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:
[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.
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.
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