Issues of Arbitrability in Telecoms Arbitrations

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The functioning of telecommunications networks is not only a matter of private commercial interest. Telecommunications ensure and facilitate economic activity, security and social interactions. The importance of telecommunications is reflected in the high regulation of the industry. In this context, it is relevant to consider whether the public interests at stake have implications for the arbitrability of telecommunications disputes.

In this chapter, we consider the nature of arbitrability and considerations of applicable law, the arbitrability of some key areas that may arise in telecommunications disputes, and the implications of Achmea[2] and EU law.

Arbitrability

Arbitrability, as stated in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention), relates to the question of whether a dispute is ‘concerning a subject matter capable of settlement by arbitration’.[3] A subject matter is not capable of settlement by arbitration where it is reserved for determination by a court, to the exclusion of arbitration.[4] This is also referred to as ‘objective arbitrability’, as opposed to ‘subjective arbitrability’, which relates to the capacity of parties to submit a dispute to arbitration.[5]

The question of whether a matter has been reserved for determination by a court must be answered by reference to national law, as it is for each country to determine those matters that should be resolved exclusively by a court or other tribunal.[6] There is no ‘autonomous’ concept of arbitrability that applies internationally.[7] Typical types of disputes that may be considered non-arbitrable to varying degrees in different jurisdictions are those where it is considered that the state has a monopoly, or concerning rights in rem that are enforceable against third parties or the world at large. This may include criminal matters, matters affecting personal status, insolvency, employment disputes and certain types of intellectual property (IP) matters.

Over time, the scope of subject matters that are considered to be non-arbitrable as a whole has reduced, diminishing the effect of arbitrability as a doctrine.[8] Already in 2009, one commentator declared that the concept of arbitrability ‘has virtually died in real arbitral life’.[9] As a result, it is no longer helpful to speak of entire subject matters that are not capable of being arbitrated. It is more accurate to consider whether the exercise of jurisdiction by an arbitral tribunal in relation to the claims made in a specific case would conflict with the exclusive jurisdiction of a court or other competent authority under applicable law.[10]

In addition, when deciding on arbitrability, many courts draw a distinction between domestic and international cases, since the rationale of exclusive judicial determination does not apply in the same way to domestic and international disputes.[11] This further limits the types of international disputes considered to be non-arbitrable.

Although public policy considerations often underpin national laws limiting the arbitrability of certain types of disputes, public policy is a separate ground for the setting aside of arbitral awards under the United Nations Commission on International Trade Law, Model Law on International Commercial Arbitration (the UNCITRAL Model Law) and for refusal of enforcement under the New York Convention.[12] Indeed, some commentators are of the view that public policy considerations are now of limited relevance to the issue of arbitrability.[13]

Courts in some jurisdictions treat arbitrability as a condition of validity of an arbitration agreement,[14] while others consider it a requirement for the jurisdiction of the arbitral tribunal.[15] Some jurisdictions mix these two approaches, depending on the circumstances of the case.[16] This will affect whether an issue of arbitrability is referred for decision by the arbitral tribunal or if arbitration is refused by the court.

In general, the question of the contractual validity of an arbitration agreement is separate to arbitrability of a subject matter, and is dealt with separately under the UNCITRAL Model Law and the New York Convention.[17] A finding of invalidity of the arbitration agreement is determined by reference to rules of contract formation and validity, resulting in an arbitration agreement that is invalid for all types of disputes.[18] A finding of non-arbitrability of a dispute, on the other hand, may be based on an arbitration agreement that is otherwise valid for different types of disputes.[19]

Applicable law

In an international arbitration, the key question is which national law applies to determine the arbitrability of the dispute. The answer may depend on who is being asked the question and at which stage of the proceedings.[20]

The New York Convention provides that, for foreign awards, the question of arbitrability at the enforcement stage is to be answered by reference to the law of the forum (‘[t]he subject matter of the difference is not capable of settlement by arbitration under the law of that country’).[21] In proceedings to set aside an award, the UNCITRAL Model Law mirrors the language of the New York Convention: an arbitral award may be set aside if the competent court finds that the ‘the subject matter of the difference is not capable of settlement by arbitration under the law of that country’.[22]

Although other views are possible,[23] it is generally accepted that the law of the forum also applies to determine arbitrability at the stage of referral to arbitration by a court, even if Article II(1) of the New York Convention does not expressly state as much.[24] It has also been argued that the referring court should refrain from applying its own law to determine arbitrability unless the exclusive jurisdiction of their national courts conflicts with the jurisdiction of the tribunal in that case. According to this view, the matter can be decided by the tribunal as a matter of enforceability of the award.[25]

When arbitral tribunals are faced with questions of arbitrability, many favour an assessment by reference to the law of the seat, to protect the award from being set aside in that jurisdiction.[26] This approach is convincing for maintaining the distinction between contractual validity of the arbitration agreement and the jurisdictional question of the arbitrability of the subject matter. A related approach that has been advocated is for arbitral tribunals to determine (1) whether the dispute is non-arbitrable under the law of the seat, but only to the extent that there would be a conflict with the exclusive jurisdiction of the courts of the seat that would apply to the specific dispute before the tribunal, and (2) whether an arbitral award is able to successfully dispose of the dispute, based on the inherent or practical limitations of arbitration.[27] Others have argued that the law governing the arbitration agreement (and, therefore, its validity) should apply to the question of arbitrability.[28]

The question remains whether an arbitral tribunal can and should have regard to other mandatory law that provides that the dispute is non-arbitrable outside the law of the seat or the law governing the arbitration agreement. This could arise under the national law where the contract is performed, the law of a place of potential enforcement of the award, the law of the jurisdiction in which IP is registered, or under another law applicable to the parties.

Arbitrability issues by subject matter

Given the broad range of potential telecommunications disputes, there are a number of potentially relevant subject matters to consider from the perspective of arbitrability. Below we consider arbitrability issues arising in relation to:

  • the subject matter of telecommunications itself;
  • IP disputes;
  • competition law disputes;
  • consumer protection disputes;
  • data protection disputes; and
  • disputes related to other new services and technology.

