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Commercial Arbitration 2017

Last verified on Tuesday 27th June 2017

United States

Richard Ziegler and Elizabeth A Edmondson
Jenner & Block

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
    1. The United States acceded to the New York Convention in 1970, subject to the “reciprocity” and “commercial” reservations. The United States will apply the Convention only to awards made in another signatory nation and to disputes arising out of “commercial” relationships. The New York Convention is codified in Chapter 2 of the Federal Arbitration Act (FAA), 9 U.S.C. § 201 et seq.

  2. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
    1. The United States is a party to the Panama Convention (which governs enforcement of commercial arbitration between certain countries in the Americas, even where the New York Convention would otherwise apply), 9 U.S.C. § 305, and the Washington Convention (which provides for the recognition of ICSID awards), 22 U.S.C. § 1650a. 

      Further, the United States has signed over forty bilateral and multi-party investment treaties (BITs and MITs), including the North American Free Trade Agreement, which generally provide for the enforcement of awards. A list of BITs the United States has signed can be found at https://www.state.gov/e/eb/ifd/bit/117402.htm

  3. 3.National law
    Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?
    1. The FAA governs the arbitration of virtually any commercial transaction, see Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995), including both domestic and international arbitration proceedings. Because the FAA is federal (ie, national) law, it applies to all arbitral proceedings seated in the United States that involve interstate or foreign commerce. Any motion to compel arbitration or enforce an award subject to the New York Convention may be filed in federal court. However, the location of the seat can still be important in determining the applicable rules because the FAA is subject to varying interpretation among the different federal circuit courts.

      The FAA differs from the UNICITRAL Model Law in the grounds for challenging an award, the procedures for seeking to modify an award, the authority of the arbitration tribunal to rule on its own jurisdiction, and the default method of selecting arbitrators. 

  4. 4.Arbitration bodies in your jurisdiction
    What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?
    1. There are three leading international arbitral bodies operating in the United States: The American Arbitration Association’s international division, the International Centre for Dispute Resolution (ICDR), the International Institute for Conflict Prevention and Resolution (CPR), and the International Chamber of Commerce (ICC) each have offices in New York City. Other arbitral institutions, such as the London Court of International Arbitration, can administer US-seated proceedings from their offices outside the United States.

      Each of these institutions can appoint arbitrators depending on the specific terms of the arbitration agreement. 

  5. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?
    1. Yes. The International Chamber of Commerce’s Court of International Arbitration operates in the United States through an affiliated office in New York City. Other foreign providers can administer proceedings with US seats from their offices elsewhere.

  6. 6.Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with the law and practice of international arbitration?
    1. Courts are very familiar with international arbitration and have recognized that the FAA favours the use of arbitration. See Southland Corp. v. Keating, 465 U.S. 1, 10 (1984). Consistent with this policy, US courts generally construe agreements for arbitration broadly. 

      There are no specialist federal courts dedicated to international arbitration. Some states – like Florida – have set up specialist arbitration courts, while others – like New York – offer dedicated judges. While there is no specialised court in Delaware, the Rapid Arbitration Act provides special procedural rules for certain arbitrations to provide for much speedier resolution of disputes (arbitration must be completed within 120 days). 

    Agreement to arbitrate

  7. 7.Formalities
    What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?
    1. The only requirements for enforceability of an arbitration agreement under United States law are that an agreement to arbitrate exists and that it is memorialised in writing. The FAA provides procedures for the enforcement of both agreements to arbitrate and awards.

      Although a written agreement is required to enforce an agreement to arbitrate, the FAA does not clearly require a written agreement for judicial enforcement of an award and there is precedent for enforcing an award arising from a proceeding based on an oral arbitration agreement. See Magness Petroleum Co. v. Warren Resources of California, 103 Cal. App. 4th 901, 908 (Cal. Ct. App. 2002). See response to question 37.

      Because arbitration agreements are a matter of contract, the parties may (and commonly do) agree to commit future disputes to arbitration. 

  8. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?
    1. All types of private disputes are typically arbitrable in the United States. While the Supreme Court has held that Congress could make clear in a federal statute that private claims under it cannot be arbitrated, the Supreme Court has yet to identify any such statute and has instead determined that parties may arbitrate claims under many important federal statutes. See Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1987) (compelling arbitration of Securities Exchange Act and civil Racketeer Influenced and Corrupt Organizations Act claims).

