International Arbitration: Comparative Regimes

1. International Arbitration: Comparative Regimes Presented to: The American Bar Association 1

2. Overview Speaker Bios Litigation vs. Arbitration Arbitration Institutions The Arbitration Clause Pleadings/Written Submissions Selecting the Arbitrators Interim Relief/Anti-Suit Injunctions Discovery Conduct of the Arbitration Hearing The Award 2

3. Robert F. Brodegaard 3

4. International Arbitration: Comparative Regimes 4

5. Litigation vs. Arbitration Factors to Consider Predictability (appeal vs. no appeal) Availability of witnesses and documents Costs (compared to litigation vs. other arbitration institutions) Speed (anybody�s guess) Confidentiality (not always�ICSID) Enforceability of awards (easier to domesticate arbitration award than foreign judgments) 5

6. Arbitration Institutions(among others) ICC � International Chamber of Commerce ICDR/AAA � International Center for Dispute Resolution ICSID � International Centre for Settlement of Investment Disputes LCIA � London Court of International Arbitration Stockholm � Arbitration Institute Stockholm Chamber of Commerce SIAC � Singapore International Arbitration Center 6

7. The Arbitration Clause Arbitration Institution vs. Ad Hoc Arbitration Model Clauses: ICC � International Chamber of Commerce Model Arbitration Clause:All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.Parties are reminded that it may be desirable for them to stipulate in the arbitration clause itself the law governing the contract, the number of arbitrators and the place and language of the arbitration. The parties� free choice of the law governing the contract and of the place and language of the arbitration is not limited by the ICC Rules of Arbitrator. Costs 7

8. The Arbitration Clause ICDR/AAA � International Center for Dispute Resolution Model Arbitration Clause:Any controversy or claim arising out of or relating to this contract shall be determined by arbitration in accordance with the International Arbitration Rules of the American Arbitration Association.The parties may wish to consider adding:(a) The number of arbitrators shall be (one or three);(b) The place of arbitration shall be (city and/or country);(c) The language(s) of the arbitration shall be ____. Costs 8

9. The Arbitration Clause ICSID � International Centre for Settlement of Investment Disputes Arbitration of Investment Disputes between Contracting States and Nationals of Other Contracting States Dispute must arise out of an �investment� in the Contracting State Equity investments in companies and joint ventures Service contracts Technology transfers Natural resource concession agreements Construction and operation of a facility in host state Promissory notes 9

10. The Arbitration Clause ICSID cont�d Model Arbitration Clause:The [Government/Agency] of [Contracting State] and [Investor] hereby consent to submit to the International Centre for Settlement of Investment Disputes any dispute arising out of or relating to this agreement for settlement by arbitration pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. 10

11. The Arbitration Clause ICSID cont�d No sovereign immunity defense to liability Awards are immune from national court review Enforceable in the courts of all 135 signatory states without the need to domesticate the award ICSID awards are published Developing countries have a vested interest not to challenge the World Bank Absent express agreement, default to law of Contract State Costs 11

12. The Arbitration Clause LCIA � London Court of International Arbitration Model Arbitration Clause:Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause.The number of arbitrators shall be (one/three).The seat, or legal place, or arbitration shall be (city and/or country).The language to be used in the arbitral proceedings shall be ____.The governing law of the contract shall be the substantive law of ____. Costs 12

13. The Arbitration Clause Stockholm � Arbitration Institute Stockholm Chamber of Commerce Model Arbitration Clause:Any dispute, controversy or claim arising out of or in connection with this contract, or the breach, termination or invalidity thereof, shall be finally settled by arbitration in accordance with the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce.The parties are advised to make the following additions to the clause, as required:The arbitral tribunal shall be composed of ____ arbitrators (a sole arbitrator)The seat of arbitration shall be ____.The language to be used in the arbitral proceedings shall be ____.This contract shall be governed by the substantive law of ____ (insert jurisdiction). Costs 13

14. The Arbitration Clause SIAC � Singapore International Arbitration Center Model Arbitration Clause:In drawing up international contracts, we recommend that parties include the following arbitration clause:Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (�SIAC Rules�) for the time being in force, which rules are deemed to be incorporated by reference in this clause.The Tribunal shall consist of ____ arbitrator(s) to be appointed by the Chairman of the SIAC.The language of the arbitration shall be ____. Costs 14

15. The Arbitration Clause UNCITRAL (Not an Institution) Model Arbitration Clause:Any dispute, controversy or claim arising out of or relating to this contract, or to the breach, termination, or validity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules as at present in force.The appointing authority shall be ____.The place of arbitration shall be ____.The number of arbitrators shall be [one] [three] appointed in accordance with said Rules.The language to be used in the arbitral proceedings shall be ____. 15

16. The Arbitration Clause Choice of Law What law governs the validity of the arbitration agreement? Law of the Contract/Law of the Arbitration (avoid ambiguity) What law governs the arbitration proceeding themselves? Unless expressly agreed otherwise, the procedures of the Institution (ICC, ICSID, LCIA, etc.) will control. Ad hoc (UNCITRAL, etc.) What law applies to the substance of the dispute? Law of the Contract/Law of the Arbitration (avoid ambiguity) U.S. (New York, Texas), English common law (or law based on English law such as New Zealand, Nigeria, etc.) (Retain local counsel) 16

