International Arbitration: Law and Practice Gary b. born Published by: Kluwer Law International PO Box 316 2400 AH Alphen aan den Rijn The Netherlands Website: www.kluwerlaw.com Sold and distributed in North, Central and South America by: Aspen Publishers, Inc. 7201 McKinney Circle Frederick, MD 21704 United States of America Email: [email protected] Sold and distributed in all other countries by: Turpin Distribution Services Ltd. Stratton Business Park Pegasus Drive Biggleswade Bedfordshire SG18 8TQ United Kingdom Email: [email protected] eISBN 978-90-411-4675-5 © 2012 Kluwer Law International BV, The Netherlands All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, mechanical, photocopying, recording or otherwise, without prior written permission of the publishers. Permission to use this content must be obtained from the copyright owner. Please apply to: Permissions Department, Wolters Kluwer Legal, 76 Ninth Avenue, Seventh Floor, New York, NY 10011-5201, United States of America. E- mail: [email protected]. For Clyde Raymond Born Table of Contents Preface Acknowledgments Part I International Arbitration Agreements Chapter 1 Introduction to International Arbitration §1.01 Definition of International Arbitration [A] What Is “Arbitration”? [1] Consensual Means to Resolve Disputes [2] Non-Governmental Decision-Maker Selected by or for the Parties [3] Final and Binding Decision [4] Use of Adjudicatory Procedures [B] Forum Selection Clauses and National Courts [C] Other Forms of Alternative Dispute Resolution [1] Mediation and Conciliation [2] Expert Determination [3] Mini-Trials and Neutral Evaluation [4] “Baseball” or “Final-Offer” Arbitration [D] “International” Arbitration §1.02 Reasons for International Arbitration [A] Neutrality [B] Centralized Dispute Resolution [C] Enforceability of Agreements and Awards [D] Commercial Competence and Expertise [E] Finality of Decisions [F] Party Autonomy and Procedural Flexibility [G] Cost and Speed [H] Confidentiality and Privacy of Dispute Resolution [I] Arbitration Involving States and State-Entities §1.03 Popularity of International Arbitration §1.04 Contemporary International Arbitration Conventions [A] New York Convention [B] Inter-American Convention [C] European Convention §1.05 Contemporary National Arbitration Legislation [A] Supportive National Arbitration Legislation [B] 1985 UNCITRAL Model Law and 2006 Revisions [C] Less Supportive National Legislation §1.06 Ad Hoc and Institutional Arbitration [A] Institutional Arbitration [B] Ad Hoc Arbitration [C] Relative Advantages and Disadvantages of Institutional and Ad Hoc Arbitration [D] UNCITRAL Arbitration Rules [E] Leading International Arbitral Institutions [1] International Chamber of Commerce [2] London Court of International Arbitration [3] American Arbitration Association/International Centre for Dispute Resolution [4] Singapore International Arbitral Centre [5] ICSID [6] Permanent Court of Arbitration [7] Other International Arbitral Institutions §1.07 Elements of International Arbitration Agreements [A] Submission Agreement versus Arbitration Clause [B] Critical Elements of International Arbitration Agreements [1] The Agreement to Arbitrat [2] Scope of Arbitration Agreement [3] Institutional Arbitration Rules [4] Seat or Place of the Arbitration [5] Number, Method of Selection and Qualifications of Arbitrators [6] Language of the Arbitration [7] Choice-of-Law Clauses [C] Other Provisions of International Arbitration Agreements §1.08 Overview of Choice of Law in International Commercial Arbitration [A] Law Applicable to the Substance of the Parties’ Dispute [B] Law Applicable to the Arbitration Agreement [C] Procedural Law Applicable to the Arbitral Proceedings [D] Choice of Laws Rules Applicable in International Arbitration §1.09 Investor-State Arbitration [A] ICSID Convention [B] Bilateral Investment Treaties §1.10 State-to-State Arbitration Chapter 2 International Arbitration Agreements: Legal Framework §2.01 Disputes Concerning International Arbitration Agreements [A] Challenges to Existence, Validity and Scope of International Commercial Arbitration Agreements [B] Procedural Settings for Jurisdictional Objections [1] Consideration of Jurisdictional Objections by Arbitrators [2] Consideration of Jurisdictional Objections by National Courts §2.02 Jurisdictional Requirements of International and National Commercial Arbitration Regimes [A] “Arbitration” Agreement Requirement [B] “Commercial” Relationship Requirement [C] “Disputes” or “Differences” Requirement [D] “Existing or Future” Disputes Requirement [E] “Defined Legal Relationship” Requirement [F] “Foreign” or “International” Arbitration Agreements Requirement [G] Reciprocity Requirements §2.03 Presumptive Validity of International Arbitration Agreements [A] Historic Rules of Unenforceability [B] New York Convention [C] National Arbitration Legislation §2.04 Separability of International Arbitration Agreements [A] Separability Presumption [B] Rationale