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

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

Tuesday, October 5, 2010

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

Waiving Rights Goodbye: Class Action Waivers in Arbitration Agreements after Stolt-Nielsen v. Animalfeeds International
Diana Link and Richard A. Bales

Many arbitration agreements contain clauses that prohibit the parties from bringing class actions in arbitration or in court. The federal courts of appeals are split on whether these class action waivers are enforceable: some courts have held that §2 of the Federal Arbitration Act allows such agreements to be disregarded under basic contract principles, whereas other courts have found that class mechanisms are merely procedural and can be waived in an arbitration agreement. An April 2010 United States Supreme Court case, Stolt-Nielsen v. Animalfeeds International Corp., raised but did not resolve the issue. This article argues that the FAA should be amended or interpreted to provide a “totality of the circumstances” approach in which courts would consider factors such as whether the size of each claimant’s individual recovery would make it difficult or impossible for the claimant to pursue his or her claims on an individualized basis.

How Far Can Arbitration Practice as an Alternative Dispute Resolution within the WTO Go? A Perspective on Intellectual Property Disputes
Tsai-Yu Lin

Arbitration has been recognized as an expedite procedure to facilitate the settlement of disputes at the WTO. Unlike to the prevalent use of arbitration as an effective alternative means to litigation in the private filed, the author argues that arbitration under Article 25 of the Understanding on Rules and Procedures Governing the Dispute Settlement, as practiced in the Copyright case, might in effect come closer to the normal dispute settlement procedure, rather than a substitution for it. In terms of analysis of procedural flexibility, remedy, protection for business confidential information and Secretariat supports, this paper concludes that it does not seem that Article 25 arbitration would have a bright future for the resolution of intellectual property disputes provided it exhibits no great differences with the normal dispute settlement procedure.

Compulsory License for Access to Medicines, Expropriation and Investor-State Arbitration under Bilateral Investment Agreements: Are There Issues beyond the Trips Agreement?
Tsai-Yu Lin

In this paper, the author argues that compulsory licenses might potentially amount to indirect expropriation provided that their effects constitute a severe curtailment of the patent rights. Inasmuch as the expropriation standards in BIAs differ from those articulated under the TRIPS Agreement, particularly in the focus of due process and compensation requirements, the ability of developing countries to make use of compulsory licenses at the WTO level might be reduced. Also, regarding the arbitral procedure, it is of much value from the public health perspective that an investor-state arbitration structure could pursue a balanced reform between private investment and pubic policy. It is a matter for deliberation whether an ultimate return to state-state dispute settlement, rather than investor-state arbitration, would be more feasible to settle disputes concerning health-related compulsory licenses under BIAs.

The Maryland International Commercial Arbitration Act: The Proper State Response Until Congress Enacts a Comprehensive Federal Statute
Francis J. Gorman and Sanjay M. Shirodkar

Maryland has taken a unique approach to address international commercial arbitrations conducted within the state. In 1990, the Maryland General Assembly passed the Maryland International Commercial Arbitration Act (MICAA), which precludes the application of state law to international arbitrations. Instead, the MICAA makes the uniform federal law the sole body of law to govern the process and enforcement of international commercial arbitrations occurring in Maryland. Consequently, the MICAA will add certainty and uniformity to the business and legal climate for international arbitrations in this state.

This article asserts that pending the enactment of a more comprehensive federal statute, the Maryland approach is the appropriate state response to the need in the United States for a better and uniform law governing the process and enforcement of international commercial arbitration. In making this argument, the article first highlights the lack of legal uniformity by surveying the different and overlapping schemes applicable to international arbitration in the United States, including the United States Arbitration Act (FAA) and the various state statutes that address international commercial arbitration. Second, by comparing the FAA with the United Nations Commission on International Trade Law (UNCITRAL) Model Law, this article will develop the rationale behind the Maryland approach. This article suggests that Congress should amend the FAA by expressly requiring it to preempt state international arbitration laws. In conclusion, this article argues that other states contemplating the enactment of international commercial arbitration statutes should follow Maryland's lead. A bifurcated multi-statute system leads to a host of complex litigation-generating problems; the Maryland approach, in contrast, will decrease the confusion engendered by multiple statutes and add certainty to international commercial arbitrations.

A Digital Sideshow: Why the 'Great Debate' Regarding the Use of Electronically Stored Information in International Commercial Arbitration Misses the Point and Why Practitioners Should Take Note
Nicholas Paul Manganaro

Anecdotal evidence suggests there is an ideological divide between attorneys from the United States and their European counterparts regarding the use of electronically stored information (ESI) in international commercial arbitration. Attorneys from the United States are portrayed as favoring expansive evidence production akin to what is available under the U.S. Federal Rules of Civil Procedure. Even if true, painting all parties from the United States with the same brush may distort the reality of the situation and overstate the need for new and ambitious ESI rules. The preliminary results of a survey of in-house counsels of the Fortune 500 suggest that U.S. firms may be no more in favor of the liberal use of ESI in arbitration than would the stereotypical civil-law practitioner. Furthermore, treating the ESI question as simply a procedural matter ignores important ethical considerations and gives short shrift to the concept of party autonomy. Attorneys on both sides of the divide have a duty to inform clients of the evidentiary pitfalls increasingly associated with international arbitration and should recommend the inclusion of language akin to the International Institute for Conflict Prevention & Resolution (CPR) Protocol on the Disclosure of Documents in the arbitration clauses they draft.

