"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Tuesday, June 22, 2010

Fortnightly Roundup of SSRN Articles on Arbitration (June 1-15)

Andrej Savin, The Arbitration Exception and Protection of Arbitration Agreements in the EU

Abstract:
Arbitral proceedings are excluded from the scope of Brussels I Regulation on the Recognition and Enforcement of Foreign Judicial Awards. This exception, a result of the fact that the 1958 New York Convention serves successfully as a primary instrument for the recognition and enforcement of arbitral awards, creates a number of difficulties both for arbitral tribunals and for regular courts.

The first part of this article looks at the exception from Article 1(2)(d) of the Regulation through official commentaries and court cases of the European Court of Justice. Although there is confirmation in the latter that arbitration is excluded, the inconsistencies and doubts about the article’s scope continue to put parties in doubt.

The second part analyzes some difficulties which arise out of Article 1(2)(d) and which are encountered in practice. Among these are the problem of the arbitration agreement’s validity, the issues of interim measures and court assistance and the problem of recognition and enforcement of judgments made in violation of arbitration agreements.

The third part analyzes the recent initiatives for reforming the Regulation. Before all, a look is taken at the so-called Heidelberg Report which the European Commission ordered as a basis for its own Green Book on the changes and the Report that follows it. Attention is also drawn to other suggestions which look at arbitration exception.

Lorenzo Casini, The Making of a Lex Sportiva: The Court of Arbitration for Sport 'Der Ernährer'

Abstract:
The purpose of this paper is to examine the structure and functions of the Court of Arbitration for Sport (CAS), in order to highlight a number of problems concerning judicial activities at the global level more generally. Section 1 will outline CAS’ organization and functions, from its inception to the present date. In particular, this section will show how the history of the CAS is reminiscent of a famous German novel based on a biblical saga, “Joseph and his brothers” by Thomas Mann. Put briefly, the CAS was originally the “favourite son” of the Olympic movement’s founding fathers; it subsequently became the target of its envious “brothers” - i.e. the International Federations and other sporting arbitration institutions - which viewed the CAS as a dangerous enemy; ultimately, the CAS defeated its opponents, gained independence and brought normative harmonization, thereby becoming “the Nourisher” (Der Ernährer) of global sports law. Section 2 will focus on the role of CAS in making a lex sportiva, and it will take into account three different functions: the development of common legal principles; the interpretation of global norms and the influence on sports law-making; and the harmonization of global sports law. Section 3 will consider the relationships between the CAS and public authorities (both public administrations and domestic courts), in order to verify the extent to which the CAS and its judicial system are self-contained and autonomous from States. Lastly, section 4 will address the importance of creating bodies like CAS in the global arena, and it will identify the main challenges raised by this form of transnational judicial activity. The analysis of CAS and its role as law-maker, in fact, allows us to shed light on broader global governance trends affecting areas such as the institutional design of global regimes, with specific regard to the separation of powers and the emergence of judicial activities.

Thomas V. Burch, Manifest Disregard and the Imperfect Procedural Justice of Arbitration

Abstract:
Arbitration is an efficient dispute-resolution system that respects parties’ right to an accurate award. But because arbitration is designed to be efficient, accuracy is not guaranteed. This presents a challenge when courts are asked to confirm or vacate arbitrators’ decisions. Judges dislike approving inaccurate awards, especially in cases where parties have unequal bargaining power. Yet, judges also recognize arbitration’s limited-review principle. So they are forced to balance their desire for accuracy against arbitration’s efficiency policy. Efficiency typically wins at the expense of accurate outcomes.

This Article contends that courts place too much emphasis on the efficiency policy in mandatory arbitration. Consider the narrow manifest disregard standard that most courts apply. It is virtually impossible to vacate an award under this standard because the court must have proof that the arbitrator consciously disregarded known, applicable law. Consequently, parties subjected to mandatory arbitration have little chance of overturning inaccurate awards, which is problematic from a procedural justice standpoint because parties like decision control. This Article proposes giving parties greater decision control by allowing them to appeal arbitrators’ awards for legal error. This expanded standard creates a procedural mechanism for correcting arbitrators’ mistakes, thereby enhancing mandatory arbitration’s procedural justice.

