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Guide to Regional Arbitration (volume 5 - 2017)

White List: Special Occasions

02 November 2016

Not all "specialist" institutions focus on a region. Some specialise in a sector or type of case. It's the second we mean by "special occasions". The "occasion" may be particularly technical type of dispute (about finance, say, or IP) or one from a particular industry or activity (shipping, direct foreign investment, sport, even German-Chinese trade)

Why are they needed? Can't the top arbitration providers cover them, simply by appointing correctly qualified arbitrators? Of course they can. But focus can also be good – leading to more efficient rules and techniques. More significantly, a specialist organisation can create buy-in, particularly if it emerges as an outgrowth of the industry or activity it serves. And they can lead to innovation – witness the radical approach to arbitration offered by the Basketball Arbitration Tribunal (not listed yet here) – which provides a full ex aequo et bono approach as its default setting.

COURT OF ARBITRATION FOR SPORT (CAS)

What is it?

An independent institution, tailor-made to the settlement of sports-related disputes.

How is it different to standard commercial/investment arbitration?

It functions mainly as an appeals body, rather than a sole institution (though it does perform this function when the agreement demands), reviewing decisions issued by sports federations.

There's also a difference in how parties come to be there. Regular users of arbitration are there because they at some point signed a contract. But many sportspeople have it imposed upon them when they sign up to their sporting body's code, or by other event-related rules.

What kinds of cases are most common?

Most of the court's time is taken up either by disputes around contracts and the transfer of football players, or by doping issues. The court has a separate, dedicated list of arbitrators for football disputes, while the World Anti-Doping Code contains a mandatory reference to CAS for appeals by international athletes.

Since 1996, it's also set up ad hoc divisions for each summer and winter Olympic Games, and more recently, the World Cup.

What do those ad hoc divisions do?

Usually, they set up an office in the host city for the duration of the games that can accept filings from participants or sports entities.

The president then establishes a panel (or sole arbitrator) and offers all potential parties the chance to argue at a hearing. There are no written submissions outside of the request. Decisions are rendered within 24 hours.

What sorts of disputes come up during the Olympics?

There have been some groundbreaking ones. In Salt Lake City, an arbitral tribunal ordered a potential witness not to leave the jurisdiction during a dispute about the judging of figure skating (thought to be the first time arbitrators have ever invoked that power). And at the London 2012 Olympics, Swedish triathlete Lisa Nordén sought a reinterpretation of a photo finish after being placed second. CAS ruled that it couldn't hear the dispute as it was against a field-of-play decision.

Those matters aside, the Olympics disputes are usually about qualification and eligibility.

Is there a doctrine of precedent?

There is. In the Nordén case, for example, the panel looked to earlier cases to find the principle that CAS is not able to review umpire decisions.

Is it busy?

Very. It had a record-breaking year in 2012, when it received 407 requests for arbitration. The average annual turnover is 350.

That's almost a case a day…

It is. But then about a day is the usual length for a CAS case, at least the hearing. And then four to five months on average.

Where does it find its arbitrators – and are they sportspeople?

You can only sit as a CAS arbitrator if you are on the approved list. The list is around 300 names strong, featuring names from 87 countries. Most of them are lawyers, usually with an interest in sport.

What does the future hold?

CAS is growing. As well as its headquarters in Lausanne, it now has offices in Sydney and New York. In the future there will probably be more. The court's governing has already signed a partnership agreement with the city of Shanghai to establish an alternative hearing centre in the Pudong area, and similar agreements are in place with Abu Dhabi, Kuala Lumpur and Cairo. There's also expected to be a base before too long in Latin America.

Are there any special rules?

The rules state, "CAS arbitrators and mediators may not act as counsel for a party before the CAS," which is the first instance of an institution saying an arbitrator or counsel can't wear two hats.

Does it have any competition?

It's at the top of its field, though some more generalist institutions are also handling sports matters. Germany's DIS has its own set of rules for sports arbitrations, which were called upon 16 times in 2012.

Does it have any critics?

It certainly does. Some think CAS is unfair because they have no choice but to accept it – or they can't compete. Claudia Pechstein, a German speed skater has been pursuing a case (helped by Germany's professional footballer's federation) to that effect. She recently lost, but it may not be the end of the matter.