Report to Law Revisions Commission Regarding Recommendations for Changes to California Arbitration Law
Roger Paul Alford

In this Article, Professor Alford discusses a report by the Law Revision Commission recommending that certain changes be made to arbitration law in California. It begins by outlining the history of arbitration in California, from its 1961 adoption of the Uniform Arbitration Act, to the 1988 enactment of an international arbitration statute modeled on the UNCITRAL Model Law, to the 1989 enactment of Section 1281.8, which allowed courts to grants provisions remedies to parties involved in arbitration proceedings. It also provides a general overview of the purpose and practice of arbitration law. Then, it provides a chapter-by-chapter analysis the Law Revision Commission's Report: general provisions, enforcement of arbitration agreements, conduct of arbitration proceedings, enforcement of awards, arbitration of medical malpractice, public construction contract arbitration, international commercial arbitration, real estate contract arbitration, and firefighter and law enforcement arbitration.

An Analysis of an Order to Compel Arbitration: To Dismiss or Stay?
Melanie A. Goff and Richard A. Bales

The Federal Arbitration Act makes arbitration agreements judicially enforceable. Often, however, one party to a dispute would prefer to litigate, and files suit on the underlying claim. The party preferring arbitration may then file a motion to compel arbitration. If the court grants the motion, the court must then decide whether to stay the suit during the pendency of the arbitration proceedings, or whether to dismiss the suit outright. Though this issue has arisen thousands of times, in probably every federal district court in the country, there is no clear answer as to whether courts should stay or dismiss. This article argues that courts should stay a case when some points of dispute between the parties fall outside the arbitration agreement and cannot be resolved by the arbitrator, and that otherwise courts should have the discretion to dismiss the case in favor of arbitration.

Much Ado About Nothing: The Future of Manifest Disregard after Hall Street
MyLinda Kay Sims and Richard A. Bales

Section 10 of the Federal Arbitration Act contains a list of bases for vacating an arbitrational award. The lower courts have long stated but seldom held that these bases are non-exclusive. In narrow circumstances, courts have found that an award may be vacated on non-statutory grounds such as manifest disregard of the law. In Hall Street, the Court created doubt as to whether nonstatutory standards are still applicable when it stated that the grounds for vacatur are “exclusive” to those stated in the FAA. Some courts have interpreted this language as eliminating all non-statutory grounds for vacatur; other courts have interpreted it as merely limiting the use of non-statutory grounds.

This article argues that the FAA standards are not exclusive and that while the standard of manifest disregard of the law survives, it should be replaced with the standard of manifest disregard of the agreement. Under the doctrine of manifest disregard of the agreement, an arbitrator’s award is vacated only if it fails to “draw its essence” from the construction of the contract. By contrast, under manifest disregard of the law, vacatur is based on an arbitrator’s acknowledgment and disregard of external law.

Bilateral Investment Treaty (BITS) and EU Law
Nikos Lavranos

The main aim of this contribution is to analyze the interaction and impact of EU law (i.e Community law) on BITs and more generally on international investment law. Accordingly, section II will very briefly highlight some of the distinctive features of BITs as well as some of the recent developments in this field. Section III will then turn towards the relevant Community law aspects. This section will focus on the ECJ’s jurisprudence on BITs and the innovations introduced by the Lisbon Treaty. Based on the previous sections, section IV will attempt to provide an analysis, while section V will wrap up this contribution with some concluding remarks.

Drafting International Mediation Clauses
Mediation Techniques, IBA, 2010
Rahim Moloo and Justin Jacinto

This chapter seeks to identify various topics that are important to consider in drafting a mediation clause, whether based on a model clause or not, in the context of an international transaction.

The International Centre for Settlement of Investment Disputes: Its Emerging Principles with Reference to Some Latest Cases
Sugandh Saksena

It’s an age of globalisation where trade and investment are no where concerned with international boundaries. Where there is trade, there is investment. Likewise, investments bring with them a room for disputes. International disputes are best resolved by Arbitration and Conciliation, i.e., Alternative Dispute Resolution system. In order to facilitate such a system of dispute resolution, the International Law provides for a Convention, known as the Convention for Settlement of Investment Disputes, much popularly as, the ‘Washington Convention’. The body established under this Convention, for the settlement of Investment Disputes, is the International Centre for Settlement of Investment Disputes (ICSID). The ICSID Convention is a multilateral treaty formulated by the Executive Directors of the International Bank for Reconstruction and Development (the World Bank). It was opened for signature on March 18, 1965 and entered into force on October 14, 1966.

To date 143 countries have signed and ratified the Convention to become Contracting State. As evidenced by its large membership, considerable caseload, and by the numerous references to its arbitration facilities in investment treaties and laws, ICSID plays an important role in the field of international investment and economic development.

This Paper aims at throwing light on the functioning of the Centre with the most recent principles laid down by the Centre in its awards, regarding Foreign Investments, and relations between the States and the Parties investing, along with a motive, as to why India should also be one of the signatories and ratifiers of the Convention.

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