  9. 9.Third parties
    Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?
    1. Persons who have not agreed to submit to arbitration generally cannot be compelled to arbitrate except in limited circumstances, such as in cases of alter ego, assumption, or estoppel. See Merrill Lynch Inv. Mgrs. v. Optibase, Ltd., 337 F.3d 125, 129 (2d Cir. 2003) (explaining standard and granting preliminary injunction to prevent arbitration involving non-signatory). Estoppel of an unwilling non-signatory requires a substantial showing. Recently, the New York Court of Appeals explained that "the mere existence of an agreement with attendant circumstances that prove advantageous to the nonsignatory would not constitute the type of direct benefits justifying compelling arbitration by a non-party to the underlying contract" Matter of Belzberg v. Verus Invs. Holdings, 21 N.Y.3d 626, 635 (N.Y. 2013). Instead, courts should only allow arbitration by estoppel where "the benefit gained by the no signatory is one that can be traced directly to the agreement containing the arbitration clause." Id.

      See the response to question 11 for additional information.

  10. 10.Consolidation
    Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?
    1. The availability of consolidation of separate proceedings is unusual, and will depend on whether the arbitration agreement is interpreted to authorise it. Whether the decision lies with a judge or an arbitrator is unsettled.

      Some courts have determined that where an agreement makes reference to a specific arbitration institution’s rules, the agreement evinces an intent to have an arbitrator determine the question of consolidation. Both the CPR and ICDR Rules permit consolidation if the claims arise from the same arbitration agreement or the same legal relationship.

      It is best practice to address explicitly the availability of consolidation in the arbitration agreement. An agreement’s clear prohibition on class or consolidated arbitration cannot be disturbed. See AT&T Mobility v. Concepcion, 563 U.S. 333 (2011).

  11. 11.

    Groups of companies
    Is the "group of companies doctrine" recognised in your jurisdiction?

    1. Courts can "pierce the corporate veil" to permit arbitration against a non-signatory but "should be wary of imposing a contractual obligation to arbitrate on a non-contracting party". Merrill Lynch Inv. Mgrs. v. Optibase, Ltd., 337 F.3d 125, 131 (2d Cir. 2003).

      The requirements for piercing the corporate veil in the United States vary by state, but typically are stringent. It is not enough to show "a mere parent-subsidiary relationship". Zurich American Ins. v. Watts Indus., 417 F.3d 682, 688 (7th Cir. 2005). 

  12. 12.Separability
    Are arbitration clauses considered separable from the main contract?
    1. Yes, an arbitration agreement is severable from the remainder of the contract. Buckeye Check Cashing v. Cardegna, 546 U.S. 440, 445 (2006). 

  13. 13.Competence-competence
    Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
    1. In the United States, competence-competence refers to the arbitrator’s power to determine arbitrability. A party to an arbitration may ask courts to determine the arbitration tribunal’s jurisdiction and competence if the parties did not agree to submit the arbitrability question to the arbitrator. Where parties have unmistakably agreed to submit questions of arbitrability to the arbitrator, courts should give ‘considerable leeway’ to the arbitrator’s determination of the scope of arbitration; if the agreement is silent, courts determine the jurisdiction of the arbitrator. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943–44 (1995). Some courts have found that incorporation of institutional rules conferring this authority upon the arbitrator meets this requirement. See Terminex Intern. Co. v. Palmer Ranch Ltd., 432 F.3d 1327 (11th Cir. 2005).

  14. 14.Drafting
    Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?
    1. As also discussed in the responses to questions 7, 37, 41, and 42, there are few formalities required for arbitration agreements and limited grounds to set aside arbitration awards in the United States. Most critically for the purposes of drafting, parties should ensure that the proceedings comport with due process requirements by calling for a fair process before an impartial and capable tribunal; a clause that invokes an acknowledged set of procedural rules will satisfy this requirement.

  15. 15.Institutional arbitration
    Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?
    1. Both institutional and ad hoc arbitrations are common in the United States; although reliable data on this issue is not readily available, ad hoc (self-administered) arbitrations are likely more common in domestic disputes. UNCITRAL Rules commonly apply to ad hoc international arbitrations seated in the United States, but other non-administered rules may also be selected, such as CPR’s Non-Administered Arbitration Rules.

