Arbitration: its growth, practical uses and limitations in an employment law context

There is a growing appetite to resolve employment disputes by arbitration.  This is the finding of the UK Employment Lawyers Association (ELA) which published its Report on Arbitration and Employment Disputes in November 2017.  The Report, a product of over two years of research, conducted by ELA’s Arbitration and ADR Group (chaired by Peter Frost of HSF and Paul Goulding QC of Blackstone Chambers), concludes that arbitration clauses are increasingly found in partnership and LLP agreements, deferred remuneration scheme rules and contracts of employment.

The Report notes the development of the European Employment Lawyers Association (EELA) arbitration scheme, including EELA’s bespoke arbitration rules, a model arbitration clause and a submission agreement (prepared with the assistance of Hannah Ambrose of HSF) under which existing disputes can be resolved by arbitration. Interestingly, the Report encourages the adaptation of the EELA’s documentation to provide the materials for a truly bespoke dispute resolution process for UK employment contracts.

In addition, the ELA intends to bolster its training programme by including sessions focusing on arbitration and its applications. The goal is twofold. First, ELA seeks to provide practical education to those involved in drafting and negotiating employment contracts and those litigating employment disputes. Second, this initiative will help to develop a pool of specialised arbitrators, advocates and advisers.  Such efforts will ensure appropriate use of arbitration in the context of an area that is tightly regulated by statute in many jurisdictions. Continue reading

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Filed under Arbitrability, Europe, Jurisdiction

Use of experts in international arbitration: LCIA releases note and practice guidance

Experts often play a pivotal part in the resolution of complex disputes. The London Court of International Arbitration (“LCIA“) recently released a note discussing the ways in which experts are involved in international arbitration. The Note serves as a useful reminder that each type of expert participation in the arbitral process presents opportunities for the effective resolution of a dispute. The Note also provides some guidance on how to get the most out of expert involvement. Whilst it is only a short foray into a broad subject matter, the Note is a further example of how international institutions are increasingly seeing their role as offering the parties more insight and practical guidance to encourage the development of an effective and efficient process.

The LCIA’s reflections on the role of experts

Given the variety of parties and subject matter involved in arbitrations, experts are used differently from case to case. The LCIA observes how the traditional role of independent experts, in which they are appointed by the parties, draft expert reports for the tribunal and subsequently testify at a hearing, is being supplemented by a number of different expert roles in order to aid arbitral decision-making and improve the quality of arbitral awards.

The note continues with a brief overview of some of the ways in which experts are being used in LCIA arbitration, together with an explanation of challenges that this can present. These additional expert roles include: advising behind the scenes to the client, legal team or another expert on record (referred to in the report by the colloquial terms “shadow” or “dirty” experts, although the report notes the invaluable role such experts can play); as a tribunal appointed expert; or as an expert tribunal member. While acknowledging that expert determination is an alternative contractual form of dispute resolution to arbitration, the note also touches on expert determination and some of the more complicated drafting points relating to the use of expert determination clauses and arbitration clauses.

The LCIA suggests that, “while each method presents opportunities and unique benefits, it is important to recognise their respective shortcomings“. The note therefore concludes with some ways in which the parties can optimise their use of experts. First, it is suggested that both counsel and arbitrators should develop their familiarity with issues upon which experts are frequently asked to opine, particularly quantum (which features in a vast majority of cases). Second, experts themselves should ensure that they are prepared to facilitate a discussion with the tribunal, as well as other experts involved in the proceedings.

Comment

Experts are an important part of the arbitral process – their evidence is integral in clarifying technical points which will enable the tribunal to deliver a well-reasoned final award. Parties and counsel in particular will get the best out of experts if they:

  • think carefully about whether expert evidence is really needed and whether the tribunal will be best served by party or tribunal appointed experts in all the circumstances of the case;
  • start the appointment process of a party appointed expert early to identify the right candidate;
  • agree a clear list of issues to be considered in expert evidence at an early stage;
  • tailor the approach taken with the expert depending on their previous experience or background and plan ahead for the workstream;
  • make sure the expert is properly and clearly instructed and their duty to assist the tribunal is explained and understood;
  • ensure the expert has all the relevant documents and information;
  • keep in regular communication and provide quick and meaningful responses to the queries which the expert raises throughout the arbitration;
  • act consistently with the expert’s role in the proceedings and avoid the appearance of a “hired gun” expert;
  • work with the expert to advise on whether the report produced can be understood by a non-expert or someone reading it in a second or third language (as appropriate);
  • consider whether agreeing to “hot-tubbing”, an expert “meet and confer” or an expert joint statement may aid the efficient resolution of the dispute; and
  • make good use of the opportunity to test the conclusions the counterparty’s expert has reached in his or report with the party-appointed expert.

