appears to be the leading officially registered arbitral institution in China dealing with domestic as well as international arbitration proceedings. According to Chinese law, domestic arbitral awards are only recognized if the arbitration proceedings are administered through an officially authorized arbitral institution. With respect to such official authorization, Art. 10 of the Arbitration Law of the People’s Republic of China (PRC Arbitration Law) which has entered into force on 1 September 1995 provides that “commissions may be established in the municipalities directly under the Central Government, in the municipalities where the people’s governments of provinces and autonomous regions are located or, if necessary, in other cities divided into districts.” CIETAC itself was founded and authorized by the Government Administration Council of the Central People’s Government on 6 May 1954. Even though CIETAC’s authorization took place long before Art. 10 of the PRC Arbitration Law came into force, even measured by this present standard, CIETAC is duly authorized. Until 2012, the sub-commissions of CIETAC in Shanghai, Shenzhen, Tianjin and Chongqing also benefitted from CIETAC’s official recognition.
Continue reading Beijing vs. Shanghai: CIETAC Arbitration-Dispute settled?

By Shriya Maini[1]

 

Today, anti-trust claims in the U.S. are regarded as arbitrable provided the dispute is encompassed within a valid arbitration clause in an international transaction[2]. Though extensive, the extent of arbitrability of anti-trust claims is not unequivocally absolute. Even though the U.S. courts endeavor to avoid any post-award review, the standard of such review and the courts’ attitude of deference enable the extent of arbitrability to remain an open question. In contrast, the E.U. appears to be more cautious in allowing the arbitration of anti-trust claims (arbitrability stage) and is also more vigorous in reviewing awards to ensure adherence to national statutory objectives (review stage). The extent of arbitrability of anti-trust claims in the U.S. appears to be similar to the E.U. at the arbitrability stage but far more rigorous and precise at the review stage.

Continue reading ARBITRATION OF ANTI-TRUST CLAIMS IN THE UNITED STATES AND EUROPE: A COMPARATIVE ANALYSIS