for Separability Presumption [C] Consequences of Separability Presumption §2.05 Allocation of Competence to Decide Disputes Over Existence, Validity and Interpretation of International Arbitration Agreements [A] Competence-Competence Doctrine [B] Allocation of Competence to Decide Jurisdictional Disputes [1] France: Prima Facie Jurisdiction [2] United States: Interlocutory Judicial Decisions [3] UNCITRAL Model Law: Diversity of Approaches §2.06 Law Applicable to Formation, Validity and Interpretation of International Arbitration Agreements [A] Law of Judicial Enforcement Forum [B] Law Chosen by Parties [C] Law of Arbitral Seat [D] “Validation” Principle [E] International Law [F] Other Choice-of-Law Issues [1] Formal Validity [2] Capacity [3] Non-Arbitrability [4] Non-Signatory Issues §2.07 Effects of International Arbitration Agreements [A] Positive Effects of Arbitration Agreement: Obligation to Arbitrate in Good Faith [1] Source of Positive Obligations to Arbitrate [2] Content of Positive Obligation to Arbitrate [3] Remedies for Breach of Positive Obligation to Arbitrate [B] Negative Effects of Arbitration Agreement: Obligation Not to Litigate [1] Negative Obligations under Agreement to Arbitrate [2] Remedies for Breach of Negative Obligation Not to Litigate Arbitrable Disputes: Stay or Dismissal of Litigation [3] Remedies for Breach of Negative Obligation Not to Litigate Arbitrable Disputes: Antisuit Injunction [4] Remedies for Breach of Negative Obligation Not to Litigate Disputes: Damages for Breach of Obligation Not to Litigate [5] Remedies for Breach of Negative Obligation Not to Litigate Disputes: Non- Recognition of Judgments [C] Anti-Arbitration and Anti-Suit Orders Chapter 3 Formation and Validity of International Arbitration Agreements §3.01 Formation of International Arbitration Agreements [A] Consent to Arbitration Agreement [B] Standard of Proof for International Arbitration Agreements [C] Essential Terms of Arbitration Agreements [1] Agreement to Arbitrate [2] Incidental Terms [3] Blank Clauses [D] Pathological Arbitration Clauses [1] Indefinite Arbitration Agreements [2] Arbitration Agreements Referring to Non-Existent Arbitral Institutions, Arbitration Rules, or Arbitrators [3] Internally Contradictory Arbitration Agreements [4] “Optional” or Non-Mandatory Arbitration Agreements [E] Formal Validity of International Arbitration Agreements [1] Written Form Requirement – New York Convention [2] Written Form Requirement – National Arbitration Legislation [3] UNCITRAL Model Law, Article 7 (and Revisions) [4] Relationship between New York Convention and National Law [5] 2006 UNCITRAL Recommendations [6] Incorporation of Arbitration Agreement [F] Substantive Validity of International Arbitration Agreements [1] “Null and Void,” “Inoperable” and “Incapable of Being Performed” [2] Unconscionability and Duress [3] Fraudulent Inducement or Fraud [4] Impossibility and Frustration [5] Illegality [6] Lack of Capacity [7] Termination and Repudiation [8] Waiver of Right to Arbitrate [9] Inconvenient Arbitral Seat §3.02 The Non-Arbitrability Doctrine [A] Basis for Non-Arbitrability Doctrine [B] Applications of Non-Arbitrability Doctrine [1] Competition and Antitrust Claims [2] Securities Claims [3] Bankruptcy [4] Employment Contracts [5] Consumer Disputes [6] Other Non-Arbitrable Disputes [C] Choice of Law Governing Non-Arbitrability [D] Non-Arbitrability Issues in Annulment or Enforcement of Awards Chapter 4 Interpretation of International Arbitration Agreements §4.01 Scope of Arbitration Agreements [A] Rules of Construction [1] Pro-Arbitration Rules of Construction [2] Anti-Arbitration Rules of Construction [B] Recurrent Issues [1] Commonly-Used Formulae in Arbitration Agreements [2] “Broad” versus “Narrow” Arbitration Clauses [3] Tort Claims [4] Statutory Claims [5] Multiple Contracts §4.02 Incorporation of Institutional Arbitration Rules §4.03 Allocation of Competence to Interpret International Arbitration Agreements Chapter 5 International Arbitration Agreements: Non-signatory Issues §5.01 Non-Signatories to Arbitration Agreements [A] Agency [B] Alter Ego and Veil-Piercing [C] Group of Companies [D] Succession [E] Assignment or Transfer [F] Estoppel [G] Corporate Officers and Directors §5.02 Formal Validity and Non-Signatories §5.03 Choice of Law Governing Non-Signatory Issues §5.04 Allocation of Competence to Decide Non-Signatory Issues §5.05 Non-Signatory Issues and Institutional Arbitration Rules Part II International Arbitral Proceedings Chapter 6 International Arbitral Proceedings: Legal Framework §6.01 Meaning and Importance of the Arbitral Seat [A] Location of Arbitral Seat [B] Arbitral Seat Distinguished from Location of Hearings [C] Territorial Structure of National Arbitration Legislation [D] Issues Governed by Law of Arbitral Seat [1] “Internal” Procedures in the Arbitration: Due Process Requirements of Arbitral Seat [2] “External” Relationship with National Courts: Supervisory Authority of