17. The Arbitration Clause Situs Consider the forum law on setting aside arbitral awards Consider witnesses, experts, and documents Consider forum law on obtaining extraordinary relief and contempt Discovery Include Built-in Discovery Mechanism even if contrary to choice of law IBA Rules � International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration (Bob Brodegaard will discuss) Confidentiality �The parties agree to keep and maintain confidential the evidence, testimony presented, findings and award in any arbitration contemplated herein.� 17

18. The Arbitration Clause Default Provisions What if Respondent Country/Party fails to pay? Without express language, Claimant pays for Respondent and it will be included in the award. Without express authority, Tribunal is without power to declare Respondent in default or to provide death penalty sanctions. Suggestion: Add express language in the arbitration provision authorizing the Tribunal to compel Respondent to pay the administration and arbitrator fees and to declare Respondent to be in default for failure to do so. Include express language consenting and authorizing Tribunal to impose death penalty sanctions. 18

19. The Arbitration Clause No Parallel Proceedings �The Parties agree not to institute litigation concerning the validity or subject matter of this Agreement and expressly authorize the Tribunal to adjudicate all matters concerning the Agreement, the arbitration provision paragraph __ and whether any dispute is subject to arbitration.� Limitation of Damages If you are likely to be a defendant in any dispute arising from the Agreement, expressly limit damages in the arbitration provision. �Notwithstanding anything in this Agreement to the contrary�� Consequential, punitive, exemplary, non-economic damages To avoid any ambiguity between the choice of law provision and the limitation of damages provision 19

20. Pleadings International arbitration is focused primarily on written submissions Notice of Arbitration Statement of Claim Statement of Defense 20

21. Pleadings Parties have considerable freedom when drafting pleadings Names and addresses of the claimant Copy of the relevant agreement, if any, including the arbitration agreement A brief statement of the factual circumstances of the case and relief sought A statement regarding the number of arbitrators, the location of the arbitration proceeding, language to be used, and the applicable arbitration rules 21

22. Pleadings Common Law Style Material facts No argument No exhibits No legal authorities Advantages Flexibility Surprise Impact 22

23. Pleadings Civil Law Style Less formal, more narrative Argumentative Exhibits and case law Advantages Creating an impact early on in the case 23

24. Written Submissions Reply Briefly address key issues in Statement of Defense Rejoinder Briefly address key points in Reply, if necessary 24

25. Written Submissions Witness Statements Signed statement of a fact witness or expert Submitted before or with a party�s memorial/pre-hearing brief Required of any witness who is expected to testify at the hearing Most often a substitute for direct examination Any witness who submits a written statement is expected to testify on cross examination at the hearing Rebuttal and/or supplemental witness statements usually permitted 25

26. Written Submissions Memorials or Pre-Hearing Briefs Further develops the arguments of both sides in the case Includes documents, witness statements, expert reports, and legal authorities Longer and more comprehensive than initial pleadings Post-Hearing Briefs Summary of the evidence presented at the hearing on key issues Answer specific questions posed by the tribunal during the hearing 26

27. Selecting Arbitrators � The Tribunal In the absence of an arbitration clause that sets the number of arbitrators, arbitration rules provide a mechanism favoring one or three arbitrators. ICC, LCIA, AAA, WIPO One arbitrator unless administrator decides otherwise UNCITRAL, IACAC, ICSIC Three arbitrators 27

28. Selecting Arbitrators � The Tribunal Arbitrator Considerations Arbitration experience Legal background � common or civil law attorney Experience in governing law Industry experience Availability Nationality 28

29. Selecting Arbitrators � The Tribunal Neutral Appointment Procedure Under most regime rules, the parties designate an arbitrator, and the administering institution appoints the third arbitrator. Others allow the party appointed arbitrators to appoint the third arbitrator. Nationality of Neutral Arbitrator ICC, LCIA, ICSID National of a third state AAA, UNCITRAL, IACAC Discretion of arbitration institution 29

30. Selecting Arbitrators � The Tribunal Challenging Arbitrators All arbitration rules require arbitrators to be impartial and independent. A party may challenge an arbitrator whenever circumstances exist that give rise to justifiable doubts as to the arbitrator�s impartiality and independence. 30

31. Interim Relief Provided for under arbitral rules, domestic laws, and international conventions Injunctions Security for costs Attachment Protection of property 31

32. Interim Relief ICC, AAA Tribunal may take �whatever interim measures it deems necessary, including injunctive relief and measures for the protection and conservation of property.� LCIA, IACAC Tribunal may take �any interim measure it deems necessary in respect of the subject matter of the dispute, including the conservation of goods forming the subject matter of the dispute.� ICSID �A party may request that provisional measures for the preservation of rights be recommended by the Tribunal. The tribunal may also recommend provisional measures on its own initiative or recommend measures other than those specified in a request.� 32

33. Interim Relief Common Standard for Interim Relief Urgency Imminent harm Preserve status quo Likelihood of success on the merits Tribunals consider the laws of the arbitration seat or wherever the relief is sought 33

