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

-Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Monday, August 16, 2010

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


In many ways, United States courts are still searching for a coherent theory to guide their treatment of arbitral tribunals and their relationship to the country where they are located. In reference to the application of 28 USC 1782, recent cases have shown divergences in the approach. This article analyzes the text of the statute and how it relates to discovery in the United States and the courts treatment of arbitration.

Rodney Quinn Smith II and Mauricio Gomm Santos Sr., The Changing Landscape of Arbitration in the United States and its Effects on International Arbitration


The contemplated Arbitration Fairness Act would reshape significant parts of arbitration jurisprudence, but with the amendments offered in 2009, it appears the drafters have exempted international arbitration. This article analyzes the effects of the Arbitration Fairness Act on international arbitration in the context of the State's attempts to control arbitration through statute.

Rodney Quinn Smith II and Omar Ibrahem, Arbitrating at the Crossroads of East and West: An Overview of Prominent Arab National Arbitration Laws


International companies and law firms increasingly look to the Middle East to invest and conduct business. Arbitration is often an excellent way to resolve disputes for these types of investments, but many investors feel anxious about the legal structure and application of local arbitration laws. This article addresses some of the most prominent national laws, demonstrating their differences and roots in Arab and Islamic history.

Rodney Quinn Smith II, Sotomayor's Position on Arbitration: A Survey of Past Cases and a View to the Future


With the appointment of Justice Sonia Sotomayor to the Supreme Court, the majority of criticism has focused on the typical, hot button issues, but little comment has addressed her stance on arbitration. This article reviews the cases where she participated in the drafting of the opinion as either an author or panelist. It shows a careful style by Justice Sotomayor and familiarity with the subject matter. Her opinions appear well-researched, studious, and adhering to the tenets familiar to students of international arbitration.

Prof Loukas Mistelis and Crina Baltag, Trends and Challenges in International Arbitration: Two Surveys of In-House Counsel of Major Corporations


International commercial disputes are often resolved effectively by arbitration. While many publications and other print and electronic resources address the law and practice of international arbitration, many questions remain unanswered: How much do we know about arbitration practice and, more importantly, what do users of arbitration think about the process? Why do users select it, and what expectations do they have?

The School of International Arbitration at Queen Mary, University of London, with funding from PricewaterhouseCoopers, has conducted two empirical surveys on the attitudes of corporations towards international arbitration, in 2006 and 2008. The motivation for these SIA/PwC Surveys lies first in the fact that still little empirical data is available in international arbitration. Second, the Surveys focus on corporations rather than their outside lawyers, since corporations are the ultimate users of this process. Third, the Surveys were designed for revealing not only the advantages of international arbitration, but also what fails to work and what can be improved.

This paper briefly present the findings of the two SIA/PwC Surveys, which generally confirm international arbitration’s status as an effective (but imperfect) dispute resolution process; even though the process largely works well, it can be improved. This will be dealt with in the second and third parts of the article, with focus on the significance and impact of the Surveys on the arbitration community and the arbitration proceedings, laws and regulations.

Mauricio Gomm Santos Sr. and Rodney Quinn Smith II, The Extent of the Arbitral Tribunal's Power to Manage Discovery in the United States of America


Parties to an arbitration increasingly need the tribunal's help to obtain documents and testimony for use in the proceedings. Many authors have discussed 28 USC 1782, but a key provision of the Federal Arbitration Act often gets lost in the shuffle. In this article, the authors analyze recent case law interpreting 9 USC 7, which gives the tribunal the authority to subpoena documents for use at a hearing. Recent case law has revealed differences in the circuits and merits consideration when plotting the strategy of handling an arbitration.

Luke R. Nottage, New Legislative Agendas, Legal Professionals and Dispute Resolution in Australia and Japan: 2009-2010


This paper is the third in a series of edited and updated selections of my postings to the ‘East Asia Forum’ blog (indicated with a double asterisk in the Table of Contents below) and my partly-overlapping ‘Japanese Law and the Asia-Pacific’ blog. They mainly cover developments from mid-2009 through to mid-2010, with a focus on law and policy in Australia and Japan in a wider regional and sometimes global context.

