Kluwer Law International

Posts Tagged ‘Efficiency’

Pepperdine University School of Law

A new study of dispute resolution practices in Fortune 1,000 corporations shows that many large companies are using binding arbitration less often and relying more on mediated negotiation and other approaches aimed at resolving disputes informally, quickly and inexpensively. The 2011 survey of corporate counsel developed by researchers at Cornell University’s Scheinman Institute on Conflict Resolution, the Straus Institute for Dispute Resolution at Pepperdine University School of Law, and the International Institute for Conflict Prevention & Resolution (CPR) produced results that appear to be strongly reflective of U.S. practices and trends, but thoughtful practitioners and scholars will ponder its implications for the future of international practice.

Although the approaches of large corporations to managing conflict vary widely, their strategies typically boil down to how best to control cost and risk in dispute resolution processes and outcomes. As the U.S. experienced what some have called a “quiet revolution” in dispute resolution in the 1980s, corporate counsel played a critical role. They were in the forefront of efforts to avoid the expense and risk of hardball litigation. They began using settlement-oriented approaches like mini-trial, and, more significantly, negotiation with the help of mediators. They banded together to form the Center for Public Resources (now CPR), which actively promoted corporate and law firm pledges to seek out-of-court solutions before resorting to litigation.

Around the same time, corporate counsel also participated in efforts to address what they perceived to be the limitations or inadequacies of binding arbitration as a substitute for litigation. Although forms of arbitration had been a mainstay of business dispute resolution throughout much of the latter half of the Twentieth Century, arbitration was thrust into an even more prominent role as a substitute for public trial thanks to a series of U.S. Supreme Court decisions strongly promoting the enforcement of arbitration agreements.

When in 1997 Cornell conducted the first survey of Fortune 1,000 corporate counsel on their attitudes and practices regarding dispute resolution, mediation and arbitration were both prominently and positively portrayed. Corporate counsel expressed positive views of many perceived benefits of these options, including savings of time and cost and more satisfactory, durable results. A majority of respondents predicted that their companies would make use of both mediation and arbitration in the future.

The 2011 survey, reflecting the responses of more than 300 Fortune 1,000 corporate counsel, presents a very different, decidedly mixed picture. The respondents, almost half of whom are general counsel, assert that their companies are less likely to employ hardball litigation as a primary strategy, and instead broadly embrace mediation as a tool for resolution of all kinds of disputes now and in the future. They are also becoming more proactive in managing conflict in the early stages of litigation and employing third parties to evaluate and assess different dimensions of a legal dispute. Around two-thirds of responding counsel said their company employ some form of “early case assessment”—an approach that in companies like DuPont is a formalized and systematic method of analyzing all aspects of a dispute in the early stages in order to plot the appropriate course for its resolution.

At the same time, however, corporate counsel tend to be markedly less assured of the potential benefits of “alternative dispute resolution,” perhaps reflecting a more realistic (or more cynical) view borne of long experience. As a group, they are less certain that these processes will be deemed satisfactory, or that they will produce satisfactory settlements or durable results. These data may mirror anecdotal evidence that mediation is often subject to manipulation by attorneys seeking to prolong or frustrate the dispute resolution process or “spin” mediators.

When it comes to adjudication, more companies seem to be turning back to litigation in court. Binding arbitration usage has dropped for most kinds of disputes (including commercial, employment, environmental, intellectual property, real estate and construction disputes), and corporate counsel are now evenly divided on the question of their company’s future use of arbitration. Notable exceptions to this marked downward trend are consumer and products liability cases, as some companies appear to be taking advantage of U.S. Supreme Court’s decisions supporting the use of binding arbitration clauses in standardized consumer contracts, including provisions waiving the right to participate in class actions.

The common theme in these changing patterns appears to be a desire for maximal control of the dispute resolution process. Corporate attorneys logically prefer to manage outcomes, so mediation and other approaches that aim at achieving a mutually acceptable settlement are strongly favored. The evidence suggests that in the U.S. the models they currently embrace are heavily lawyered, with the emphasis on third party predictions or evaluations of a case’s chances in adjudication. The great majority of cases are resolved prior to hearings on the merits; thus, the incidence of court trial has fallen dramatically, and there are also fewer cases going to arbitration hearings.

Where settlement cannot be achieved, some large companies—perhaps as many as half the Fortune 1,000—then want to try their commercial cases in court despite the well-known costs and risks, if only because of the traditional “second chance”—the opportunity to overturn a faulty verdict or judgment on appeal. For many corporate counsel, concerns about the inability to overturn arbitration awards that do not comport with applicable law or proven fact, coupled with suspicions about the abilities or motivations of arbitrators, are paramount.

