Navigating dispute resolution

1. Navigating dispute resolution 19 SEPTEMBER 2018

2. Your presenters Tom CumminsPartner, London Tel: +44 (0)20 7895 1051 Email: tom.cummins@ashurst.com Myfanwy WoodSenior Associate, London Tel: +44 (0)20 7859 2821 Email: myfanwy.wood@ashurst.com Ghislaine LawlessAssociate Tel: +44 (0)20 7859 2896 Email: ghislaine.lawless@ashurst.com

3. The case study 闪亮 Ruritania National Bauxite Corp

4. Session 1: Advising on the dispute resolution clause

5. Reviewing the AluCo & BauxCo arbitration clause Ruritania National Bauxite Corp SHANLIANGALUMINIUM

6. Drafting the governing law clause Multiple governing laws Scope Non-national governing law

7. Governing law clause “This agreement, and any non-contractual obligations arising out of or in connection with it, will be governed by and construed in accordance with the laws of [insert name of [state], country].”

8. Escalating or “tiered” dispute resolution clauses

9. Tiered dispute resolution clauses – pros and cons

10. Tiered dispute resolution clauses: drafting considerations

11. Arbitration or litigation? Arbitration Litigation A comparison Consensual Non-consensual Arbitral Tribunal Judge/Court Freedom to choose the procedure (more flexible) Court procedures/rules of evidence Less formal More formal Final and binding award Decision that may be appealed

12. Arbitration or litigation? Advantages of arbitration

13. Arbitration or litigation? Disadvantages of arbitration

14. Source: www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYCon vention_status_map.html Enforcement New York Convention Convention in force

15. Drafting the arbitration clauses The key elements

16. The laws and rules that govern arbitration Law of the contract The law which governs the substantive rights of the parties, and which the arbitrator will apply to the merits of the case – e.g. English law. Law of the seat The law of the seat of arbitration which sets out mandatory rules regarding arbitral procedure – e.g. the English Arbitration Act 1996 Arbitration Rules The rules which the parties select to supplement the law of the seat – i.e. the more detailed rules about how the arbitration will proceed – e.g. the ICC Rules

17. Waiver of sovereign immunity

18. Session 2: Dispute management

19. Trouble in Ruritania… • A 25-year agreement for the development of a bauxite mine was signed in 2010. • AluCo believes BauxCo is selling part of its share of the bauxite to AluCo’s competitor, ShenXiu Metals, in breach of the agreement. • AluCo will need documents to prove the breach and its loss, and expert evidence on the quantum of damages. • AluCo believes it has suffered a US$4bn loss. Ruritania National Bauxite Company (“BauxCo”) ShanLiang Aluminium (“AluCo”)

20. Initial considerations Managing disputes Pre-conditions to arbitration? Early stage dispute or claim Creation and retention of documents Settlement strategy Objective assessment of case

21. An overview of the arbitration process Commencement of arbitration Award & enforcement Pleadings stage Preliminary Stage Hearing

22. An overview of the arbitration process Commencement of arbitration Award & enforcement Pleadings stage Preliminary Stage Hearing • Notice of Arbitration • Response to Notice of Arbitration • Appointment of arbitrator/s

23. An overview of the arbitration process Commencement of arbitration Award & enforcement Pleadings stage Preliminary Stage Hearing • Preliminary procedural hearing held to determine timetable of arbitration • Interim applications (e.g. for an interim injunction) can be heard at this stage

24. An overview of the arbitration process Commencement of arbitration Award & enforcement Pleadings stage Preliminary Stage Hearing • Statement of Claim, Statement of Defence, Statement of Reply • Document disclosure • Factual and expert witness statements (and replies)

25. Disclosure • The process by which documents that are relevant to the issues in dispute must be produced to the other parties in litigation or arbitration. • In arbitration, disclosure will be ordered by the Tribunal. The scope will be determined in PO No 1. • It is not just the witnesses’ documents that may be subject to a disclosure order, but any documents within the control of the party to the arbitration.

