Fortnightly Roundup of SSRN Articles on Arbitration (July 16-31)

Alan Scott Rau, Understanding (and Misunderstanding) 'Primary Jurisdiction'

[This paper was first posted in SSRN on 4 July 2010 but has been revised by the author. Link to the original paper was provided in a previous post]

Abstract: In our “Westphalian” regime of international arbitration, conflict and competition between national jurisdictions, with overlapping and yet plausible claims to supervise the process, become inevitable. The conventional starting point for any discussion - the fulcrum around which the entire arbitral enterprise pivots - has been the supposed dichotomy between the state of the “seat” - where the arbitration finds its juridical “home,” and whose jurisdiction over the process is therefore “primary” - and all other states whose jurisdiction must therefore be deemed only “secondary.” Both legislation and Convention envisage an exclusive role for the former in setting the process in motion - for example, by appointing the arbitrators - and above all in monitoring compliance with the agreement - for example, by annulling or vacating the resulting award.

That the “seat” is the privileged starting point with respect to any allocation of judicial authority has traditionally been a simple reflection of the power of any sovereign over acts taking place within its “territory”; an alternative and perhaps more robust explanation would be somewhat more “contractualist,” giving priority to the parties’ exercise of autonomy in the very act of selecting the place of arbitration - and to the intuition that, by extension, they have presumptively chosen to subject themselves both to a certain body of “arbitration law,” and to the supervisory jurisdiction of the courts charged with applying that law.

I begin by canvassing the various fact patterns in which the traditional allocation of international competence on the basis of “primary” and “secondary” jurisdiction might possibly be thought useful: It has become, for example, the heuristic of choice to test the extraterritorial effect of an award, in circumstances where the agreement of the parties has subjected the arbitral process to a particular legal system whose own courts have found it lacking in legitimacy. All this is much controverted, but generally well understood.

The inevitable problem, though, is that none of this is a universal solvent - the world can after all be understood and patterned and divided up in all sorts of ways. What may have begun as a rough attempt to allocate responsibility over the unfolding of the process, has often been unthinkingly applied to all sorts of new and unexpected and inappropriate contexts.

Where, for example, a party has asked a court to enjoin an arbitration against him that has been threatened or initiated - perhaps on the fundamental ground that he has never even given his assent - American courts will increasingly hold that, whatever power they might have to enjoin a “local” arbitration, it would be “inconsistent with the purpose of the New York Convention” to enjoin arbitral proceedings in a state of “secondary jurisdiction” - and thus they “lack jurisdiction” to do so. Where a party has claimed that a foreign award has been obtained by bribery and corruption, and wishes to institute a “collateral attack” in this country through a RICO action, it may equally be held that the court lacks “subject matter jurisdiction” to reassess an award rendered in a state of “primary jurisdiction”; “under the framework of the New York Convention, the proper method of obtaining this relief is by moving to set aside or modify the award in a court of primary jurisdiction.”

American courts thus seem curiously mesmerized, when asked to deploy familiar procedural devices in aid of their nationals, by a rhetoric invented for quite different purposes. What purports in cases like these to be a commendable solicitude for the needs of international arbitration, takes the form of an abdication of any decision making power whatever, in favor of the courts of the seat. To invoke a putative lack of “power” based upon absolute prohibitions that supposedly emanate from the Convention seems a crude and clumsy and overbroad and irresponsible way of responding; even a legal system quite committed, for example, to the proposition that attempts to evade the arbitral process are likely to be quite without merit - or for that matter to the proposition that international neutrals cannot possibly be corrupt - need not shrink, on the prophylactic grounds of lack of jurisdiction, from testing any challenges.

Yaraslau Kryvoi, Can an Arbitration Award Be Expropriated?

Abstract:
The European Court of Human Rights recently ruled that failure to enforce an arbitration award amounts to violation of the right to peaceful enjoyment of possession. This note first summarizes the ruling in Kin-Stib and Majkic v. Serbia and then considers its implications. In particular, it discusses whether an arbitration award can be expropriated by a State by virtue of non-enforcement in domestic courts.

This note concludes that under Kin-Stib and Majkic v. Serbia domestic arbitration awards, or to be more precise the contractual rights crystallized in such awards, are generally capable of being expropriated if the award is final and enforceable as such.

Applying the logic of the case to awards rendered under the ICSID Convention is more nuanced because non-enforcement in one jurisdiction does not fully deprive the award of its value. It is possible to enforce ICSID awards in other jurisdictions and therefore a case-by-case analysis is necessary to determine whether the award can be expropriated.

On the other hand, it appears that the logic of Kin-Stib cannot be applicable to awards rendered under the New York Convention because such awards are unenforceable without formal judicial recognition.

Becky L. Jacobs, Pugh's Lawn and Landscape Company, Inc. v. Jaycon Development Corporation: The Tennessee Court of Appeals Limits Judicial Review of Arbitration Awards

Abstract: 

In its April 2009 opinion in Pugh’s Lawn Landscape Company, Inc. v. Jaycon Development Corporation, the Court of Appeals of Tennessee announced its judgment that Tennessee’s arbitration statutes do not permit parties to modify by agreement the scope of judicial review of an arbitral award. The Pugh’s Lawn decision answered a state law question left open by the United States Supreme Court in Hall Street Associates, L.L.C. v. Mattel, Inc., a 2009 case in which the Court held that the Federal Arbitration Act (“FAA”) did not permit parties contractually to expand the grounds for vacating or modifying an arbitral award. While the ruling in Hall Street contemplated the possibility that expanded judicial review might be permissible under state statutory or common law, the Court of Appeals of Tennessee’s decision in Pugh’s Lawn has, for now, settled this state statutory issue in Tennessee.

S.I. Strong, Research in International Commercial Arbitration: Special Skills, Special Sources

[This is work by Strong is a must read for those interested in acquiring/ polishing their international arbitration research skills]

Abstract:
Experts agree that international commercial arbitration relies far more heavily on written advocacy than litigation does, yet very few practitioners and arbitrators have ever received any specialized training in how to research and present written arguments in this unique area of law. Newcomers to the field are particularly disadvantaged, since the legal authorities used in international commercial arbitration are unique and novices often do not know how to find certain materials, if they are even aware that these items exist. This article helps deepen the understanding of the practice of international commercial arbitration by describing how experienced international advocates and arbitrators research, present and consider legal arguments in international commercial arbitration. The article, which is useful for practitioners and arbitrators at all levels and in all countries, also distinguishes mistakes typically made by lawyers trained in the common law from those made by lawyers trained in the civil law.

Becky L. Jacobs, Often Wrong, Never in Doubt: How Anti-Arbitration Expectancy Bias May Limit Access to Justice

Abstract:
While there long have been “alternatives” to the traditional trial for those seeking to resolve disputes, the so-called “litigation explosion” in the 1970’s inspired a campaign for reform of the administration of justice that resulted in the modern ADR movement. The movement had many disparate goals, not the least of which was to improve public access to justice. At the historic 1976 National Conference on the Causes of Popular Dissatisfaction with the Administration of Justice (the “Pound Conference”), Harvard Law Professor Frank E.A. Sander first posited the concept of a “comprehensive justice center,” more famously referred to as a “multi-door courthouse,” in which a grievant’s dispute would be evaluated then directed to the most appropriate process or sequence of processes. Room 3 in Professor Sander’s Multi-Door Courthouse/Dispute Resolution Center was listed in the lobby’s directory as Arbitration, the alternative process on which this Essay will focus. The question posed herein is whether popular (mis)conceptions about arbitration may actually be preventing some of those who are most in need from receiving the legal relief they seek.