Telecommunications disputes

In general, the fact that the subject matter of a dispute relates to telecommunications will not affect its arbitrability. In specific types of telecommunications disputes, however, arbitrability can come into play owing to state control of telecommunications networks and important policy considerations at stake, leading national authorities to reserve particular matters for decision by public authorities.[29] To ensure healthy competition and liberalisation in the sector, it is not uncommon for national legislation to provide for regulatory adjudication of certain types of telecommunications disputes, such as network access or interconnection disputes.[30] Such legislation may also encourage or require other methods of dispute resolution, including arbitration. Arbitration schemes can take a range of forms. They may closely resemble a typical private commercial arbitration procedure, or may be less recognisable, with regulatory officials acting as arbitrators or overseeing the appointment of arbitrators, and publication of decisions.[31] The importance of regulatory disputes in the telecommunications sector was confirmed in the 2016 Queen Mary International Dispute Resolution Survey on ‘Pre-empting and Resolving Technology, Media and Telecoms Disputes’ (the 2016 Queen Mary Survey), which found that telecommunications disputes tend to relate to the regulated market.[32]

Exceptionally, regulatory or administrative dispute resolution in the sector may raise arbitrability issues for telecommunications disputes more broadly. In India, for example, the Telecommunications Dispute Settlement and Appellant Tribunal (TDSAT) has broad and exclusive powers to adjudicate certain types of disputes, including those arising between private parties.[33] This has raised questions about the arbitrability of telecommunications disputes in India, as well as disputes in other sectors where similar statutory tribunals have been established. With some exceptions,[34] Indian courts (and the TDSAT itself) have generally found telecommunications disputes to be non-arbitrable on the basis that the establishment of special tribunals overrides the more general Arbitration Act.[35] The Indian approach to non-arbitrability appears out of step with the general trend elsewhere of its diminishing role.[36]

Intellectual property

IP includes copyright, patents, trademarks, industrial designs, geographical indications and trade secrets.[37] The protection of IP rights is significant in the telecommunications sector. In the 2016 Queen Mary Survey, IP disputes were the most common type of dispute reported to have been encountered by respondents in the telecommunications sector.[38]

Certain types of IP disputes have historically been considered non-arbitrable in many jurisdictions. This is because they implicate rights over which the state holds a monopoly and that are often treated as enforceable against third parties and the world at large (right in rem) as opposed to only being enforceable against a contractual counterparty (right in personam).[39] Accordingly, in some cases, patents may be issued, revoked or invalidated only by a national authority. Based on this desire to maintain public control over registers, in several jurisdictions it remains the case that courts or public authorities have exclusive jurisdiction over the validity of IP rights. In South Africa, for instance, arbitration of matters under the Patent Act is excluded.[40] In Germany, China and India, patent validity disputes are not arbitrable.[41]

In the United States, on the other hand, the arbitration of patent disputes, including patent validity and infringement, is explicitly permitted in the Patent Act.[42] In Switzerland and Belgium, disputes about registered IP are considered arbitrable and an arbitral award regarding the validity of an IP right can be reflected on the public register.[43]

In 1998, an International Chamber of Commerce (ICC) Report on Intellectual Property Disputes and Arbitration reported that, although arbitrability of IP disputes was no longer a serious issue in most countries, uncertainty remained in some jurisdictions.[44] In the two decades since that report, legal developments indicated even greater recognition of the arbitrability of IP disputes, and commentary continues to highlight the suitability of arbitration for IP disputes.[45] In France, Italy and England, courts have accepted the arbitrability of IP disputes, and legislative amendments in Singapore and Hong Kong explicitly confirm the same.[46] Nevertheless, divergences among jurisdictions on the arbitrability of IP disputes remain.

Where IP validity disputes are arbitrable, in many cases this is on the basis that the resulting arbitral award has inter partes effect only, and has no effect on the public registration of the IP, which can be altered only by the competent authority.[47] In this way, arbitral tribunals often may not declare the invalidity of an IP right but only its non-enforceability against the other party or parties to the arbitration.

The significance of these arbitrability issues in relation to IP disputes should not be overstated. In practice, arbitration of IP disputes, including in the telecommunications sector, is on the rise. In 2022, 548 mediation, arbitration, expedited arbitration and good offices requests were filed with the World Intellectual Property Organization (WIPO).[48] Issues relating to patents are the most common type of IP dispute in international arbitration.[49]

In addition to consideration of the law at the arbitral seat and the law governing the arbitration agreement, when analysing the arbitrability of IP disputes, it may be necessary to take into account the law of the country for which protection of the IP right is claimed (lex loci protectionis). On this issue, the ‘Kyoto Guidelines on Intellectual Property and Private International Law’ of the International Law Committee provide soft-law guidance on choice of law. According to Guideline 31, when assessing the arbitrability of an IP dispute, courts and arbitral tribunals should take into account:

the law of the arbitration [i.e., the lex arbitri], to the extent that the rights in dispute have a close connection with it, and that of the State of protection [i.e., the lex loci protectionis], particularly insofar as the award has to be recognized and enforced in that State.[50]

Having been adopted in December 2020, it remains to be seen what role the Kyoto Guidelines will play in decision-making by courts and tribunals in practice.

One important type of IP dispute in the telecommunications sector relates to FRAND (fair, reasonable and non-discriminatory) disputes for standard essential patents (SEPs). SEPs are patents that are essential to implement a standard set by standard-setting organisations and are common in the telecommunications sector. When adopting a standard, patent holders will be required to agree to license the IP on FRAND terms. Although there is not usually an existing contract between an SEP holder and a potential licensee, the submission of FRAND disputes to arbitration after a dispute has arisen has received growing attention, including guidance by WIPO on this type of dispute.[51] Arbitration as a method of resolving FRAND disputes was also implicitly endorsed by the Court of Justice of the European Union (CJEU) in Huawei Technologies Co Ltd v. ZTE Corp, which recognised that parties ‘may, by common agreement, request that the amount of the royalty be determined by an independent third party, by decision without delay’.[52]

Overall, the general trend is that IP disputes are arbitrable, with the preservation of the domain of official IP registers by reference to the limited inter partes effect of arbitral awards in disputes about the validity of IP rights. Due care is still required in telecommunications disputes concerning IP to ensure that the arbitral award respects applicable law in that respect.

