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Guide to Regional Arbitration (volume 7 - 2019)

Whitelist / Institutions Worth a Closer Look – Special Occasions

02 January 2019

Not every “institution that specialises” in a type of arbitration specialises in a region. Some specialise in a sector or type of work. It’s these we’ve labelled as for “special occasions”. The “occasion” may be a contract about financing or IP, or one connected with a particular activity – shipping, direct foreign investment, sport. Or even more specific, for example German–Chinese trade.

Why does such a body evolve? Can mainstream arbitral providers not fill the role perfectly well, simply by appointing correctly qualified arbitrators? Of course they can. But specialist providers can provide two elements that others can’t. First, with repetition comes efficiency and better techniques. Second, greater legitimacy and adoption. Here one strays into the territory of vested interests protecting their turf, but, that aside, it’s fair to say a specialist organisation can achieve acceptance more easily with the community it aims to serve – the world of IP, of sport, etc, that an ICC or LCIA may struggle to match.

At their best, a specialist provider can even offer an entirely different version of arbitration. Witness, for example, the Basketball Arbitration Tribunal (not listed yet here because it is so niche as not to be relevant). It provides a full ex aequo et bono approach delivered at high speed that is perfectly tailored to the world of basketball beyond the NBA: where foreign players move clubs frequently and have little bargaining power or ability to enforce their contracts through local courts.

In this chapter we white-list four organisations, and suggest four others as worthy of consideration, should the fit seem right.

White List

  • Court of Arbitration for Sport (CAS)
  • International Centre for the Settlement of Investment Disputes (ICSID)
  • The Permanent Court of Arbitration (PCA)
  • World Intellectual Property Organization (WIPO)

Worth a Closer Look

  • Chinese-European Arbitration Centre (CEAC)
  • DELOS
  • Panel of Recognized International Market Experts in Finance (PRIME Finance)
  • Silicon Valley Arbitration and Mediation Centre

White List

COURT OF ARBITRATION FOR SPORT (CAS)

What is it?

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

How is it different to standard commercial/investment arbitration?

It functions mainly as an appeals body, rather than a trier of fact so to speak (though it does perform this function when the agreement demands). So CAS spends most of its time reviewing decisions issued by sports federations.

There’s also a difference in how parties agree to CAS. Regular users of arbitration have usually signed a contract. But many sportspeople have acquiescence to CAS imposed upon them when they agree to their sporting body’s code, or to an event’s rules.

What kinds of cases are most common?

The majority of cases are disputes about football contracts and transfers, or doping. The court has a separate, dedicated list of arbitrators for football disputes, while the World Anti-Doping Code contains a mandatory reference to CAS for appeals by international athletes.

Since 1996, though, CAS has also served as the on-site dispute resolution body for each Summer and Winter Olympic Games – and more recently, the FIFA World Cup – for which it forms special ad hoc divisions.

What do those ad hoc divisions do?

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

The president then establishes a panel (or sole arbitrator) and offers all potential parties the chance to argue at a hearing. There are no written submissions outside of the request; and decisions are rendered within 24 hours. As a result of this real-time work, some of CAS’s work has been pretty groundbreaking.

Groundbreaking? How?

Well, in Salt Lake City, for example, an arbitral tribunal ordered a potential witness not to leave the jurisdiction during a dispute about the judging of figure skating. It’s thought to be the first time arbitrators have ever asserted such a power. And at the London 2012 Olympics, Swedish triathlete Lisa Nordén sought a reinterpretation of a photo finish after being placed second. CAS ruled that it couldn’t hear the dispute as it was against a field-of-play decision. Ahead of the Pyeongchang 2018 Winter Olympics, two tribunals upheld 28 out of 39 appeals lodged by Russian athletes looking to overturn their lifetime bans following a state-sponsored doping scandal.

Most of the time, though, the disputes that occur during the Games are about qualification and eligibility.

Is there a doctrine of precedent?

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

Is it busy?

Very. Every year the workload grows. Its latest statistics are from 2016 when it hosted 599 procedures (101 more than in 2015). Of those, 100 were “ordinary” procedures; 458 were appeal procedures; 28 arose from ad hoc divisions; and 13 were anti-doping matters.

That’s more than a case a day.

It is. But then again individual cases don’t last long. The average CAS case is heard in a day. And then four to five months on average for the award.

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

Not for the most part. You can only sit as a CAS arbitrator if you are on the approved list. And most of those who gain approval are lawyers, if usually with an interest in sport. At last count there were nearly 400 individuals on the approved list from 87 countries.

Sport is worldwide. Is it feasible to operate just from Switzerland?