Alessandra Asteriti & Christian J. Tams, Transparency and Representation of the Public Interest in Investment Treaty Arbitration

Abstract:
This article addresses one of the crucial tensions facing modern investment arbitration: that between confidentiality and privacy on the one hand and transparency and inclusiveness on the other. It begins by reviewing how investment arbitration frameworks have addressed this tension so far, noting the traditional focus on confidentiality and privacy and the more recent trend towards transparency and inclusiveness of proceedings before ICSID and/or NAFTA tribunals.

In line with the central methodological premise of the book, the chapter then moves on to compare domestic public law approaches to questions of transparency and public interest representation. Having reviewed U.S., English, French, German and Greek law, it shows that domestic public law seems to accept the principle of transparency and provides for various forms of indirect public interest representation (e.g. through amicus curiae briefs) but also different forms of public interest claims. While this approach cannot be directly transposed to the international legal order, it can clearly – and arguably should – guide the approach of investment lawyers. In any event, the experience of many domestic legal systems suggests that there is no reason to be overly afraid of transparency and some degree of public interest representation.

Christian Tietje, The Applicability of the Energy Charter Treaty in ICSID Arbitration of EU Nationals vs. EU Member States

Abstract:
The relationship between EC law and international investment law has gained increasing attention. This is due to ongoing proceedings before the European Court of Justice (ECJ) concerning the compatibility of bilateral investment treaties (BITs) of EU Member States with EC law, several arbitral proceedings of investors versus EU Member States based on BITs between EU Member States and/or concerning substantive legal problems that are somehow related to EC law (e.g. Eastern Sugar). Insufficient attention, however, has so far been paid to the relationship between EC law and the Energy Charter Treaty (ECT) with regard to the specific situation of a possible arbitral proceeding of an EU national versus an EU Member State. As the ECT is a plurilateral treaty that has been concluded as a so-called mixed agreement by the EC and all its Member States, the questions that arise are to a large extent different than in the Eastern Sugar/BIT situation.

Accordingly this paper discusses the applicability of the ECT in ICSID arbitrations of EU nationals versus EU Member States. The first part of the paper provides an introduction to the applicable law concerning the admissibility and merits of ECT/ICSID proceedings. The second part discusses the public international status of the ECT towards the EC and its Member States and analyses the legal phenomenon of ‘mixed agreements’ within the EC and its Member States. The author continues to examine the general aspects concerning the legally-binding effects of mixed agreements such as the ECT from a public international law perspective. Following the emphasis upon a number of intrinsic legal principles of public international law, the author argues that the ECT as a mixed agreement under EC law does not influence the comprehensive legally-binding effect of the ECT treaty in view of the EC and its Member States under public international law. In the third part of the paper the contributor adheres to providing an overview of the exemptions to the comprehensive binding effects regarding mixed agreements, focussing particularly on the analysis of possible limitations of the legally-binding inter se relationship as a result of explicit and implicit ECT standards. Subsequently an intermediate conclusion is presented, which underlines that from a public international law perspective, an inter se modification of the ECT by EC law is not possible. The author continues to contextualise Part III and V of the ECT and concludes that no competency is given therein to the EC. In the last part of the paper the contributor assesses the associated sub problem of the conflicting jurisdiction in the sense of Art. 292 EC and discusses the irrelevance of Art. 307 EC from an international public law perspective in relation to ECT/ICSID proceedings.The paper closes by providing an analysis of the legal principles of lex arbitri and ordre public concerning the applicability of EC law in an ECT/ICSID proceeding. The author concludes that the legal provisions of the ECT are applicable in an ICSID proceeding of an EU national versus an EU Member State; similarly it is established that EC law does not influence such proceedings which are exclusively governed by public international law.
Emilia Onyema, The Doctrine of Separability Under Nigerian Law

Abstract:
This article examines the provisions of the Nigerian Arbitration and Conciliation Act and judicial pronouncements from the higher courts of record in Nigeria, to determine the question whether the doctrine of separability or autonomy of the arbitration clause from the underlying contract is recognised and applied in Nigeria.

Notable cases cited: The Owners of the MV Lupex v Nigerian Overseas Chartering & Shipping Ltd; Fiona Trust & Holding Corporation & Others v Perivalov & Others; Nigerian Telecommunications plc v Pentascope Int'l BV Pte Ltd.

Nicholas Pengelley, This Pig Won't Fly: Death Threats as Grounds for Refusing Enforcement of an Arbitral Award

Abstract:
Do death threats allegedly made by one party to an arbitration agreement, which deter the other party from attending the arbitration hearing out of fear for his safety, constitute grounds for a court exercising its discretion to refuse enforcement of a foreign arbitral award? This question is considered in the light of current Ontario litigation with particular reference to the inability of a party to present his case, and public policy.

