HERBERT SMITH FREEHILLS-CAMPAIGN FOR GREENER ARBITRATIONS WEBINAR: SUSTAINABILITY IN ARBITRATION – REDUCING THE ENVIRONMENTAL IMPACT OF OUR DISPUTES

Herbert Smith Freehills and the Campaign for Greener Arbitrations are delighted to invite you to attend our webinar on Sustainability in Arbitration. Environmental sustainability is not a new subject, but is one that is increasingly at the forefront of government and corporate strategy and headlining the papers, as grappling with climate change has become a global priority. Every industry is impacted, including arbitration, and every industry is able to reduce its carbon footprint.

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Construction Arbitration Podcast Series Episode 4: Preparing your case

We are pleased to share the fourth episode in our Construction Arbitration podcast series, in which we look at the importance of case preparation, both at the outset of a case and beyond.

In this episode James Doe (Partner, UK Head of Construction & Infrastructure Disputes), Maguelonne de Brugiere (Senior Associate, International Arbitration) and Olivia Liang (Associate, Construction & Infrastructure Disputes) discuss the initial preparation of the case, on-going strategy considerations throughout the life of the arbitration and preparation for the hearing. They cover a wide range of key issues, including evaluating claims and substantiating them, the context of voluminous documentary evidence, multi-party and multi-contract issues, enforcement considerations and advocacy.

You can listen to this episode here.

To listen to the previous episodes covering an introduction to construction arbitration, the role of experts and documents and factual witnesses, please visit the Construction Arbitration podcast series page here.

In the next episode, which is the last in this series, we will discuss the management of construction arbitration procedure.

If you are interested in listening to our other construction and arbitration podcasts, or reading our articles on construction and arbitration, please take a look at our Construction Notes and Arbitration Notes and subscribe to receive notifications of our latest content.

For more information, please contact James Doe, Partner, Maguelonne de Brugiere, Senior Associate, Olivia Liang, Associate, or your usual Herbert Smith Freehills contact.

James Doe

James Doe
Partner
+44 20 7466 2583

Maguelonne de Brugiere

Maguelonne de Brugiere
Senior Associate
+44 20 7466 7488

Olivia Liang

Olivia Liang
Associate
+44 20 7466 7520

 

PALAU ACCEDES TO THE 1958 NEW YORK CONVENTION

On 31 March 2020, Palau acceded to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention” or the “Convention“). With this, Palau becomes the 163rd State party to the Convention, following the recent accessions of Ethiopia, the Seychelles, the Maldives and Papua New Guinea. Palau deposited its instrument of accession on 31 March 2020 and, under Article XII (2) of the Convention, it will come into force on 29 June 2020, 90 days thereafter.

Consistent with Article I.3 of the New York Convention, contracting States are able to ratify or accede subject to certain reservations. Palau is reported by the Secretary-General of the United Nations to have acceded to the New York Convention subject to two common reservations. Palau will apply the Convention (i) on the basis of reciprocity to the recognition and enforcement of arbitral awards made only in the territory of another contracting State, and (ii) only to differences arising out of legal relationships, whether contractual or not, which are considered commercial under the laws of the Republic of Palau.

Palau’s accession is also subject to the Convention only being applicable to arbitral awards concluded after the date of Palau’s accession. The implication of this provision is that any outstanding awards made prior to the Convention coming into effect on 29 June 2020 will not be enforceable in Palau under the Convention. Parties seeking to enforce such awards will need to rely on Palau’s existing domestic enforcement regime.

For more information please contact Chris Parker, Partner, Maguelonne de Brugiere, Senior Associate, or your usual Herbert Smith Freehills contact.

Chris Parker

Chris Parker
Partner
+44 20 7466 2767

Maguelonne de Brugiere

Maguelonne de Brugiere
Senior Associate
+44 20 7466 7488

ARBITRATION OF CLIMATE CHANGE DISPUTES

On 28 November 2019, the International Chamber of Commerce Task Force on Arbitration of Climate Change Related Disputes released their Report on Resolving Climate Change Related Disputes through Arbitration and ADR  (“ICC Report“). The 66-page ICC Report explores existing and anticipated climate change-related  disputes and the benefits of using arbitration to resolve these.

Over the last five years, major arbitral institutions have witnessed a steady increase in disputes involving climate change issues.[1] Typically, these have been intrinsically linked to the energy transition away from traditional energy sources such as fossil fuels and coal to increased investments in renewable energy, the modernization of power grids and the improvement of energy and data storage.[2] The ICC Report considers the nature of these disputes and focuses on the following features of the ICC Rules which can enhance existing procedures to effectively adjudicate climate change-related disputes. It also provides extensive guidance on additional language parties may wish to include in their arbitration agreement to tailor these to the types of climate-related disputes which they anticipate may arise.

