2nd CIS Local Counsel Forum, Baku, Azerbaijan Republic June 20 – 22, 2007 Dr. Thomas Rihm, Partner Thouvenin Attorney

1. 2nd CIS Local Counsel ForumWhy arbitration ? Why in Switzerland ? 2nd CIS Local Counsel Forum, Baku, Azerbaijan Republic June 20 – 22, 2007 Dr. Thomas Rihm, Partner Thouvenin Attorneys - at - Law Klausstrasse 33 8034 Zurich, Switzerland Phone: +41 44 421 45 45 Fax : +41 44 421 45 00 E-mail t.rihm@thouvenin.com www.thouvenin.com

2. Why arbitration at all ? • existence of arbitration clause excludes a jurisdiction of foreign courts (potential exemption: interim measurers) • parties’ trust to their arbitrators vs. unknown foreign judges • neutrality and capability of third-world state courts questionable • private arbitrators more experienced in international business matters • international languages accepted

3. Why arbitration at all ? • application of foreign laws by state court doubtful • confidentiality: full privacy of arbitration proceeding vs. potentially public hearings in state courts • speed: final award cannot be challenged or only to a very limited extent (can be fully excluded for Swiss arbitration awards); state court awards in most countries subject to legal remedies

4. Why arbitration at all ? • well-known international procedures vs. pitfalls of local procedural laws • avoidance of far-reaching Anglo-Saxon pre-trial discovery proceedings / witness cross-examinations • no European-style limitations on evidence taking (IBA-Rules on Evidence Taking in International Commercial Arbitration)

5. Potential disadvantages of arbitration • expensive: yes • but consider otherwise available legal remedies; consider additional costs such as for travel of parties, witnesses and experts to far-reaching countries, less translation costs, risks and costs of enforcement

6. Arbitration is market driven • Institutional players • ICC (International Chamber of Commerce) • LCIA (London Court of International Arbitration) • Swiss Rules • CIETAC (Chinese International Economic and Trade Arbitration Commission) • SIAC (Singapore International Arbitration Centre) • Switzerland’s position in the arbitration world: 2003, 2004 and 2005 most arbitrators were Swiss; 2005 most arbitration tribunals in Switzerland (all according to ICC).

7. Why arbitration in Switzerland ? • Swiss laws as neutral laws chosen in international commercial transactions (international infrastructure projects such as oil pipelines, gas and water utilities, power stations, docks, dams, industrial manufacturing sites, energy supply contracts etc. ) • Swiss arbitrators considered neutral and experienced in application of Swiss laws

8. Why arbitration in Switzerland ? • Swiss arbitrators: long-standing arbitration culture since the middle ages, multilingual and multicultural minded, season arbitration practitioners • state-of-the-art international arbitration legislation • arbitral awards rendered in Switzerland can be executed based on UN-Convention 1958 in Georgia, Kazakhstan, Kyrgyzstan, Moldavia, Russia, Ukraine, Uzbekistan, Armenia and Azerbaijan • Belarus, Tajikistan and Turkmenistan: execution subject to local procedural laws

9. International Swiss arbitration • Swiss Rules of International Arbitration provide for institutional international arbitration in Switzerland; chambers of commerce's help in constituting arbitral tribunal • Swiss Rules are available in English, German, French, Italian, Russian, Spanish, Chinese, Croatian, Arabic and Turkish language • based on UNCITRAL-Rules • free choice of arbitrators, law, counsel, language and seat of arbitration • mandatory accelerated procedures for small and medium sized disputes (six months)

10. International Swiss arbitration • web-based cost calculator • see also ww.swissarbitration.ch