It’s getting harder – so CAS is now growing. As well as its headquarters in Lausanne, it’s opened offices in Sydney and New York, and in time there are expected to be more. The court’s governing body has signed agreements already with the city of Shanghai to establish an alternative hearing centre in the Pudong area, and similar agreements are in place with Abu Dhabi, Kuala Lumpur and Cairo. There’s also expected to be a base in Latin America before too long.

Are there any special rules?

One very significant one. The rules state, “CAS arbitrators and mediators may not act as counsel for a party before the CAS.” This is the first instance of an institution saying an arbitrator or counsel can’t wear two hats, as the saying goes. If they want to act as arbitrator, they must stop taking counsel work.

Does it have any competition?

It’s at the top of its field, though some more generalist institutions are also handling sports matters. Germany’s DIS has its own set of rules for sports arbitrations (the DIS German Court of Arbitration for Sport). It’s less busy though – the latest statistics show it had 27 matters in 2017.

Sport can be highly politicised. Is there anything controversial to bear in mind about CAS?

CAS is certainly not without its critics. There’s a significant faction in the sporting world that thinks CAS is unfair because they have no choice but to accept it – or they can’t compete – and it is run for the most part by their opponents (the sporting federations). Claudia Pechstein, a German speed skater, has been pursuing a case that makes exactly that argument (helped by Germany’s professional footballers’ federation) to that effect. Pechstein recently had her arguments rejected by the lower chamber of the European Court of Human Rights, but the panel was significantly split on some of the details. One commentator said that it was overall a good result for CAS but that equally it may want to make changes to its process in light of the criticism by the majority.

One underlying problem that gets brought up frequently is how CAS appoints its arbitrators. At the moment the president of the tribunal is picked by CAS’s members, which are for the most part the sports federations. So athletes worry the deck can be stacked against them in any dispute with a federation. There are also special powers reserved for the secretary general (Matthieu Reeb). Although changes were introduced a few years ago to insert greater detachment between the member federations and the appointment of tribunals, there remain quirks that are hard to explain to outsiders.

How has CAS met the criticisms?

It’s made some changes. There are now better legal aid provisions for poorer athletes and on occasion hearings are public (in small numbers). But so far it hasn’t completely sorted out the process of appointment.

It will be interesting to see what happens if the Pechstein case goes to the appeal tier of the ECHR, which has been threatened.

INTERNATIONAL CENTRE FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID)

What is it?

A depoliticised forum for settling investment disputes, set up by the World Bank in the 1960s.

What was wrong with the existing commercial arbitration centres?

Those were looked at, as an option. But it was decided there would be issues with applicable law, enforcement, sovereign immunity, etc. Going the treaty route was deemed easier.

So is ICSID connected to a treaty?

Indeed. The Washington Convention (more generally known as the ICSID Convention). This treaty, which also gives rise to the centre, entered force in 1966. Under it, ICSID cases follow their own rules of procedure, unaffected by the law of the seat, and awards are only subject to the remedies granted by the convention itself. They don’t depend on the New York Convention. Initially, the convention was ratified by more than 50 states. Today it has 162 signatories, of which 153 have ratified. Not all the signatories have been satisfied, however.

Who hasn’t?

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

How busy is ICSID?

It had 53 new cases in 2017 – more than the preceding year, and exceeding its busiest ever period for new cases (2015–2016, when it had 52 new cases).

One reason for the uptick is more cases from eastern Europe and central Asia. But no single state is behind the rise, in contrast to the years when Argentina and later Venezuela single-handedly kept the centre busy. Croatia was on the receiving end of the newest cases in 2017 – with four new claims.

Are all the cases brought under the convention?

Mostly. Some use the additional facility rules.

What are they?

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

Who runs ICSID?

Meg Kinnear, who was appointed in 2009. She’s supported by a 50-strong secretariat. Before Meg Kinnear, ICSID didn’t have a full-time secretary general, which is curious given the size of the role. Instead it was a job performed part-time by the general counsel of the World Bank. Kinnear spends much of her time addressing complaints about the ICSID process – for example, its slowness and the fact that awards can be hollowed out by an annulment committee. She’s also sought to educate states better on how to get the most out of the system.

Does the system have critics?

Yes. There was a whole conference in Paris in late 2015 devoted to things perceived to be wrong with ICSID (see www.globalarbitrationreview.com/article/1034993/is-icsid-a-monarchy). It saw complaints from both sides: counsel who represent investors, and those affiliated with the sovereign’s view. At times, the two sides agreed on what needed to change. Both groups wanted to see the power in the hands of the secretary general reduced, and the less of a coterie of ICSID insiders: arbitrators who are appointed time and time again.