Griffin Toronjo Pivateau, Reconsidering Arbitration: Evaluating the Future of the Manifest Disregard Standard

Abstract:
In a recent decision, the Supreme Court indicated that parties may now have fewer rights to appeal arbitration awards. In Hall Street v. Mattel, Inc., the Court found that parties to an arbitration agreement could not supplement, by contract, the statutory grounds for challenging an arbitration award. Unfortunately, the Court called into doubt a long line of cases holding that a party could seek to vacate an arbitration decision where the arbitrator exhibited a manifest disregard for the law.

Until the Hall Street decision, the manifest disregard doctrine enjoyed widespread acceptance. Appellate courts from every circuit have used the manifest disregard doctrine as a supplement to the statutory standards for vacatur of an arbitration award. The manifest disregard doctrine has been heavily litigated, and a number of decisions exist establishing and clarifying the meaning of “manifest disregard”.

At this point, the consequences of Hall Street remain unclear. The Court cast doubt on whether manifest disregard survives, and listed several possibilities for what it might mean if so. In effect, the Court created further confusion and then failed to resolve it. Lower courts have been left to struggle with the aftermath. Federal courts have since split roughly three ways on the question of whether manifest disregard survives Hall Street.

This article examines the bases for challenging arbitration awards – the statutory grounds as well as the common law manifest disregard doctrine. The article examines the past and present status of the manifest disregard doctrine. The article concludes by examining the possible courses of action that could be taken as well as my proposed solution. I propose a solution that would permit the continued use of the standard, while at the same time satisfying the concerns raised by the Supreme Court.

Matthew P. Allen, A Lesson from History, Roosevelt to Obama — The Evolution of Broker-Dealer Regulation: From Self-Regulation, Arbitration, and Suitability to Federal Regulation, Litigation, and Fiduciary Duty

Abstract:
It is no accident that the (1934 Securities Exchange Act) was promulgated in the aftermath of the greatest economic catastrophe in U.S. history. The law and macroeconomics of the Act was patent: Roosevelt sought to place the American capitalistic system upon a firmer legal and regulatory foundation. Most urgently, Roosevelt sought to take positive action to restore investor confidence and spur more investment transactions leading to greater economic growth.

Here we are again. History repeated. This time, President Obama is the man history will find at the center of an economic crisis rivaled only by Roosevelt’s Great Depression. President Obama has acted swiftly in the face of this “Great Recession,” proposing his own financial New Deal in June 2009, styled: Financial Regulatory Reform, A New Foundation: Rebuilding Financial Supervision and Regulation (“Obama Whitepaper”). President Obama has continued with regulation of the securities industry where President Roosevelt left off with the industry’s self-regulation.

This Article examines the key proposals from the Obama Administration that affect broker-dealers. It then argues that Congress should specifically study and then legislate these new standards, and not give the SEC the broad new authorities to regulate them as is currently proposed. The Article concludes that permitting the SEC to regulate these new standards will create years of judicial confusion and policy-making by the courts, which will in turn make business practices and transactions in the securities industry riskier and more uncertain, the costs of which will ultimately be borne by the consumer in the form of higher costs and lack of robust product options as issuers, underwriters, and sponsors market their products in non-U.S. regulated markets. And because overzealous enforcement of the U.S. securities markets could drive companies to foreign exchanges, this Article calls for moderation in enacting practical yet effective new standards for securities broker dealers.

Rahim Moloo, Arbitrators Granting Antisuit Orders: When Should They and on What Authority?

Abstract:
Parallel proceedings are common even when an arbitral agreement mandates that all disputes be resolved in one forum. When a party to an arbitration agreement wishes to prevent the other from pursuing a parallel proceeding it may seek an antisuit remedy, either from the court at the seat of arbitration or from the arbitral tribunal. This article considers when and on what authority an arbitral tribunal should grant an antisuit order. This article argues that an exclusive arbitration agreement, requiring the parties to resolve their disputes through arbitration to the exclusion of any other forum, gives arbitrators the authority to grant an antisuit order to remedy a breach of the arbitration agreement itself. It is also argued that an award of damages covering the costs of the parallel litigation may be an appropriate supplementary remedy for the breach of an arbitration agreement, or an appropriate remedy for the breach of an antisuit order already granted.

Noel Rhys Clift, Introduction to Alternative Dispute Resolution: A Comparison between Arbitration and Mediation

Abstract:
Historically, legal disputes have been resolved either by litigation or by arbitration. Mediation (a form of ADR) is a new way to settle commercial disputes. Litigation is quite unlike mediation, but some consider that arbitration is a form of ADR and similar to mediation. In fact the two are fundamentally different. The purpose of this paper is to describe these differences and to set out some supplementary information about mediation, its use and effectiveness.

The main body of this paper has been designed so that you can dip into any section or point of interest, or alternatively read the whole narrative. Arbitration (and litigation) procedures in England and Wales are in many ways excellent and legal process is arguably indispensable. However, and these are broad generalisations, legal process has deficiencies which can be remedied in suitable cases by the use of mediation.

 

[Note: Formatting changed after posting]

UNCITRAL Arbitration Rules 2010

UNCITRAL has, after more than three decades come up with a new version of its Rules on Arbitration. For a long time practitioners and academicians have wondered why UNCITRAL has not revised its Arbitration Rules,1976 (UAR) just like several arbitration institutions which have revised their Rules from time to time. For example, SIAC has revised its Rules three times after its first publication in 1991 (1997, 2007, 2010)

One of the possible reasons for such non-revision might have been that the adoption of the UNCITRAL Model Law on International Commercial Arbitration was in itself a sort of Rules revision. The below timeline briefly portrays the steps that were involved in the creation of these Rules by the UNCITRAL.

19.06-07.07.2006 In the 39th session of the UNCITRAL, it was decided to accord priority to the revision of the UAR

11.09-15.09.2006 In its 45th session, the Working Group on International Coommercial Arbitration and Conciliation (WG) compared the UAR with the Rules of several other institutions and identified possible areas
which might need consideration for revision. Some of the areas identified were to make the Rules applicable to even non-contractual arbitration, giving power to arbitral tribunals to change the time lines given in the Rules, Separation of Notice of Arbitration and Statement of Claim, separation of Reply to Notice of Arbitration and Statement of Defence, introduction of provisions for multiparty arbitration, providing for a continuing duty of disclosure of independence and impartiality by arbitrators, having time limits for challenge for arbitrators and so on.

The WG has been working since then on the revision of the UAR. Following is a summary of their deliberations, proposals and the Rules:

The 2000 UAR contains a model clause, which reads:

"Model arbitration clause for contracts:

Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules.