Gus Van Harten, Thinking Twice About a Gold Rush: Pacific Rim v. El Salvador

Abstract:
This is a short op-ed on Pacific Rim's CAFTA claim against El Salvador. It discusses the tension between stability and change in law and the role played by investment treaty arbitrators in resolving this tension.

Institute for the Advancement Of the American Legal System, Civil Litigation Survey of Chief Legal Officers and General Counsel Belonging to the Association of Corporate Counsel

Abstract:
This Report sets forth the results of the Institute for the Advancement of the American Legal System’s civil litigation survey of Chief Legal Officers and General Counsel belonging to the Association of Corporate Counsel. This survey explored the opinions of those who lead corporate legal departments – one per company – in an effort to capture how businesses experience the American civil justice process. The survey’s goal was to achieve a better understanding of the litigant’s perspective. While businesses are certainly a specific category of litigants, they are an important one, and their often repeat contact with the civil justice system is relevant to obtaining a complete picture of the status of that system.

Karsten Nowrot, International Investment Law and the Republic of Ecuador: From Arbitral Bilateralism to Judicial Regionalism

Abstract:
Following more than two decades of unprecedented expansion, the legal regime on the protection of foreign investments has more recently become – again – increasingly controversially debated. There are clear indications in state practice, that an increasing number of countries assume a more cautious or even openly critical position on the current predominant approach in international investment law. This applies also to the recently renewed suspicion displayed by many Latin American countries in this regard. Among the Latin American countries, it is in particular also Ecuador, which has in recent years emerged as one of the main opponents of the current state of international investment law in general and international investment arbitration in particular.

Ecuador not only adopted an increasingly critical stance on this issue but has also – in contrast to many other Latin American countries – in fact already employed a variety of measures in the domestic and international realm that clearly signal this state’s intention to exit the present system and to establish a new alternative scheme of international investment protection.

Against this background, the contribution is intended to analyse some international legal implications of Ecuador’s actions aimed at largely disconnecting itself from the present framework of international investment protection. Furthermore, some broader conceptual thoughts on the perspectives for the future design of international investment agreements in the Latin American context will be provided. For this purpose, the contribution has been divided into three main parts.

The first part is devoted to an identification and overview of the characteristics and importance of the currently predominant scheme of international investment protection, including certain public interest challenges arising from the present design. In the second part some legal implications and thus possible short-term effects of Ecuador’s recent policy responses to these public interest challenges are evaluated. Finally, the third part includes some thoughts on potential medium-term alternatives enjoyed by Latin American countries to initiate and implement a reformation of the international legal framework on investment protection. In this connection, it will be argued that the adoption of a regional investment agreement including the creation of a Latin American court of investment law – although appearing at first sight a rather ambitious (and not only to many foreign investors probably suspicious) alternative – can in the medium-term perspective be considered as an acceptable, politically feasible and thus viable option to facilitate a reconciliation, on modified terms, between countries like Ecuador and the international legal regime on the protection of foreign investments.

James Thuo Gathii, Alternative and Critical: The Contribution of Research and Scholarship on Developing Countries to International Legal Theory

Abstract:
The first set of articles provides an explanation of international law from the viewpoint that international law is culturally constitutive and historically contingent. Obiora Okafor’s article demonstrates that the frailty of the nation state in Africa is partly connected to the impositions of Eurocentric notions of the nation-state on culturally heterogenousheterogeneous African nations, which led to a view of illegitimacy in the eyes of sub-state groups. Balakrishnan Rajagopal uses an ahistorical reading of international legal history to show how Third World resistance as a factor in expansion, consolidation, and renewal of international institutions has been underestimated.

The second set of articles argues that international law can play a mediating role in addressing some legal gaps in market reform. Amy Chua explains the fundamental conflict between free markets and democracy. Eleanor Fox demonstrates that market failures in competition policy can result from the removal of market restraints. Kenneth Vandevelde examines bilateral investment treaties and raises concerns about their narrow focus.

The last set of articles argues that notions of international law, development policy, and local custom do not have predetermined outcomes. Amr Shalakany discusses how bias is not the discernible and determinate outcome of doctrines and institutions in his examination of international commercial arbitration. Celestine Nyamu examines gender hierarchy and demonstrates that custom has both positive and negative impacts on women, which runs counter to the assumptions in human rights and development policy.

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