But many other corporate attorneys continue to view the preference for litigation as ironic, since the alternative—binding arbitration—is a choice-based process that affords countervailing advantages such as options for enhanced confidentiality, speed and efficiency, expertise . . . and even, potentially, private appeal to another tier of arbitration! All too often, however, it seems that corporate counsel fail to recognize or take advantage of such options, and instead complain about the shortcomings of arbitration. To make active choices regarding arbitration means overcoming formidable barriers such as the prevalent caution among corporate counsel about leaving traditional comfort zones, and the low priority assigned to dispute resolution in the negotiation and drafting of business agreements. These are the source of great inertia. As one expert on corporate deal-making recently explained when asked why the companies he advises had not rushed to employ a particular new program for dispute resolution, “My clients prefer to cross the street in a group.”

What do trends among Fortune 1,000 corporations portend for international arbitration and dispute resolution practice? First off, it must be said that because of the unique and critical role played by binding arbitration in the resolution of international commercial disputes, both as an alternative to national courts and as a framework for worldwide enforcement of adjudicated results, one cannot imagine in the international arena the kind of market competition between arbitration and litigation observable in the U.S. and reflected in the 2011 Fortune 1,000 survey. In other words, arbitration will undoubtedly remain the preferred mechanism for adjudication of international business disputes.

But there remains the important question of the future evolution and impact of mediated negotiation and other strategies that afford parties at least the possibility of earlier, quicker, less expensive, less formal, more private, and more appropriately tailored solutions to business conflict. It would be a mistake to assume the U.S. experience with mediation, so reflective of our culture and our system of justice, will be fully replicated internationally. On the other hand, it is reasonable to expect that over time international businesses will increasingly probe the opportunities to enhance their control and active management of conflict, including intervention strategies that help to promote greater cross-cultural and cross-border communication and which reduce the need for arbitration hearings. Such developments are likely to be stimulated to the extent that businesses perceive international arbitration is becoming more costly and less efficient—a perception that has factored significantly in recent years on the American scene.

What are your perspectives on the future of international commercial arbitration and dispute resolution? What questions or concerns, if any, are raised by observed trends among Fortune 1,000 corporations? The complete study, “Living with ADR: Evolving Perceptions and Use of Mediation, Arbitration and Conflict Management in Fortune 1,000 Corporations” by Thomas J. Stipanowich and J. Ryan Lamare may be found at http://ssrn.com/abstract=2221471.

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	International Arbitration: Law and Practice by Gary B. Born € 30
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Penn State Law,
for ITA

In a recent post, here, I argued that the time has come to move on from the gumshoe clue-hunting approach currently employed to select international arbitrators. Existing practices are severely outdated and unduly expensive in an era of information and technological efficiency. The process for selecting arbitrators, I argued, should be more transparent and key information about arbitrators should be more equally accessible. The solution I proposed is what I have termed the “International Arbitrator Information Project,” a project that would aim to provide reliable, online one-stop-shopping for information about arbitrators. This post sketches some of the features and challenges that would be involved in launching the Project.

As its name suggests, the International Arbitrator Information Project would primarily be a research project. Its aim would be to collect and provide parties with easy electronic access to critical information for making informed decisions in the arbitrator selection process. A project of this sort raises many questions about form, sources, and management. Those are the topics this post seeks to explore.

The best way to describe the Project is to start with an explanation of what it would not be. It would not be a new advertising space for international arbitrators. It would not be a for-profit resource. It would not be an arbitrator-related version of Wikipedia. It would not be the equivalent of a grocery store “comment box” that acts as a receptacle for all gripes, or a tabloid that collects reckless an scintillating gossip. It would, instead, be defined by its purpose, which would be to increase equal access to comprehensive, substantive, and reliable information about arbitrators through network-based research and responsible editorial policies. While the details for accomplishing these aims may evolve, the remainder of this blog sketches the basic form of the Project and addresses some issues that will be raised in implementing it.

In the Project, each arbitrator would have a dedicated webpage that would be electronically searchable. Each page would include standard biographic information, such as education, professional training, nationality, language skills, and arbitration experience. Arbitrator webpages would also include links to all publicly available arbitral awards associated with the arbitrator, and all judicial opinions (translated into English or summarized in English) that reference the arbitrators or their awards. It would also include links to arbitrators’ academic and professional publications, again fully- or partially-translated into English where necessary. Additionally, the Project would also allow searchable access to publications by other arbitrators and academics that comment on the relevant arbitrator’s publications, awards, and judicial decisions that rule on or reference those publications or awards.

While all this information is useful for parties, the most critical, and the most elusive and costly information to track down regards arbitrators’ case management skills, predilections, and demeanor as an adjudicator. Parties seek information about an arbitrator’s actual conduct on arbitral tribunals—including whether the arbitrator is willing to allow or disallow certain procedures (such as document exchange, including so-called “e-discovery”), has strong case management skills, adopts a strict constructionist (or a more flexible) approach to contract interpretation, is willing to assert (or reject) an expanded view of arbitral jurisdiction, as well as the arbitrator’s decisional history, temperament, or intellectual orientation on particular issues. Currently, as described in my earlier post, this information is typically collected through ad hoc, piecemeal individualized inquiries. Counsel usually rely on so-called “ISO” emails to gather this information, and follow up through individualized research and more personal phone calls to colleagues in the field to refine it.