 

For further information, contact Chris Parker, Partner, Hannah Ambrose, Professional Support Consultant, Vanessa Naish, Professional Support Consultant, or your usual Herbert Smith Freehills contact.

Chris Parker
Chris Parker
Partner
Email | Profile
+44 20 7466 2767
Hannah Ambrose
Hannah Ambrose
Professional Support Consultant
Email | Profile
+44 20 7466 7585
Vanessa Naish
Vanessa Naish
Professional Support Consultant
Email | Profile
+44 20 7466 2112

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Filed under Europe, Institutions, News, Procedures in arbitration

Bear Creek Mining Corp. v. Peru: the potential impact on damages of an investor’s contributory action and failure to obtain a social license

In an award dated 30 November 2017 (the “Award“), an ICSID Tribunal ordered Peru to pay around US$30.4million to Canadian company Bear Creek Mining (the “Claimant“) following its finding that a 2011 decree (“Decree 032“) constituted an unlawful indirect expropriation of the Claimant’s right to operate the Santa Ana mine (the “Project“).

This post discusses the disagreement between Karl-Heinz Bockstiegel (the president of the tribunal) and Michael Pryles (appointed by the Claimant) (together, the “Majority“), and Prof. Philippe Sands QC (appointed by Peru), on the assessment of damages. Prof. Sands considered that the damages should be reduced due to contributory fault on the part of the Claimant.

The impact the Claimant’s conduct had on the Tribunal’s calculation of damages was, in any case, significant. Given the extent of, and reasons for, the opposition to the Project by the time of Decree 032, the Tribunal thought a hypothetical purchaser would not have obtained the necessary ‘social license’ to proceed with the Project. Ultimately it awarded the Claimant only a fraction of the US$522 million claimed. The reduced damages award emphasises the importance of respect for human rights and engagement with indigenous communities by investors.

The respective views expressed by the arbitrators concerning the Claimant’s conduct are also interesting in light of the broader debate about the relevance of the human rights of non-parties in investor-state arbitration.

An overview of the overall Award can be found in the post published on 16 December 2017 on the Kluwer Arbitration Blog. Continue reading

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Filed under Awards, Damages, International Human Rights, Investment Arbitration, ISDS, The Americas

Japanese Supreme Court deals with issues relating to an arbitrator’s duty to disclose

Under Article 18(4) of the Japan Arbitration Act (“JAA“), arbitrators have an ongoing obligation to disclose circumstances which may give rise to justifiable doubts as to their impartiality or independence. In the latest judgement in a series of appeals relating to an application to set aside an arbitral award, the Japanese Supreme Court confirmed that this disclosure obligation will only be breached where an arbitrator is aware of such circumstances but fails to disclose them, or could have learned of such circumstances through a reasonable investigation but did not. Continue reading

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Filed under Arbitrators, Asia, East Asia, Independence

3rd EFILA annual conference 2018: parallel states’ obligations in investor-state arbitration – 5 February 2018, London

The European Federation for Investment Law and Arbitration (EFILA) will be holding its third Annual Conference on 5 February 2018 at the Senate House in London. The conference will focus on four topics:

  1. non-disputing third parties and their influence on arbitration;
  2. investment regulation and arbitration;
  3. human rights, environment and arbitration; and
  4. the proposed Investment Court System.

For more information and details on how to reserve a place, please see the conference flyer here. Continue reading

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Filed under Europe, Events, International Human Rights, Investment Arbitration, ISDS, Procedures in arbitration, Third-Party Rights

Amendments to the Singapore International Commercial Court Regime to strengthen Singapore as an international arbitration seat of choice

On 9 January 2018, amendments were passed to the Supreme Court of Judicature (Amendment) Act (“SCJA “) which clarify that the Singapore International Commercial Court (“SICC“) has jurisdiction to hear proceedings relating to international commercial arbitration.  The amendments also abolish the pre-action certificate procedure for applications to the SICC.