Are those concerns valid?

It’s true the secretary general plays a central role at times. For example, if a matter goes to annulment (the ICSID version of review), the secretary general decides the make-up of the annulment committees, and that can pretty much determine the result. The secretary general is also called on to resolve arbitrator challenges, if earlier steps fail – usually if there’s a deadlock by the other arbitrators on the case (who are supposed to rule on challenge decisions).

It’s also true that certain arbitrators appear far more at ICSID than others, and that there are names on its approved list who never receive a case. The ICSID staff, however, respond that difficult cases need experienced people. So it’s inevitable that there will be frequent flyers. The same goes they say for annulment committees – only more so.

Do those responses satisfy critics?

Not particularly. They say there are still too many developed world arbitrators appearing, and that reduces the legitimacy of the system.

What’s the solution?

Changing the treaty would help, but this is seen as an impossibility. Without that, the best ICSID’s secretariat can do is listen to concerns and adapt as best it can, within the current rules.

Is ICSID adapting?

After two years of work, it unveiled a new set of rules over the summer of 2018. The rules, which are draft, may be finalised before the end of 2018.

What changes do they make?

Meg Kinnear promised six areas of adjustment during the workshops to devise the rules. Namely, a streamlined process for appointing arbitrators; a code of conduct for arbitrators; an improved process for challenging arbitrators; rules on the disclosure of third-party funding; more guidance on how to allocate costs after a case; and more steps intended to put decisions and orders into the public domain.

Has she delivered?

Not on all of them. There are plans for a code of conduct (to be developed with UNCITRAL) but so far no actual code. There is talk of expanded disclosure requirements in the meantime.

In other areas, possibly. The new rules contain several elements intended to speed up registration of the case, and stop it being lost for months in administrative limbo. And there are adjustments to the position on third-party funding; bifurcation; and security for costs.

As for putting decisions in the public domain, the rules switch things from an opt-in to opt-out system. A party now has 60 days to opt out of publication) and even if they do, that’s not the end of things. ICSID now reserves the power to publish portions of the award – those covering “legal reasoning” regardless of what the parties say.

They also go some way to addressing concerns about challenges to arbitrators. Those include stricter time frames for making a challenge – which now must be brought within 20 days of discovering whatever it is that gives rise to the challenge; and a rule that work can continue on a case while the challenge is pending (previously, the arbitrator was automatically suspended).

Has ICSID’s business suffered because of the criticisms?

It’s hard to know. The figures don’t appear to show a hit, but at the same time other institutions have seen their share of the investment treaty pie growing. It may be that some of those cases would have gone to ICSID but for the complaints.

And not everybody avoids ICSID for the same reasons. Some think it doesn’t exercise enough control over arbitrator fees, and that other institutions are better on this score. Many treaties give users a choice, and some now exercise it. Still, it’s important that ICSID is seen to be addressing its users’ concerns – and the draft rules are a big step towards doing so.

THE PERMANENT COURT OF ARBITRATION (PCA)

What is it?

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

Initially? What changed?

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

What sets it apart from other investor–state administrators?

Well, for a start it has its own palace – the “Peace Palace” – albeit shared with the International Court of Justice. The grand building is something of a metaphor for the whole endeavour. States, unsurprisingly, don’t much like getting sued; they tolerate it better when it comes with due pomp and ceremony. The Palace is one part of that. Another is the PCA secretariat’s courteous approach and attention to detail, which makes the parties feel at ease. To have a case at the PCA is to experience the Rolls-Royce of arbitrations.

Has it heard any particularly famous cases?

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

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

How busy is it?

It had 160 cases on its docket in 2017, a rise of 12 on the year before. The number of new matters rose slightly, from 40 in 2016 to 41 in 2017.

The PCA continues to administer many high-profile disputes under multilateral and bilateral investment treaties and national investment laws, and others from contracts with state entities. In 2016, for example, the PCA concluded an arbitration between the Philippines and China over maritime rights in the South China Sea, one of the most politically sensitive disputes in recent years. The tribunal ruled in favour of the Philippines, and said China didn’t have any historic claim to 90 per cent of the sea. China has said it won’t respect the award.

It also had 47 requests to act as an appointing authority, which is a common function it undertakes under the UNCITRAL and other rules.

Who runs the show?

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

What else is unique?

The PCA has several sets of highly specific rules. One covers arbitration about natural resources and the environment; another is for disputes from outer space – literally. Disputes out of space exploration and infrastructure.