Expertise of arbitrators and experts

The ICC Report acknowledges that access to appropriate scientific expertise is often critical in climate change disputes. It highlights the parties’ ability under the ICC Rules to have a decisive impact on the choice of arbitrators, including by:

  • setting out the competence and skills they require their arbitrators to have in their arbitration agreements;
  • requiring the ICC Court to consult them prior to appointing a sole arbitrator or presiding arbitrator; and even
  • challenging arbitrator appointments “whether for an alleged lack of impartiality or independence or otherwise“.[3] Interestingly, the ICC Report suggests that the catch-all “or otherwise” opens the door for challenges where parties consider that arbitrators appointed lack the requisite qualifications to hear a dispute.

The ICC Rules similarly leave the door open for the use of both party-appointed experts and/or tribunal-appointed experts in proceedings. This ensures that a tribunal has access to any climate change-related expertise it needs to determine the issues in dispute. The ICC can assist with the appointment of tribunal-appointed experts by providing expert recommendations as well as assisting with the administration of expert proceedings.

In contrast with other institutions such as the Permanent Court of Arbitration (“PCA“), the ICC does not maintain a formal list of specialised environmental arbitrators or technical and scientific environmental experts.[4] The ICC Report highlights this as a potential working point, and issues a recommendation to the ICC to reach out to climate change scientists and other technical and modelling experts.

Measures and procedures to expedite early or urgent resolution of issues

The ICC offers flexibility in the method of resolution of disputes. The parties’ options are not limited to arbitration. They can choose to mediate their dispute or refer these to expert determination, which may facilitate the early neutral assessment of technical facts in issue. The ICC also assists in the formation and use of standing dispute resolution bodies which are uniquely suited to handle disputes arising in long-term infrastructure projects, or projects where funding is subject to the Equator Principles (which require Equator Principles Financial Institutions to have an ongoing grievance mechanism to facilitate the resolution of concerns and grievances about a project’s environmental and social performance).

The ICC Report highlights the availability of a number of measures and procedures to expedite the early resolution of issues in climate change-related disputes, such as emergency arbitration, interim and conservatory measures and other time and cost management techniques. The ICC Rules do not go as far as the PCA Optional Rules for Arbitration of Disputes Relating to the Environment and/or Natural Resources (“PCA Environmental Rules”) which expressly empower tribunals to order interim measures to “prevent serious harm to the environment falling within the subject matter of the dispute“,[5] or the UN Convention on the Law of the Sea (“UNCLOS“) Rules which give tribunals the powers to prescribe provisional measures where necessary to prevent serious harm to the marine environment pending a final decision. However, the ICC Report suggests that should they wish, the parties could include a provision to this effect in their arbitration agreement or in the Terms of Reference.

Transparency and public participation

The ICC Report acknowledges that a major concern in the context of climate change-related disputes is transparency, and the lack of transparency typically associated with commercial arbitration has acted as a barrier to it being viewed as a satisfactory dispute resolution mechanism for climate change-related disputes.

It suggests that increased transparency in relation to climate change-related disputes could be achieved by: (i) opening the proceedings to the public, (ii) publishing case documents; and (iii) publishing awards. The ICC Rules prevent neither open proceedings nor publication of case-related documents, and the parties are free to agree to enhanced transparency wording in their arbitration agreements. The ICC currently promotes a certain degree of transparency, for example by providing for the publication of awards in commercial arbitrations from 1 January 2019 onwards, two years after notification of the award to the parties, absent any objection by the parties. This does provide some additional transparency but falls short of other more extensive transparency provisions, for example, those in the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration.

In addition, should the parties wish, the interests of third parties such as NGOs, environmental protection agencies or scientific research entities, may be taken into account in a contractual arbitration through: (i) the joinder of an additional party, or (ii) non-party participation such as through a written amicus curiae brief.[6] Again, appropriate wording would need to be included in either the arbitration clause or the Terms of Reference to provide for this.

Comment

The ICC Report responds to the IBA Climate Change Justice and Human Rights Task Force‘s call to all arbitral institutions to “take appropriate steps to develop rules and/or expertise specific to the resolution of environmental disputes, including procedures to assist consideration of community perspectives“.[7] Its publication reflects the growing concern climate change represents, not just for individuals but for corporates alike, and the need to ensure that appropriate fora are available to resolve the increasing number of climate change-related disputes, be they claims against companies and governments for breaches of human rights, claims against governments to accelerate climate change prevention, shareholder claims against companies for failing to adequately disclose the environmental impact of their operations, insurance disputes, company disputes in the energy sector, or other climate change-related disputes.