Competition law

Telecommunications disputes may raise competition law issues. Key jurisdictions accept that competition law is arbitrable in international disputes,[53] and examples of jurisdictions in which such disputes are non-arbitrable are limited.[54] Landmark cases on competition law have been crucial in shaping the approach taken to other fields of mandatory law and eroding the hold of non-arbitrability in general.

In the 1985 decision of Mitsubishi Motors Corp v. Soler Chrysler-Plymouth, Inc, the US Supreme Court held that a dispute was arbitrable even if it involved competition claims, on the basis that US courts would have the opportunity at the award enforcement stage to take a ‘second look’ at the decision.[55] Similar to this second-look approach, in 1999 the Eco Swiss decision by the CJEU held that a national court reviewing an arbitration award in the context of an annulment application must annul the award where the court considers that the arbitration award is contrary to the prohibition on anticompetitive agreements, in the same way that would be the case for a failure to observe national rules of public policy.[56] Implicit in this decision is an acceptance of the arbitrability of disputes requiring the application of competition law.

These cases have paved the way for a similar approach to be taken in respect of other subject matters that would require a tribunal to apply mandatory law.

Consumer protection

Most telecommunications disputes encountered in international arbitration are business-to-business (B2B) disputes. Arbitral decisions in B2B telecommunications disputes may affect consumers without necessarily implicating consumer protection laws. Unless national regulation limits the opportunity to arbitrate a specific kind of telecommunications dispute (see the section on telecommunications subject matter, above), arbitration of B2B telecommunications disputes would not typically deal with consumer protection law in a manner that raises arbitrability concerns.

Insofar as telecommunications operators or other telecommunications businesses seek to arbitrate potential disputes with consumers, such business-to-consumer (B2C) disputes could raise arbitrability issues in some jurisdictions, especially to the extent that disputes are domestic.[57]

In the United States, B2C disputes are arbitrable and arbitration is widely adopted in agreements with consumers, with some fairness requirements.[58]

In Canada, B2C disputes are generally arbitrable; however, courts have held arbitration agreements invalid on a number of occasions on different bases.[59] Notably, in 2020, the Supreme Court of Canada held an arbitration agreement between Uber and its drivers to be invalid based on the doctrine of unconscionability. Although not a B2C dispute, the Court’s reasoning based on the unequal bargaining power between the parties and the onerous terms could be instructive in the B2C context.[60]

In Australia, B2C disputes are arbitrable in principle, and courts have not so far declared such a clause to be invalid on the basis of unfair contract terms or other consumer protection legislation.[61]

Under EU law, consumer protection law does not render B2C disputes non-arbitrable but does place strict limitations on the contractual validity of the arbitration agreement.[62] EU legislation on unfair terms in consumer contracts severely limits parties from resorting to B2C arbitration when it relates to a pre-dispute agreement to arbitrate or would limit access to the EU judicial system.[63] EU Member States have taken different approaches to implementation of this legislation. In France, for example, arbitration agreements cannot be enforced against consumers.[64] In Germany, an arbitration agreement with a consumer must be contained in a separate agreement personally signed by the parties.[65] In Belgium, the law is less strict as it does not prohibit arbitration clauses in B2C contracts. Rather, only those clauses in a B2C contract that contain a prohibition on consumers seeking redress against traders are considered to be abusive.[66] However, Belgian courts consider that consumers should have a choice between arbitration and litigation and, therefore, tend to invalidate pre-dispute clauses that contain an arbitration clause to the exclusion of the courts.[67]

The mandatory and public policy nature of EU consumer protection law was recognised in the CJEU decisions of Mostaza Claro (2006)[68] and Asturcom (2009).[69] Following the approach in Eco Swiss, these decisions held that courts must annul an arbitral award that does not comply with consumer protection law in the circumstances of the case. It also implicitly confirms, on the other hand, the arbitrability of such disputes in principle.[70]

The fact that the subject matter of consumer disputes is arbitrable in the European Union is further confirmed by official initiatives to arbitrate B2C disputes after a dispute has arisen, in compliance with EU law. In this regard, the European Union hosts an online platform that facilitates the resolution of consumer disputes by alternative dispute resolution, including arbitration.[71] Among the top 10 sectors that are the subject of consumer complaints on the platform, information and communication technology goods are the third (6.68 per cent of complaints) and mobile telephone services are the 10th (2.1 per cent of complaints).[72]

In the United Kingdom, existing law is largely inherited from EU law. Mandatory B2C arbitration agreements are automatically unfair and unenforceable to the extent that claims are £5,000 or less. For claims over that amount, the fairness and, therefore, enforceability of the arbitration agreement will be evaluated on the circumstances of each case.[73]

Data protection

In light of rapid technological developments and the huge amount of personal data collected in the context of telecommunications, it is foreseeable that telecommunications disputes will also increasingly implicate data protection matters. Although data protection laws are not new, the significance of data to a state’s economy is still a relatively recent phenomenon. Since the EU General Data Protection Regulation (GDPR)[74] came into effect in May 2018, multiple jurisdictions have followed with new or updated data protection laws.[75] It has not yet been settled how each jurisdiction will approach the arbitrability of data protection disputes, but much can be discerned from the approach to other laws.

In relation to a dispute under data protection law that arises between commercial parties, arbitrability is unlikely to be an issue. In many jurisdictions, the fact that mandatory laws may need to be applied by an arbitral tribunal does not mean that a dispute is incapable of being settled by arbitration. This is the case even if the mandatory law is not the law chosen by the parties to govern the contract, but another law that applies as a result of the place of performance of the contract or otherwise. The approach taken in the case of Mitsubishi Motors in the United States, or Eco Swiss in the European Union, is instructive in that arbitral tribunals can (and must, in the view of national courts) apply mandatory law applicable to a dispute even if it is not the law chosen to govern the contract.

