INTERNATIONAL ARBITRATION Domenico Di Pietro STUDYING LAW AT ROMA TRE FALL SEMESTER 15 October 2010

RECURRENT FEATURES IN INTERNATIONAL TRADE: PROBLEMATIC PRIVITY Incorporation by Reference Assignment of contract Tacit acceptance - agreements per facta concludentia New means of communication - Letters and telegrams? - Case law

INCORPORATION BY REFERENCE: EXAMPLES Agreement to re-new or enter into new transaction with reference to previous contract between the same parties Contract with reference to one of the parties’ general conditions of trade Contract with reference to conditions of trade drafted by trade or industry associations (GAFTA, FIDIC etc) Subcontract with reference to the contract entered by principal and contractor Bill of lading making reference to the provisions contained in the charter-party

INCORPORATION BY REFERENCE: THE TWO MAIN SCENARIOS a) documents exchanged do not contain an arbitration clause, but do make express reference to an arbitration clause contained in another document (so-called relatio perfecta), or b) documents exchanged do not contain an arbitration clause but make reference to a document containing one, although there is no express reference to it in the exchanged documents (so-called relatio imperfecta)

DRAFTING TIPS AND ARBITRATION PLANNING Lex Arbitri? First or one-off transactions The characteristics of the counterpart should be closely assessed (experienced trader in a different industry) Assess the parties’ actual awareness about the arbitration agreement (repeated transactions with similar entities) In the event of incorporation, express reference should be used where possible Escalation Clauses Assess the attitude of the courts Consider alternative enforcement plans

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

ESCALATION CLAUSES LCIA MEDIATION AND ARBITRATION In the event of a dispute arising out of or relating to this contract, including any question regarding its existence, validity or termination, the parties shall first seek settlement of that dispute by mediation in accordance with the LCIA Mediation Procedure, which Procedure is deemed to be incorporated by reference into this clause. If the dispute is not settled by mediation within [ ] days of the appointment of the mediator, or such further period as the parties shall agree in writing, the dispute shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause.

Special-Purpose Clauses Escalation Clauses/Multi-Tier - Is it appropriate for all contracts or all aspects of a contract? - Binding or non-binding ADR? Unilateral Arbitration Clauses - Option for one of the parties to arbitrate rather than litigate - It encourages claims - Uncertainty as to first-commenced action Complex Structures and the Need for Synchronisation - Multi-party/Multi-agreement structures - Synchronised clause to provide for different nature of relationship and parties

Complex Deals: Need for Synchronisation. Insurer Re-insurer Lender(s) Borrower Guarantor

Problematic Privity Article II of the New York Convention Incorporation –Is the Agreement validly entered into or effectively assigned? –Direct and Indirect Reference –Drafting Tip Assignment –Is the Agreement effectively assigned? –Drafting Tip New Means of Communication Contracts by Conduct

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

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