  16. 16.Multi-party agreements
    What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.
    1. The Global Arbitration News Practical Guide to Multi-Party Arbitrations offers helpful drafting suggestions that are applicable to international arbitration in the United States, available at: https://globalarbitrationnews.com/multi-party-arbitrations-a-practical-guide-20150928/.

      Where parties have separate bilateral arbitration agreements, the clauses in each contract should be as similar as possible and should include clauses consenting to consolidation. A single agreement in which all parties are signatories, like an umbrella agreement, is the best way to ensure multi-party arbitration.

      To appoint arbitrators, parties may choose to leave the designation of all arbitrators to the arbitral tribunal. However, parties can also agree that, if all claimants and all respondents can agree, each group of parties will nominate one arbitrator as is common in bilateral arbitration. The latter option may provide more choice to parties, but could also create conflict among similarly situated parties.

    Commencing the arbitration

  17. 17.Request for arbitration
    How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?
    1. If the arbitration agreement or applicable arbitral rules specify the method for commencing an arbitration, parties must commence the arbitration as specified. Under both CPR and ICDR rules, commencement of an arbitration begins when the claimant provides written notice (including through an electronic filing system) to the arbitral institution and to the respondent.

      If the agreement is silent on the means of commencement of the proceeding and also fails to designate an applicable set of procedural rules, the procedural laws of the state where the proceeding is to take place will apply.

      Courts will enforce a contract’s temporal limitation that specifies a deadline by which parties can bring claims. Note, however, that many states restrict the ability of parties to enlarge the limitations periods applicable to various state-created claims (including breach of contract), so any contractual provision that sets a time limit should be checked for enforceability under state law. Typically, however, arbitration clauses do not include limitations provisions and the parties must look to relevant state laws and the relevant arbitral rules to identify the limitation period(s), which can vary according to the specific claim(s) asserted in the arbitration. For example, Financial Industry Regulatory Authority Rule 12206(a) bars parties from bringing an arbitration more than six years after the occurrence or event giving rise to the claim.

    Choice of law

  18. 18.Choice of law
    How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
    1. Parties are free to specify the controlling substantive law in their contracts, and courts will generally honour such agreements. When the parties have not agreed, the tribunal will apply such laws as it determines to be appropriate. The tribunal may look to the applicable choice of law rules in the jurisdiction in which it sits; in most states, the tribunal will most likely apply the law of the jurisdiction with the most significant contacts and relationship to the controversy. See Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 394 (2d Cir. 2001). Note that if a contract subject to the United Nations Convention on Contracts for the International Sale of Goods (CISG) does not expressly disclaim the applicability of that convention, many U.S. courts will apply the CISG even if the contract expressly specifies the law of a particular state. See BP Oil Intern. v. Empresa Estatal Petroleos de Ecuador, 332 F.3d 333, 337 (2d Cir. 2003).

    Appointing the tribunal

  19. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?
    1. There are generally no restrictions concerning a party’s choice of arbitrator other than the requirements of independence and impartiality. The FAA provides that an arbitration award may be vacated on the ground of partiality of one or more or the arbitrators. For this reason, arbitral institutions require prospective arbitrators to disclose potential conflicts. Courts have also refused to compel arbitration or vacated arbitration awards involving an arbitrator-selection process deemed unfair. See Murray v. United Food & Comm. Works Int’l Union, 289 F.3d 297, 302-03 (4th Cir. 2002).

  20. 20.Foreign arbitrators
    Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?
    1. Non-US nationals can act as arbitrators for proceedings held in the United States, so long as they comply with applicable immigration (visa) requirements. 

  21. 21.Default appointment of arbitrators
    How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?
    1. Arbitral institution rules include default procedures for the appointment of arbitrators. Under both the FAA and some states’ laws, courts are authorised to appoint an arbitrator when the arbitration agreement is silent as to the appointment of arbitrators and the parties cannot agree on a method of appointment. 

  22. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
    1. Arbitrators have immunity from civil liability for acts “which aris[e] out of their arbitral functions in contractually agreed-upon arbitration hearings”. Wasyl v. First Boston Corp., 813 F.2d 1579 (9th Cir. 1987). This arbitral immunity is generally considered absolute, though some courts have declined to extend immunity to purely administrative functions. See, eg, Pfannenstiel v. Merrill Lynch, Pierce, Fenner & Smith, 477 F.3d 1155, 1159 (10th Cir. 2007). Arbitral institutional rules also confer immunity.