26. Disclosure (continued) • For each document, you must ask yourself: • does the document fall within the Tribunal's order? • if so, is there any basis on which disclosure can be withheld or information redacted (such as privilege or confidentiality)? • If it falls within the Tribunal's order (i.e., it is relevant) and there is no basis to withhold then it must be disclosed.

27. An overview of the arbitration process Commencement of arbitration Award & enforcement Pleadings stage Preliminary Stage Hearing • Opening written submissions • Oral hearing • Closing written submissions

28. First, some points to note about advocacy in international arbitration

29. An overview of the arbitration process Commencement of arbitration Award & enforcement Pleadings stage Introduction to arbitration Preliminary Stage Hearing • Award (on merits and costs) • Identification of type and location of assets • Recognition/enforcement proceedings

30. Session 3: Enforcement

31. Case study • Congratulations, AluCo has won its case and has an arbitration award in its favour for US$2 billion. • However, it now needs to enforce its award against BauxCo. • You have commissioned a report from an investigations agency, SnoopEnterprises, into where BauxCo has assets.

32. Starting point: The New York Convention • Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 • Replaced the 1927 Geneva Convention • “the single most important pillar on which the edifice of international arbitration rests” Wetter, ‘The Present Status of the International Court of Arbitration of the ICC: An Appraisal’ (1990)

33. The reach of the New York Convention Convention in force Source: http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status_map.html

34. Options for challenging an award: The two basic options Apply to the courts of the seat of the arbitration to set aside the award Active When enforcement of the award is sought in the courts of the country where your assets are located, challenge that enforcement Passive

35. The six (usual) grounds for setting aside* Composition of tribunal or procedure not in accordance with agreement of parties, or otherwise contrary to lex arbitri Party not given proper notice of appointment of arbitrator or arbitral proceedings, or otherwise unable to present his case Subject matter of dispute is non-arbitrable under the lex arbitri Invalidity of the arbitration agreement Award deals with dispute, or contains decisions on matters, beyond scope of submission to arbitration Award is contrary to “public policy” of seat of arbitration * These can change from country to country. The six grounds above are those found in the UNCITRAL Model Law, adopted by many countries around the world.

36. The seven grounds for challenging enforcement (New York Convention) The award has not yet become binding on the parties or has been set aside or suspended by a court at the seat of arbitration The same grounds as setting aside,* plus … * The non-arbitrability, and public policy grounds are decided according to the law of the place of enforcement, not the law of the seat / lex arbitri

37. NYC in practice

38. What is state immunity?

39. Immunity from what?

40. “State” or “separate entity”? • A separate entity is one that is distinct from the executive organs of the government of the State and capable of suing or being sued (s14(1) SIA) (S1(2)(i) SA FSIA) • La Générale des Carrières et des Mines –v- F.G. Hemisphere Associates LLC [2012] UKPC 27 • Key considerations: • Degree of government control • Exercising governmental functions • Separate legal personality • Constitution, powers, duties and activities

41. To sum up….. State or separate entity? No immunity from adjudication (but may be immune from execution/ enforcement) Express submission to the jurisdiction (via a jurisdiction clause or conduct)? OR Proceedings relate to commercial transaction? OR Proceedings relate to a contractual obligation performed wholly or partly in the UK? OR Proceedings are in support of an arbitration clause? Yes to any State Immune from adjudication, enforcement and execution No to all Yes Separate entity Acting in the exercise of sovereign authority? Not entitled to immunity from adjudication enforcement or execution No

42. The losing party refuses to satisfy the award, and their assets are located in a country other than the seat of arbitration You make an application in the country in which the assets are located to enforce your award as a “foreign award” Award is handed down (nationality of award determined by seat of arbitration)

43. Enforcement strategy How would you advise your client?

44. These materials are for training purposes only and are not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Please take legal advice before applying anything contained in these materials to specific issues or transactions. For more information please contact the presenters or your usual contact.