Note — Parties should consider adding:
(a) The appointing authority shall be ... (name of institution or person);
(b) The number of arbitrators shall be ... (one or three);
(c) The place of arbitration shall be ... (town and country);
(d) The language to be used in the arbitral proceedings shall be ... ."

Possible waiver statement
Note — If the parties wish to exclude recourse against the arbitral award that may be available under the applicable law, they may consider adding a provision to that effect as suggested below, considering, however, that the effectiveness and conditions of such an exclusion depend on the applicable law.

"Waiver: The parties hereby waive their right to any form of recourse against an award to any court or other competent authority, insofar as such waiver can validly be made under the applicable law."

Article 1:

• Reference of even non-contractual disputes to arbitration has been included
• When there was only one UNCITRAL Rules, it was not problematic as far as reference was concerned. But when the Rules were updated, it was problematic when the parties did not mention the version of the Rules that they had wished to adopt in their agreement. Hence certain changes were made to include even this aspect.
• Further, recognition is given to modifications to the arbitration agreement which the parties may subsequently agree to, orally or otherwise.

Article 2

Inclusion of electronic communication/ telecommunication for notification

Article 3 and 4

The Claimant would file a Notice of Arbitration and once the arbitral proceedings commence, the Claiamant could decide to consider the same as the Statement of Claim or file a Statement of Claim independently. Consequently, the Respondent would have the right to file a reply to the Notice of Arbitration and, if there is a Statement of Claim, the Respondent would have the right to file a Statement of Defence.

Article 6

Secretary General of the Permanent Court of Arbitration (Hague) has been named as the default designated authority to aid the constitution of the arbitral tribunal. This is subject to agreement between the parties.

Article 7

• The number of arbitrators is three, by default, unless parties agree for a single arbitrator.
• 7(2) is a novel provision which is intended to reduce the burden of costs on the Claimant in case the Respondent does not participate in the arbitration proceedings

Articles 8- 10
Appointment of a sole arbitrator by the appointing authority is by list procedure. The appointing authority would communicate an identical list of arbitrators to each of the parties. The parties are to delete names from the list which they consider inappropriate and also allot priority to the arbitrators they approve of. The appointing authority would appoint such the sole arbitrator which both parties have agreed to, in accordance with the choice made by them.

Article 10 deals with multi-party arbitration. Appointment of three arbitrator tribunal in a multiparty arbitration would be such that the joint claimants appoint one, the joint respondents appoint the other and the joint arbitrators so appointed would appoint the third.

At times, parties might have, especially in tripartite agreements, provided for a five arbitrator tribunal. In such a case, each party appoints one arbitrator and the three arbitrators so appointed appoint the fourth and the fifth.

More on the UAR 2010 in another post

National Litigation Policy- Comment

From inveterate litigant to responsible litigant

Part II
(Find Part I here)

Full stop to a litigation

Government litigations have a telltale character, it never ends. Appeals are routine in most cases. The Law Officers and the Government Pleaders recommend appeal as a matter of course. In most cases it is a preemptive measure to be on the safe side. If at all any question is raised later as to why an appeal opportunity was missed, the counsel could very well clear self by pointing out his advice to appeal. This behaviour pattern is fostered by two reasons; seldom questions are raised as to why a fruitless appeal and the reluctance to take responsibility of once own decisions. In a culture of bureaucracy, where the lower rung officials are the ready available scapegoats, such a response is not a surprise. Besides the suggested measures, capacity and confidence building measures are required for those officers involved in the initial decision making process. Decisions with integrity call for backing of the superiors and should be incentivised. Much of this depends on the Nodal Officers and Heads of Departments.

Loosing cause of action or appeal by limitation is a commonplace incident for the Government. Seldom have officers or counsels held accountable for this. The policy suggests fastening accountability based on the realization that most often getting hit by limitation is engineered than by legitimate errors. The solution suggested is efficient case management and perceptive drafting of condonation petitions. A shift from the present practice of ‘one size fits all’ attitude.

ADR- the fad

ADR, for many, is the panacea for the ills of legal system. It is the mantra of policy makers, administrators and judiciary while thinking of legal reforms. Arbitration is one of its mainstays. In the present state of affairs, arbitration has failed to deliver any of the claims that it makes; simple, quick and inexpensive. The clout created around arbitration is appalling. It has become an elite club of retired justices where they transplant the court room to the conference rooms of luxury hotels. It has become a means of private justice, unending.

The policy has identified some of the problems of the arbitration process as it stands. It requires a Hercules to clean this Aegean Stable. Very little could be done by the small fries like the Department Heads as the malady is deep rooted. Along with the suggested means, an effort is to be undertaken to see that Arbitration proceedings deliver what it promises.

The menace of PIL!

The policy framers appear to be contemptuous about PILs. Since there are no legislative procedural guideposts for PIL but the ones judiciary has developed by themselves, the policy prescription is out of place. Most of the suggestive action is directed towards how the judiciary should deal with PILs, especially, the suggestion that, “[i]f interim orders are passed stopping such [public contract] projects then appropriate conditions must be insisted upon for the Petitioners to pay compensation if the PIL is ultimately rejected.” A policy prescriptive should be the last means to direct the judiciary as to what they should do. True, it could be a guideline for the Government counsel as to how to approach PIL. If that be the case the policy need to be more nuanced about the benefits and shortcomings of PILs.

Wrapping up

The effort to bring out this policy document is creditable. As always, the implementation and sustainability is the test factor. Success of the policy is heavily hinged on the selection and functioning of the Nodal Officers and Department Heads along with Government Counsels. A good deal depends upon how successful will these officers be to change their own mindset and motivate the officialdom to respond to the required setting. It takes a lot to pull someone from the comfortable niche into the demanding area of accountability and responsibility.

The political masters should be the first ones to respond to turn the policy into a success. It is them who should stash political considerations and favouritism for merit and competence in appointments to the key posts and Government Counsels.

Will this Empathy Ultimately Render Justice?

Recent Judgment

Mahanadi Coal Fields Ltd. v. Mathias Oram, SPECIAL LEAVE PETITION (C) NO.6933 OF 2007. Date of Judgment 19-07-10

That is one great stroke of judicial empathy. Half of the judgment is a preface (16 paragraphs out of 25) which has highlighted the agony of the writ petitioners and reflected it against the norms of constitution and democracy. It raised questions about the current approach of development and the dichotomies therein. It even touched on the Maoist activities without naming it. In the end, a Commission under the Chairmanship of a retired Justice of High Court of Orissa, fixing his remuneration as that of a sitting High Court judge and equivalent perks, was appointed to implement the scheme proposed by the Solicitor General of India.

Lapse of Time- The Essence of the Judgment

It took 20 years for the petitioners whose properties has been acquired by the Central Government under the Coal Bearing Areas (Acquisition and Development) Act, 1957 and not paid a paisa as compensation, not even sure as to whether the status of land is acquired or is de-notified as of date, to reach the SC. Another 3 years in SC to get the attention of Justices Aftab Alam and B.S Chauhan.

It is commendable that the court thought out of the box to find a solution to the problem without further delay . Reportedly, with the able help of the Solicitor General of India, Mr. Gopal Subramanium, a scheme was drawn to accord relief to the petitioners than going through the entanglement of further process of litigation.

Will it be Another White Elephant!