The underlying problem is the way that CAS appoints its arbitrators. At the moment the president of the tribunal is picked by CAS's members, which are mainly sports federations. So athletes worry the deck may be stacked against them. In practice too, the secretary general wields a lot of power. Changes to CAS's structure a few years ago went some way to balancing things up – but further changes are probably needed to make everyone feel comfortable there.

Is CAS doing anything in response?

It's done a bit. There's now better legal aid provision for poorer athletes and members of the public can attend hearings (in small numbers) But no reform of the appointing rules is planned, so far as we can ascertain.

INTERNATIONAL CENTRE FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID)

What is it?

A depoliticised place to settle investment disputes, set up by the World Bank in the 1960s.

What was wrong with the existing commercial arbitration centres?

 They were thought about. But there would have been issues with applicable law, enforcement, sovereign immunity etc, It was realised that some sort of treaty was needed.

Is ICSID connected to a treaty?

It is. The Washington Convention (more generally known as the ICSID Convention), which also gives rise to the centre, was drafted to balance the interests investors and states and entered into force in 1966. Under it, ICSID cases follow their own rules of procedure, which are unaffected by the law of the seat, and awards are only subject to the remedies granted by the convention itself. They don't depend on the New York Convention. Initially, the convention was ratified by more than 50 states. Today it has 159 signatories, of which 151 have ratified. Not all have been satisfied customers, however.

Who hasn't?

Bolivia, Ecuador and Venezuela have renounced the convention in recent years, claiming ICSID arbitration is skewed in favour of investors and against sovereign states. In 2009, the Bolivian and Ecuadorean presidents even went so far as to call for the institution's closure.

How busy is ICSID?

It had another"busiest year ever"in 2015, with 52 newly registered cases. That came after a dip over 2014 and 2013, which saw only 38 and 40 new cases respectively.

Were all the cases brought under the convention?

Mostly. Some used the additional facility rules.

What are they?

They're what the centre uses when one state party in a dispute isn't a member of ICSID. They were launched in the late 1970s to make the process more accessible, and to help settle arbitrations taking place under multilateral investment treaties (such as NAFTA or the Energy Charter Treaty), which provide for ICSID arbitration.

Who runs it?

Meg Kinnear, who was appointed in 2009, heads the 50-strong secretariat. Before that, ICSID didn't have a full-time secretary general; the role was performed part-time by the general counsel of the World Bank (not a tenable state of affairs). Kinnear has striven to address some of the complaints that were starting to develop about ICSID cases – their slowness, the operation of annulment committees. She's also sought to educate states better on how to get the most out of the system. Nevertheless there are some who remain dissatisfied.

Who are they?

They're varied – there was a whole conference in Paris last year devoted to criticisms of the institution (see www.globalarbitrationreview.com/article/1034993/is-icsid-a-monarchy). Some critics are counsel who represent investors; others have leanings towards the state view. Both, though, have a common set of concerns. Generally they come down to the amount of power wielded by the secretary general, and the emergence of a coterie of ICSID insiders: arbitrators who are appointed time and again.

Are those concerns valid?

It's true that the secretary general has some important functions to play, at times. For example, if a matter goes to annulment (the ICSID version of review), she decides who forms the annulment committees. She can also be required to decide an arbitrator challenge, in the event of deadlock by the other arbitrators on the case (who are supposed to rule on challenge decisions).

It's also true that certain arbitrators appear far more at ICSID than others, and that there are names on its approved list who never receive a case. The inside view is that difficult cases need experienced people. The same is true at the annulment stage – only more so.

But critics still think this leads to too many developed world arbitrators appearing, which reduces the legitimacy of the system.

What's the solution?

There probably isn't one. Changing the treaty would be all but impossible to organise. Without that, the best ICSID's secretariat can do is listen to concerns and do what it can, within the current rules.

Is there any sign that ICSID business is suffering?

As already stated, ICSID's had its best year ever in terms of numbers – but other institutions are also getting an increased investment treaty caseload, some of which would go to ICSID if there were no complaints. But the concerns raised above aren't necessarily the factors driving users away. Others complain that the centre doesn't exercise meaningful control over arbitrator fees and time that other institutions would. Where treaties allow, there's plenty to attract users to well-regarded centres elsewhere – the ICC, SCC and even SIAC are all potential destinations that are happy to take on an investment treaty caseload.