It is also likely that at least in the European Union, and in other jurisdictions with strong data protection laws, data protection may be considered a matter of public policy. While outside the scope of this discussion on arbitrability, it should be taken into account in respect of the enforceability of an award.[76]

In jurisdictions where disputes involving the application of mandatory law have been held non-arbitrable, more caution regarding arbitrability is warranted. In particular, the treatment of the arbitrability of consumer protection law by courts in a given jurisdiction may indicate a likely approach to data protection, since it entails a similar context of protecting individual rights and those in a weaker bargaining position.

There may also be complexities arising from the fact that the processing of personal data often involves chains of actors and contractual arrangements. In this regard, the European Commission has approved Standard Contractual Clauses (SCCs), which are required to be used in certain circumstances for the transfer of personal data outside the European Union. The SCCs contain a number of formulations on governing law and choice of forum depending on the type of data transfer (controller to controller; controller to processor; or processor to processor).[77] To the extent that there are several agreements between the parties or covering the processing of personal data, the SCCs may affect the relevant laws to be taken into account for the assessment of arbitrability. In this regard, Clause 5 of the SCCs is entitled ‘Hierarchy’ and provides: ‘In the event of a contradiction between these Clauses and the provisions of related agreements between the Parties, existing at the time these Clauses are agreed or entered into thereafter, these Clauses shall prevail.’[78]

To the extent that a data protection dispute arises in the context of a B2C relationship, the considerations outlined above with respect to consumer protection equally apply. This may raise an issue of arbitrability in some jurisdictions, or contractual validity in others. Where consumer protection laws are not applicable or are complied with,[79] the subject matter of data protection itself is arbitrable in principle under EU law.[80] Under the GDPR, such a dispute could include a compensation claim for ‘material or non-material damage as a result of an infringement of this Regulation’.[81]

Also relevant to arbitrability is that data protection laws may contain specific statutory guarantees to individuals regarding the availability of remedies against data controllers. For example, Article 79(1) of the GDPR provides:

Without prejudice to any available administrative or non-judicial remedy . . . each data subject shall have the right to an effective judicial remedy where he or she considers that his or her rights under this Regulation have been infringed as a result of the processing of his or her personal data in non-compliance with this Regulation.

It has been suggested that this provision does not exclude parties from exercising their autonomy to resolve a data protection dispute by the ‘non-judicial remedy’ of arbitration.[82] Caution is warranted before assuming that data subjects under the GDPR can validly waive the right to a judicial remedy by agreeing to arbitration, especially in advance of a dispute arising.

New services and technology

Changes in the market for telecommunications have seen providers enter uncharted territory, seeking to take advantage of their subscriber bases and the availability of data. This has included ventures into mobile money, payment platforms, ‘ecosystems’ that may include news, entertainment and gaming, loan and credit services, e-commerce marketplaces, telehealth, internet of things, car insurance, satellites and the metaverse.[83]

The expansion of sectors in which telecommunications players participate will diversify the kinds of disputes that will arise. Some new sectors are also highly regulated; for example, financial services, health and insurance. This will not raise issues with arbitrability in most jurisdictions, but care is still necessary to determine any requirements or restrictions of mandatory law that may affect the validity of the arbitration agreement. This may arise from the law at the arbitral seat, the place of enforcement, under the governing law of the contract, the place of performance of the contract, or other law applicable to the parties.

Achmea and intra-EU disputes

Although not necessarily a matter of objective arbitrability, it is worth mentioning the effects of the CJEU’s Achmea judgment on parties’ ability to arbitrate intra-EU investment disputes in the telecommunications sector. In the 2018 Achmea decision, the CJEU held that an investor-state dispute settlement mechanism in a bilateral investment treaty has an adverse effect on EU law and is ‘precluded’ by the EU treaties.[84] This decision does not apply to commercial arbitration awards, which were expressly carved out by the CJEU.[85]

The CJEU later confirmed in Komstroy that intra-EU investment arbitration proceedings brought under the Energy Charter Treaty are, like bilateral investment treaties, also incompatible with EU law.[86] Likewise, it was held in PL Holdings that EU Member States are precluded from entering into ad hoc arbitration agreements with EU-based investors with identical content to an arbitration agreement contained in an intra-EU investment treaty.[87] The 2022 decision of the CJEU in the Micula case further held that, at the moment of Romania’s accession to the European Union, the system of judicial remedies provided for by the European Union treaties ‘replaced’ the arbitration procedure through the International Centre for Settlement of Investment Disputes (ICSID) that Romania had previously agreed under a bilateral investment treaty, invalidating Romania’s consent to the arbitration.[88]

In publicly reported decisions of arbitral tribunals and ICSID annulment committees to date, jurisdictional objections based on Achmea appear to have been largely unsuccessful, save for the decision in Green Power v. Spain, which was seated in Stockholm and conducted under the arbitration rules of the Stockholm Chamber of Commerce.[89] EU Member States have had greater success in their national courts, in fulfilment of their pledge to request the setting aside of such awards.[90] The French courts have set aside at least two arbitral awards as a result of the Achmea judgment. This was on the basis that the Member State’s consent to arbitration was contrary to EU law and, therefore, the tribunal lacked jurisdiction.[91] The German Federal Court of Justice set aside an intra-EU award on the basis of a lack of arbitration agreement, which it held to be equivalent to its invalidity.[92] German courts have also found intra-EU arbitrations to be inadmissible, even under the self-contained regime under the ICSID Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which typically does not provide for review by national courts.[93] The Swedish Supreme Court has issued decisions (1) holding the award in PL Holdings invalid on the basis of public policy, following the CJEU’s preliminary ruling in that case,[94] and (2) upholding the decision of the Svea Court of Appeal to set aside an intra-EU award on the basis of non-arbitrability.[95] The Lithuanian Supreme Court has already held that no valid arbitration existed in relation to an intra-EU ICSID arbitration.[96]