Is it popular?

It appears to be. In 2016, the Bahamas, Djibouti and Kosovo joined the organisation, bringing the total number of member states to 121.

It also continues to be invited to open branches around the world. It has recently opened a permanent office in Singapore, to service the number of PCA matters now taking place there. It has a similar office in Mauritius (though fewer cases have so far been heard there). The PCA also signs host country agreements, permitting PCA proceedings to take place in similar conditions as those at the Peace Palace. In 2017, it teamed up with Brazil, bringing the total number of host agreements to 12.

WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO)

What is WIPO?

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

What arbitration services does it offer?

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

What kind of disputes does it see?

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

How busy is it?

In all, it’s handled nearly 500 ADR matters since it began offering ADR in 1994. As it doesn’t distinguish between arbitration, mediation and expert determination in that figure, it’s not possible to say how many it’s done of which. But there has been a steep uptick in requests for ADR over the past few years: 60 new matters in 2016 and 52 new cases in 2017 versus 29 in 2015 and 18 in 2014. Sixty new cases is the most there’s ever been.

Why the increase?

WIPO hasn’t really said – but with the growing role of technology in all aspects of life, it probably isn’t a surprise.

What are the rules like?

They’re from mid 2014. They include the 2010 changes to the UNCITRAL rules (increased powers of joinder and consolidation and extra powers over arbitrator appointment were introduced). They also include a mandatory preparatory conference between the parties and tribunal within 30 days of the tribunal being formed – and allow for emergency relief.

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

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

Where is WIPO based?

The main office is in Geneva. Since 2010 it’s had a space at Maxwell Chambers, Singapore too.

Who does it appoint as arbitrator?

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

Any concerns?

It’s notable that some of the biggest IP disputes GAR has reported on used other sets of rules – ICC and AAA/ICDR to name but two. It would appear that elements within the IP world don’t rush to send their biggest stuff to WIPO.

Worth a Closer Look

The world of specialist arbitration providers has a few more recent arrivals. Here are four we think are useful for the right case.

CHINESE-EUROPEAN ARBITRATION CENTRE (CEAC)

What is it?

A centre based in Hamburg, focused on settling disputes between Chinese and European parties. It was founded in 2008.

Can’t existing providers – either in Asia or Europe – help with such disputes?

They can, but that doesn’t mean there’s not a niche. It’s far from easy getting foreigners to agree to arbitrate in China, or the Chinese to arbitrate anywhere else. So a place that is neutral territory and specialises in precisely this work makes a lot of sense. Plus, it is in Hamburg, where many Chinese firms have offices.

Is it gaining traction?

It would appear so. CEAC clauses are said to be standard for a number of DAX and Dow Jones-listed companies for China contracts. The CEAC rules were also used in the 2013 Vis Moot, which was a boon.

Does it have any cases?

It had 11 cases registered by the end of 2017 (the most recent stats), two of which ended in an award and a further three ended with claims being withdrawn by parties.

Who’s been bringing them?

At least four of the cases arise from disputes between German and western European or North American parties, with indirect links to China (such as one party being a subsidiary of the Chinese company). The aggregate value of the cases is around €60 million.

What are the rules like?

They’re closely based on the most recent UNCITRAL rules with a few amendments.

Such as?

Special provisions on the appointment and challenge of arbitrators through a neutral appointing authority; a choice of law clause; a time limit for an arbitral award; and new provisions on costs, among others.

Why is it in Hamburg?

CEAC grew out of an agreement between the Hamburg and the Tianjin Bar Associations, in 2004. The agreement led to a fringe event at an IBA annual conference in Singapore three years later, where the idea for CEAC was born.

As to the city itself, it’s somewhere the Chinese feel comfortable. More than 400 Chinese businesses have offices in Hamburg. Most are there because of shipping.

Who runs it?

Its sole shareholder (though it’s not really a backer) is the Chinese European Legal Association (CELA), a non-profit entity. As well as supporting the centre, CELA organises meetings and workshops to try to stimulate legal exchange between China and Europe. It has also started a youth wing: Young CEAC.

DELOS DISPUTE RESOLUTION

What is it?

A Paris-based centre launched in 2014 to focus on small- and medium-value disputes.

Who started it?

A group of lawyers from Dechert led by senior associate Hafez Virjee. They benefited from patronage from Pierre Mayer and the late David Caron, a leading US arbitrator.

Who is it for?

The centre aims itself at users in start-up industries who want to keep the time and costs of arbitration down.

Does it have its own rules?