  23. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
    1. The FAA is silent on security for fees; typically, administering arbitral institutions obtain advance deposits from the parties that secure payment of the arbitrators’ fees and expenses as well as the institution’s costs. The rules of some arbitral institutions authorise the tribunal to require the parties to provide security for costs and awards. 

    Challenges to arbitrators

  24. 24.Grounds of challenge
    On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?
    1. A party may challenge an arbitrator for lack of impartiality or independence; under the FAA an award will be vacated if “evident partiality” is shown. 9 U.S.C. § 10. Arbitral institutions and the courts consider the IBA Guidelines on Conflicts of Interest in International Arbitrations, and arbitrators also rely on them in making disclosures and deciding whether to serve. Arbitral institutions decide a party’s challenge to an arbitrator. ICDR article 14; CPR Rule 5.4. CPR typically convenes a “challenge committee” comprised of experienced neutrals to adjudicate challenges. The courts consider challenges in the context of proceedings to vacate an award. The federal circuit courts disagree on how to apply the FAA’s “evident partiality” standard – none requires proof of “actual bias” but some (as in California) find “an impression of possible bias” sufficient while others (as in New York) require proof that one would ‘have to conclude the arbitrator was partial”. See Ometto v. ASA Bioenergy Holding A.G., 2013 WL 174259, at *3 (S.D.N.Y. Jan. 9, 2013), aff’d, 549 F. App’x 41 (2d Cir. 2014). 

    Interim relief

  25. 25.

    Types of relief
    What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

    1. Although the FAA is silent on interim relief (other than to compel arbitration or stay litigation pending arbitration), some state laws authorise courts to grant such relief. Arbitral institution rules also include procedures for the award of interim relief.

      However, unlike courts in many jurisdictions, federal courts in the United States lack the authority to issue a blanket freezing order enjoining a party from disposing of assets in anticipation of a future judgment, though they may order the attachment of particular assets within the jurisdiction as permitted by state law. See Grupo Mexicano de Desarrollo v. Alliance Bond Fund, 527 U.S. 308, 333 (1999).

      Notably, parties may waive their right to arbitrate if their use of the court system demonstrates an intent not to arbitrate. See In re Pharm. Benefit Managers Antitrust Litig., 700 F.3d 109, 117-18 (3d Cir. 2012). Such waiver is not lightly inferred and generally would not include seeking injunctive relief in court in aid of arbitration.

  26. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?
    1. The FAA is silent on security for costs. However, most arbitral institution rules permit either the institution or the arbitrators to require the parties to provide security for costs.

    Procedure

  27. 27.

    Procedural rules
    Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

    1. The FAA does not include rules governing the conduct of the arbitration. Some states have adopted rules governing the conduct of the arbitration, but these rules permit parties to agree otherwise.

      Parties generally agree to the rules governing the conduct of the arbitration by contract and adopt the procedural rules promulgated by an arbitral institution.

      In the absence of agreement or procedures dictated by state law, the tribunal will be responsible for determining the conduct of the proceeding. 

  28. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
    1. When one party refuses to participate in an arbitration, the other party can obtain a court order to compel arbitration under the FAA. Arbitral institution rules also provide for default awards. Typically, a tribunal will entertain an abbreviated presentation of evidence by the participating party establishing its claim before entering a default award.

  29. 29.

    Admissible evidence
    What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

    1. Generally, formal rules of evidence are not followed and arbitrators have broad discretion to determine the scope and form of admissible evidence. The IBA Rules on the Taking of Evidence are often relied upon for guidance, although some US arbitrators will also be guided by the Federal Rules of Evidence. Evidence is typically taken in the form of documentary exhibits and witness testimony provided at a live hearing, though direct examination is frequently provided by written statement. Where warranted, witnesses may testify by telephone or videoconference. 

  30. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?
    1. Courts will enforce subpoenas issued by a tribunal for the production of documents and the attendance of witnesses at an evidentiary hearing. Arbitrators’ subpoena power is usually limited to those witnesses who could be served with a subpoena under the rules applicable in federal court, which is restricted by geographic scope. 