There are several problems with this ad hoc, “ISO” methodology. First, individuals with the most essential insights on these critical questions are more likely to be candid and forthcoming if an inquiry originates from someone they know. The results are predictable. Leading arbitration specialists must undertake these time-intensive inquiries themselves to get the most full and accurate answer, and cannot farm them out to more junior colleagues with lower billing rates. If you are a party or counsel outside that elite group altogether, tough luck. Finally, even when senior partners make inquiries directly, however, there are limits. Memories can be faulty; assessments can be biased or self-interested; information can be outdated.

Increasingly, another problem has emerged—new, relatively unknown arbitrators. As the number and variety of disputes has increased, so has the number of arbitrators. Tracking down information on newer arbitrators, particularly from outside the well-known European and North American hubs, can be especially difficult.

The International Arbitrator Information Project would provide a more cost-effective, systematic, and equally accessible source for this critical information. It would gather this information through means designed to solicit reliable and useful feedback, specifically through structured questionnaires requesting substantive assessments on specific questions. By treating the effort as a research project as opposed to a potential for-profit product, and by involving academic institutions and arbitration trade organizations, the Project would ultimately aim to reconfigure how information about arbitrators is generated, disseminated, and used in arbitrator selection processes. Given the increasingly sophisticated empirical research being developed about arbitrators and arbitral decisionmaking patterns, it may also include cross-references to that research.

The Project undoubtedly raises a number of important practical and legal questions. Who would provide that feedback—counsel or parties? Could arbitrators themselves provide feedback, and would doing so be consistent with confidentiality obligations? How would the process control for the possibility of distortions by disgruntled losing parties and overly buoyant prevailing parties? Would feedback be publicly attributed to the person providing it? If not, how would contributors be accountable? How would the Project obtain arbitrator-specific information since most conduct is undertaken as a member of a three-person tribunal? How would confidentiality about the parties’ dispute and arbitral proceedings be protected? Could the Project be potentially liable for defamatory or otherwise improper postings?

There may also be some structural obstacles, such as a “collective action” problem and incessant “free ridership,” meaning that narrow self-interest in maximizing their own information relative to others would deter parties and counsel from willingly participating. Moreover, some may be skeptical that, as so-called “rational actors,” leading arbitration specialists might never agree to any mechanism that would threaten what some have characterized as a tight, monopolistic control over the market for arbitrator services. There are undoubted other challenges, in addition to those listed here, that would have to be overcome to implement the Project. These are not, however, insurmountable obstacles.

Several of the legal issues can be resolved by predicating participation on consent and support from the arbitration community. Arbitrator webpages would be created for those who consent to participate in the Project. Arbitrators might readily consent as an opportunity to build and enhance their reputations. As noted in my previous post, the Project would give newer arbitrators and arbitrators from outside the central North-American and European arbitration hubs a mechanism for developing and enhancing their reputations. Alternatively, parties—both commercial parties and States—could spur voluntary participation by indicating that they will select arbitrators from among those listed in the Project. Relatedly, parties are already consenting at ever-increasing rates to publication of awards as well as participation in various surveys about arbitration. For similar reasons, there might be reason to assume some general willingness to participate.

Whatever issues could be bridged through consent, there would still be a need for responsible, neutral editorial polices. The Project would have an editorial board comprised of leading international arbitrators, specialists, and party-users, as well as an outside advisory board comprised of representatives from arbitral institutions. The editorial board would set policies to ensure content is professional, credible, and germane. These editorial policies might include procedures for allowing responses and clarifications to particular posts, as well as standards and procedures for assessing and removing inaccurate or inappropriate material. The critical marker for any editorial policy or procedure would be how well it will ensure the Project provides information that is fair, neutral, and constructive.

No matter how well planned, the Project could only be successful if it were able to garner broad support within the international arbitration community. The aim would be to encourage a professional norm that parties’ and counsel commit to contributing useful, responsible feedback for the growth and legitimacy of the system. Such support could be encouraged by structural incentives. For example, party- or law-firm-access to the Project could be conditioned on agreement to provide information in the case for which information is sought. As noted above, pressure from parties would be essential, but they have the most to gain from increased transparency and accuracy in arbitrator selection, as well as reduced costs.