Outside the European Union, decisions have varied. In 2023, the High Court of England and Wales and the High Court of Australia separately recognised and enforced an intra-EU award in relation to the same underlying ICSID arbitration.[97] The US District Court of Colombia has taken different approaches to the application of Achmea in different cases leading to diverging results.[98]

Even though the question in these Achmea-related cases has more often been treated as one of validity of the arbitration agreement rather than arbitrability of subject matter, these decisions tie into the discussion on arbitrability as a matter of jurisdictional conflict. An explicit consideration in each of the CJEU’s decisions was that EU Member States (as opposed to private commercial parties) are not permitted to remove disputes from the judicial system of the European Union that may concern the application and interpretation of EU law. In the CJEU’s view, such removal would be inconsistent with the system of judicial remedies that the EU treaties requires the Member States to establish in the fields covered by EU law.[99]

In light of this perceived jurisdictional conflict with EU law, there are serious obstacles to EU telecommunications operators or other telecommunications investors seeking to arbitrate under an intra-EU bilateral investment treaty or the Energy Charter Treaty against an EU Member State, whether under the ICSID Convention, other institutional rules or ad hoc.

Conclusion

The non-arbitrability of specific subject matters is a concept with narrow relevance in jurisdictions with a developed practice of arbitration. In light of the diverse nature of telecommunications disputes and their ability to touch on issues that are either highly regulated or subject to a state monopoly, it remains relevant to monitor whether any arbitrability issues arise. Where arbitrability as such is not at stake, it may still be necessary to consider whether issues relating to public interest, public policy and mandatory laws affect the arbitration of a specific dispute.


Footnotes

[1] Emily Hay is counsel at Hanotiau & van den Berg.

[2] Slovak Republic v. Achmea B.V. (Case C-284/16), Judgment of 6 March 2018, ECLI:EU:C:2018:158 (Achmea).

[3] Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention), Articles II(1), V(2)(a). In the United States, a broader concept of non-arbitrability also captures (1) whether a dispute falls within the scope of an arbitration agreement and (2) whether an arbitration agreement is valid and enforceable. This contribution is based on the narrower understanding of arbitrability under the Convention.

[4] Albert Jan van den Berg, The New York Arbitration Convention of 1958 (Kluwer, 1981), 369; Stavros Brekoulakis, ‘Law Applicable to Arbitrability: Revisiting the Revisited Lex Fori’ in Loukas A Mistelis and Stavros Brekoulakis (eds), Arbitrability: International and Comparative Perspectives (Kluwer, 2009), para. 6-6; Winnie Jo-Mei Ma and Lawrence Boo, ‘Autonomous Arbitrability: Whose Autonomy? Whose Arbitrability?’ in Franco Ferrari and Friedrich Jakob Rosenfeld (eds), Autonomous Versus Domestic Concepts under the New York Convention (Kluwer, 2021), 299; Gary B Born, International Commercial Arbitration (3rd edition, Kluwer, 2021), 1032.

[5] Loukas A Mistelis, ‘Arbitrability – International and Comparative Perspectives’ in Mistelis and Brekoulakis, op. cit. note 4, paras. 1-6, 1-13.

[6] See the United Nations Commission on International Trade Law, Model Law on International Commercial Arbitration (UNCITRAL Model Law), at Article 1(5), which provides: ‘This Law shall not affect any other law of this State by virtue of which certain disputes may not be submitted to arbitration or may be submitted to arbitration only according to provisions other than those of this Law.’

[7] Ma and Boo, op. cit. note 4, 300; Born, op. cit. note 4, 1045.

[8] Born, op. cit. note 4, 1029, 1036–37.

[9] Karim A Youssef, ‘The Death of Inarbitrability’ in Mistelis and Brekoulakis, op. cit. note 4, para. 3-1.

[10] Brekoulakis, op. cit. note 4, para. 6-63; Maarten Draye, ‘The Three Card Trick – Reflections on Third Party Opposition in Arbitration, Arbitrability and the Belgian Arbitration Law’s Transitional Regime in Light of CFI Brussels (Fr.), 12 April 2018’ in Annet van Hooft and Jean-François Tossens (eds), b-Arbitra, Belgian Review of Arbitration (Kluwer 2019:1), 117–72, para. 103.

[11] Van den Berg, op. cit. note 4, 152–53, 360; Born, op. cit. note 4, 1043.

[12] New York Convention, Article V(2)(b); UNCITRAL Model Law, Article 34(2)(b)(ii). See Born, op. cit. note 4, 1034; Brekoulakis, op. cit. note 4, para. 6-54.

[13] Brekoulakis, op. cit. note 4, para. 6-2; Homayoon Arfazadeh, ‘Arbitrability Under the New York Convention: The Lex Fori Revisited’ (2001) 17(1) Arbitration International 73–88, at 76.

[14] Pascal Hollander, ‘Report on the Concept of “Arbitrability” under the New York Convention’ (May 2017) 11(1) Dispute Resolution International 47–65, 54, citing Austria, Belgium, Germany, China, Egypt, Italy, Japan, Lebanon, Mexico, Serbia, Sweden and Ukraine.

[15] id., citing Albania, Argentina, Australia, Canada, Finland, France, Poland and Uruguay.

[16] id., 55, citing England, Greece, Portugal, Romania, United Arab Emirates, United States and Vietnam.

[17] New York Convention, Article V(1)(a); UNCITRAL Model Law, Article 34(2)(a)(i).

[18] Born, op. cit. note 4,1033; Arfazadeh, op. cit. note 13, 79–80.

[19] Born, op. cit. note 4, 1033.

[20] Bernard Hanotiau, ‘The Law Applicable to Arbitrability’ (2014) 26 Singapore Academy of Law Journal 874–85, para. 13.

[21] New York Convention, Article V(2)(a).

[22] UNCITRAL Model Law, Article 34(2)(b)(i).