Central Government as well as the appellant agreed upon the scheme of action presented by the Solicitor General. To make sure that the plan of action is implemented, the SC on its own accord appointed a Commission. There is clear direction as to the composition and emoluments and who is to bear the expenses but failed to mention a time frame within which the Commission has to carry out the proposed action plan. Time will tell whether this Commission will serve its purpose, as earnestly intended by the Justices, or will become another white elephant.

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

Mavluda Sattorova, Judicial Expropriation or Denial of Justice? A Note on Saipem v. Bangladesh

Abstract:

In its award on the merits, an ICSID tribunal in Saipem v Bangladesh found the host state responsible for expropriation resulting from the judicial intervention in arbitral proceedings instituted by an investor in pursuit of its contractual right. Having dismissed the respondent’s objection invoking the exhaustion of local remedies as a substantive condition for challenging judicial acts in investment arbitration, the tribunal held that the local remedies rule would apply in the case of denial of justice, but not in the case involving judicial expropriation. This note offers a critique of the Saipem award. It argues that by distinguishing between denial of justice and judicial expropriation, the Saipem tribunal effectively undermined the main rationale behind a theory that postulates the exceptional treatment of denial of justice cases. It questions whether the assertion of expropriation by the host state’s judiciary should enable the foreign investor to disguise its denial of justice claim and thus avoid the application of the local remedies rule. The note also discusses the tribunal’s adoption of the legality test in addition to (or substitution of) the ‘sole effect’ doctrine which hitherto prevailed as a method of establishing expropriation in investment treaty arbitration.

Julie A. Maupin, MFN-Based Jurisdiction in Investor-State Arbitration: Is There Any Hope for a Consistent Approach?

Abstract:

MFN clauses are a hotly contested basis for jurisdiction in investment arbitration. This paper surveys the divergent approaches taken by arbitral tribunals to-date, revealing the major types of MFN clauses interpreted, the key types of MFN questions confronted, and the major reasons cited for either upholding or denying MFN-based jurisdiction. It analyzes trends emerging from the awards and key differences between the interpretive approaches taken by various investor-state tribunals. The presentation posits an explanation for the current disparate state of the law concerning MFN-based jurisdiction and explores the feasibility of finding a more consistent and predictable approach, one which respects both the dictates of the Vienna Convention and the pragmatic concerns of investors and host states.

Alan Scott Rau, Understanding (and Misunderstanding) 'Primary Jurisdiction'

Abstract:

In our “Westphalian” regime of international arbitration, conflict and competition between national jurisdictions, with overlapping and yet plausible claims to supervise the process, become inevitable. The conventional starting point for any discussion - the fulcrum around which the entire arbitral enterprise pivots - has been the supposed dichotomy between the state of the “seat” - where the arbitration finds its juridical “home,” and whose jurisdiction over the process is therefore “primary” - and all other states whose jurisdiction must therefore be deemed only “secondary.” Both legislation and Convention envisage an exclusive role for the former in setting the process in motion - for example, by appointing the arbitrators - and above all in monitoring compliance with the agreement - for example, by annulling or vacating the resulting award.

That the “seat” is the privileged starting point with respect to any allocation of judicial authority has traditionally been a simple reflection of the power of any sovereign over acts taking place within its “territory”; an alternative and perhaps more robust explanation would be somewhat more “contractualist,” giving priority to the parties’ exercise of autonomy in the very act of selecting the place of arbitration - and to the intuition that, by extension, they have presumptively chosen to subject themselves both to a certain body of “arbitration law,” and to the supervisory jurisdiction of the courts charged with applying that law.

I begin by canvassing the various fact patterns in which the traditional allocation of international competence on the basis of “primary” and “secondary” jurisdiction might possibly be thought useful: It has become, for example, the heuristic of choice to test the extraterritorial effect of an award, in circumstances where the agreement of the parties has subjected the arbitral process to a particular legal system whose own courts have found it lacking in legitimacy. All this is much controverted, but generally well understood.

The inevitable problem, though, is that none of this is a universal solvent - the world can after all be understood and patterned and divided up in all sorts of ways. What may have begun as a rough attempt to allocate responsibility over the unfolding of the process, has often been unthinkingly applied to all sorts of new and unexpected and inappropriate contexts.

Where, for example, a party has asked a court to enjoin an arbitration against him that has been threatened or initiated - perhaps on the fundamental ground that he has never even given his assent - American courts will increasingly hold that, whatever power they might have to enjoin a “local” arbitration, it would be “inconsistent with the purpose of the New York Convention” to enjoin arbitral proceedings in a state of “secondary jurisdiction” - and thus they “lack jurisdiction” to do so. Where a party has claimed that a foreign award has been obtained by bribery and corruption, and wishes to institute a “collateral attack” in this country through a RICO action, it may equally be held that the court lacks “subject matter jurisdiction” to reassess an award rendered in a state of “primary jurisdiction”; “under the framework of the New York Convention, the proper method of obtaining this relief is by moving to set aside or modify the award in a court of primary jurisdiction.”

American courts thus seem curiously mesmerized, when asked to deploy familiar procedural devices in aid of their nationals, by a rhetoric invented for quite different purposes. What purports in cases like these to be a commendable solicitude for the needs of international arbitration, takes the form of an abdication of any decision making power whatever, in favor of the courts of the seat. To invoke a putative lack of “power” based upon absolute prohibitions that supposedly emanate from the Convention seems a crude and clumsy and overbroad and irresponsible way of responding; even a legal system quite committed, for example, to the proposition that attempts to evade the arbitral process are likely to be quite without merit - or for that matter to the proposition that international neutrals cannot possibly be corrupt - need not shrink, on the prophylactic grounds of lack of jurisdiction, from testing any challenges.

Genevieve Saumier, Consumer Arbitration in the Evolving Canadian Landscape

Abstract:
The enforceability of pre-dispute consumer arbitration clauses is not uniform across Canada despite the Supreme Court of Canada's recent approval of the practice in the Dell Computers case. Legislation in Quebec and Ontario prohibits these clauses and B.C. courts have struggled with the impact of the Dell decision on their contrary earlier decisions. This article examines this dynamic and changing landscape for consumer arbitration, contrasting it with approaches prevalent in the U.S. and in Europe.

William T. Fryer III, Handling Internet Domain Name Arbitration

Abstract:
This article reviews the administrative and legal actions that can be used to cancel or transfer a registered domain name that is in conflict with an earlier used trademark. For purposes of this article these alternative remedies will be referred to as a group by reference to the transfer step, the most common remedy used. The same analysis also can help guide a business in selecting a non-conflicting domain name. After analyzing the dispute resolution options, this article will suggest strategies that should be considered in selecting which domain name conflict resolution path to follow.

