INTERNATIONAL ARBITRATION Domenico Di Pietro STUDYING LAW AT ROMA TRE FALL SEMESTER 18 October 2010

Article II(3) 3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed

RESISTING ENFORCEMENT ARTICLE V(1) 1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: […]

RESISTING ENFORCEMENT ARTICLE V(2) 2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: […]

ARTICLE V(1)(A) 1.Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: (a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made;

ARTICLE V(1)(B) 1.Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: (b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

ARTICLE V(1)(C) 1.Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: (c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

ARTICLE V(1)(D) 1.Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: (d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

ARTICLE V(1)(E) 1.Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: (e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

ARTICLE V(2) 2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: (a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or (b) The recognition or enforcement of the award would be contrary to the public policy of that country.

NULL AND VOID, INOPERATIVE AND INCAPABLE OF BEING PERFORMED Null and Void - identification of the relevant Law Inoperative –arbitration agreement is conditional –arbitration agreement is explicitly or implicitly revoked or modified –Res judicata Incapable of being performed –Inconsistency (conflict with other contractual provisions) –Uncertainty –Deadlock clauses

PATHOLOGICAL CLAUSES General Comments Not enough time devoted to the dispute resolution clause Complexity of deal does not necessarily mean complexity of clause Examples: –Wrong name/no longer existing arbitral institution (Court of Commercial Arbitration with seat in London) –Appointment ad personam –Conflicting jurisdictions (court vs. arbitration) Courts and arbitral institutions inclined to help? Should they? What do you do in the presence of a defective clause?

All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules. ICC MODEL CLAUSE

Any dispute arising out of or related to the present contract shall be settled by arbitration under the Rules of the Chamber of Arbitration of Milan (the Rules), by a sole arbitrator / three arbitrators, appointed in accordance with the Rules. CAM MODEL CLAUSE

(Seriously) Pathological Clauses The Chairman of the Tribunal, in the absence of agreement between the parties, will be appointed by: “… The President of the Court of Castration in France…”

“Any dispute or claim by one party against the other shall be amicably resolved by the Parties’ representatives. Should the settlement negotiations fail, any difference relating to the interpretation of this agreement, shall be amicably resolved by arbitration under the rules of the international arbitration court. The arbitration shall be held in London or Paris, at the exclusive choice of the defendant. The parties submit to the exclusive jurisdiction of the English courts” ANALYSING ARBITRATION CLAUSES I

“In case of disputes, if any, arbitration, London” ANALYSING ARBITRATION CLAUSES II

LUCKY-GOLDSTAR INTERNATIONAL LTD V. NG MOO KEE ENGINEERING LTD High Court of Hong Kong - 5 May 1993 THE ARBITRATION AGREEMENT “Any dispute or difference arising out of this contract shall be arbitrated in a 3rd Country, under the rule of a 3rd Country and in accordance with the rules of procedure of the International Commercial Arbitration Association.”

LUCKY-GOLDSTAR PATHOLOGIES OF THE AGREEMENT The institution provided for in the clause, namely the “International Commercial Arbitration Association” did not exist. No seat of arbitration was specified The rather ambiguous reference to “a 3rd Country” made no sense There was no indication which this “3rd Country” might be

LUCKY-GOLDSTAR HIGH COURT OF HONG KONG DECISION A common mistake do not nullified the agreement to arbitrate. Clear intention of the parties to go to arbitration is not nullified by the fact that the organisation for settling such disputes does not exist. Arbitration agreement was not "inoperative or incapable of being performed" Claimant could commence ad hoc arbitration at any place other than in countries of the parties’ place of business.

LUCKY-GOLDSTAR HIGH COURT OF HONG KONG DECISION “the correct approach in this case is to satisfy myself that the parties have clearly express the intention to arbitrate any dispute which may arise under this contract. As to the reference to the non-existent arbitration institution and rules, I believe that the correct approach is simply to ignore it. I can give no effect to it and reject all reference to it so as to be able to give effect to the clear intention of the parties”

LUCKY-GOLDSTAR CONCLUSION Even if this case indicates that to name a nonexistent arbitration association will not prevent the parties from arbitrating, parties intending to arbitrate should ascertain whether the nominated arbitration association actually exists. As a matter of fact, the parties eventually lost time and money, as they had first to resort to a national court before finally starting arbitration proceedings.