Herbert Smith Freehills’ partner Thierry Tomasi, who participated in the ICC’s Task Force on Arbitration of Climate Change Related Disputes observes that: “stimulating discussions in the context of the Task Force’s sessions have led to a report which provides both a comprehensive assessment of the current state of play in relation to arbitrating climate change related disputes, and a very useful roadmap for the ongoing reflection, within the ICC, on this growing field of investigation“.

The ICC Report highlights the availability of an existing number of provisions which could make arbitration under the ICC Rules an attractive forum for climate change-related disputes. In particular, provisions can be adopted for increased transparency, the involvement of third parties, interim and conservatory measures, as well as the appropriate expertise of arbitrators appointed. As ever, the flexibility of the arbitration process means that it can be purposefully adapted to suit the dispute resolution needs of the parties. However, the ICC makes it clear that the onus is on the parties to tailor their arbitration agreements or Terms of Reference to suit the particular requirements of their likely disputes.

The ICC Report highlights certain areas where the ICC can focus its efforts, for example by building a more extensive database of climate change-related experts. It does not, at this stage however, propose any changes to its Rules to cater to these types of disputes. This contrasts with  other institutions such as the PCA which have taken a more radical approach to climate change disputes, by enacting new rules specifically designed to attract new users who have climate change-related disputes.

The ICC Report shortly preceded the publication of the much-anticipated  Hague Rules on Business and Human Rights Arbitration, launched on 12 December 2019 (“Hague BHR Rules“), which propose an arbitration framework to deal with human rights-related disputes and therefore also climate change, environmental, and human rights-related claims. The Hague BHR Rules are accompanied by detailed commentary on issues similar to those raised in the aforementioned IBA Climate Change and ICC Reports, including: (i) having arbitrators with expertise appropriate for such disputes and bound by high standards of conduct, (ii) the possible need for the tribunal to create special mechanisms for the gathering of evidence and protection of witnesses, (iii) prescribing rules for third-party participation in arbitrations, and (iv) other procedural issues relevant to human rights disputes.

While the ICC Report does not suggest any radical overhaul or changes to adapt the existing ICC arbitration procedure to meet the specific needs of climate change-related disputes, its recommendations, which overlap with those made by the IBA or contained in the Hague BHR Rules suggest that there may be a growing consensus in the procedural developments that will take on greater significance in climate change-related disputes.

For more information, please contact Florencia Villaggi, Counsel, Maguelonne de Brugiere, Senior Associate, Christine Sim, Associate, or your usual Herbert Smith Freehills contact.

Florencia Villaggi

Florencia Villaggi
Counsel
+1 917 542 7804

Maguelonne de Brugiere

Maguelonne de Brugiere
Senior Associate
+44 20 7466 7488

Christine Sim

Christine Sim
Associate
+1 917 542 7853


[1] “Resolving Climate Change Related Disputes through Arbitration and ADR,” ICC, 2019, Annex, ¶24.

[2] Supra 1, Section II(B).

[3] ICC Arbitration Rules, Art 14(1).

[4]  Permanent Court of Arbitrators Specialized Panel of Scientific experts, https://pca-cpa.org/wp-content/uploads/sites/6/2016/07/Current-List-Annex-3-SP-SciEXP-update-20190930-184038-v6_.pdf

[5] PCA Environmental Rules, Art 26.

[6]  Supra ¶5.83-5.91.

[7] IBA Climate Change Justice and Human Rights Task Force Report, “Achieving Justice and Human Rights in an Era of Climate Disruption”, 2014, p. 144.

English Commercial Court orders stay of Lebanon-seated arbitration in ‘exceptional’ case

In the most recent decision in the Sabbagh family feud, Sabbagh v Khoury & Ors [2018] EWHC 1330 (Comm), the English Commercial Court ordered the stay of parallel Lebanon-seated arbitration proceedings. This was despite the tribunal in that case having found that it had jurisdiction to hear it. In granting the interim injunction to restrain the pursuit of the arbitration proceedings, Mr Justice Knowles was quick to acknowledge the significance of a court that is not the supervisory court granting an injunction to prevent parties prosecuting a foreign arbitration.

 

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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

ITLOS rules in favour of Ghana in long-standing maritime dispute with Côte d’Ivoire

On 23 September 2017, a Special Chamber of the International Tribunal for the Law of the Sea (ITLOS) delivered its judgment on the longstanding maritime boundary dispute between Ghana and Côte d’Ivoire.

The Special Chamber reconfirmed the relevance of the equidistance methodology in determining the maritime boundary between the two States. The judgment also touches on important issues affecting States and international companies operating in disputed waters such as the applicable obligations pending resolution of such disputes.
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