Robin F. Hansen, Parallel Proceedings in Investor-State Treaty Arbitration: Responses for Treaty-Drafters, Arbitrators and Parties

Abstract:
Parallel investment treaty arbitrations present a demonstrated risk of inconsistent awards. This article examines several ameliorative responses to parallel investment treaty proceedings, executable by treaty-drafters, arbitrators and parties themselves. The unique jurisdiction mechanics and applicable law in investment treaty disputes frames the responses available. Despite the unique context within which parallel investment arbitrations occur, the challenges they pose to party interests, to principles including legal fairness and to the effective pursuit of dispute resolution closely resemble those posed by parallel proceedings in other domestic and international legal fora

Richard Bilder, Adjudication: International Arbitral Tribunals and Courts

Abstract:

This essay, a chapter in a U.S. Institute of Peace sponsored study of various methods and techniques for seeking to manage or resolve international disputes and conflicts, focuses on the role of international adjudication as a method of international dispute settlement. The chapter discusses inter alia: (1) some broad caveats regarding the usefulness of international adjudication, as compared with other the techniques of international dispute settlement, the somewhat different role of adjudication in national legal orders, the preference for non-adversarial methods in some – particularly non-western - societies, and the historic ambivalence of the U.S. government towards international adjudication; (2) the nature of international adjudication, including a description of how international arbitration and international judicial settlement typically operate and the factors that may influence states in choosing between them; (3) a detailed description of the International Court of Justice (ICJ), its jurisdiction, its work, and U.S. attitudes towards the Court; (4) the question whether there are now too many international tribunals; (5) the advantages and disadvantages of adjudication as a dispute management technique; (6) the reasons why the author believes international adjudication deserves the international community’s encouragement and support, and (7) a list of measures that might be taken to facilitate and encourage the use of international adjudication.

Ana Stanic, Challenging Arbitrators and the Importance of Disclosure: Recent Cases and Reflections

Abstract:
The last few years have seen a rise in challenges to arbitrators. It is argued that challenges are a tactic resorted to by parties and their counsel to cause delay and increase the costs of arbitration and, thus, undermine the parties’ choice and the finality of awards. However, the right to challenge an arbitrator and the arbitrators’ duty of disclosure are key to ensuring the integrity of the arbitral process. This article examines how the balance is struck between these two objectives by looking at the nature and the scope of the right to challenge arbitrators and the duty to disclose under national laws and rules of arbitral institutions. After reviewing recent national court cases and arbitral decisions concerning challenge, the article calls for (i) the threshold for challenging arbitrators in investment arbitrations to be, at the very least, the same as in international commercial arbitrations; (ii) a neutral and independent body to be given the authority to review challenges under the ICSID system; and (ii) disclosure obligations to be imposed on counsel and the parties.

Pradhuman Gautam, The Umbrella Clause: A Search for Greater Legal Certainty

Abstract:
The aim of this research is to search for a greater legal certainty in the interpretation of the Observance of Undertakings or umbrella clause in a Bilateral Investment Treaty. In doing so, it will look into the history and origin of the clause, the theories given by academicians, the language of the clause in the different BITs, and the interpretations of the clause as given by the different Tribunals of the International Centre for Settlement of Investment Disputes. The conclusion of the research involves answering two basic questions related to the umbrella clause, which are as follows: 1. What is the exact scope of an umbrella clause? 2. Does the umbrella clause elevate contractual claims to a treaty level?

This paper argues that historically, the clause was introduced as a measure of safeguard to prevent the foreign investor from suffering due to unilateral acts of atrocity by the host State, by taking investment and investment related contracts to an international forum. To arrive at the exact ambit of the clause, I have analysed the language of the clause, through its various nuances, in order to know which specific contracts can be brought within the purview of the clause. Next I have looked at the different Tribunal decisions that have interpreted the clause from different perspectives. Some of them have taken a restrictive approach, which says that the clause gives jurisdiction to an international forum only when coupled with some other substantive treaty claim. Some other Tribunals have, on the other hand, decided that the clause internationalises contract claims by elevating them to a treaty level. There are even others who have advocated keeping the contract and treaty claims as parallel remedies.

My conclusion is that there are problems in both the restrictive as well as the parallel claims approach. The restrictive approach nullifies the entire objective of the clause. Giving parallel remedies to the foreign investor will create problems of jurisdictional overlap and the possibility of double recovery. The correct interpretation of the clause is that it gives the foreign investor a choice – either to pursue his claim in the contractual forum, whereby the proper law of the contract will become applicable; or to treat it as a breach of Treaty and go to the international forum provided by it, whereby the claim shall be determined according to the rules of international law. Taking either course will disbar him from pursuing the other course of action, and thereby will help create certainty in this legal area of conflict.

Richard Bilder, International Third Party Dispute Settlement

Abstract:
This essay, a chapter in a U.S. Institute of Peace sponsored volume exploring various approaches to international conflict management, discusses the potential role of third-party intervention in dispute settlement.

After noting several broad questions underlying the study of dispute settlement problems and processes more generally, the essay discusses: (1) what is meant by “Third-Party Dispute Settlement”?; (2) whether nation-states have an obligation to submit their disputes to third parties for assistance or binding settlement?; (3) why disputing parties may turn to third parties; (4) why third parties may be willing to intervene; (5) what kinds of third-party techniques are available; (6) how third parties can help; (7) which techniques work best; (8) the potential role of adjudication, including its advantages and disadvantages; (9) some limitations of third-party intervention or settlement; (10) how important is third-party dispute settlement and does it really work?; (11) a summary suggesting the proper role of third parties in managing international disputes; and (12) a list of recommendations for measures which might improve the usefulness of such third-party interventions.

These recommended measures include: (1) expanding the availability and use of nonbinding conciliation processes and of the advisory jurisdiction of international tribunals; (2) developing a wider, more easily available and more credible array of international fact-finding, monitoring and verification facilities; (3) exploring ways of making international adjudication and, in particular, resort to the International Court of Justice, more acceptable, accessible and flexible; (4) strengthening the ability of third parties to intervene on a temporary basis in disputes and conflicts to help keep matters from getting worse; (5) developing ways to better use national legal systems to implement international dispute management objectives; and (7) supporting innovative research – particularly empirical and interdisciplinary studies – about international dispute processes and dispute-management techniques, with a listing of research questions that might particularly merit attention.

Julien David Payne, Family Conflict Management And Family Dispute Resolution on Marriage Breakdown and Divorce: Diverse Options

Abstract:
Avoidance of litigation; various options for dealing with marriage and family breakdown.

Ban a book, keep the trouble out and the votes in

Case Comment on State of Maharashtra v. Sangharaj Damodar Rupawate. Decided on 09-07-10 by the SCI

(Judgment affirming the HC decision of quashing the direction of forfeiture of the book “Shivaji – Hindu King in Islamic India”)

It has been an easy way out for most of the Governments to ban any controversial publication and be on the safe side than protecting the freedom of speech and expression, which is constitutional mandate. Section 95 of the Cr. P.C is resorted to for ban of publications which appear to be containing a matter punishable under sections 124A, 153A, 153B, 292, 293, 295A of the Indian Penal Code, 1860. The State Government by a notification stating the grounds of its opinion, forfeit every copy of the document. Power is vested in the police to search and seizure such documents.

At a flash of any controversy, raised usually by fundamentalist outfits with fascist ideologies, about any work, the States silence the soft target- the author/publisher. Government always takes the plea of creation of hatred among the communities and slap charges under IPC against author/ publisher/ printer. Ironically, the same state which has the mandate to protect the freedom. Similar pattern was followed in this case as well. In the instant event where the reprehensible act of vandalism and burning of invaluable historic documents by Sambhaji Brigade, it is yet to come to light what action has been taken against the outfit and whether those action reached its logical conclusion. So much for the cherished freedom of free speech and expression! It is politically rewarding to ban a book and keep the potential voters in good humour than adorning the mantle of protector of fundamental rights.

