Erika Levin, Oksana Wright and Michael Lieberman discuss, in a Law360 article, new Article 21 of the 2021 ICDR Rules, which specifically reinforces the tribunal’s authority to rule on its own jurisdiction without the involvement of the courts.
Like some other international arbitration institutions, the International Centre for Dispute Resolution (“ICDR”) recently adopted amendments to its International Dispute Resolution Procedures (the “2021 ICDR Rules”). The ICDR’s amendment became effective on March 1, 2021. The amendments, according to the ICDR, aim to “promote greater efficiency and economy by addressing the early disposition of issues, emphasizing the use of mediation, and expanding the applicability of the expedited procedures. Importantly, the rules also place an increased emphasis on arbitrators’ ethical obligations.” The 2021 ICDR Rules also address challenges and concerns related to the COVID-19 pandemic, including the use of video, audio, and other electronic means of communication.
Notable and significant revisions include:
Authority of International Administrative Council (“IARC”)
Article 5 of the 2021 ICDR Rules expressly authorizes IARC to (1) determine challenges to the appointment or continuing service of an arbitrator; (2) decide disputes regarding the number of arbitrators to be appointed; (3) determine whether a party has met the administrative requirements to initiate or file an arbitration; (4) in case of parties disagreement, determine the initial place of arbitration.
The joinder rules have been expanded in Article 8(1) as now the joinder is permitted after the constitution of the tribunal if the tribunal determines that the joinder is appropriate and the additional party consents to be joined.
As we have previously reported, International Court of Arbitration (“ICC”) also recently expanded its joinder rules. Continue Reading Revised ICDR 2021 Rules Are Now In Effect
In our recent post, we discussed the split in the federal appeals courts over whether a private international arbitration constitutes a “foreign or international tribunal” within the meaning of 28 U.S.C. § 1782(a), which authorizes U.S. district courts to provide assistance to foreign or international tribunals by ordering discovery of persons in the district.
On March 22, 2021, the U.S. Supreme Court agreed to decide the issue by accepting a petition for certiorari to review judgment of the Court of Appeals for the Seventh Circuit, which joined the Second and Fifth Circuits in holding that 28 USC § 1782(a) applies only to cases in foreign courts and not to private international arbitration. The Fourth and Sixth Circuits have held just the opposite – that 28 USC § 1782(a) does apply to private international arbitration.
In Servotronics, Inc. v. Rolls-Royce PLC et al., No 19-1847, the parties were involved in arbitration in England under the rules of the Chartered Institute of Arbiters, which concerned an indemnification dispute over losses incurred when an aircraft engine caught fire during testing in South Carolina. Servotronics filed an ex parte application under Section 1782 in the U.S. District Court for the Northern District of Illinois seeking a subpoena compelling Boeing to produce documents to be used in the arbitration in England. The District Court initially issued the subpoena, but after Rolls-Royce intervened and moved to quash it, the District Court ruled in with Rolls-Royce’s favor.
Servotronics, which was previously successful in the Fourth Circuit, appealed the District Court’s decision. The Seventh Circuit, after discussing the split among the circuit courts, held that “a more limited reading of Section 1782(a) is probably the correct one: a ‘foreign tribunal’ in this context means a governmental, administrative, or quasi-governmental tribunal operating pursuant to the foreign country’s ‘practice and procedure.’” The Seventh Circuit relied on the statute’s legislative history and the fact that the narrower interpretation of the “tribunal” avoids “a serious conflict” with the Federal Arbitration Act.
The Seventh Circuit noted that if Section 1782 were construed to permit federal courts to provide discovery assistance in private foreign arbitrations, litigants in those arbitrations would have access to more expansive discovery than litigants in domestic arbitrations:
It’s hard to conjure a rationale for giving parties to private foreign arbitrations such broad access to federal-court discovery assistance in the United States while precluding such discovery assistance for litigants in domestic arbitrations.