  31. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
    1. See the response to question 30. Whether arbitrators may issue subpoenas to non-parties for the pre-hearing production of documents varies by federal circuit; some tribunals will exercise their discretion to facilitate pre-hearing disclosure by scheduling a separate "hearing" in advance of the evidentiary hearing for the purpose of allowing a party to compel by subpoena the production of documents or testimony from a non-party witness. 

  32. 32.Hearings
    Is it mandatory to have a final hearing on the merits?
    1. No. Occasionally, tribunals enter final awards without an evidentiary hearing when they are persuaded that there are no disputed material factual issues. Dispositive, pre-hearing final awards are not common, in part because they may be challenged on the ground that the losing party was not afforded the right to present its position adequately. 

  33. 33.

    Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

    1. The FAA is silent on the location of hearings and meetings. Tribunals typically will conduct hearings in the location specified by contract, although it is common that tribunals will conduct hearings elsewhere at the request of the parties or pursuant to the discretion typically afforded tribunals under applicable procedural rules. 

    Award

  34. 34.Majority decisions
    Can the tribunal decide by majority?
    1. Yes.

  35. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
    1. In general, the FAA and state law do not limit a tribunal’s ability to award various types of relief. The availability of remedies is not affected by the absence of specific reference to remedies in the arbitration clause. However, tribunals will typically be bound by contractual provisions that expressly limit or restrict the amount or type of damages that may be awarded, since such provisions are enforceable under the laws of most states. 

  36. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
    1. Dissenting opinions are permitted; since most arbitral awards are confidential, there is no reliable data on the frequency of dissents but they are generally viewed as uncommon.

  37. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?
    1. The FAA does not specify the form of an arbitration award. However, awards must comply with the applicable rules of the arbitration. Under the CPR and ICDR rules, awards must be made in writing and state the reasoning on which the award rests. Several states, including New York, also require that awards are signed and affirmed by the arbitrator(s). It is also prudent for an award to be dated and indicate the seat of the arbitration. Also see responses to question 7 and 14.

  38. 38.Time frames
    What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?
    1. Under the FAA, a party seeking to vacate, modify, or correct an arbitration award must bring the petition in the district where the award was made within three months of the issuance of the award. The prevailing party has one year to seek to confirm an award.

      Arbitral institution rules generally set deadlines for requests to the tribunal correct or interpret an award. The CPR Rules require such requests within 20 days after issuance, while the ICDR allows 30 days. 

    Costs and interest

  39. 39.

    Costs
    Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

    1. Under the "American" rule, each party bears its own costs, absent some contractual or statutory basis for fee-shifting. Many arbitration rules, such as the CPR and ICDR rules, permit the tribunal to apportion costs and legal fees in its discretion. 

  40. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?
    1. Arbitrators may award interest. Absent an interest rate specified in the agreement, a tribunal may award interest at the prejudgment rate of the state in which it sits, which varies state to state, ranging from variable rates as low as 2 per cent to a fixed rate of 12 per cent. A tribunal may also award interest at a different rate, such as the cost of capital of the defendant, up to the date the award is converted into a judgment. After that point, in federal court, interest is set at the federal courts’ post-judgment rate. 28 U.S.C. § 1961. 

    Challenging awards

  41. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
    1. US courts apply a strong policy of enforcing arbitration awards without substantive review. The grounds for attacking or setting aside an arbitration award under the FAA are viewed as very narrow: (i) corruption or fraud; (ii) evident partiality; (iii) lack of due process (such as failure to postpone a hearing for good cause or refusal to hear pertinent evidence); or (iv) where the tribunal exceeded the scope of its authority. Parties cannot agree to expand the scope of the review provided by the FAA. 

  42. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?
    1. Although US courts had for many years included “manifest disregard of the law” as a ground upon which to reverse an award, the US Supreme Court in Hall Street Assocs. v. Mattel, Inc., 552 U.S. 576(2008), cast doubt on the continued viability of this doctrine, suggesting that awards can only be challenged on the grounds discussed in the response to question 41. 

  43. 43.Modifying an award
    Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
    1. US courts are reluctant to enforce contractual provisions that would prevent a district court from considering whether to vacate an arbitration award. At least one circuit court has held, however, that parties may agree to waive any appeal to a court of appeals from the district court’s judgment confirming or vacating an arbitration award. Mactec, Inc. v. Gorelick, 427 F.3d 821 (10th Cir. 2005). 