[23] See Hollander, op. cit. note 14, paras. 41–44; Brekoulakis, op. cit. note 4, para. 6–15, fn 7.

[24] Van den Berg, op. cit. note 4, 152; Brekoulakis, op. cit. note 4, para. 6-15; Julian Lew, Loukas Mistelis and Stefan Kröll, Comparative International Commercial Arbitration (Kluwer, 2003), paras. 9–13, 9–18; Hanotiau, op. cit. note 20, para. 29; Hollander, op. cit. note 14, para. 40.

[25] Brekoulakis, op. cit. note 4, para. 6–25.

[26] Brekoulakis, op. cit. note 4, para. 6–37; Christopher Boog and Benjamin Moss, ‘Arbitrability, Foreign Mandatory Law and the Lazy Myth of the Arbitral Tribunal’s Obligation to Render an Enforceable Award’ (2013) 31 ASA Bulletin 647–58, at 647.

[27] Brekoulakis, op. cit. note 4, paras. 6–38, 6–7.

[28] Hanotiau, op. cit. note 20, para. 16; Alexis Mourre, ‘Private Arbitration and Regulatory Adjudication in the Telecommunications Industry’ (2005) 22(3) Journal of International Arbitration 207–23, at 214.

[29] Mourre, op. cit. note 28, 214; Robert R Bruce, Rory Macmillan, Timothy St J Ellam, Theresa Miedema and Hank Intven, ‘Dispute Resolution in the Telecommunications Sector: Current Practices and Future Directions’, Discussion Paper prepared for the World Bank and the International Telecommunications Union (October 2004) (World Bank/ITU Discussion Paper), 88.

[30] World Bank/ITU Discussion Paper, op. cit. note 29, 29; Mourre, op. cit. note 28, 214.

[31] World Bank/ITU Discussion Paper, 46; US Federal Telecommunications Act 1996, § 252; American Arbitration Association, Wireless Industry Arbitration Rules, effective 1 June 2009; Australian Telecommunications Act 1997; Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 establishing the European Electronic Communications Code (Recast), Articles 25 and 26; Australian Competition and Consumer Commission, ‘Resolution of telecommunications access disputes – a guide’ (March 2004); Barbara Alicja Warwas, ‘ADR in B2B Disputes in the EU Telecommunications Sector: Where Does the EU Stand and What Does the EU Stand For’, EUI Working Papers LAW 2014/12 (2014), 11.

[32] Queen Mary University of London, ‘Pre-empting and Resolving Technology, Media and Telecommunications Disputes: International Dispute Resolution Survey’ (2016) (Queen Mary 2016 Survey), 15.

[33] Telecom Regulatory Authority of India Act 1997 (as amended), Section 14.

[34] Bharti Cellular Ltd v. Dept of Telecommunications, 2012 SCC OnLine Del 4846, paras. 60–62 (India). This exception also only applies in the limited situation where an arbitral tribunal is approached prior in time to or in exclusion to the Telecommunications Dispute Settlement and Appellant Tribunal (TDSAT). In other words, if the TDSAT is approached first, the telecoms dispute would fall within its exclusive purview and would not be considered suitable for arbitration. See Harshad Pathak and Pratyush Panjwani, ‘The Arbitrability Doctrine and Tribulations of Tribunalisation’ (2021) X(1) Indian Journal of Arbitration Law 72–97, at 83, 90.

[35] Aircel Digilink India Ltd. v. Union of India, 2005 SCC OnLine TDSAT 105, para. 20; Reliance Infratel Ltd v. Etisalat DB Telecom Pvt Ltd, 2012 SCC OnLine TDSAT 293, paras. 281, 283 (India); Viom Network Ltd v. S Tel Pvt Ltd, 2013 SCC OnLine Del 4511, para. 34. See Harshad Pathak and Pratyush Panjwani, ‘The Arbitrability Doctrine and Tribulations of Tribunalisation’ (2021) X(1) Indian Journal of Arbitration Law 72–97. Pathak and Panjwani, op. cit. note 34.

[36] Pathak and Panjwani, op. cit. note 34; Born, op. cit. note 4, 1113.

[37] See https://www.wipo.int/about-ip/en (accessed 24 August 2023).

[38] Queen Mary 2016 Survey, op. cit. note 32, 10, Chart 3: 71 per cent of respondents indicated that they had encountered an IP dispute in the past five years.

[39] For a survey of the arbitrability of IP rights in various jurisdictions, see Matthew R Reed, Ava R Miller, Hiroyuki Tezuka and Anne-Marie Doernenburg, ‘Arbitrability of IP Disputes’ in John V H Pierce and Pierre-Yves Gunter, The Guide to IP Arbitration (Global Arbitration Review, 2021).

[40] South Africa Patents Act 1978, Article 18(1): 'Save as is otherwise provided in this Act, no tribunal other than the commissioner shall have jurisdiction in the first instance to hear and decide any proceedings, other than criminal proceedings, relating to any matter under this Act.'

[41] Dário Moura Vicente, ‘Arbitrability of intellectual property disputes: a comparative survey’ (2015) 31 Arbitration International 151–62, at 154; Zhuan Li Fa [Patent Law] (promulgated by the Standing Committee National People’s Congress, 12 March 1984, Article 45; Pathak and Panjwani, op. cit. note 34, 76–77.

[42] See US Patent Act, § 294(a).

[43] Decision of 15 December 1975 of the Swiss Federal Office of Intellectual Property; Belgian Patents Act, Article 51(1); Vicente, op. cit. note 41, 157.

[44] ‘Final Report on Intellectual Property Disputes and Arbitration’ (1998) 9(1) ICC International Court of Arbitration Bulletin 37, paras. 2.31–2.32.

[45] Born, op. cit. note 4, 1080; Trevor Cook and Alejandro I Garcia, International Intellectual Property Arbitration (Kluwer, 2010), 48; Jacques De Werra, ‘Arbitrating Intellectual Property Disputes: Time to Think Beyond the Issue of (Non-)Arbitrability’ (2012) 3 International Business Law Journal 299–317, at 300; Michael Woller, ‘IP Arbitration on the Rise’ (16 July 2019), Kluwer Arbitration Blog.