Half of the postings introduce some new policy and legislative agendas proclaimed by the then Prime Ministers of Australia (Kevin Rudd, in late July 2009) and Japan (Yukio Hatoyama, through the Democratic Party of Japan [DPJ] which he led to a remarkable general election victory in late August 2009). Both had resigned by mid-2010, indicating some of the difficulties involved in implementing ambitious reforms in both countries. All the more so, perhaps, if innovative measures are to be added to both countries’ Free Trade Agreements (FTAs) in order to foster more sustainable socio-economic development in the aftermath of the Global Financial Crisis (GFC).

The remaining postings end by introducing Australia’s regime for international (and domestic) commercial arbitration enacted in mid-2010, centred on a United Nations Model Law – like Japan’s Arbitration Act of 2003. However it sets these enactments in broader context by focusing on legal professionals – lawyers, judges and specialists in Alternative Dispute Resolution (ADR) – as well as aspects of the legal education systems in both countries. Those systems will need to gel better as well for both Australia and Japan to achieve the ‘cultural reform’ needed to generate sustainable critical mass in commercial (and investor-state) arbitration activity.

The order of postings has been changed somewhat in this paper to create more of a ‘chain novel’ narrative effect. However, as with the previous two papers, readers may still prefer to move around the topics in a different order.

Mark L. Movsesian, Fiqh and Canons: Reflections on Islamic and Christian Jurisprudence


This essay, a contribution to a symposium on Religious Legal Theory, compares Islamic and Christian conceptions of law and suggests implications for contemporary debates about religious dispute settlement. Both Islam and Christianity begin with faith, but they express that faith differently – and the difference relates to law. In Islam, a comprehensive body of law, fiqh, sacralizes daily life and connects believers to God. In Christianity, by contrast, law serves an auxiliary function; it is facilitative, not constitutive, of believers’ relationship to God. Moreover, unlike classical fiqh, canon law has a limited scope and is not exegetical. This essay explores these differences and shows how they influence the ways in which Muslims and Christians view religious tribunals today, as evidenced by recent controversies over Islamic family and commercial law arbitration in Canada and the United Kingdom.

Rohullah Azizi, Grounds for Refusing Enforcement of Foreign Arbitral Awards under the New York Convention (A Comparison of the US and Sharia Law)


In this section, the refusal grounds under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is discussed. This requires discussing about different types of refusal grounds in light of Article V of the New York Convention. After that, the implementation of the New York Convention is discussed in the United States and under the Sharia Law. The question is how the US courts have construed each of those grounds? In other words, while the New York Convention does not give any definition from the refusal grounds, how broad or narrow the US courts have interpreted each of the grounds? The answer for the same question is followed under the Sharia Law. For finding the answer of this question, we need to refer to judicial decisions of the United States Courts in the cases in which one or more of those grounds are raised. However, discussing about what would be Sharia Law’s interpretation from those grounds will not be easy. Under the Sharia section, the theatrical bases for arbitration along with the relevant discussions to the refusal grounds both in Sharia’s main sources and Islamic jurisprudence (School of thoughts) is discussed. Finally, it is concluded that how the courts in the United States and under the Sharia Law construe and apply each of the refusal grounds.

Samuel Estreicher and Zev J. Eigen, The Forum for Adjudication of Employment Disputes


This chapter focuses on the appropriate design of the forum for adjudication of employment disputes. By the term “adjudication,” we refer to the resolution of “rights” disputes – disputes over the application of a contract or the application of a statutory or regulatory rule to a particular factual situation. We are not referring to “interests” disputes – disputes over the substantive content of an initial contract or renewal agreement. In considering the design question, we assume that all involved actors, (employees, employers, unions, etc.) retain whatever endowments they currently possess in terms of intelligence, energy, income, occupational status, access to resources, union representation, and statutory and contractual rights. Holding these endowments constant, we ask what institutional arrangements for adjudicating rights disputes would do the best job of resolving those disputes in a fair, efficient manner for workers, managers and the public generally.