The publisher of the book in the instant case got the FIR quashed and moved the HC under section 96 of Cr.P C and Art. 226. The HC nullified the forfeiture order against which this appeal was preferred.

The SC decision is an attempt to put some sense in the State Governments while issuing forfeiture orders henceforth. It has pointed out certain basic requirements to be followed and distinguished ‘opinion’ and ‘grounds’ that figure in section 95. The Government may have multiple opinions but requirement for an order under section 95 has to be clear about the grounds as to why the forfeiture is declared. It has to be based on certain solid foundations not on mere presumptions and surmises that there would be communal hatred and law and order problem.

The court has laid down course of action to deal with section 96 petitions as given below.

1. The statement of the grounds of its opinion by the State Government is mandatory and a total absence thereof would vitiate the declaration of forfeiture.
2. Grounds of opinion must mean conclusion of facts on which opinion is based.
3. The validity of the order of forfeiture would depend on the merits of the grounds.
4. The State cannot extract stray sentences of portions of the book and come to a finding that the said book as a whole ought to be forfeited.
5. The intention of the author has to be gathered from the language, contents and import of the offending material.
6. If the writing is calculated to promote feelings of enmity or hatred, it is no defence to a charge under Section 153-A of the IPC that the writing contains a truthful kind of past events or is otherwise supported by good authority. Adherence to the strict path of history is not by itself a complete defence to a charge under Section 153-A of the IPC.
7. Section 95(1) of the Code postulates that the ingredients of the offences stated in the notification should “appear” to the Government to be present. It does not require that it should be “proved” to the satisfaction of the Government that all requirements of punishing sections, including mens rea, were fully established
8. The onus to dislodge and rebut the prima facie opinion of the Government is on the applicant.
9. The effect of the words used in the offending material must be judged from the standards of reasonable, strong-minded, firm and courageous men, and not those of weak and vacillating minds, nor of those who scent danger in every hostile point of view. The class of readers for whom the book is primarily meant would also be relevant for judging the probable consequences of the writing.

My attention was drawn towards the last part of point 6 (Adherence to the strict path of history is not by itself a complete defence to a charge under Section 153-A of the IPC). It was unnecessary for the court to make such an opinion in this case where charge under section 153 is not an issue. Though it is a mere obiter, for a future judge this could be an indicator to read-in additional meaning to the words of Article 19 (2). Disowning history is never a creditable character for any civilisation.

The apprehension raised against the appeasement policies of the Governments is proved right by the declared stand of the State of Maharashtra. Soon after the judgment, the Government have reiterated its resolve to pass a legislation ‘to prevent defamation of state icons’ that state could continue its practice despite the judgment, which in effect will be censorship. It has thereby taken a public stand against academic freedom and fundamental rights.

National Litigation Policy - Comment

From inveterate litigant to responsible litigant

Part I

The recently espoused National Litigation Policy is an attempt to convert the compulsive litigant into an efficient and responsible litigant with the higher motive to lessen the average pendency time of the litigation. Government being the prime litigant, adoption of a policy guideline for the Government litigation makes sense. Similar and effective policies need to be formulated by States to accomplish the target of slashing down the pending cases of the Government.

Change in the mindset

The policy attempts to inspire a change in the approach towards litigation which was to go to court for everything to the opposite, to court only for unavoidable causes. Use of judicial proceedings efficiently and responsibly is the motto.

Fair enough, but why the tendency “[l]et the court decide”, has crept in the Babudom at the first place? Will this policy prescriptive address the real issue? Pushing things to courts have been a convenient strategy followed not only by the bureaucracy but by politicians also. Passing the buck to the judiciary absolves the politicians from taking unpleasant decisions which may deride vote banks. For Babus, it is a way of eschewing responsibility of the decisions.

Whereas, the right decision at the right stage is a stitch in time. The first level of check therefore should be to see whether anything could be done to avoid matters turning into litigation. To avoid litigations at the formative stage requires a change in the mindset in the Government officials. By giving freedom to take decisions, enabling the officers to take appropriate decision and fixing accountability is one measure.

Efficient nodal officer for efficient litigation

The policy is hinged on the integrity and efficiency of the ‘nodal officers’ who will oversee case management. The national and regional ‘Empowered Committees’ are expected to monitor the implementation of the policy.

It is refreshing to see the acknowledgment that most of the cases are lost even before beginning or are filed without any need, due the incompetence of the empanelled lawyers or Government Counsels. The incompetence of these representatives are well accepted by the Governments themselves that high profile cases will be conducted by high profile lawyers outside the panel, spending from public exchequer while there are dime a dozen lawyers in the pay lists of Governments. The selection and retention of Government counsels therefore is a prime factor in being an efficient litigant.

Pay packet is a crucial factor and the policy is evasive here. Why would one want to be a Government Counsel, when pay is rock bottom? Lawyers fight tooth and nail to be Government representative. It is the political clout of the person generally sees him through. Let us be rational here. If not from Government brief, the counsel is benefiting from elsewhere being a Government counsel. This is a highway to corruption.

Proper conduct of the case, through prompt paper work and making progress in the proceedings depends heavily on the flow of relevant information from respective departments. Experience tells that it is hard to come by from Government departments ill famed for its lethargy. The policy recognizes this challenge. Here also reliance is on the nodal officers to oversee the conduct of the cases. One more pointer that the success of the policy is heavily dependent upon the selection of the nodal officers.

Contd.

Rent-a-Center v Jackson- The Dissent

One of us had, in the Lex Arbitri blog, written a guest post on the US Supreme Court's decision in Rent-a-Center v Jackson. We had noted that the majority (MAJ) had held that unless an agreement to arbitrate a gateway issue (A gateway issue here refers to issues pertaining to arbitrability of the dispute, whether as a matter of law or as a matter of the scope of arbitration agreement) is specifically challenged, decision on such issues would go to the arbitrators.

To get a grasp of what the court held, we suggest perusal of the at least the summary contained in the said post, if not the judgement.

This purpose of this post would be to analyse the minority decision, which we'll call DIS. Both judgements are equally convincing. Here, we will summarize the DIS but we will attempt to point out where both judgements have disagreed in a subsequent post.

1. The arbitration agreement (AA) between Rent-a-Center (RC) and Jackson (J) is a part of the broader service contract between RC and J.

2. Since arbitration is a "matter of contract", courts usually intervene less and enforce the agreement of the parties to arbitrate. However certain conditions precedent ("necessary antecedents") of arbitration, known as gateway issues or questions of arbitrability, are assigned to the courts by the Federal Arbitration Act (FAA). Such questions include the questions relating to the existence and validity or the scope of the arbitration agreement. This case is on the question relating to the existence and validity of the arbitration agreement.