Yes. They’re based on four “Delos principles” that, if followed, will reduce time and costs. Those are: “Active engagement of the tribunal”; “safe seats, not any seat”; “pragmatism when forming the tribunal”; and “preparation preparation, preparation”. To accompany the second principle it has published a guide to the seats of the world, designating 16 of them “safe”.

What does this mean in practice?

The rules reject an adversarial approach, giving arbitrators a more active role in the proceedings. Disputes at Delos are usually heard by sole arbitrators, rather than tribunals, though three-member panels are still an option for cases worth over €5 million.

So how is it working so far?

The early signs are very good. The centre issued its first-ever award in 2017 in a dispute arising from the “smart wearables” industry. The case was concluded exactly as advertised, lickety-split. A single arbitrator issued the award three months after the cases started.

Delos duly won the GAR award for innovation by an individual or organisation in 2018.

More significantly, the DELOS clause is now in “several thousand” agreements according to Hafez Virjee. He and colleagues have plans to build on the goodwill generated from happy users down the line.

PANEL OF RECOGNIZED INTERNATIONAL MARKET EXPERTS IN FINANCE (PRIME FINANCE)

What is it?

A specialist body intent to bring arbitration to complex financial disputes. It was founded in The Hague in 2012.

Who set it up?

A senior banking lawyer, Jeffrey Golden (ex-Allen & Overy), aided by former Lord Chief Justice of England and Wales Lord Woolf. It grew out of a series of lectures Golden gave before the collapse of Bear Stearns and Lehman Brothers, on the lack of a world court for financial transactions. With the assistance of the Dutch government and various lawyers, bankers and regulators, Golden got the idea for an arbitration court off the ground.

Has it been well received since?

Banks used to prefer litigation over arbitration (and had the luxury of being able to, because they had the bargaining power to insist on court). But the spread of derivatives and other products to a new sort of client (state-owned companies in emerging economies) changed things and made arbitration in certain scenarios quite attractive.

ISDA – the organisation responsible for creating standard contracts for derivatives deals – now offers a model clause that includes PRIME Finance as an option (alongside the ICC and LCIA and the UNCITRAL rules). ISDA agreements govern 90% of the world’s over-the-counter derivatives transactions. In 2015, PRIME joined forces with the PCA to pool both people and know-how.

Who’s on its PRIME panel?

Around 150 names. It added 25 new names to its panel of “recognised experts” in January 2017. They include Manuel Conthe, a former chairman of Spain’s Securities and Exchange commission; Matthew Gearing QC of Allen & Overy; and Loukas Mistelis, a GAR editorial board member and director of the School of International Arbitration at Queen Mary University of London. They join an illustrious mix of former banking lawyers (including Jeffrey Golden), in-house types (such as Georges Affaki) and retired judges (such as Sir Bernard Rix).

What are the rules like?

They’re already on their second edition. Revised rules were published in February 2016; the first rules were launched in 2012 (when the centre won a GAR award).

What changes did they bring in?

The update clarified when time starts to run following the service of arbitration.

There were some concerns before the new edition about the ability to appoint “off list” and to appoint an arbitrator of the same nationality as one of the parties (which wasn’t allowed in the first set). The revision addressed both points.

Is PRIME Finance good?

It can be. It was a runner-up in the 2016 GAR awards, in the Most Important Decision category, after it managed to arbitrate a US$1.7 billion case, about a credit derivative, in just eight days.

Are there any other unusual elements?

It has a fairly rigid pricing structure, with incremental caps on administrative fees relative to the amount in dispute. Anything over €500,000 is capped at €66,400.

SILICON VALLEY ARBITRATION & MEDIATION CENTER (SVAMC)

What is it?

It’s a non-profit centre based in Palo Alto that was launched in 2015. Unlike the other establishments in this book, the SVAMC is not an institution in the traditional sense. It does not administer cases itself. Rather it advocates for the use of arbitration in technology disputes, and curates a list of tech-savvy arbitrators, updated annually.

Who is on the list?

In 2018, this list featured 49 practitioners from the US, Geneva, Hong Kong, Lisbon, Paris and Sydney, and includes well-known names in the industry, such as Maria Chedid of Arnold & Porter Kaye Scholer in San Francisco and Thomas Legler of Pestalozzi in Geneva.

Great. How does one get on the list?

The centre accepts nominations from its own members and from the arbitral community in general. Candidates are scrutinised by two committees.

What else does it have going for it?

In 2017, it launched an under-45 young professionals group and an international task force, which aims to raise awareness about the use of arbitration in tech disputes among companies and firms.

Does it have any plans to release rules or go into case administration?

It doesn’t appear to, but never say never.