ICC STRIVES FOR GREATER TRANSPARENCY AND EFFICIENCY IN UPDATED PRACTICE NOTE TO PARTIES AND ARBITRAL TRIBUNALS ON THE CONDUCT OF ARBITRATION UNDER THE ICC RULES

On 20 December 2018, the International Court of Arbitration of the International Chamber of Commerce (ICC) published updated guidance on the conduct of arbitration under its arbitration rules. The Note to Parties and Arbitral Tribunals on the Conduct of Arbitration under the ICC Rules of Arbitration (Note) entered into force on 1 January 2019, and represents a continuation of the ICC’s efforts to increase transparency and efficiency, and widen its range of services to users.  We consider six of the most significant updates to the Note below.

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The threat of imprisonment for arbitrators in the UAE has been removed as Article 257 is amended

A decision by the federal government of the UAE to remove arbitrators from the scope of application of Article 257 of the UAE Penal Code has been welcomed by the arbitral community in the UAE and beyond. Federal Decree No. 24 of 2018 came into force on 8 October 2018.

Dubai, seen as an arbitration-friendly jurisdiction, saw a threat to its image when Article 257 was amended in 2016 to include arbitrators in the category of individuals against whom criminal sanctions could be imposed if they failed to maintain integrity and impartiality in the discharge of their duties.

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India’s lower house of Parliament approves further amendments to the Indian Arbitration Act

As previously reported here, a draft Bill to amend the Arbitration and Conciliation Act 1996 (the “Act“) was approved by the Indian Cabinet on 7 March 2018 (the “Bill“). The Bill was listed as a part of the agenda for the monsoon session of the Indian Parliament and was passed by the Lower House on 10 August 2018, without any amendments. The text of the Bill can be found here.

The Law Minister has described the Bill as “a momentous and important legislation” aimed at making India “a hub of domestic and international arbitration”. The key features of the Bill are:

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Award dismissing a claim for inordinate and inexcusable delay survives challenge in the English court

In Grindrod Shipping Pte Ltd v Hyundai Merchant Marine Co. Ltd, the English High Court (“the Court“) rejected an application under s68 of the Arbitration Act 1996 (“the Act“) to challenge an Award (the “Award“). Six years after the proceedings had commenced, the tribunal (“Tribunal“) issued a final award dismissing the claim under s41(3) of the Act on the ground of inordinate and inexcusable delay. Grindod Shipping challenged the award under s68 of the Act,  arguing that the Tribunal’s decision was based on grounds not advanced by the respondent. The Court concluded that the issues had been sufficiently “in play” for all sides to have had a fair opportunity to respond. There was no breach of the tribunal’s duty to act fairly and impartially and therefore no procedural irregularity.

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ENGLISH COURT OF APPEAL CONSIDERS DISCLOSURE OF ARBITRAL APPOINTMENTS IN RELATED OR OVERLAPPING REFERENCES

In Halliburton Company v Chubb Bermuda Insurance Ltd [2018] EWCA Civ 817, the English Court of Appeal was asked to consider:

  1. whether it is possible for an arbitrator to accept multiple appointments with overlapping reference and one common party, without giving rise to doubts over impartiality?
  2. at what point should an arbitrator disclose these further appointments – if at all?

The Court of Appeal dismissed the appeal, stating that, on the facts of the case, there was no real possibility that the arbitrator was biased when viewed from the perspective of a “fair minded and informed observer”.  Nevertheless, the Court held that, in accordance with English law and best practice in international arbitration, disclosure should have been made. Continue reading

HKIAC 2017 CASE STATISTICS

The HKIAC has recently published its case statistics for 2017, showing a continued healthy demand for its services. The HKIAC saw a 15.7% increase in its caseload compared to 2016, with the total amount in dispute in HKIAC arbitrations doubling since last year. The statistics demonstrate that HKIAC maintains its position as one of the world’s leading arbitral institutions, serving parties throughout Asia and beyond. Continue reading

English Court of Appeal reinstates the appointment of an arbitrator on the basis that he qualifies for appointment under the arbitration clause

In Allianz Insurance and Sirius International Insurance Corporation v Tonicstar Limited [2018] EWCA Civ 434, the English Court of Appeal has reversed the decision of the High Court on whether a party-appointed arbitrator met the contractual requirements as to requisite experience. The Court of Appeal held that that an English QC with experience of insurance and reinsurance law was sufficient to comply with a contractual clause requiring arbitrators to have “experience of insurance and reinsurance”.

This decision is of particular interest as such challenges to arbitrators rarely come before the courts. It highlights once again the importance of drafting arbitration clauses clearly, particularly where parties require their arbitrators to possess certain qualifications or experience.

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Further Indian jurisprudence on appointments of former employees as arbitrators

Since our previous report on the Delhi High Court refusing to uphold an arbitration clause that provided for the tribunal to be comprised of one party’s employees or retired employees, there have been several cases which have provided useful guidance in relation to the appointment of arbitrators under the new provisions in the Arbitration and Conciliation (Amendment) Act 2015, which came into force on 23 October 2015 and amended the Arbitration and Conciliation Act 1996 (“Amended Act“).  The Amended Act applies to arbitration agreements which pre-date the amendments.[1]

The recent jurisprudence on appointing former employees as arbitrators has dealt with a number of issues, but four key principles emerge:

  1. The provisions of the Amended Act dealing with independence of arbitrators do not prohibit the appointment of former employees.
  2. Nonetheless, it is still important for there to be no doubts in relation to the neutrality, impartiality and independence of the arbitral tribunal. Therefore, where a party has a contractual right to compose a list or panel from which the other parties are to select an arbitrator, a ‘broad based’ approach must be adopted.
  3. The Courts have adopted a narrow definition of what constitutes an employee, and therefore all government employees are not automatically ineligible to be appointed as an arbitrator where one of the parties is a government body.
  4. If an ineligible person (e.g. an employee) was nominated as an arbitrator in the arbitration agreement but is now ineligible as a consequence of the Act, that person cannot nominate another independent arbitrator, notwithstanding what the agreement might provide.

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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

English High Court removes arbitrator on the basis that he did not possess necessary qualifications

In Tonicstar Limited v Allianz Insurance and Sirius International Insurance Corporation [2017] EWHC 2753, the English High Court considered an application under Section 24 of the Arbitration Act 1996  (the Act) for the removal of an arbitrator on the basis that he did not satisfy the contractual stipulation as to relevant experience. This judgment is of particular interest given that questions of the removal of arbitrators do not often come before the courts (because they are, in institutional arbitration, typically decided by arbitral institutions so are not usually public). The Court decided to remove the arbitrator on the basis that he had experience of insurance and reinsurance law, rather than required experience in the business of insurance and reinsurance. This decision highlights the importance of the careful drafting of arbitration clauses which specify characteristics of an arbitrator.  It also serves as a reminder of the importance of precedent in the English judicial system.

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