Organizations that provide collective representation for parties, such as the OECD or the Corporate Counsel International Arbitration Group, should realize that their constituencies have much to gain and encourage participation. Participating arbitral institutions, meanwhile, could encourage parties and counsel to contribute, most specifically by assisting in the distribution and collection of questionnaires, in exchange for institutional access to the Project. This offer might be particularly enticing to regional institutions, whose resources in this regard are more limited, but whose input and contributions will arguably fill information gaps that currently exist for major European and North American institutions.

Ultimately, I am optimistic about the potential for the Project. The international arbitration community has proven to be highly innovative community that is intensely concerned with its own legitimacy. As a result, it has been a largely responsible custodian of the procedures and standards that govern the conduct of proceedings. Meanwhile, parties have become increasingly active in recent years, insisting on measures to make arbitration more responsive to party needs, particularly in terms of efficiency and cost-effectiveness. The combined effect of these two features is that a range of competitive and cooperative forces have emerged within the international commercial arbitration community to induce a tempered, but voluntary and steady, march toward greater transparency, increased protections for fairness and impartiality, and more accountability. Support for the creation of the International Arbitrator Information Project would be a consistent and natural continuation of these essential trends.

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	Litigation in the Netherlands. Civil Procedure, Arbitration and Administrative Litigation - 2nd Edition by Marieke van Hooijdonk, Peter V. Eijsvoogel € 70
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	International Arbitration: Law and Practice by Gary B. Born € 30
	Arbitrating Under the 2012 ICC Rules. An Introductory User’s Guide by Jacob Grierson, Annet van Hooft € 140

Penn State Law,
for ITA

As Rusty Park remarked, “[I]n real estate the three key elements are ‘location, location, location,’ … in arbitration the applicable trinity is ‘arbitrator, arbitrator, arbitrator.”’ Empirical studies consistently verify that parties’ ability to select arbitrators is one of the primary reasons they select arbitration as a means of dispute resolution. Parties also consistently vote with their feet by rejecting available options to have arbitral institutions or appointing authorities select arbitrators on their behalf.

Parties seek to actively participate in the arbitrator selection process—the ultimate form of forum shopping. The arbitral tribunal can, in the absence of party agreement, determine such pivotal issues as the seat of the arbitration, the choice and interpretation of substantive law, the availability of particular procedures (such as interim relief, joinder of third parties, witness examination, and document disclosure), the nature and extent of hearings, and the allocation of costs and fees. And, of course, the tribunal ultimately decides the substantive outcome of the case.

For these reasons, in a recent survey, 90% of respondents designated “reputation” as the single most important factor in selecting an arbitrator. In part, these respondents were inevitably commenting on an arbitrator’s overall reputation for integrity, intelligence, and acumen. In addition, however, they were likely commenting on an arbitrator’s reputation regarding particular sub-issues relevant to their specific case strategies. These issues might include whether an arbitrator is willing to allow or disallow certain procedures (such as those mentioned above), has strong case management skills, adopts a strict constructionist (or a more flexible) approach to contract interpretation, is willing to assert (or reject) an expanded view of arbitral jurisdiction, and the like.

Although an arbitrator’s capabilities in all these respects are critical, information with regard to specific arbitrators is not generally available through public sources. There is limited public information about many arbitrators. Moreover, the process for obtaining the piecemeal information that is available often resembles a cloak-and-dagger intelligence operation from a 1950s film noir than a modern process of information collection, management, and assessment.

The primary means counsel use to obtain information about prospective arbitrators are ad hoc research and personal inquiries—a lawyer’s equivalent of sleuths’ shoe-leather research to track down clues. Large law firms and corporations solicit general information from colleagues who have had recent experience with those in the pool of potential arbitrators. So-called “ISO” emails are routine in large-firm litigation and arbitration practices. Information generated from these general inquiries is then followed up on, usually through individualized research and more personal phone calls to colleagues in the field.

Those doing the research hope the individuals they contact can provide the most accurate and specific feedback about arbitrators on issues that are most essential to the case at hand. Research also includes scouring academic works, judicial opinions that might be authored by (or comment on) an arbitrator, and those rarely published arbitral awards to glean insights about the arbitrator’s decisional history, temperament, or intellectual orientation on particular issues. Given the stakes (and the players), it is a surprisingly low-tech process with an inherently hit-or-miss quality. It can also be quite expensive.

The nature and accuracy of information generated by any particular inquiry can vary depending on the identity of the person asking the question, the person responding, and the arbitral candidate. Opinions about arbitrators are based on individual perceptions filtered through experiences in particular cases. They are necessarily subjective, and they can be incomplete or outdated. More importantly, individuals’ willingness to share candidly sensitive information about arbitrators may also depend on how well they know or trust the person making the inquiry. If someone were asked about a particular arbitrator, that person would necessarily be more willing to disclose unflattering information to someone whom the person knows well and trusts. The effect of this individualized sorting of inquirers is that, at least hypothetically, counsel for opposing parties in the same arbitration could pose the same inquiry about the same candidate to the same person, but receive different responses!

