Legal issues covering the settlement of disputes in international public contracts

1. Legal issues covering the settlement of disputes in international public contracts

2. What to consider?

3. Summary of Issues • Type of disputes arising in a contractual context • Type of dispute resolution • Choice of Forum • Applicable law • Strategy to avoid disputes?

4. Type of disputes thatmay arise with an international public contract Disputes between state-state Disputes between state-investor Disputes betweeninvestors: privatedisputes Disputes between State-contractor

5. Legal remedies for contractual disputes between the state and the contractOR • Goal: when a dispute arises between the two contractual parties, the goal is to find an equitable solution without blocking the contract’s performance. • Interested parties: contracting parties (Public entity and Contractor), potentially third parties (users, subcontractors) • Options: internal and non judicial remedies/ arbitration/ judicial solution

6. Agenda • (1) Overview of different means to settle contractual disputes, including judicial, ADR, negotiation, mediation and arbitration, • (2) Arbitration : definition and legal framework • (3)Types of arbitrations • (4) Procedural rules applicable in arbitration

7. 1. Dispute resolution clauses • Single clause • Combined clauses • Mediation-arbitration clause • Negotiation arbitration clause

8. Alternative Dispute Resolution (ADR) • Alternative Dispute Resolution mechanisms are designed for the amicable settlement of contractual disputes that arise during the implementation of a procurement contract or for disputes related to the expiry or termination of the contract.

9. Amicable means v. judicial/Binding means Non binding: Binding: Non bindingmeans : negociation, mediation and conciliation resortto state courts, and Arbitration

10. Courts • Domestic judicial system: Civil courts/Commercial courts/Administrative courts? • Proceedings? Time frame? Powers? Interim measures? • Appeal • Enforcement

11. Judicial proceedings • Settlement of disputes could be mandatory done by courts: • In some countries, governmental agencies lack the power to agree to ADR or arbitration, except under specific circumstances, • while in other legal systems the parties have the freedom to choose between judicial and arbitral proceedings. • The efficiency of the national judicial system and the availability of forms of judicial relief that are adequate to disputes that might arise under the project agreement are additional factors to be taken into account.

13. ADR covers: • Negotiation and amicable settlement • Early warning requires the claiming party to submit a quantified claim, along with the necessary proof, within an established time period. • Facilitated negotiation with a facilitator appointed at the beginning of the contract implementation • Conciliation: in conciliation, a third party is trying to bring together the disputing parties to help them reach a mutually agreeable settlement of the dispute (based, e.g., on a set of conciliation rules such as the UNCITRAL Conciliation Rules) or its variant “adjudication”. • Mediation goes further by allowing the mediator to suggest terms for the resolution of the dispute. However, the terms (“conciliation” and “mediation”) are used interchangeably in practice. E.g. the 2012 International Chamber of Commerce (ICC) ADR Rules, will provide for mediation and other forms of amicable dispute resolution. They coincide with the launch of the ICC International Centre for ADR, previously informally known as the ICC "green services".

14. ADR (follow-up) • Non-binding arbitration, when it pertains to the ADR mechanisms, it is conducted in the same manner as arbitration, and the same rules may be used except that the procedure ends with a recommendation. • Non-binding expert appraisal • Mini or mock trial with 3 persons • Dispute review boards: is an ad-hoc forum established by the contracting parties to prevent and handle contractual disputes.

15. 2. Arbitration : definition • Necessity of consent • The bindingcharacter of the decisionrendred by the arbitrator • Arbitration v. Litigation • Arbitration v. Negotiation • Arbitration v. Mediation • Arbitration v. Conciliation

16. Advantages of Arbitration : • Impartiality and Expertise of the arbitrator • Rapidity: • Availability of the arbitrator • Lack of formal proceedings • Confidentiality • Exceptions to confidentiality in some cases

17. Cost and expenses • Arbitrator must be paid • Ideas about the cost of arbitration • Comparaison between ad hoc arbitration and institutional arbitration • Cost of lawyer • Cost of the institution that administers the arbitration

18. Arbitration : the necessary LEGAL FRAMEWORK

19. Clarification • A clear separation of roles between the Judiciary and the arbitral tribunal should be established, • A clear separation between the contractual clause on arbitration and the national law on arbitration in accordance with the national procurement law

20. Law on arbitration/ contractual clause on arbitration • The clause on arbitration in the contract itself should mirror the Arbitration Law, with mention of the specific arbitral forum, the applicable arbitration rules and the applicable law for interpreting the contract that will governs the issue in case one of the parties is a foreign company.

21. The UNCITRAL Model law on International Commercial arbitration • 1985 revised 2006 • It covers all stages of the arbitral process from the arbitration agreement, the composition and jurisdiction of the arbitral tribunal and the extent of court intervention through to the recognition and enforcement of the arbitral award. It reflects worldwide consensus on key aspects of international arbitration practice having been accepted by States of all regions and the different legal or economic systems of the world.