Established in 2015 as the ‘international’ division of the Singapore High Court, the SICC has gone from strength to strength in a short span of time, gaining a reputation for the quality and speed of judgments rendered. Since its establishment the SICC has heard 17 cases on matters ranging from construction, investment, banking and finance, and shipbuilding, all of which are high value cases involving international parties and counsel.

These latest amendments, along with the addition of four new esteemed international jurists to the SICC bench, are intended to further increase the popularity and usage of the SICC, and Singapore as a preferred seat of international arbitration. Continue reading

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Filed under Arbitration laws, Asia, Jurisdiction, News, South East Asia

SPC publishes new judicial interpretations on arbitration

The Supreme People’s Court of China (SPC) has released two judicial interpretations (Interpretations) on arbitration. The Interpretations were passed on 20 November 2017 and 4 December 2017. The texts of both were made public on 29 December 2017 and became effective on 1 January 2018. The Interpretations are the latest in a series of steps by the SPC to improve the regime for both domestic and cross-border arbitration in mainland China.

The Interpretations primarily address the judicial review of arbitration cases. The important provisions that have been given effect include:

  • Extending the existing “reporting system” to domestic arbitrations in order to achieve judicial consistency
  • Granting parties limited opportunities to participate in the reporting system to improve transparency
  • Encouraging parties to state expressly the law they intend to govern a foreign-related arbitration agreement
  • Clarifying that the decisions of the PRC Courts under the “reporting system” are not subject to appeal.

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Filed under Arbitration laws, Asia, Court intervention, East Asia, Enforcement, Hong Kong & China

OHADA ARBITRATION REFORM – PUBLICATION OF THE NEW UNIFORM ACT ON ARBITRATION AND THE REVISED CCJA ARBITRATION RULES

Almost 18 years after the Uniform Act on OHADA arbitration law was adopted and the Common Court of Justice and Arbitration created (the CCJA), the OHADA Council of Ministers has adopted three new, very important, texts for arbitration and dispute resolution within the OHADA area: a largely modified Uniform Act on arbitration law, revised CCJA Arbitration Rules, and a new Uniform Act on mediation. These new texts aim at strengthening and promoting alternative dispute resolution mechanisms in the OHADA area.

The arbitration reform aims to promote arbitration within the OHADA area, offering expedient, effective, and transparent arbitral proceedings and easily enforceable awards. The reform is also aimed at making the CCJA more attractive as a centre for arbitration by bringing its modus operandi closer to the international standards of other centres for arbitration, in order to position OHADA as a serious competitor on the African continent, including as a suitable venue in many respects for arbitration within the OHADA area.

The new Uniform Act on arbitration, the revised CCJA Arbitration Rules, and the Uniform Act on mediation were published in the OHADA Official Journal the 15 December 2017 and will entry into force on 15 March 2018. This blog piece addresses the first two texts.

For a French language version of this blog post, please click here.

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SIAC issues proposal for consolidation of arbitral proceedings between institutions

On 19 December 2017, the Singapore International Arbitration Centre (SIAC) released a proposal on cross-institution cooperation and consolidation of arbitral proceedings conducted under different arbitral rules (the SIAC Proposal).

SIAC has invited comments on its Proposal by 31 January 2018. The memorandum enclosing the SIAC Proposal can be accessed here.

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Filed under Arbitration clauses, Arbitration rules, Asia, Institutions, Procedures in arbitration, South East Asia

English Commercial Court upholds s68 serious irregularity challenges to an arbitral award holding that the arbitrator should have ensured that costs are pleaded by all parties

In Oldham v. QBE Insurance (Europe) Ltd [2017] EWHC 3045 (Comm), the Commercial Court held that the arbitrator’s decisions on costs could be challenged on grounds of serious irregularity under Section 68 of the Arbitration Act of 1996 (the Act) on the basis that the applicant had been denied the opportunity to make submissions. This decision is a rare instance of the English Courts intervening in the conduct of an arbitration in order to protect the integrity of the process, and ensure equal treatment of parties to the arbitration. Continue reading

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Filed under Arbitration Act 1996, Arbitration proceedings, Challenges to awards, Costs, Court intervention, Europe