During the last weekend I had the chance to attend the Young Arbitrators Forum: Young Approaches to Arbitration organized by the International Chamber of Commerce and the Young Austrian Arbitration Practitioners in Vienna. The event was widely registered for by participants from around the world mainly because the VIS moot was also in town. University of Vienna was the ideal host of this event because of its breathtaking lecture hall and the number of arbitration practitioners, who consider it to be their alma mater. I was paying attention (and thus missed a couple of networking opportunities!) and here is a brief summary of the hottest topics in international arbitration discussed in Vienna.
II. Keynote Speech and the Rule of Law
The thought-provoking keynote speech was given by Wendy Miles, QC of Boies, Schiller & Flexner LLP, who began by describing a celebration of the hundredth anniversary of the Chartered Institute of Arbitrators in Hong Kong. As she noted, the average age in that celebration was from 65 to 75. This only underscored the importance of incorporating the younger generation of arbitration practitioners into these circles. Wendy’s lecture, however, focused on the anniversary of the 1215 Magna Charta, which introduced the rule of law into to world.
The rule of law is in itself also very important in international arbitration, as she pointed out, because businesses branch out to less developed markets. These markets are not capable of providing effective dispute resolution at the courts and international arbitration is the best alternative. She continued by saying that, just like national legal systems, even arbitration must uphold the basis of the rule of law. Accordingly, it must be predictable and clear, whereas today we are faced with a situation where the wider public does not recognize the difference between investment and commercial arbitration. And since investment arbitration has a very negative connotation nowadays, it will, according to Wendy, also spread to commercial arbitration. In connection with this topic, she mentioned the IBA report on Climate Change Justice and Human Rights, which recommends arbitration as the best way to resolve connected disputes. It should serve as a good marketing tool for the entire arbitration community. The last aspect of the rule of law was the affordability of justice and Wendy pointed out that submitting 700-pages long submissions does not help to resolve any case effectively and also is a financial burden for the clients. This point was eagerly debated during lunch because some suggested that they cannot imagine shorter submissions in construction or other highly factual cases. Wendy, however, received a well-deserved applause for her keynote speech.
III. Impartiality and Independence of Arbitrators: Is it Getting Stricter?
The first panel was moderated by Christopher Boog of Schellenberg Wittmer and consisted of Mélanie Riofrió Piché of Armesto & Asociados, Filip Boras of Baker & McKenzie and Ziad Obeid of Obeid Law Firm. Ziad started off the presentations by explaining the difference between the, intertwined but at the same time distinct, terms of impartiality and independence. Simply put, the former can be described as subjective – having a clear state of mind – while the latter is more objective and is connected with relationships of the arbitrator. Ziad interestingly pointed out that the Dubai International Arbitration Centre has recently had a rise in the challenges of arbitrators, although there are not official statistics (as he responded to my superfluous question). Mélanie then addressed the disclosure of arbitrators and mentioned that if an arbitrator is “friends on Facebook” with one of the counsels, there is no need to disclose. This eventuality is in fact on the Green List in the IBA guidelines on impartiality. She then continued by describing a guerilla tactic in one of her cases at the DIS in Germany: a counterparty submitted thirteen challenges to the panel of arbitrators and in the fourteenth then alleged that the arbitrators now must be biased at least because of the previous conduct of the counsel. This experience was, naturally, followed by a sincere laughter in the hall. Filip continued with the same enthusiasm and sarcastically mentioned that he is asking his assistant every morning whether there are new conflicts in any of the arbitrations. His assistant allegedly replied that that one partner in his firm in Melbourne represents an affiliate of an affiliate of their client in a tax matter and thus he had to disclose this. It turned out to be a joke but it may be a representation as to what should be expected in the near future.
A discussion then convened where Mélanie suggested that the counsels should disclose all the lawyers working on a case in order to avoid conflicts in advance. Ziad, however, argued that disclosing every single intern would also serve no good to the efficiency of the process. Filip then moved the discussion to ex parte communication of the arbitrators and right from the start stated that it should be absolutely prohibited. But also, if a challenge is based on ex parte communication (as one of his cases at the Austrian Supreme Court), it is very difficult to prove. According to the panel, a possible sanction for ex parte communication could also be a one-on-one meeting with the chairman, where concerns would be expressed. Zaid added to this discussion that a senior arbitrator he knows tested his co-arbitrators by leaking arguments to them during dinner and then waited whether the counsels would adapt their strategy accordingly. It seemed like to most elegant way of dealing with the problem effectively and elegantly too.
IV. Interim Measures
After lunch, I used a lot of time discussing the ideas expressed during the lectures with friends and colleagues. I was thus not able to listen to the “Call for ideas” debate, where selected authors presented their work. I did, however, return for the last panel moderated by Rafal Morek of K & L Gates and consisted of Shaparak Saleh of Freshfields, Catherine A. Kunz of Skadden, Arps, Slate, Meagher & Flom and Alexander G. Fessas of the ICC. Alexander began by an intriguing summary of a case he had managed at the ICC, where two US companies were involved in a JV-related dispute. An emergency arbitrator was called upon to grant an interim relief. The arbitrator considered that the only standard, which was legally binding was contained in the applicable ICC Rules and the rest should be covered by related case law and doctrine, not national substantive law. He abstracted standards like urgency of the relief, probability of success or harm to the requesting party and decided not to grant the interim relief. Catherine described an equally intriguing application for an anti-enforcement injunction. A party applied for this interim measure after a state court rendered a decision that favored its counterparty, although a parallel arbitration was still pending. The relief was supposed to stop the counterparty from executing the state court decision until the arbitration ended as well. Catherine asked the lecture hall whether we would grant the relief and an overwhelming “no” was expressed by raised hands. Nevertheless, we were wrong and the anti-enforcement injunction was granted because it was considered as a type of anti-suit injunction, because the counterparty breached the arbitration agreement by going to the court and because there was an evident risk of conflicting decisions. The emergency arbitrator, however, ordered the applicant to open a bank guarantee in case it loses the arbitration, i.e. the arbitral tribunal decides like the state court.
Ultimately, it was a day full of creative ideas and an inspiration for most of the participants at the YAF and YAAP Conference. Sunday was also eventful because I was honoured to attend the reception of the Forum for International Conciliation & Arbitration, which has now obtained the Observer Status at the UNCITRAL. This conference and reception provided for great networking opportunities and there will hopefully be similar events in Vienna even when the VIS moot is not in town!
written by Peter Plachy