3. The 'Who decides the arbitrability?' question is governed by two series of cases:

[We have summarized this aspect in the order in which the court has dealt it with. We suggest readers first read 3(b) and then read 3(a). That way, this makes a lot of sense]

      a) One line of cases suggests that gateway questions can be delegated to the arbitrator provided there is a clear and unmistakable intent on the parties to do so. In order to assess the clear and unmistakable intent on the parties to delegate gateway issues to the arbitrator, the courts should generally apply ordinary state law principles that govern the formation of contract. Thus, decision on whether such clear and unmistakable intent exists is for the court to determine. 

     b) The second series of cases govern the law on who should decide challenges to the validity of the arbitration agreement. Two kinds of challenges are contemplated:

                i)  Challenge as to the validity of the arbitration agreement specifically

                ii) Indirect challenge to the arbitration agreement by challenging the entire contract

As per the prevailing cases, challenges in the nature of b(i) go to the court and challenges in the nature of b(ii) goes to the arbitrator.

 4. The simple question in this case is whether there was a clear and unmistakable intent of the parties to delegate gateway issues to the arbitrator.

5. J's contention that the AA was unconscionable shows that J never clearly or unmistakably intended to arbitrate the gateway issues. It may be noted that a more rigorous standard applies when such a question arises. This was recognised in First Options of Chicago v. Kaplan 514 US 938 (1995) [First Options] as a reverse presumption, that is, a presumption in favour of reference of the matter to the court as against the usual presumption in favour of arbitration.

[Readers may note that Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) was prior to First Options]

6. A contention of unconscionability is a contention as to the existence of the clear and unmistakable intent to arbitrate gateway issues.Such a question is to be decided as per state law. J here has claimed he never "meaningfully" assented to the AA in the first place. Thus,

"when a party raises a good-faith validity challenge to the arbitration agreement itself, that issue must be resolved before a court can say that he clearly and unmistakably intended to arbitrate that very validity question."

To decide whether there was a valid AA under § 2 FAA, the District Court should have decided whether there was a valid arbitration agreement to refer threshold issues to the arbitrator in the first place. § 2 FAA reads:

"Section 2. Validity, irrevocability, and enforcement of agreements to arbitrate:

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."

7. Therefore, the judgement of the Court of Appeals is affirmed, and the matter remanded to the District Court to decide on whether the AA was invalid for unconscionability.

[Sections III and IV of the DIS deal with an analysis of the MAJ. We will defer analysis of this aspect to a future post, where we would compare the MAJ and the DIS.] 

Handicrafts & Handloom Exports Corporation of India v. Ashok Metal Corporation

Today's Business Standard has reported a judgement of the Delhi High Court wherein the court is said to have held in Handicrafts & Handloom Exports Corporation of India v. Ashok Metal Corporation that:

• S 5 is a provision which bars a civil court from entertaining a suit which is the subject matter of arbitration, unless authorised by the Arbitration and Conciliation Act, 1996.
• A civil court cannot go into the question of non-existence of arbitration agreement in a suit for declaration, in view of S 5 as well as the competence of the arbitrators to rule on their own jurisdiction.

We had analysed a case which discussed the same issue in a previous post, wherein we had noted a few judgements which went against the above view.

Fortnightly Roundup of SSRN Articles on Arbitration (June 16-30)

Marina Lombardo & Carlo Garbarino, Arbitration of Unresolved Issues in Mutual Agreement Cases: The New Paragraph 5, Art. 25 OECD Model Convention, a Multi-Tiered Dispute Resolution Clause

Abstract:
The paper deals with arbitration of unresolved issues in mutual agreement cases as regulated by the new paragraph 5, Article 25 of the OECD Model Convention to avoid double taxation in respect to income taxes. After general introductory remarks on the arbitration method in international tax matters, the paper describes the evolution of international tax arbitration. The central part of the paper is devoted to the analysis of the procedure of the tax arbitration established by new Article 25(5) of the OECD Model Convention, which has the features of a a multi-tiered dispute resolution clause. The paper concludes with a discussion on the effectiveness of the tax treaty arbitration of Article 25(5) OECD Model Convention.

Patrick Dumberry, Compensation for Moral Damages in Investor-State Arbitration Disputes

Abstract:
This article examines the issue of monetary compensation awarded by arbitral tribunals for moral damages suffered by foreign investors in the context of investor-State arbitration. It examines the nature and the function of moral damages in international investment law as well as several controversial issues, including the proper form of reparation to remediate moral damages suffered by a State, whether proof of malicious intent is a necessary condition for a tribunal to award compensation and whether compensation should be limited to cases involving “egregious” or grave treaty violations. The article argues that particularly condemnable governmental actions toward foreign investors will have a bearing on the actual quantification of the amount of compensation to be awarded for moral damages. The goal is not only to remediate the actual damage suffered but also to send a “clear message” to the host State.

Amy Schmitz, Legislating in the Light: Considering Empirical Data in Crafting Arbitration Reforms

Abstract:
Consumer advocates and policymakers call for abolition of predispute arbitration clauses in consumer contracts, while proponents of arbitration claim such abolition would increase companies’ dispute resolution costs, leading to higher prices and interest rates. Policymakers on both sides of the debate, however, rarely consider the empirical research necessary for crafting informed arbitration disclosure rules. This article therefore focuses on how varied research, including my own empirical studies, may inform policies regarding arbitration disclosure regulations. The article also offers suggestions for regulations tailored to have the most impact for the cost in light of this research.

Amy Schmitz, ‘Drive-Thru’ Arbitration in the Digital Age: Empowering Consumers Through Regulated ODR

Abstract:
Online Dispute Resolution (ODR) has been promoted for quickly and conveniently resolving claims using online “drive-thru” processes instead of more costly and time-consuming face-to-face meetings and hearings. Most commentators have nonetheless focused mainly on non-binding or automated bidding processes, perhaps due in part to fairness concerns associated with off-line arbitration. This Article, however, explores the potential for online binding arbitration (OArb), and sheds new light on arbitration as means for empowering consumers to obtain remedies on their e-merchant claims. By moving arbitration online, OArb helps address concerns regarding companies’ use of arbitration clauses to curb consumers’ access to remedies on their typically small claims. This Article offers suggestions for regulations that aim to capitalize on OArb’s potential for providing consumers with convenient and cost-effective access to remedies while augmenting companies’ cost-savings from avoiding court and class actions, which they may pass on to consumers through lower prices and better quality products.

John W. Hinchey & Thomas V. Burch, The Effect of Forum Selection Clauses on District Courts’ Authority to Compel Arbitration
 

Abstract:
This is a short piece written for the AAA's Dispute Resolution Journal on two competing provisions in Section 4 of the FAA. One provision tells district courts to compel arbitration in accordance with the parties' agreement, including any forum selection clause. The other says that the court can compel arbitration only within its own territory. This, of course, creates a problem when the forum selection clause calls for arbitration in another jurisdiction. This short article addresses the conflict, showing how courts tend to rule on the issue (as of 2006).

John W. Hinchey & Thomas V. Burch, Georgia General Assembly Adopts 'Manifest Disregard' as a Ground for Vacating Arbitration Awards: How Will Georgia Courts Treat the New Standard?

Abstract:
This is a short piece written for the Georgia Bar Journal on the General Assembly's adoption of manifest disregard as a statutory ground for vacating arbitration awards.