On the legislative front, we oppose current efforts in Congress to amend the Federal Arbitration Act to prohibit predispute arbitration agreements. At least if applied in the employment context, this is a case of throwing out the baby with the bath water. Employment arbitration, if it is properly structured and regulated, improves the likelihood that employees, and most especially those who are relatively low-paid, will be able to obtain an adjudication on the merits of their rights disputes with the employer. Abolition of employment arbitration simply relegates those employees to the courts to fare as best they can on their own in a complex, formal litigation environment.

Based on what is practically and politically feasible as of this writing, employer-promulgated ADR should be the basis of an employment adjudication system that supplements the work of courts, administrative agencies and, in the union sector, the grievance and arbitration process. We say this because unless adequate resources are provided to administrative agency adjudicators or courts to handle responsibly the vast increase in self-represented employee claims – which we think unlikely – the appropriate legislative response, even for critics of employer-promulgated ADR, is to develop safeguards that help minimize their concerns without driving employers to abandon the process entirely.

If we were starting from scratch, we would be inclined to consider a system similar to Great Britain’s. The UK approach started as a wrongful dismissal statute and over time also assumed adjudicatory authority over discrimination claims. The UK system mixes government-supplied mediation services with a tripartite government-funded, public adjudication. The system supersedes any common law cause of action for breach of the employment agreement and employment statutes; employment disputes that go to the regular civil courts are limited to libel and slander, certain torts and claims for injunctive relief for breach of restrictive covenants. Class actions are not authorized.

There may be some institutional features of the UK approach that are difficult to replicate here. One such feature is the tripartite adjudicatory structure used in England. With our low union density in private companies and the fact that employers tend not to form representative associations in the employment law field, it will take some ingenuity to develop a regularized procedure for selecting employer- and employee-side adjudicators.

The more difficult question is whether there is any political will to adopt something like the UK system. Lawyers representing employees would not necessarily oppose such legislation if they could remove all caps on recovery and retain their ability to bring lawsuits (including class actions) in the courts. Employers might support such legislation, if it did not include abolition of employment at-will and there was some institutional guarantee of modest awards of the UK variety. Most employees, we believe, would be best off under the UK approach but we cannot get there politically. Therein lies the dilemma for law reform.

We do believe, however, that working with what is in place at many companies, much can be done to improve employer-promulgated ADR to pick up many of the desirable features of the UK approach but in an American flavor responsive to U.S. legal and popular culture.

Jorge E. Vinuales, Foreign Investment and the Environment in International Law: An Ambiguous Relationship


The purpose of this study is to analyse the interactions between two thriving fields of current international law, namely international investment law (IIL) and international environmental law (IEL). Since their modern inception back in the 1960s, the historical development of these two bodies of law has been characterised by a remarkable transformation from loosely-defined arrays of standards and principles, often controversial and with limited legal impact, to sophisticated legal fields, of considerable importance from both the policy and business perspectives. This transformation has also changed the relations between IIL and IEL.

The emerging legal literature on the interactions between IIL and IEL seeks to capture different dimensions of this interface, focusing on issues such as the environmental responsibility of multinational corporations, the scope of investment protection clauses, the role of non-disputing parties, the operation of emergency or necessity clauses, or the treatment given in foreign investment disputes to some particular environmental question. Despite the importance of this research, the overall picture that emerges from these contributions remains difficult to appraise, mostly as a result of the specific nature of the issues and perspectives selected.

Building on this literature, the study presents a broader assessment of the current state of international law on this topic. In the first section, the study provides a conceptual framework to facilitate the analysis of both mutually supportive and conflicting interactions between foreign investment and environmental protection and their international legal regimes (II). This is followed by an analysis of the most significant questions posed by such interactions in the light of the relevant investment-related decisions from international courts and tribunals. The analysis is structured into two sections dealing with issues arising, respectively, in the conduct of arbitration proceedings (jurisdiction, applicable law, procedural issues) (III) and in the assessment of the merits of investment claims (normative and legitimacy conflicts, compensation) (IV). The last section is devoted to some prospective considerations concerning the interactions between IIL and IEL (V).

Najman Alexander Aizenstatd, Guyana v. Suriname Maritime Boundary Arbitration

Keyword contribution for the Max Planck Encyclopedia of Public International Law.