[46] Hong Kong Arbitration (Amendment) Ordinance 2017, Section 103.D(1) (‘an IPR dispute is capable of settlement by arbitration as between the parties to the IPR dispute’), Section 103.G(2) (‘it is not contrary to public policy of Hong Kong to enforce an award only because the award is in respect of a matter that relates to an IPR dispute’); Singapore Intellectual Property (Dispute Resolution) Act of 2019. See Born, op. cit. note 4, 1082; Cook and Garcia, op. cit. note 45, 51.

[47] This is the case with various nuances in France, the United States, Italy, Portugal, Spain, Canada and Australia. See Vicente, op. cit. note 41, 155–56; Cook and Garcia, op. cit. note 45, 68–69; Reed, et al., op. cit. note 39.

[48] See https://www.wipo.int/amc/en/center/caseload.html (accessed 11 September 2023).

[49] See https://www.wipo.int/amc/en/center/caseload.html, stating that patent disputes represent 29 per cent of dispute cases, copyright 24 per cent, trademarks 20 per cent, ICT 14 per cent and commercial 12 per cent.

[50] Marie-Elodie Ancel, Nicolas Binctin, et al., ‘International Law Association’s Guidelines on Intellectual Property and Private International Law (Kyoto Guidelines): Applicable Law’ (2021) 12(1) Journal of Intellectual Property, Information Technology and E-Commerce Law, Guideline 31.

[51] WIPO Arbitration and Mediation Centre, ‘Guidance on WIPO FRAND Alternative Dispute Resolution’ (2021); Munich IP Dispute Resolution Forum, ‘FRAND ADR Case Management Guidelines’ (2018); Jacques De Werra, ‘The Expanding Significance of Arbitration for Patent Licensing Disputes: From Post-Termination Disputes to Pre-Licensing FRAND Disputes’ (2014) 32 ASA Bulletin 692; Maryam Pourrahim, ‘Arbitration in FRAND-related disputes’ (2022) 19(2), Transnational Dispute Management; European Commission, ‘Group of Experts on Licensing and Valuation of Standard Essential Patents, “SEPs Experts Group”: Contribution to the Debate on SEPs’ (January 2021); Piergiuseppe Pusceddu, ‘Are we FRAND now?’ (26 August 2021) Kluwer Arbitration Blog.

[52] Huawei Technologies Co. Ltd v. ZTE Corp., ZTE DeutschlandGmbH (Case C-170/13), Judgment of 16 July 2015, para. 68. See also the Apple v. Samsung antitrust proceedings, in which the European Commission accepted binding commitments made by Samsung that included a determination of the standard essential patent licensing rate by arbitration.

[53] Including the United States, the European Union, Australia, New Zealand and Canada. See Born, op. cit. note 4, 1067.

[54] For example, China. See Born, op. cit. note 4, 1068.

[55] Mitsubishi Motors Corp v. Soler Chrysler-Plymouth, Inc, 473 US 614 (1985).

[56] Eco Swiss China Time Ltd v. Benetton International NV (Case C-126/97), Judgment of 1 June 1999, ECLI:EU:C:1999:269, paras. 37, 39.

[57] This is the case in India, as well as in some European jurisdictions, some Canadian provinces, and some US states. See Born, op. cit. note 4, 1107, 1110; Richard Garnett, ‘Arbitration of Cross-Border Consumer Transactions in Australia: A Way Forward?’ (2017), 39(4) Sydney Law Series, 569–599, at 591.

[58] Born, op. cit. note 4, 1106–08; Karolina Mania, ‘American and European Perspectives on Arbitration Agreement in Online Consumer Contracts’ (2019) 36 Journal of International Arbitration 659; Gabrielle Kaufmann-Kohler and Thomas Schultz, ‘Online Dispute Resolution: Challenges for Contemporary Justice’ (Kluwer, 2004) 178; Imre S Szalai and Judge John D Wessel, ‘The Prevalence of Consumer Arbitration Agreements by America’s Top Companies’ (2019) 522 UC Davis Law Review Online 233, 235; Pathak and Panjwani, op. cit. note 34.

[59] Garnett, op. cit. note 57, 590–91.

[60] Uber Technologies Inc v. Heller, 2020 SCC 16.

[61] Garnett, op. cit. note 57; Dialogue Consulting Pty Ltd v. Instagram, Inc [2020] FCA 1846 (22 December 2020).

[62] Niuscha Bassiri and Emily Hay, ‘“Consumer Protection” in International Arbitration and EU Law’ in José Rafael Mata Dona and Nikos Lavranos (eds), International Arbitration and EU Law (Edward Elgar, 2021) 111–131, at 112, 126.

[63] Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts. See Bassiri and Hay, op. cit. note 62, 112.

[64] French Civil Code (Code Civil), Article 2061.

[65] German Code of Civil Procedure (Zivilproze ordnung), Article 1031(5).

[66] Belgian Economic Code, Article VI.83(22).

[67] Niuscha Bassiri and Maud Piers, ‘Article 1676’ in Niuscha Bassiri and Maarten Draye (eds), Arbitration in Belgium: A Practitioner’s Guide (Kluwer, 2016), para. 32.

[68] Mostaza Claro v. Centro Móvil Milenium SL (Case C-168/05), Judgment of 26 October 2006, ECLI:EU:C:2006:675.

[69] Asturcom Telecomunicaciones SL v. Rodríguez Nogueira (Case C-40/08), Judgment of 6 October 2009, ECLI:EU:C:2009:615.

[70] Bassiri and Hay, op. cit. note 62, 126.

[71] See https://ec.europa.eu/consumers/odr/main/index.cfm?event=main.home2.show&lng=EN. See also Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No. 2006/2004 and Directive 2009/22/EC [2013] OJ L165/63 (Consumer ADR Directive); Regulation (EU) No. 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No. 2006/2004 and Directive 2009/22/EC [2013] OJ L165/1 (Consumer ODR Regulation).