THE PERMANENT COURT OF ARBITRATION (PCA)

What is it?

An intergovernmental institution in The Hague, initially set up to hear state-to-state disputes.

Initially? Has its mission changed?

It's broadened. The PCA was established in 1899 (under the Convention for the Pacific Settlement of International Disputes at the first Hague Peace Conference) when its mandate was to facilitate arbitration and other forms of dispute resolution between states. It gained authority to hear disputes between states and private parties during the 1930s – the trigger was an arbitration between the Chinese government and Radio Corporation of America over telegraphic communications between the two countries. In 1962, the PCA published new rules on investor–state disputes, which influenced the first ICSID Convention in 1965. Today, it's investor–state disputes that dominate its work.

What sets it apart from other investor–state administrators?

Well, for a start it has own palace, albeit shared with the ICJ: the Peace Palace, a specially built home in The Hague. It's not mere decor either; it's actually symbolic of the whole project. States, unsurprisingly, don't much like getting sued. Someone astute worked out that they tolerate it better when it comes with due pomp and ceremony. The palace is one part of it. Another is the PCA's secretariat's attention to detail, which makes the parties feel at ease. They're famous for going the extra mile. To have a case at the PCA is to experience the Rolls-Royce of arbitrations.

Has it heard any particularly famous cases?

A host of them. In the early years, Norwegian Shipowners and Religious Properties raised important issues of state responsibility and the international minimum standard in the treatment of states. They helped to establish that expropriation required compensation

The arbitration "trial of the century" – Yukos v Russia – took place there, resulting in the largest recorded award in arbitration history (US$50 billion) for the claimants. That's now in the Dutch court system (where Russia appears to have regained the upper hand).

How busy is it?

It had 138 cases on its docket in 2015, 42 of which were initiated that year. More than half of its cases were brought under multilateral or bilateral investment treaties and national investment laws, while the majority of the rest arose under contracts with state entities. It also had 42 requests to act as an appointing authority, which is a common function it undertakes.

In 2016, the PCA concluded an arbitration between the Philippines and China over maritime rights in the South China Sea, one of the most politically sensitive disputes in recent years. The tribunal ruled in favour of the Philippines, and said China didn't have any historic claim to 90 per cent of the sea. China has said it won't respect the award.

Who runs the show?

Hugo Hans Siblesz is the current secretary general and Brooks Daly is his deputy and the court's principal legal counsel.

What else is unique?

It has its own dedicated sets of rules for the arbitration and conciliation of natural resources and environmental disputes, and 2011's rules on disputes relating to outer space activities. In contrast to some, it's continuing to expand its user base. In 2016, the Bahamas, Djibouti and Kosovo join the organisation, bringing the total number of member states to 121.

WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO)

What is WIPO?

A UN-backed agency that gives a global forum for IP services.

What arbitration services does it offer?

It has its own dedicated ADR centre, offering arbitration, mediation and expert determination services on disputes between private parties.

What kind of disputes does it see?

Patent and software licence, trademark and distribution agreement, pharmaceutical product, and research and development agreement claims on the contractual side. Infringement claims on the non-contractual side. Patent-related matters still take up the lion's share of the caseload.

How busy is it?

Since its inception in 1994 there have been around 400 cases across the board of its ADR services, but the centre says these have picked up considerably of late.

Why's that?

WIPO hasn't really said – but with the pace of technological change, it's not really a surprise.

What are the rules like?

The current rules date from mid-2014. They adopted the 2010 changes to the UNCITRAL rules (increased powers of joinder and consolidation and extra powers over arbitrator appointment were introduced). They also added a mandatory preparatory conference between the parties and tribunal within 30 days of the tribunal being formed – and provided for emergency relief measures.

Aside from expertise in IP, is there any reason to use it?

Users get access to the WIPO Electronic Case Facility, which allows them to submit documents and communications to an online docket, and which helps cut down on time and costs.

Where is WIPO based?

The founding office is in Geneva, but, since 2010 it's had a second office in Maxwell Chambers, Singapore.

Who does it appoint as arbitrator?

WIPO maintains a database of over 1,500 neutrals from 70 countries for arbitrator and mediator appointments. The general list is kept under wraps, but WIPO publishes its dedicated list of domain-name panellists on its website.