34. Interim Relief Resort to local courts If the panel has yet to be seated To attach assets of a party To enjoin a third party Provided under arbitral rules, domestic laws, and international conventions Consider adding language in arbitration clause that permits parties to resort to local courts for interim relief 34

35. Anti-Suit Injunctions Issued upon the request of a party that the other party be enjoined from initiating or from proceeding with arbitration. The proper forum to challenge the jurisdiction of an arbitral tribunal is the tribunal itself, or if necessary, a court located in the same jurisdiction as the pending arbitration. 35

36. Discovery By agreement at time of contract Party autonomy � by subsequent agreement If no agreement Not likely to have depositions, but will get witness statement Discrete, limited document production � no �fishing expedition� LCIA Rules, Articles 15, 22 ICC Rules of Arbitration, Article 20 UNCITRAL Arbitration Rules, Articles 24, 25 ICDR Arbitration Rules, Article 19 SIAC Arbitration Rules, Article 24 Stockholm Arbitration Rule 26 ICSID Rules 33, 34 36

37. Discovery IBA Rules on the Taking of Evidence in International Commercial Arbitration Tries to accommodate common law and civil law See, e.g. Article 3 (provides for document requests) and Article 4 (complete and detailed witness statement) 37

38. Discovery 28 USC � 1782 � 1782: Assistance to foreign and international tribunals and to litigants before such tribunals (a) The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal� 38

39. Discovery Applicability to International Arbitration National Broadcasting Company v. Bear Sterns, 165 F.3d 184 (2nd Cir. 1999) Republic of Kazakhstan v. Biederman International, 168 F.3d 880 (5th Cir. 1999) Intel v. Advanced Micro Devices, 542 US 241 (2004) 39

40. Discovery Applicability to International Arbitration In re Roz Trading Ltd., 469 F.Supp.2d 1221 (N.D. Ga. 2006) In re Application of Hallmark Capital Corporation, 53 F.Supp.2d 951 (D. Mn. 2007) Comision Ejecutiva Hidroelectrica del Rio Lempa v. Nejapa Power Co., LLC, 8 WL 4809035 (D. Del. Oct. 14, 2008) appeal dismissed as moot, 341 F. App'x. 821 (3d Cir. 2009) 40

41. Discovery Applicability to International Arbitration Oxus Gold PLC, Misc. No. 06-82, 2007 WL 1037387 (D.N.J. 2 April 2007) In re Operadora DB Mexico, S.A. de C.V., 6:09-CV-383-ORL-22GJK, 2009 WL 2423138 (M.D. Fla. Aug. 4, 2009) La Comision Ejecutiva Hidroelecctrica Del Rio Lempa v. El Paso Corp., 617 F. Supp. 2d 481 (S.D. Tex. 2008) aff'd sub nom. El Paso Corp. v. La Comision Ejecutiva Hidroelectrica Del Rio Lempa, 341 F. App'x. 31 (5th Cir. 2009) In re Arbitration between Norfolk S. Corp., Norfolk S. Ry. Co., & Gen. Sec. Ins. Co. & Ace Bermuda Ltd., 626 F. Supp. 2d 882 (N.D. Ill. 2009) 41

42. Conduct of the Arbitration Hearing Much depends on the legal background of arbitrators Inquisitorial versus adversarial No recognized rules of evidence In discretion of arbitrators �the arbitral tribunal shall determine the admissibility, relevance, materiality, and weight of the evidence offered�; UNCITRIAL Article 25 (6); see also, ICDR Article 20(6); IBA Article 9 (1); Stockholm Article 26 (1); ICSID Rule 34 42

43. Conduct of the Arbitration Hearing Privilege recognized to varying degrees Direct examination usually is in the form of written statement Consequences Most rules provide for cross-examination LICIA Article 20; Singapore Arbitration Rule 22.3; Stockholm Article 29 (3); IBA Article 8 (2); ICSID Rule 35 But some rules are silent ICC 43

44. Conduct of the Arbitration Hearing Americanization of International Arbitration Much more discovery is being allowed Hearings becoming trials Ever increasing importance of cross-examination and oral advocacy 44

45. The Award Competence/competence In first instance, arbitral tribunal decides if it has jurisdiction Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) 45

46. The Award Convention on the Recognition and Enforcement of Foreign Arbitral Awards (�New York� or �1958� Convention) / Federal Arbitration Act Chapter 2 142 of 195 FAA � 207 � 3 years to apply to enforce award 46

47. The Award Grounds to refuse enforcement of New York Convention Incapacity, invalid agreement Lack of notice Award not within terms of submission Arbitral tribunal or procedure not within terms of agreement Award not binding or set aside �by a competent authority of the country in which, or under the laws of which, that award was made� Subject matter may not be arbitrated Contrary to public policy Manifest disregard? 47

48. The Award Inter-American Convention on International Commercial Arbitration (the �Panama� Convention) / FAA Chapter 3 3 years to enforce Relationship with New York Convention Applies in U.S. only if the majority of the parties are citizens of signatory states and are members of OAS Grounds for refusal Same as New York Convention 48

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