    Enforcement in your jurisdiction

  44. 44.Enforcement of set-aside awards
    Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
    1. On at least two occasions a US court has confirmed an award set aside at the seat. See Corporación Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex–Exploración Y Producción, 832 F.3d 92, 105 (2d Cir. 2016); In Re Chromalloy Aeroservices and the Arab Republic of Egypt, 939 F. Supp. 906 (D.C. Cir. 1996). At least one US circuit court has clarified that a foreign award can be enforced in the US without any attempt to obtain confirmation at the seat. See CBF Industria de Gusa S/A v. AMCI Holdings, 850 F.3d 58 (2d Cir. 2017).

  45. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
    1. The trend among US businesses to expand the use of arbitration in consumer agreements and to include prohibitions on class actions continues to be controversial. In 2017, the Supreme Court agreed to hear two appeals to decide the issue of the enforceability of class action waivers in arbitration clauses contained in employment agreements, though those cases will turn on federal labour laws. 

      Another trend focuses on whether a court needs to have personal jurisdiction over a party before it can enforce an arbitration award issued against that party. 

  46. 46.State immunity
    To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
    1. A foreign state’s arbitration agreement and conduct throughout the arbitration will determine its ability to raise a defense of sovereign immunity in the courts.

       

      Section 1605(a)(1) of the Foreign Sovereign Immunities Act (FSIA) grants federal district courts jurisdiction over foreign states in cases in which immunity is expressly or impliedly waived. Federal courts have found that a foreign state’s agreement to arbitrate in the United States allows a court to compel arbitration. Likewise, most courts have found that a foreign state’s agreement to arbitrate in a New York Convention signatory state is an implied waiver of immunity. Finally, courts have held that participating in an arbitration by filing a responsive pleading impliedly waives sovereign immunity. Raising an immunity defence for the first time at the enforcement stage will therefore be ineffective.

    Further considerations

  47. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?
    1. Generally, arbitral institutions treat the proceeding as confidential, and will require the arbitrators to do the same. The rules of some arbitral institutions may also obligate the parties to keep the proceedings confidential but many do not; consequently, parties can – and often do – enter into confidentiality agreements to ensure the confidentiality of the arbitral proceeding and pleadings, exhibits and information supplied in connection with it.

      However, post-award judicial proceedings to confirm or vacate will likely make the award public, along with some portions of the record. Also, publicly held companies will be obligated by securities laws to disclose aspects of the arbitration proceeding if it is material to their financial condition or performance.

  48. 48.Evidence and pleadings
    What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?
    1. See the response to question 47. In US courts, all litigation papers filed with the court (including post-arbitration award proceedings) are publicly available except in exceptional circumstances. Once evidence or pleadings have become public, they can be used in other proceedings.

  49. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
    1. Ethical standards for lawyers vary by state, though state rules are based on the American Bar Association’s model rules. The ABA Model Rule of Professional Responsibility 5.5 provides that an out-of-state lawyer may appear in an arbitration if the representation is ‘reasonably related’ to the lawyer’s practice in the lawyer’s home jurisdiction.

      ABA Model Rule 8.5 provides that: (i) for conduct in connection with a matter before a tribunal, the ethical rules of the geographic location of the tribunal govern, and (ii) for any other conduct, the rules of the jurisdiction where the attorney’s conduct occurred or where the “predominant effect of the conduct” applies.

      Arbitrators who are lawyers remain subject to the ethical rules of the state by which they are licensed, including rules applicable to lawyers acting as arbitrators. Moreover, the American Arbitration Association has issued a Code of Ethics for Arbitrators in Commercial Disputes, which has been endorsed by CPR. 

  50. 50.Procedural expectations
    Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?
    1. There is a perception that US arbitrators are more likely to permit more expansive document disclosure than arbitrators from other countries because broad disclosure of documents is the norm in litigation proceedings in the US. However, arbitrators serving in international arbitrations seated in the US are cognisant of the norms in that arena and typically will be guided by the more restrictive disclosure practice set out in the IBA Rules for the Taking of Evidence in International Commercial Arbitrations. 

  51. 51.

    Third-party funding
    Is third-party funding permitted in your jurisdiction?