Thomas V. Burch, Necessity Never Made a Good Bargain: When Consumer Arbitration Agreements Prohibit Class Relief

Abstract:
Courts rely on the "national policy favoring arbitration" to restrict the review of arbitration agreements under state laws of unconscionability. Consequently, banks, phone companies, and other consumer businesses implement mandatory arbitration clauses that provide complete immunization from both class actions and classwide arbitrations. As potential defedants, these companies hope that courts will force individual resolution of all consumer claims against them by upholding their agreements to arbitrate. Such an exercise raises an important question, which is the subject of this Article: To what extent should courts use the "national policy favoring arbitration" to protect consumer arbitration agreements that prohibit all class relief?

John W. Hinchey and Thomas V. Burch, An Arbitrator's Authority to Award Attorney Fees for Bad-Faith Arbitration

Abstract:
This is a short piece written for the AAA's DIspute Resolution Journal discussing when an arbitrator may award fees against a party for arbitrating in bad faith.

Abhijit P.G. Pandya and Sandy Moody, Legitimate Expectations in Investment Treaty Arbitration: An Unclear Future?

Abstract:
The dangers of the excesses of legitimate expectations as a public law doctrine are exposed when it is applied to investment treaty arbitration. Current jurisprudence makes a strong case for restraint by arbitrators. However, recent decisions, have only paid lip-service to deference to sovereignty of states, as the EDF v. Romania decision shows.

Aubrey Laine Thomas, Nonsignatories in Arbitration: A Good-Faith Analysis

Abstract:
As businesses conduct more and more transactions in the world market, the ability to settle disputes between international parties in a neutral forum has become a paramount concern. For this reason, the arbitration clause is an integral part of the international commercial contract. Still, due to the complex nature of most international commercial transactions, a nonsignatory, often times a subsidiary or parent corporation of one of the signatories, becomes materially involved in the performance of the contract. All of the benefits of the arbitration clause relied on by the contracting parties - such as a neutral forum, dispute finality, party autonomy, and reliance on enforceability - can be lost if the nonsignatory is not required to arbitrate disputes arising out of the contract.

Acknowledging this problem, U.S. courts have applied a variety of legal theories to require arbitration with a nonsignatory. Still, application of these different theories is inconsistent from jurisdiction to jurisdiction and is incongruent with the delocalization movement inherent in international transactions. This Comment proposes that U.S. courts should apply the principle of good faith to determine whether arbitration including a nonsignatory is appropriate. Essentially, courts should utilize the equitable principle of good faith to analyze both the contractual language as well as the conduct of the parties during negotiation and performance of the contract to determine whether the nonsignatory may compel or be compelled to arbitrate. This Comment focuses on past cases dealing with the nonsignatory issue to exemplify how the principle of good faith would create a uniform test and to demonstrate how this principle is consistent with the public policy underpinnings of arbitration. Last, this Comment concludes with arbitration clause drafting tips. Parties must engage in “conscious drafting” so that when the principle of good faith is used to interpret the parties’ contract, it will be clear when a nonsignatory should or should not arbitrate.

[The timing of this article cannot be more right. Extension of arbitration agreement to non-signatories has been an issue post the decision of the Indian Supreme Court in Indowind Energy Ltd. v. Wescare (I) Ltd. & Anr]

Maureen Weston, The Other Avenues of Hall Street and Prospects For Judicial Review of Arbitral Awards

Abstract:
In Hall Street Associates, L.L.C. v. Mattel, Inc., the U.S. Supreme Court held that the Federal Arbitration Act (FAA) provided the exclusive grounds for judicial vacatur and modification of arbitral awards covered under the Act. In so ruling, the Court rejected the contention that the FAA’s requirement to enforce arbitration contracts as written includes private contracts that seek to expand the scope of judicial review beyond the grounds enumerated in the FAA. Despite holding that parties cannot expand a court’s power to review an arbitration award under the FAA, the Court alluded to the possibility of “other possible avenues” for judicial review of arbitration awards. This decision arguably raised more questions than it answered. For example, did Hall Street limit a court’s power to review an arbitral award for a judicially recognized standard of manifest disregard of the law or violation of public policy? Can parties achieve essentially the same result through creative drafting, such as provisions that limit the scope of an arbitrator’s powers to render only factually or legally correct decisions? Are state courts bound by the FAA’s narrow modification and review standards, and Hall Street’s interpretation thereof? This Article analyzes these questions and considers Hall Street’s impact on arbitration practice and judicial willingness and ability to review arbitral awards.

Katia Fach Gómez, CSID Claim by Spanish Companies Against Mexico Over the Center for the Integral Management of Industrial Resources

Abstract:
On December 11, 2009, The ICSID Secretary General registered a request for the institution of arbitration proceedings. Abengoa, S.A. and COFIDES, S.A. are the companies who requested the arbitration against the United Mexican States. There is no further information about this claim on the ICSID’s website, but the Spanish press has reported that these companies require the Mexican federal government to pay USD $ 96 million plus interest for failure to implement the waste plant in Zimapán -USD $40 million for the cost of the plant and USD $56 million for lost profits.

The request for arbitration stresses that the inability to operate the project is a consequence of various acts carried out by Zimapán’s municipal authorities, such as the revocation of the municipal license to operate, the digging of trenches and roadblocks to keep out truck en route to the landfill, and the diversion of public funds to prevent the operation. The Spanish companies also accuse the federal government and the state of Hidalgo’s authorities of various acts and omissions that may encompasses a violation of the Bilateral Investment Treaty between Mexico and Spain.

[Abstract in Spanish omitted]

Caroline Osborne, Pathfinder on International Investment Law and Alternative Dispute Resolution Web Based Resources

Abstract:
This pathfinder is intended to assist government officials, investors, practitioners, arbitrators, scholars, and other stakeholders in locating literature on the dialogue of international investment law and dispute resolution. This document covers online resources useful in promoting collaborative relationships among experts in international investment law and dispute resolution.

Primary international investment law materials include multinational and bilateral investment and trade agreements, as well as domestic laws and regulations of foreign investments made in other countries. Traditional topics of interest under international investment law include tax, antitrust, securities, corporate, environmental, and labor laws.

Arbitration is a dispute resolution process typically conducted in a non-judicial setting. As a general concept alternative dispute resolution is broadly construed to include negotiation, mediation, conciliation, and arbitration. These techniques are not considered to be mutually exclusive and one or more techniques may be used in sequence or as part of a combination. The process is simple and traditionally governed by the rules of a neutral arbitration organization selected by the parties or an agreement administered by a panel of arbitrators agreed upon by the parties. Confidentially requirements are often included. The presence of confidentiality requirements can limit access to information.

The large number of dispute resolution institutions adds a complexity to locating certain information on awards. This paper presents selected resources in the areas of international investment law and dispute resolution, including the following categories: locating literature and resources; organizations, associations, societies, and institutions; arbitration; rules; news services, discussion lists and blogs; resources regarding conventions, treaties, cases, and awards; other web resources; specialized journals; resource guides, pathfinders and annotated bibliographies; and UNCTAD. Resources available solely in print and resources the scope of which is limited solely to an individual nation are excluded as beyond the scope of this document.