Servotronics filed a petition for a writ of certiorari to the Supreme Court, posing the following question: “Whether the discretion granted to district courts in 28 U.S.C. §1782(a) to render assistance in gathering evidence for use in a ‘foreign or international tribunal’ encompasses private commercial arbitral tribunals, as the Fourth and Sixth Circuits have held, or excluded such tribunals without expressing an exclusionary intent, as the Second, Fifth, and, in the case below, the Seventh Circuit, have held.” The International Institute for Conflict Prevention and Resolution and the Atlanta International Arbitration Society filed amicus briefs in support of Servotronics’ petition.
The Supreme Court granted the petition, which means that, unless there is some procedural reason not to reach the merits, the Court will now resolve this issue that has long divided the lower courts.
On March 3, 2021, Israel signed the HCCH Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (“2019 Convention”). Israel became the third State to sign the Convention, joining Uruguay and Ukraine.
The Hague Conference on Private International Law adopted the Convention to provide a uniform process to HCCH member states for enforcing civil judgments in other countries throughout the world. The convention provides that contracting states will recognize and enforce certain civil or commercial judgments rendered by courts of other contracting states, obviating the need for a review of the underlying judgment on its merits.
The principal tenet of the convention is Article 4, which provides that “a judgment given by a court of a contracting state (state of origin) shall be recognized and enforced in another contracting state (requested state) in accordance with [chapter 2 of the convention].”
Although three States have now signed the 2019 Convention, the Convention has yet to be ratified, which is an important milestone for the Convention to come into full force and effect. Continue Reading Israel Becomes Third Signatory To 2019 HCCH Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters
The parties in a $238-million dispute over the construction of the third set of locks for the Panama Canal is raising issues concerning alleged conflicts of interest on the part of the International Chamber of Commerce (“ICC”) arbitrators in the United States District Court for the Southern District of Florida. The case may resolve rarely litigated issues concerning whether arbitrators who sit on multiple arbitration panels together or who support appointment of each other to lead arbitration panels have disabling conflicts of interest.
The case pits Grupo Unidos por el Canal, S.A. (“Grupo”), a consortium of Spanish, Italian, Belgian, and Panamanian construction firms, against Autoridad del Canal de Panama (“ACP”), the Panamanian entity that operates the Panama Canal and that sponsored the multi-billion-dollar, decade-long project to expand the Canal’s capacity by building a new set of locks (the “Project”). The current dispute (the “Panama 1 Arbitration”), which centers on the suitability of the rock coming from the excavations to be used to produce concrete aggregates for the Project, was arbitrated before a three-member ICC Tribunal and resulted in a $238-million award to ACP and against Grupo. The ICC Tribunal reversed a decision of the dispute review board established in the parties’ contract.
Grupo has filed a motion to vacate the award, claiming undisclosed conflicts of interest on the part of the arbitrators involving “multiple cross-appointments and interrelationships among themselves and other involved in the dispute.” (Grupo Motion to Vacate, at 2.)
In particular, Grupo is claiming that it was improper for the arbitrators not to disclose that: (1) ACP’s arbitrator purportedly “appointed” the Tribunal president to a different arbitration tribunal before the Panama 1 Arbitration Tribunal began its deliberations, a position that Grupo said could garner the Tribunal president several hundreds of thousands of dollars; (2) during the Panama 1 Arbitration, the Tribunal president sat on multiple arbitral tribunals with the tribunal president in an earlier arbitration between the parties (the “Cofferdam Arbitration”), which dealt with “questions of principle” also at issue in the Panama 1 Arbitration; (3) potential conflicts of interest arising from the activities of the barristers’ chambers to which ACP’s arbitrator belongs; and (4) one of the arbitrators was sitting on an arbitration panel with counsel for ACP. (Grupo Motion to Vacate, at 7-12.)
For its part, ACP argues that none of Grupo’s claims raises true conflict requiring vacatur of the award.
The case is entitled Grupo Unidos por el Canal, S.A. v. Autoridad del Canal de Panama, Case No. 1:20-cv-24867 (S.D. Fla.). The issues are raised in Grupo’s motion to vacate the award and ACP’s cross-motion to confirm and enforce the award. Sarah Biser represents Constructora Urbana, the Panamanian contract that is one of the four shareholders of Grupo.
 The parties to the motion to vacate include Grupo Unidos por el Canal, S.A., Sacyr, S.A., Webuild S.p.A., Jan De Nul, N.V.