Jan Kleinheisterkamp, Brazil and Disputes with Foreign Investors

This article in Portuguese language traces the roots of the Brazilian resistance against international arbitration as a means for settling disputes with foreign investors. It sketches how all bilateral treaties on the protection of foreign investments signed by the Brazilian government have systematically been rejected by the Brazilian Parliament. The arguments forwarded for this rejection show that the notorious Calvo doctrine is everything but dead. This paper argues that the foundations of the Calvo doctrine can hardly be ignored. Brazil's resistance and the persistence of the Calvo doctrine give valuable insight on how the present investment dispute settlement mechanisms contained bilateral and multilateral investment treaties could be adapted in order to remove their "imperialist" image and gain broader global acceptability.

Jason N. Summerfield, The Corruption Defense in Investment Disputes: A Discussion of the Imbalance between International Discourse and Arbitral Decisions

Corruption is a defense to expropriation. Disputes submitted for arbitration look to international conventions and domestic laws that universally chastise corruption. Arbitrators are accordingly willing to punish those that participate in such illicit conduct through the denial of a favorable award. But the actual operation of the corruption defense raises uncertainty with respect to how the defense is applied, uncertainty that often leads to inequitable results; between two parties that engaged in corrupt practices, one will not recover their expenses and one will walk away with an economic windfall.

Arbitrators should be concerned with the impact and harms of a corrupt practice on the daily lives of a country’s citizens, but the interests of this unrepresented group are not reflected in arbitral awards. Corruption poses risks of harm to four separate targets: the host state, citizens of the host state, investors, and the independent judgment of arbitrators.

This paper proposes a shift in the corruption defense to reflect the apparent evils that normative policies against corrupt practices are designed to address. Arbitrators should consider whether a cognizable harm was caused by the investment to determine if the influence and benefits exchanged in a corrupted agreement were in fact ‘undue’ and thus whether the defense of corruption applies to a dispute.

Salim Rizvi, The Essential-Facilities-Doctrine in the USA, EC and Switzerland with a Special Focus on FRAND

There have been many books, essays and decisions by courts about the Essential-Facilities-Doctrine, especially since the famous decision of US Supreme Court on United States v. Terminal Railroad Ass’s in 1912.

In this paper I give an overview about the Essential-Facilities-Doctrine in the US, EC and Switzerland. In the first part I will explain the Essential-Facilities-Doctrine in general and point out some open and unsolved questions. In the second part selected leading cases in the US, EC and Switzerland will be presented. In part three, I will focus on the FRAND-Principle, which was a hot issue at the EU-Commission (e.g. Case of Qualcomm) and on Arbitration. The paper ends with a final conclusion and prospects.

Michael Z. Green, Alternative Dispute Resolution of Employment Discrimination Claims: Does Race Matter When Reading Ricci and Pyett?

In the landmark article by Richard Delgado and his co-authors, Fairness and Formality: Minimizing the Risk of Prejudice in Alternative Dispute Resolution, 1985 Wisc. L. Rev. 1359, the authors attacked the increasing use of alternative dispute resolution (ADR) to resolve disputes because of the risks of prejudice. Using social science research, the authors argued that the informality of these methods of dispute resolution had a negative impact on persons of color. This paper looks at the impact of ADR in the workplace as a method to resolve employment discrimination claims and re-examines the concerns espoused by the Delgado article which has reached its twenty-five year anniversary. In particular, the paper compares the opportunities for formalized resolution of employment discrimiantion disputes through the courts with the informalized resolution of employment discrimination disputes under ADR. Using the Supreme Court's analysis in two recent cases, Ricci v. DeStefano and 14 Penn Plaza v. Pyett, as a framework for understanding purported post-racial analysis of employment discrimination dispute resolution, the author's thesis asserts that a balance of both informal and formal dispute resolution processes would represent the best possibilities for employees of color seeking racial justice in today's workplace. To achieve this balance, the author focuses on developing workplace arbitration and mediation processes that offer workers of color a fair opportunity for voice and resolution. WIth this focus, the author searches for racial justice opportunities that will allow employers, employees, and unions to converge their interests to support a comprehensive dispute resolution system.

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