Economists call this phenomenon “information asymmetry.” An information asymmetry exists when one party to a transaction has superior information that can be used to that party’s advantage in the transaction. The information asymmetries in the market for arbitrator services may be uniquely severe because it is a largely closed system, largely private, and non-transparent. In other ways, they resemble information asymmetries in other contexts. For example, information asymmetries about arbitrators tend to favour insiders and larger, well-funded parties, and tend to undermine the efficient functioning of the marketplace. As noted above, sources are likely to be more forthcoming about arbitrators in response to the inquiries from known colleagues, which often means senior arbitration experts—whose billing rates can exceed $1000/hour. The fact that they are in the best position to obtain the most accurate feedback keeps both the information within a relatively small circle of insiders and the cost of obtaining that information very high.

Apart from abstract economic arguments, using ad hoc personal inquiries to piece together an arbitrator’s reputation is a bizarrely outdated technique in the modern Information Age. For virtually every other product or service, technology provides consumers with all manner of information, often neatly collated, searchable, and with multiple points of relevant comparison. Take the trivial example of a $25 book purchase on Amazon.com. In deciding whether to add that book to a virtual shopping cart, a consumer can access professional reviews, sometimes hundreds of reader reviews, recommendations of similar books, competing price options, evaluations of the vendor’s reliability, and the like. Meanwhile, innumerable websites have popped up offering collective evaluations of various service providers, from doctors, lawyers, accountants, and law professors, to hair stylists, plumbers, and palm readers. For many of these websites, the service providers being evaluated not only participate willingly, but regard it as a means of building their reputations among a wide audience. Yet, international arbitrator shoppers still treat the process like an information scavenger hunt.

Perhaps the time has come for an International Arbitrator Information Project, a resource to provide reliable one-stop-shopping for information about arbitrators. The Project would collect and provide instant electronic access to all available and relevant awards, publications, judicial opinions, and commentaries about individual arbitrators. It would also include a mechanism for providing feedback about arbitrators. The challenge will be to solicit reliable and useful feedback, and avoid feedback that resembles the gripes that disgruntled customers cram into grocery store comment boxes. Constructive and reliable information about arbitrators will be sought primarily through questions addressing the specific issues that are currently pursued through ad hoc inquiries. Judicious editorial policies and procedures will provide safeguards against unprofessional postings and disclosure of confidential information.

Developments in recent years may signal that the international arbitration community is ready for the Project. State parties in investment arbitration have become more assertive. They are less tolerant of information asymmetries that systematically benefit law firms and arbitrators, but increase the cost of arbitrator selection and potentially disadvantage parties in particular cases. In addition, many new arbitrators have been introduced into the international arbitration community from regions that are customarily outside of the traditional core of international arbitration practice. With respect to these newer recruits, Anglo-American and Euro-centric law firms and companies may find themselves on the losing end of information asymmetries.

Arbitrators may now also be seeing the advantages of feedback. Arbitrators are coming under greater pressure from parties and arbitral institutions to demonstrate efficiency and value for the considerable sums paid for arbitration services. One bad-apple arbitrator can undermine perceptions about the performance of the entire tribunal. On the other hand, the mere potential for feedback may act as a deterrent for an errant arbitrator. It may also be a remedy for the other members of a tribunal to differentiate themselves and avoid being collectively impugned. Weeding out “bad” arbitrators may also increase the potential for appointments by “good” arbitrators. Moreover, publicly available feedback may allow more junior arbitrators, women arbitrators, and arbitrators from outside the traditional international arbitration hubs to establish strong reputations and increase their chances of appointment.

Finally, arbitral institutions may also benefit from more publicly available information about arbitrators. Currently, if an arbitral institution knows about serious past misconduct by an arbitrator, it has limited options. It can avoid appointing that person when it acts as an appointing authority or remove it from its list of arbitrators (if it is an institution that maintains such a list). An institution cannot, generally, advise parties about this information as the parties select the arbitrators who will preside in their case. An arbitral institution, nevertheless, suffers when it administers an arbitration that goes awry because of arbitrator misconduct or ineffectiveness. With increasing competition among them, arbitral institutions may welcome the opportunity to reduce appointments of ineffectual arbitrators through increased publicly available information.

With all these potential benefits, and cognizant of the many challenges that remain, perhaps the time has come for the arbitration community to support the launch of the International Arbitrator Information Project.

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The China International Economic and Trade Arbitration Commission (“CIETAC“) has recently published its revised Arbitration Rules, which will come into force on 1 May 2012 (the “2012 Rules“). This is the seventh revision of the CIETAC Rules since they were first published in 1956. Whilst the majority of the changes in the 2012 Rules are aimed at clarifying existing practice, a number of the developments may have a significant impact on the conduct of CIETAC proceedings in the future.