As we have discussed in previous posts, federal appeals courts in the United States are split over whether a private international arbitration constitutes a “foreign or international tribunal” within the meaning of 28 U.S.C. § 1782(a), which authorizes U.S. district courts to provide assistance to foreign or international tribunals by ordering discovery of persons in the district. In a very recent case, the United States District Court for the District of Columbia recognized this split, and directed the parties to provide additional briefing before deciding this hotly disputed issue.
In In re Application of: Food Delivery Holding 12 S.A.R.L., 1:21-mc-00005, 2021 WL 860262 (Mar. 8, 2021), Food Delivery Holding 12 S.a.r.l. (“FDH”) filed an application under 28 U.S.C. §1782 for an order to issue a subpoena for the taking of deposition and production of documents for use in a matter before the Dubai International Finance Centre-London Court of International Arbitration (“DIFC-LCIA”).
The Court began its analysis by noting that deciding whether to grant discovery under Section 1782 involves a two-step inquiry:
First, the court must determine whether it can order the requested relief—that is, whether it has the authority to do so; second, it must decide whether it should order the requested relief—that is, whether exercising its discretion to do so would further the statute’s “twin aims of ‘providing efficient assistance to participants in international litigation and encouraging foreign countries by example to provide similar assistance in our courts.’”
The leading international arbitration institutions, including the London Court of International Arbitration (“LCIA”) and the International Court of Arbitration (“ICC”), are revising their arbitration rules to improve efficiency, flexibility and transparency, and address challenges and concerns related to the COVID-19 pandemic.
In a previous post, we discussed LCIA’s updates to its arbitration and mediation rules, which came in effect on October 1, 2020. The ICC has issued similar updates to its 2017 Arbitration Rules, which will take effect on January 1, 2021 (the “2021 ICC Rules”). The updates, according to the ICC Court President, Alexis Mourre:
mark a further step towards greater efficiency, flexibility and transparency of the Rules, making ICC Arbitration even more attractive, both for large, complex arbitrations and for smaller cases.
Notable and substantive revisions to the 2021 ICC Rules include:
Article 3 of the 2021 ICC Rules now allows the parties to make their submissions by email, replacing the previous requirement to provide the submissions in a hard copy. This amendment recognizes that most communications are now conducted electronically and addresses COVID-19 concerns when hard copy filing may be impossible and present health risks.
The ICC, like other international arbitration fora, quickly adopted to the COVID-19 reality of remote hearings. Article 26(1) of the 2021 ICC Rules now provides that “[t]he arbitral tribunal may decide, after consulting the parties, and on the basis of the relevant facts and circumstances of the case, that any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication.” Continue Reading 2021 ICC Rules Update Aims At Greater Efficiency, Flexibility, And Transparency and Addresses COVID-19 Issues
Sarah Biser moderated a webinar roundtable discussion on how to conduct business in the UAE and Israel – now that the Abrahams Accords have made possible trade and commerce between Israel and the UAE. The roundtable discussion, held on October 28, 2020, included Sarah Biser and Mark Hess of Fox Rothschild, Uzi Dayan, Member of the Knesset; Charles Laubach, Partner at Afridi & Angell Legal Consultants (Dubai, UAE); Omar Al Busaidy, Fulbright Scholar, MICE International (UAE); Yoram Elkaim, Head of Legal, Google – Europe, Middle East and Africa; and Stephen Barak Rozen, Partner at Amit Pollak Matalon & Co.
If you would like a recording of the session, kindly email email@example.com.
Join Sarah Biser, and other arbitration practitioners for a virtual discussion regarding the challenges of virtual hearings including preparation for virtual mediations and arbitrations – sponsored by the American Bar Association, Section of Litigation and Ankura. The Webinar will be broadcast live on November 5, 2020 at 12 pm. Please register at this link https://us02web.zoom.us/webinar/register/8216025154109/WN_hG0erzLwQJyUvgcvWcxN_w
Arbitration awards may be vacated or annulled based on arbitrator conflicts of interest and even just an appearance of impropriety. Read how different arbitrations deal with disqualification motions.
