Arbitrator’s independent inquiries amount to a serious irregularity – English court remits award back to arbitrator

The English High Court has upheld a challenge to an arbitration award on the grounds of serious irregularity, in Fleetwood Wanderers Ltd (t/a Fleetwood Town Football Club) v AFC Fylde Ltd [2018] EWHC 3318 (Comm). The Court held that the sole arbitrator’s conduct in making independent investigations after the substantive hearing, without notifying the parties and without giving them an opportunity to respond, breached the tribunal’s general duty under s33 of the UK Arbitration Act 1996 (the “Act“), and amounted to a serious irregularity under s68 of Act. The award was remitted back to the arbitrator for reconsideration.

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English Court refuses to grant an injunction against the enforcement of a s1782 US Evidence Order

In a decision dated 24 August 2018, the English Commercial Court (the “Court“) dismissed Dreymoor Fertilisers Overseas PTE Ltd’s (“Dreymoor“) application to continue an injunction preventing the enforcement of an order of a U.S. court granting discovery under section 1782 of the United States Code (the “Order“). The Order required one of Dreymoor’s employees to be deposed and produce evidence for use in various international proceedings by Eurochem Trading GMBH (“ECTG“) against Dreymoor. Dreymoor argued that enforcing the Order would constitute unconscionable conduct as it would interfere with its preparation for arbitration proceedings against ECTG.

The Court accepted that the enforcement of orders such as the Order could potentially be unfair, as they would effectively provide an opportunity to cross-examine the same witness twice. However, whether to injunct the enforcement of such an order required a careful case-by-case analysis. Based on various case-specific factors, the Court decided that it would not be unconscionable to allow ECTG to enforce the Order and dismissed Dreymoor’s application to continue the injunction.

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English High Court grants an anti-suit injunction and confirms that the choice of arbitral seat is “analogous to an exclusive jurisdiction clause”

In Atlas Power v National Transmission and Despatch Company Ltd [2018] EWHC 1052 the English High Court granted a final anti-suit injunction to permanently restrain a national grid company owned by the Government of Pakistan (“NTDC“) from challenging an LCIA Partial Final Award in Pakistan (or anywhere other than England and Wales).

The injunction was granted on the “entirely straightforward” basis that the seat of the arbitration was London.  Phillips J rejected NTDC’s arguments that the courts of Pakistan had concurrent jurisdiction or that the seat of the arbitration was Lahore, Pakistan, and confirmed that an agreement on the seat of the arbitration is also an agreement on the forum for any challenges to an award.  Continue reading

LCIA 2017 Casework Report

The LCIA has recently released its Casework Report for 2017. This report provides an overview of and insights into the LCIA’s caseload. It includes detailed statistics concerning aspects of the caseload with a breakdown by sector, contract type, and time elapsed since the underlying agreement was reached. The Report also looks at arbitrator appointments and the frequency of use of different procedures under the LCIA’s Arbitration Rules (the “Rules”).The statistics show that the institution has had another strong year. Despite a small decrease in referrals from 2016, the overall picture is one of long term growth and a strong international profile. It is also important to note that the LCIA continues to make steady progress its efforts to improve the diversity of arbitrators. The number of female and non-British arbitrators has increased from 2016, albeit at a gradual rate.

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English Court holds that the time limit for appeal of an award runs from the date of the award, unless there is a “material” correction to the award

In a decision dated 16 March 2018, the English Commercial Court (the “Court“) dismissed the application of appeal under s69 of the English Arbitration Act 1996 (the “Act“) by Daewoo Shipbuilding & Marine Engineering Company Limited (“DSME“) on the ground that the application was not made within the statutory time period provided by s70(3) of the Act and there was no reason to grant an extension to that period.

The key issue was whether the 28 day statutory period for appeal commenced on the date of the original award or the date of the correction of the award (to remedy clerical errors pursuant to s57(3) of the Act). The Court held the 28 day period commences on the date of the original award unless the correction was material to the challenge to the Award. This exception did not apply here so DSME’s application was out of time.

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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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Inside Arbitration: Issue #5 of the publication from Herbert Smith Freehills’ Global Arbitration Practice

We are delighted to share with you the latest issue of the publication from the Herbert Smith Freehills Global Arbitration Practice, Inside Arbitration.

In addition to sharing knowledge and insights about the markets and industries in which our clients operate, the publication offers personal perspectives of our international arbitration partners from across the globe.

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English court sets aside tribunal’s award on jurisdiction, finding that the LCIA Rules do not permit a party to bring claims under multiple contracts in a single arbitration

In its recent decision in the case of A v B [2017] EWHC 3417 (Comm) (available here), the English Commercial Court (the “Court“) set aside the tribunal’s award upholding its own jurisdiction, on the grounds that the LCIA Rules 2014 do not permit a party to commence a single arbitration in respect of disputes under multiple contracts.  As a result, the Claimant’s Request for Arbitration was invalid. The Court also held (contrary to the tribunal’s award) that the Respondent had not lost its right to object to the tribunal’s jurisdiction by failing to raise its jurisdictional challenge until shortly before filing its Statement of Defence.

This is a rare instance of the English court setting aside a tribunal’s award and a significant reminder to parties to transactions involving multiple related contracts to consider efficient resolution of disputes at the contract drafting stage. Continue reading

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
+44 20 7466 2767
Hannah Ambrose
Hannah Ambrose
Professional Support Consultant
+44 20 7466 7585
Vanessa Naish
Vanessa Naish
Professional Support Consultant
+44 20 7466 2112

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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