The publication of the 2012 Rules comes at a time when CIETAC’s influence is perhaps greater than it has ever been. Whilst many alternatives exist, CIETAC maintains a dominant position in China, where PRC law restricts offshore arbitration in certain circumstances. Furthermore, even where offshore arbitration is available, there is an increasing trend amongst PRC parties to seek to negotiate CIETAC clauses (with a Mainland seat) in their international contracts. As explained further below, the new rules will allow CIETAC to increase its influence still further, providing for the administration of proceedings outside of Mainland China for the first time, and purporting to allow CIETAC to administer proceedings brought under the rules of other arbitral institutions.

Some of the major amendments include:

1. Arbitral tribunals empowered to grant interim measures in certain circumstances

Under the PRC Arbitration Law and the PRC Civil Procedure Law, the power to grant conservatory measures – including orders for the preservation of property or the protection of evidence – is reserved to the competent Chinese court. The current position under the CIETAC Rules, therefore, which is reflected in Article 21.1 of the 2012 Rules, is that, wherever a party applies for conservatory measures pursuant to the laws of the PRC, “the secretariat of CIETAC shall forward the party’s application to the competent court designated by that party in accordance with the law“.

Under Article 21.2 of the 2012 Rules, however, an arbitral tribunal may also now order “any interim measure it deems necessary or proper in accordance with the applicable law“. This provision will apply, for example, in any CIETAC arbitration seated outside of Mainland China where the law of the seat permits arbitral tribunals to grant interim measures (such as in Hong Kong, where CIETAC has already announced plans to establish a new sub-commission later this year). It is also possible that Article 21.2 will apply to arbitrations in the Mainland wherever the type of interim relief sought falls outside of the exclusive jurisdiction of the Chinese Courts. It remains to be seen, however, whether Article 21.2 will be invoked in Mainland arbitration proceedings and, if so, whether any interim measures granted by an Arbitral Tribunal can be enforced in practice.

2. Expert witnesses required to give oral evidence if called to do so by the Arbitral Tribunal

One feature of CIETAC arbitration which has attracted plaudits and criticism in equal measure is the limited use of witness evidence in some cases. Both the existing and new CIETAC Rules afford a broad discretion to the Arbitral Tribunal to conduct the proceedings “in any way that it deems appropriate“. Article 42.3 of the 2012 Rules, however, now stipulates that expert witnesses must participate in any oral hearing and “give explanations” on their written reports if called to do so by the Tribunal. There is no similar provision for factual witnesses, but the new rules may nevertheless be of assistance in cases where the examination of experts would otherwise be limited.

3. New rules on consolidation

Currently, the CIETAC Rules make no provision for the consolidation of parallel proceedings dealing with related issues (whether between the same parties, or, for example, multiple parties under a suite of related contracts). The 2012 Rules now provide a mechanism for parallel proceedings to be consolidated into a single arbitration.

To some extent, the new CIETAC Rules mirror the provisions of the recently revised ICC Rules, which also contain detailed provisions on consolidation. Under both sets of rules, for example, consolidation will only be possible with the consent of all parties (Article 17.1 of the 2012 Rules and Article 10 of the ICC Rules). Equally, under both sets of rules, the decision as to whether to consolidate the proceedings will be taken by the institution rather than the Arbitral Tribunal. Unlike the ICC Rules, however, which provide clear guidance on the criteria which must be satisfied before any application for consolidation will be granted (Article 10, ICC Rules), the 2012 Rules provide a broad discretion to the CIETAC to take into account “any factors it considers relevant” in making the decision (Article 17.2). This may include: (i) whether all of the claims are made under the same arbitration agreement; (ii) whether the arbitrations are between the same parties; and (iii) whether one or more arbitrators have been nominated or appointed in the arbitrations (although this list is non-exhaustive). The introduction of consolidation provisions is to be welcomed: it can prove particularly useful in complex disputes involving multiple parties or multiple contracts. Users of CIETAC arbitration will therefore watch with interest to see how the institution exercises its discretion under the new Rules moving forward.

4. New rules for determining the seat of arbitration

Under the current Rules, where parties have not agreed on the seat of arbitration, it is deemed to be the city where CIETAC (or any of its sub-commissions) is located, namely a place inside Mainland China. The 2012 Rules now allow CIETAC to decide that the seat shall be a city other than the location of CIETAC (or any of its sub-commissions), which could be a city outside Mainland China (Article 7.2).

This is a significant change, at least on paper, given that the seat determines both the law governing the arbitration procedure and the courts which will retain supervisory jurisdiction over the arbitration. It remains to be seen, however, how often CIETAC will exercise its new discretion in favour of a seat outside of Mainland China.