22. 3. Types of arbitration • Traditional (or commercial) arbitration v. Investment Arbitration • Domestic v. international Arbitration • Institutional arbitration v. Ad hoc Arbitration

23. Type of arbitration: Commercial arbitration/ Investment arbitration • Specificity of investment arbitration • Models clauses that provides for the consent of the state in investment treaties • ICSID : Investment arbitration

25. International/domestic arbitration • Often, the national procurement law is essentially aligned with the United Nations Commission on International Trade Law (UNCITRAL) Model law on International Commercial Arbitration. • The Country should be a member of the Convention on the recognition and enforcement of foreign arbitral awards (New York, June 10, 1958), to recognize and to enforce on its territory arbitral awards rendered in other countries.

26. WB SBD for works (2010) GCC • 20.6 • (a) For contracts with foreign contractors, international arbitration with proceedings administered by the institution appointed in the Contract Data, conducted in accordance with the rules of arbitration of the appointed institution, if any, or in accordance with UNCITRAL arbitration rules, at the choice of the appointed institution, • (b) the place of arbitration shall be the city where the headquarters of the appointed arbitration institution is located, • (c) the arbitration shall be conducted in the language for communications defined in Sub-Clause 1.4 [Law and Language], and • (d) For contracts with domestic contractors, arbitration with proceedings conducted in accordance with the laws of the Employer’s country.

27. Procedures

28. BIT arbitration in Iraq Steps in commercial arbitration • BIT negotiations for investment agreements are underway with the following countries: • Egypt France Germany Italy Jordan Lebanon Oman Romania Syria Turkey United Kingdom  

29. Type of arbitration Ad Hoc arbitration Institutional arbitration The parties determine freely the arbitration rules Appointment of members of the arbitral Tribunal Number of Arbitrators Independence and impartiality Replacement and Disqualification of Arbitrators Fees and Expenses Arbitration and Domestic Courts Role of courts Non interference, Arbitration Centers: (e.g.) ICC CRCICA, ICSID

30. "CRCICA The Cairo Regional Centre for International Commercial Arbitration (the "CRCICA" or the "Centre") is an independent non-profit international organization established in 1979 under the auspices of the Asian African Legal Consultative Organization ("AALCO"), in pursuance of AALCO's decision taken at the Doha Session in 1978 to establish regional centres for international commercial arbitration in Asia and Africa.

31. Rules of procedure • Reference to specific arbitration rules that will apply to the process of the dispute, such as the Arbitration Rules formulated by UNCITRAL is recognized as a best practice in particular for international contracts. • Venue of arbitration, • Language, • Terms of Reference, • Statements of claim(s) and defense, including counter claim, • Submission of documents • Role of host government and its agencies

32. UNCITRAL Arbitration Rules revised in 2010 • The UNCITRAL Arbitration Rules, as revised, have been effective since 15 August 2010. • They include provisions dealing with, amongst others, multiple parties arbitration and joinder, liability, and a procedure to object to experts appointed by the arbitral tribunal. • A number of innovative features contained in the Rules aim to enhance procedural efficiency, including revised procedures for the replacement of an arbitrator, the requirement for reasonableness of costs, and a review mechanism regarding the costs of arbitration. They also include more detailed provisions on interim measures. • It is expected that the Rules, as revised, will continue to contribute to the development of harmonious international economic relations.

33. ICC rules http://www.iccwbo.org ICC arbitration is respected worldwide. It is supervised by the ICC Court and administered by the Court's Secretariat. The Court — which numbers business specialists as well as international lawyers — was created in 1923 and tracks the progress of each case and reviews the awards in order to facilitate their enforcement ever since.

34. The ICC 2012 Rules of Arbitration The Rules of Arbitration of the International Chamber of Commerce ("the Rules") govern the conduct of ICC arbitration proceedings from start to finish. They regulate the filing of claims, the constitution of arbitral tribunals, the conduct of proceedings, the rendering of decisions and the determination of costs. While offering security and predictability, the ICC Rules also accommodate any preferences parties in dispute might have with respect to certain aspects of the proceedings, such as the choice of arbitrators, the place, and the language of arbitration. In all matters that are not expressly provided for in the ICC Rules, the ICC International Court of Arbitration and Arbitral Tribunal act in the spirit of the Rules and make every effort to have an enforceable Award. Arbitration proceedings introduced after the 1 January 2012 will be submitted to the ICC Rules of Arbitration entered into force on 1 January 2012, unless the parties have agreed to submit to the Rules in effect on the date of their arbitration agreement.

35. New CRCICA Arbitration Rules (2011) Since its establishment, CRCICA adopted, with minor modifications, the Arbitration Rules of the United Nations Commission on International Trade Law (the "UNCITRAL"), approved by the General Assembly of the United Nations by resolution No. 31/98 on December 15, 1976. CRCICA has amended its Arbitration Rules in 1998, 2000, 2002 and 2007 to ensure that they continue to meet the needs of their users, reflecting best practice in the field of international institutional arbitration. The present CRCICA Arbitration Rules are based upon the new UNCITRAL Arbitration Rules as revised in 2010, with minor modifications emanating mainly from the Centre's role as an arbitral institution and an appointing authority. They have entered into force as from 1 March 2011 and shall apply to arbitral proceedings that have commenced after this date.