    1. The permissibility of third-party funding in the US is in flux but trending in favour of allowing the practice. Many states still prohibit champerty (and barratry and maintenance) by statute, which if literally applied would prohibit third-party funding of litigation by proscribing the spurring of lawsuits and the sharing of the proceeds of lawsuits with someone who lacks a legal interest in the dispute. But several states have eliminated such statutes and the courts in others, such as New York, have chosen to apply them narrowly with the result that third-party litigation funding is increasing in the US. Parties and third-party funders must also be cognisant of potentially relevant ethical rules, including conflicts of interest and preservation of attorney–client privilege.

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GAR know-how provides reliable cross-jurisdictional insight to help cement the building blocks of international practice. In this section, select experienced practitioners answer commonly asked questions for key jurisdictions so allowing readers to be better-placed to solve the challenges of their working days.

Questions

    Infrastructure

  1. 1.The New York Convention
    Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?
  2. 2.Other treaties
    Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?
  3. 3.National law
    Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?
  4. 4.Arbitration bodies in your jurisdiction
    What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?
  5. 5.Foreign institutions
    Can foreign arbitral providers operate in your jurisdiction?
  6. 6.Courts
    Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with the law and practice of international arbitration?
  7. Agreement to arbitrate

  8. 7.Formalities
    What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?
  9. 8.Arbitrability
    Are any types of dispute non-arbitrable? If so, which?
  10. 9.Third parties
    Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?
  11. 10.Consolidation
    Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?
  12. 11.

    Groups of companies
    Is the "group of companies doctrine" recognised in your jurisdiction?


  13. 12.Separability
    Are arbitration clauses considered separable from the main contract?
  14. 13.Competence-competence
    Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
  15. 14.Drafting
    Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?
  16. 15.Institutional arbitration
    Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?
  17. 16.Multi-party agreements
    What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.
  18. Commencing the arbitration

  19. 17.Request for arbitration
    How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?
  20. Choice of law

  21. 18.Choice of law
    How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
  22. Appointing the tribunal

  23. 19.Choice of arbitrators
    Does the law of your jurisdiction place any limitations in respect of a party’s choice of arbitrator?
  24. 20.Foreign arbitrators
    Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?
  25. 21.Default appointment of arbitrators
    How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?
  26. 22.Immunity
    Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?
  27. 23.Securing payment of fees
    Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?
  28. Challenges to arbitrators

  29. 24.Grounds of challenge
    On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?
  30. Interim relief

  31. 25.

    Types of relief
    What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?


  32. 26.Security for costs
    Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?
  33. Procedure

  34. 27.

    Procedural rules
    Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?


  35. 28.Refusal to participate
    What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?
  36. 29.

    Admissible evidence
    What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?


  37. 30.Court assistance
    Will the courts in your jurisdiction play any role in the obtaining of evidence?
  38. 31.Document production
    What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?
  39. 32.Hearings
    Is it mandatory to have a final hearing on the merits?
  40. 33.

    Seat or place of arbitration
    If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?


  41. Award

  42. 34.Majority decisions
    Can the tribunal decide by majority?
  43. 35.Limitations to awards and relief
    Are there any particular types of remedies or relief that an arbitral tribunal may not grant?
  44. 36.Dissenting arbitrators
    Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?
  45. 37.Formalities
    What, if any, are the legal and formal requirements for a valid and enforceable award?
  46. 38.Time frames
    What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?
  47. Costs and interest

  48. 39.

    Costs
    Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?


  49. 40.Interest on the award
    Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?
  50. Challenging awards

  51. 41.Grounds for appeal
    Are there any grounds on which an award may be appealed before the courts of your jurisdiction?
  52. 42.Other grounds for challenge
    Are there any other bases on which an award may be challenged, and if so what?
  53. 43.Modifying an award
    Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
  54. Enforcement in your jurisdiction

  55. 44.Enforcement of set-aside awards
    Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
  56. 45.Trends
    What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?
  57. 46.State immunity
    To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
  58. Further considerations

  59. 47.Confidentiality
    To what extent are arbitral proceedings in your jurisdiction confidential?
  60. 48.Evidence and pleadings
    What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?
  61. 49.Ethical codes
    What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
  62. 50.Procedural expectations
    Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?
  63. 51.

    Third-party funding
    Is third-party funding permitted in your jurisdiction?