It is worth noting, however, that arbitration outside of Mainland China is only permitted for “foreign-related” disputes. Whether a dispute is “foreign-related” is therefore a key question. The Supreme People’s Court has published two judicial interpretations which indicate that disputes with one or more of the following three elements will be considered as “foreign-related” (and it should be noted that Hong Kong is deemed a “foreign” jurisdiction for these purposes): (i) at least one of the parties is “foreign“; (ii) the subject matter of the contract is or will be wholly or partly outside Mainland China; and (iii) there are other legally relevant facts “as to occurrence, modification or termination of civil rights and obligations” which occurred outside Mainland China.

5. Broader provisions on the language of the arbitration

Under the current Rules, in the absence of party agreement on the language of the arbitration, the arbitration must be conducted in Chinese. The 2012 Rules allow CIETAC to determine that the language of arbitration shall be “any other language… having regard to the circumstances of the case” (Article 71.1). This is a welcome development, particularly for disputes where all of the relevant documents (including the underlying contract) may have been written in a language other than Chinese. As with the other changes to the rules, however, only time will tell how often this discretion is invoked in practice.

6. Default provision for administration by CIETAC Beijing

Unlike many other arbitral institutions, CIETAC proceedings are administered by different “sub-commissions“, located in various cities in Mainland China (and which will soon include a sub-commission in Hong Kong). Parties are advised to stipulate in their arbitration agreement which particular sub-commission they wish to administer their dispute. Previously, where the clause did not include any such designation, the party commencing proceedings was entitled to express a particular preference. The other party, however, had the right to object, which would occasionally cause delay as parties would often prefer for the dispute to be administered by different entities. The 2012 Rules, therefore, provide that if a CIETAC arbitration clause does not specify a particular sub- commission, CIETAC Beijing will administer the arbitration (Article 2.6). The new provision is welcome, and serves as a useful reminder that it is important to state the relevant CIETAC entity expressly and in full when drafting a CIETAC clause (and in this regard it is important to refer to the relevant sub-commission explicitly; a simple reference to “CIETAC arbitration in Shanghai” may not be enough and, under the 2012 Rules, may lead to the dispute being administered by CIETAC Beijing).

7. Use of other arbitration rules in CIETAC administered arbitrations

One potentially controversial development in the 2012 Rules concerns Article 4.3, which provides that: “where the parties agree to refer their dispute to CIETAC for arbitration but have agreed on … the application of other arbitration rules” CIETAC “shall perform the relevant administrative duties“. In other words, CIETAC will not only administer ad hoc arbitrations under, for example, the UNICTRAL Rules, but will also administer proceedings commenced under the rules of other arbitral institutions. This potentially brings CIETAC into conflict with, for example, the ICC, which has recently amended its rules to make clear that only the ICC Court is authorised to administer ICC arbitration proceedings (Article 1(2) ICC Rules). It is best practice, in any event, to avoid arbitration clauses which seek to allow one arbitral institution to administer proceedings brought under the rules of another institution. This may not only lead to uncertainty in the conduct of the proceedings, but can also expose the award to challenge (as evidenced by the case of Insigma Technology Co Ltd v Alstom Technology Ltd [2009] SGCA 24, where SIAC purported to administer a dispute brought under the ICC Rules).

8. Changes to the appointment of arbitrators in multi-party disputes

CIETAC has also amended its rules regarding the appointment of arbitrators in multi-party cases. Under the new Rules, where there are multiple claimants and/or multiple respondents in any proceedings, and the multiple claimants and/or respondents are unable to jointly nominate an arbitrator, CIETAC will appoint all members of the tribunal and designate the presiding arbitrator (Article 27.3). Previously, CIETAC would only appoint the arbitrator for the party in default. The objective of the new rule – which also reflects current practice at the ICC and SIAC (amongst others) – is to minimise the risk of a challenge to the arbitral award on the grounds of unfair treatment (as occurred in the well-known decision of the French Cour de Cassation in Siemens AG/BKMI Industrienlagen GmBH v Dutco Construction Company).

9. New provisions regarding mediation in CIETAC arbitrations

Article 45.8 of the 2012 Rules allows CIETAC to “assist” with the settlement of disputes through the process of mediation part-way through arbitral proceedings, if requested to do so by the parties. It is not yet clear how this rule will operate in practice, however, as the new Rules do not provide any indication of who will be responsible for the mediation (i.e. whether this is to be conducted by the administrative staff of CIETAC or whether professional mediators will be engaged by CIETAC on the parties’ behalf).

It is common practice in China for arbitral tribunals to facilitate the settlement of disputes by way of mediation or conciliation. Under both the new and existing CIETAC Rules, arbitral tribunals have a wide discretion to conduct so-called ‘arb-med’ procedures in any manner they consider appropriate. Arb-med can be effective in helping parties to settle complex disputes at a relatively early stage, saving considerable time and costs as a consequence. Although many common law practitioners remain sceptical of such processes, they can work well in particular cases, albeit that an evaluative rather than facilitative mediation may be more appropriate depending on the circumstances of the dispute.