[73] UK Arbitration Act 1996, Sections 89 to 91; UK Consumer Rights Act 2015, Part 2.

[74] Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) [2016] OJ L 119/1 (GDPR).

[75] For example, the Brazilian General Data Protection Act (Statute 13709/18); California Consumer Privacy Act of 2018, Cal. Civ. Code Section 1798.100, et seq.; South African Protection of Personal Information (POPI) Act (2020); Japan Act on the Protection of Personal Information (APPI) 2020.

[76] Alexander Blumrosen, ‘The Allocation of GDPR Compliance in Arbitration’; Mata Dona and Lavranos, op. cit. note 62, 107.

[77] Commission Implementing Decision (EU) 2021/914 of 4 June 2021 on standard contractual clauses for the transfer of personal data to third countries pursuant to Regulation (EU) 2016/679 of the European Parliament and of the Council [2021] OJ L199/31, Clauses 17 and 18.

[78] id., Clause 5.

[79] For example, in some jurisdictions this can be achieved by agreeing to submit a dispute to arbitration after the dispute has arisen and without excluding judicial remedies, as well as any other requirements under domestic law.

[80] See Jacques De Werra, ‘Using Arbitration and ADR for Disputes about Personal and Non-Personal Data: What Lessons from Recent Developments in Europe?’ (2019) 30(2) American Review of International Arbitration 195–217, at 203, noting that the EU-US Privacy Shield framework (since invalidated) included an arbitration mechanism for the resolution of disputes between individuals and Privacy Shield organisations.

[81] GDPR, Article 82(1).

[82] De Werra, op. cit. note 80, 203.

[83] For an insight into ecosystem businesses, see McKinsey & Company, ‘How telcos can succeed in launching new businesses beyond connectivity’ (25 February 2022) (https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/how-telcos-can-succeed-in-launching-new-businesses-beyond-connectivity (accessed 19 September 2023)).

[84] Achmea, op. cit. note 2, paras. 59–60.

[85] id., paras. 54–55.

[86] Republic of Moldova v. Komstroy LLC (Case C-741/19), Judgment of 2 September 2021, ECLI:EU:C:2021:655.

[87] Republic of Poland v. PL Holdings Sàrl (Case C-109/20), Judgment of 26 October 2021, ECLI:EU:C:2021:875, para. 56.

[88] European Commission v. European Food SA and Others (Case C-638/19 P), Judgment of 25 January 2022, ECLI:EU:C:2022:50, para. 145.

[89] Green Power K/S and SCE Solar Don Benito APS v. Kingdom of Spain, SCC Case No. V2016/135 (Award 16 June 2022).

[90] Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union, 5 May 2020, Article 7(b) (signed by 23 EU Member States).

[91] Paris Court of Appeal, Republic of Poland v. CEC Praha and Slot Group AS, No. 49/2022, 19 April 2022, para. 70; Paris Court of Appeal, Republic of Poland v. Strabag SE, Raiffeisen Centrobank AG, Syrena Immobilien Holding AG, No. 48/2022, 19 April 2022, paras. 61, 64, 91.

[92] Bundesgerichtshof, Decision of 31 October 2018 – I ZB 2/15. This is based on Section 1059(2)1.(a) the German Civil Code, being the equivalent to Article V(1)(a) of the New York Convention and Article 34(2)(a)(i) of the UNCITRAL Model Law.

[93] German Federal Court of Justice (Bundesgerichtshof), Decision of 17 November 2021 – I ZB 16/21 in relation to the arbitration Raiffeisen Bank International AG and Raiffeisen Bank Austria d.d. v. Croatia (PCA Case No. 2020-15). Bundesgerichtshof, Decisions of 27 July 2023 – I ZB 43/22, I ZB 74/22, and I ZB 75/22 in relation to the arbitrations Mainstream Renewable Power Ltd and others v. Federal Republic of Germany (ICSID Case No. ARB/21/26), RWE AG and RWE Eemshaven Holding II BV v. Kingdom of the Netherlands (ICSID Case No. ARB/21/4), and Uniper SE, Uniper Benelux Holding B.V. and Uniper Benelux N.V. v. Kingdom of the Netherlands (ICSID Case No. ARB/21/22.

[94] Swedish Supreme Court, Poland v. PL Holdings (Case No. T 1569-19) (14 December 2022).

[95] Swedish Supreme Court, Novenergia II v. Spain (Case No T 4658-18) (10 July 2023). The Svea Court of Appeal decision was dated 13 December 2022.

[96] Lithuanian Supreme Court, Republic of Lithuania v. ICOR, Vilniaus Energija, Litesko,Veolia Energie International SA, 18 January 2022, Civil Case No. e3K-3-121-916 / 2022.

[97] Infrastructure Services Luxembourg SARL & Anor v. Kingdom of Spain [2023] EWHC 1226 (Comm); Kingdom of Spain v. Infrastructure Services Luxembourg S.à.r.l. & Anor [2023] HCA 11.

[98] Micula v. Government of Romania, 404 F. Supp. 3d 265 (D.D.C. Sep. 11, 2019) (decision affirmed by US Court of Appeals for the District of Colombia, No. 19-7127, 2020 U.S. App. LEXIS 16008 (D.C. Cir. May 19, 2020)); NextEra Energy Global Holdings B.V. v. Kingdom of Spain, Case 1:19-cv-01618-TSC, ECF Nos. 84,85 (Feb. 15, 2023); 9Ren Holding S.À.R.L. v. Kingdom of Spain, Case 1:19-cv-01871-TSC (Feb. 15, 2023); Blasket Renewable Investments, LLC v. Kingdom of Spain, Case 1:21-cv-3249-RJL (D.D.C. Mar. 29, 2023).

[99] Slovak Republic v. Achmea B.V., op. cit. note 2, para. 55; Moldova v. Komstroy, op. cit. note 86, para. 59; Poland v. PL Holdings, op. cit. note 87, para. 52.

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