One of the advantages of arbitration is the certainty that comes with it. While arbitration awards can be challenged in court, it is extremely difficult to overturn an award. In fact, courts will vacate, or refuse to confirm an arbitration award only if there was a serious conflict of interest or corruption on the part of a neutral arbitrator, or the arbitrators exceeded their powers. This latter ground, the arbitrators exceeding their authority, is most frequently used as a basis for setting aside an arbitral award. A recent decision by the Swedish Court of Appeals setting aside a US $173 million arbitration award provides some guidance on how this standard may be applied.
There are fundamental differences between international arbitration and litigation in the U.S. courts that can impact the cost of resolving your dispute, the time to resolution, and each party's respective level of comfort with the process. Below, I set out a few important distinctions between the two processes.
A central feature of international arbitration is the presence of counsel, parties, and even arbitrators who hail from several different countries. Frequently, more than one nationality is represented at the arbitral hearing, and with that diversity come a host of issues that are not immediately apparent -- chief among them is the variety of different languages being spoken. Since a hearing will only be conducted in one language, it is often the case that many people in the room will need the services of both translators and interpreters in order to be present and fully understand the proceedings.
In the negotiation of complex cross-border commercial contracts, the parties too often pay scant attention to the terms of dispute resolution clauses. The clear advantages of choosing international arbitration over court forums can be overlooked.
The private nature of arbitration means that there is typically less information available-- to lawyers, their clients, and the public -- about the practices and preferences of arbitrators. A recently published study on arbitration, described by authors Thomas J. Stipanowich and Zachary P. Ulrich as "a wide-ranging, thoroughgoing empirical survey of practices and perspectives among experienced commercial arbitrators" sheds light on current trends in domestic and international arbitration.
As with any cross-border endeavor, language barriers can become a hurdle to overcome in international arbitration and litigation. The dispute resolution clause in a contract may compel the client to arbitrate or litigate in a country other than their own. Arbitrators, parties, and even counsel may all hail from countries that speak different languages. Thus, a successful practitioner must give due consideration to the opportunities and challenges presented by the diversity of languages that may present itself in any given case.
BG Group plc won a major victory at the U.S. Supreme Court last month when the Court upheld an arbitration award requiring Argentina to pay BG Group more than $185 million. The case is yet another example of the deference that arbitration awards receive in U.S. courts.
Parties to a dispute often cite cost control as a reason for choosing arbitration over litigation. To achieve the goal of keeping arbitration costs down, it is important for counsel to play an active role in advocating for cost control. Without counsel's vigilant attention from the outset of the case, arbitration costs can rival litigation expenses. This is especially true in international arbitrations where parties, counsel, and arbitrators hail from different parts of the world.
In August of this year, the Panama Canal will turn one hundred years old. An engineering marvel from its inception, the canal serves as a shortcut for 13,000 ships every day, making it one of the busiest and most important commercial waterways in the world. Efforts are underway to build an additional set of locks that would create a new lane of traffic, effectively doubling the canal's capacity.
Lost in the hype surrounding the Senkako-Diayou dispute between China and Japan over territoriality is another similar conflict that also involves China. For the last few years, China and the Philippines have been contesting a 2,000 mile stretch of sea that not only includes enormous deposits of oil and gas, but also serves as one of the world's primary shipping lanes.
The International Bar Association ("IBA") recently released the "IBA Guidelines on Party Representation in International Arbitration" ("Guidelines"). According to the preamble, the Guidelines are an attempt at normalizing the conduct of counsel relating to party representation in the face of the "diverse and potentially conflicting rules and norms" commonly found in international arbitration. By adopting the Guidelines, parties subscribe to "the principle that party representatives should act with integrity and honesty and should not engage in activities designed to produce unnecessary delay or expense, including tactics aimed at obstructing the arbitration proceedings."
Before running off to Court to file an emergency request for a temporary restraining order or a preliminary injunction, counsel should consider whether the same relief can and should be sought from an arbitral institution. Start with review of the agreement at issue and its dispute resolution clause; you may find that it provides a preferable alternative to Court. Effective procedures for emergency interim relief are provided by the rules of leading arbitral institutions of the world, including the International Chamber of Commerce (ICC), The London Court of International Arbitration (LCIA), the International Centre for Dispute Resolution of the American Arbitration Association (ICDR) and others.
Seven years ago this week, one of the most significant chapters in Bolivian history began. With one stroke of the pen on May 1, 2006, then-newly-elected president Evo Morales issued a decree nationalizing all of Bolivia's oil and gas reserves. This was shortly followed by efforts to nationalize many other natural resources in the country, including precious minerals and other elements. The nationalization of many industries has had significant legal consequences, most of which are still felt today.
As more and more nations strive to cut themselves a piece of the international arbitration pie, Southeast Asia is a perfect example of a region where countries are looking to broaden their presence in the field of international arbitration. Recently, the Singapore International Arbitration Centre ("SIAC") saw an increase to an all-time-high figure of $2.9bn (£1.9bn) in revenue from new international arbitration cases. The number of new cases for the SIAC jumped from 188 in 2011 to 235 in 2013, for an increase of 25 percent.
One of the questions that is most often asked by clients is whether or not an award issued in international arbitration - which is a private vehicle for dispute resolution - is enforceable and whether collection can be guaranteed to the fullest extent of the law. In other words, whether an arbitral award can be enforced in the same way that a judgment from a court is enforced.
Testimony by videoconference in international arbitration offers the disputants both a fair means for assuring that relevant evidence is heard and an effective tool for cost reduction.
As more and more companies conduct business across international borders, questions of tax revenue recognition and transfer pricing taxes become more and more salient. Tax authorities in different nations, fighting over which country gets to tax the multi-national corporation's income, enter into sometimes-heated disputes over where that income should be recognized, leading to costly and time-consuming litigation.
Finnish company Nokia Oyj recently commenced what could be a protracted battle to enforce an international arbitration award won last month against Blackberry-maker Research in Motion Ltd. ("RIM"). In late November, Nokia sued RIM in federal court in California to enforce the Swedish arbitrator's decision, which stated that Nokia is entitled to receive royalties on RIM's sale of WLAN-compliant mobile devices. "Wireless local access network systems" or "WLAN" technology allows mobile devices to connect to WiFi networks.
Australia may be the seat for many an arbitration in the next few years, thanks to a concerted effort by both the Australian government and the Australian Centre for International Commercial Arbitration (ACICA) to promote their country as the next up-and-coming venue in the world of international arbitration.
Over the last eight months, the School of International Arbitration at Queen Mary, University of London conducted a comprehensive and wide-ranging survey on issues germane to international arbitration - particularly on current and preferred practices in the field. The results of this study unsurprisingly point towards a great preference for autonomy and flexibility in international arbitration.
Lance Armstrong's defense against the persistent doping allegations leveled against him, and the athlete's subsequent refusal to participate in the U.S. Anti-Doping Agency's prosecution of several doping-related charges against him, dominated sports headlines this summer. Interestingly, Armstrong's battle against the USADA also cast a spotlight on oft-cited concerns about due process in arbitration.
Arbitration clauses in international contracts have become increasingly common. Many global companies include arbitration provisions in their standard, pre-printed documents, such as estimates, purchase orders, and invoices. Are these arbitration clauses effective in international commerce? The answer, surprisingly, is "probably not."