The Importance of Impartiality and Lack of Conflicts
Arbitrator’s impartiality and independence is the bedrock of international arbitration. Recent arbitration awards have been vacated or annulled due to arbitrator conflicts of interest or even mere appearances of impropriety. Parties may waive such conflicts, however, if the parties do not raise the conflicts in a timely and appropriate manner.
Recent proceedings demonstrate the importance of this issue.
On June 11, 2020, an annulment committee appointed in an ICSID case annulled a $128 million award against Spain in an Energy Charter Treaty case and ordered the claimants to pay all fees and costs in the case. The ruling was based on the arbitrator failing to disclose his 15-year relationship with claimant’s damage expert involving eight cases by the arbitrator’s law firm, including several where the expert was currently engaged. In addition, the arbitrator had presided over cases where the expert had previously testified. Because this information was not adequately disclosed, Spain did not have a chance to object at any time, including at the time the Tribunal was formed.
On December 16, 2015, France’s highest court annulled an arbitration award due to an arbitrator’s connection to the prevailing party. The Court of Cassation held that the partial award must be set aside because the arbitrator was a partner in a Canadian law firm that had a continuing relationship with the prevailing party.
Disqualification of Arbitrators-Know Your Audience
Finesse is required in the disqualification process, particularly when asserted later in the proceedings. Each arbitral forum has a different procedure and criteria for disqualification, and knowing the internal rules may make the difference between winning and losing the motion. One key difference is the degree to which information regarding disqualification will be shared with the Tribunal itself and whether the Tribunal has a voice in the decision.
Disqualification before the International Centre for Dispute Resolution (ICDR)
The ICDR follows the same disqualification procedure as its domestic affiliate, the American Arbitration Association. A party must send a challenge to the Administrator within 15 days of becoming aware of the circumstances supporting the challenge. Under Article 14 of ICDR Arbitration Rules, the Administrator notifies the opposing party of the challenge and grants a time to respond. The Tribunal is also notified of the challenge, but is no told which party filed the challenge. The Administrator may request information from the arbitrator who is being challenged. If the opposing party accepts the challenge, then the arbitrator must withdraw, or the arbitrator may withdraw unilaterally without admission that the challenge was correct. In the absence of agreement, the Administrator in his or her sole discretion will decide the challenge.
Disqualification Before the International Court of Commerce (ICC)
Under Article 14 of the ICC Rules, a party’s challenge must be filed in writing with the Secretariat within 30 days after the party becomes aware of a conflict, and the challenge must specify the facts and circumstances on which the challenge is based. The ICC itself “shall decide on the admissibility and, at the same time, if necessary, on the merits of a challenge after the Secretariat has afforded an opportunity for the arbitrator concerned, the other party or parties and any other members of the arbitral tribunal to comment in writing within a suitable period of time.” Unlike in the ICDR, the ICC Tribunal and the affected arbitrator, as well as all parties, shall be heard before a decision is issued.
Disqualification Before the ICSID Convention Arbitration
For treaty cases, challenges are filed with the ICSID Secretary-General or the Tribunal under Article 57 of the ICSID Convention. Once received, the challenge is forwarded to the Chairperson of the ICSID Administrative Counsel if the challenge is to a sole arbitrator or a majority of the Tribunal. A schedule is set for the challenged arbitrator to respond and for the other parties to comment. A decision on the challenge is usually made by the other members of the Tribunal (Article 58). Where a sole arbitrator or a majority of the Tribunal is challenged, the decision is made by the Chairperson of the Administrative Council.
Standards Governing Disqualification
In the ICDR, four factors are weighed in disqualification motions: whether the conflict is (a) direct, (b) continuing, (c) substantial, and (d) whether the challenge timely. Other arbitral fora apply similar rules and consider the disqualification criteria used by the seat of arbitration. That makes sense, because, if the award is challenged in court, the disqualification motion will be reviewed by the court as well.
Disqualification motions advance the integrity of the Tribunal, but must be brought timely and with good cause. Even if denied during the actual arbitration, the motion may be reconsidered at the annulment stage. Each arbitration forum has its own rules for disqualification motions, and these rules should be strictly followed.