36. Model clause

37. Selection of the applicable law on the merits Parties agreement If not, The arbitral tribunal shall apply the rules of law designated by the parties as applicable to the substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall apply the law which it determines to be appropriate.

38. Applicable law in ICSID convention Article 42 1. The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable. 2. The Tribunal may not bring in a Finding of non liquet on the ground of silence or obscurity of the law. 3. The provisions of paragraphs (1) and (2) shall not prejudice the power of the Tribunal to decide a dispute ex aequo et bono if the parties so agree.

39. Conduct of Arbitration Proceedings • Notification • Response • Hearings, • Testimony of witnesses, • Expert evidence • Failure to Present Case and Discontinuance of Proceedings

40. Contain of the notification The notice of arbitration shall include the following: • (a) A demand that the dispute be referred to arbitration; • (b) The names and contact details of the parties; • (c) Identification of the arbitration agreement that is invoked; • (d) Identification of any contract or other legal instrument out of or in relation to which the dispute arises or, in the absence of such contract or instrument, a brief description of the relevant relationship; • (e) A brief description of the claim and an indication of the amount involved, if any; • (f) The relief or remedy sought; • (g) A proposal as to the number of arbitrators, language and place of arbitration, if the parties have not previously agreed thereon. • The notice of arbitration may also include: • (a) A proposal for the designation of an appointing authority • (b) A proposal for the appointment of a sole arbitrator • (c) Notification of the appointment of an arbitrator

41. The defendant answer :Response to the notice of arbitration • The respondent shall communicate to the claimant a response to the notice of arbitration, which shall include: • (a) The name and contact details of each respondent; • (b) A response to the information set forth in the notice of arbitration, • 2. The response to the notice of arbitration may also include: • (a) A proposal for the appointment of a sole arbitrator referred • (b) A brief description of counterclaims or claims for the purpose of a set-off, if any, including where relevant, an indication of the amounts involved, and the relief or remedy sought;

42. Amendments to the claim or defence During the course of the arbitral proceedings, a party may amend or supplement its claim or defence, including a counterclaim or a claim for the purpose of a set-off, unless the arbitral tribunal considers it inappropriate to allow such amendment or supplement having regard to the delay in making it or prejudice to other parties or any other circumstances.

43. Interim measures • The arbitral tribunal may, at the request of a party, grant interim measures. • An interim measure is any temporary measure by which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral tribunal orders a party, for example and without limitation, to: • (a) Maintain or restore the status quo pending determination of the dispute; • (b) Take action that would prevent, or refrain from taking action that is likely to cause, (i) current or imminent harm or (ii) prejudice to the arbitral process itself; • (c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or • (d) Preserve evidence that may be relevant and material to the resolution of the dispute.

44. Hearings In the event of an oral hearing, the arbitral tribunal shall give the parties adequate advance notice of the date, time and place thereof. Role of Hearings Organization of Hearings

45. Enforcement of awards • Types of awards, • Contents, reasons, • Method of challenge, • Grounds for challenge, • Enforcement, • international and Regional Conventions, • Waiver of sovereign immunity,

46. Recognition and enforcement under New York convention Recognizing the growing importance of international arbitration as a means of settling international commercial disputes, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the Convention) seeks to provide common legislative standards for the recognition of arbitration agreements and court recognition and enforcement of foreign and non-domestic arbitral awards. The term "non-domestic" appears to embrace awards which, although made in the state of enforcement, are treated as "foreign" under its law because of some foreign element in the proceedings, e.g. another State's procedural laws are applied. The Convention's principal aim is that foreign and non-domestic arbitral awards will not be discriminated against and it obliges Parties to ensure such awards are recognized and generally capable of enforcement in their jurisdiction in the same way as domestic awards. An ancillary aim of the Convention is to require courts of Parties to give full effect to arbitration agreements by requiring courts to deny the parties access to court in contravention of their agreement to refer the matter to an arbitral tribunal.

47. Interpretation of the award a party, with notice to the other parties, may request that the arbitral tribunal give an interpretation of the award. Interpretation isn’t a resubmission of the case.

48. Correction of the award a party, with notice to the other parties, may request the arbitral tribunal to correct in the award any error in computation, any clerical or typographical error, or any error or omission of a similar nature. If the arbitral tribunal considers that the request is justified,

49. Additional award a party, with notice to the other parties, may request the arbitral tribunal to make an award or an additional award as to claims presented in the arbitral proceedings but not decided by the arbitral tribunal.

50. Recourse against the award • Annulment recourse or setting aside recourse • Recognition and enforcement of awards : Exequatur