10. New criteria for the selection of arbitrators by the CIETAC Chairman

Article 28 of the 2012 Rules describes the criteria which the Chairman of CIETAC may take into consideration when appointing arbitrators in the absence of party agreement. In addition to the law of the contract and the place and language of the arbitration (and any other factors considered to be relevant), the Chairman will also be able to take into account the “nationalities of the parties“. The 2012 Rules do not, however, require that the presiding or sole arbitrator be of a different nationality to the parties. If this is desirable, therefore, parties should make express provision for this in their arbitration agreements.

11. Increased threshold for CIETAC’s summary procedure

Under the existing CIETAC Rules, parties may apply for a “summary procedure” (effectively a form of fast-track arbitration) if the amount in dispute falls below a certain threshold (currently RMB 500,000). Cases heard under the summary procedure will be determined by a sole arbitrator unless otherwise agreed by parties and the time limit for rendering an award is 3 months from the constitution of the tribunal, as opposed to 6 months under the standard procedure.

Under the 2012 Rules, the relevant threshold for the summary procedure has been increased to RMB 2 million. Furthermore, if the amount in dispute later exceeds the threshold because of, for example, amendments to claims or counterclaims, the summary procedure will continue to apply unless otherwise agreed by the parties. This marks a departure from the existing Rules, where cases exceeding the RMB 500,000 threshold would automatically be transferred to the standard procedure unless otherwise agreed.

Conclusion

The changes introduced with the 2012 Rules seek to address the growing complexity of contemporary arbitration proceedings, affording parties greater autonomy and flexibility in some respects such as more freedom for parties to agree on the seat and language of arbitration, whilst also codifying and clarifying several important aspects of CIETAC’s existing practice. The new Rules reflect CIETAC’s ambition and its desire to compete with other major international arbitration institutions, all of which have witnessed a significant increase in China-related business over recent years.

Only time will tell how the new provisions will be applied in practice. Whilst many of the changes are welcome, it remains important to draft CIETAC arbitration clauses carefully. Amongst other things, it is important to make express provision for the language of the arbitration and the CIETAC sub-commission which will administer the proceedings (preferably Beijing or Shanghai, which have more experienced case administrators). In cases involving non-Chinese parties, it is also helpful to provide expressly that the sole arbitrator or chairman be of a nationality different from the parties and that the parties be permitted to appoint arbitrators from outside of the CIETAC panel.

With thanks for invaluable contributions to May Tai, Jessica Fei and Weina Ye (Herbert Smith, Beijing), Simon Chapman (Herbert Smith, Hong Kong) and Tracy Wu (Herbert Smith, Shanghai)

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In my last blog, I offered praise for the ICDR, ICC and ICSID, for taking a number of important steps over the last few years to control excessive time and costs in international arbitration. Those initiatives already have resulted in measurable reductions in the average duration of cases. But there is more that the leading institutions can do, particularly in the key areas of arbitrator availability at the outset and arbitrator diligence in rendering awards at the end. There is also much more that the users of international arbitration can do, and pressing the institutions for further reforms should never be a substitute for meaningful self-reflection and self-discipline by the parties, their counsel and the arbitrators that they themselves select.

First, what more can the institutions do to resolve proceedings more efficiently? At the outset, they must be more proactive in confirming arbitrator availability. The institutions already remind arbitrators that availability is a critical feature of their qualification to serve. The ICC now requires them to provide data about other cases in which they serve. Before proposing arbitrators to the parties, ICSID asks them to confirm sufficient availability in the next 18-24 months. The ICDR reminds its rosters that this is a requirement for accepting appointments.

But this simply isn’t enough. I have never seen an arbitrator decline an appointment based on general questions like “do you have time?” or “how many other cases do you have?” Why not a more concrete requirement that candidates block out, on a simple calendar covering the periods for which hearings might be anticipated, all of the actual dates for which they are unavailable — whatever the reason? Arbitrators have scheduling conflicts that have nothing to do with the number of appointments they’ve accepted. Many of us teach, or serve as counsel, or have other professional commitments. All of us — I would hope — have families and friends, and take vacations from time to time. These priorities block out time just as surely as other arbitrations. The CPR, when asked to appoint arbitrators, often requires them to list the specific days on which they have conflicts, during the months when a hearing is anticipated. That exercise concentrates the mind, and leads to more meaningful disclosure than a general requirement to confirm availability. I urge the institutions to consider the same kind of specific disclosure. I would not expect them to ask potential arbitrators the reasons for unavailability, just simply the dates. But that one step will go a long way.

Indeed, I would go further, and suggest that similar questions be asked of party-appointed arbitrators, and not just institutional appointees, before their appointments are confirmed. One would hope parties themselves are asking specific questions about availability, but they may not feel comfortable doing so. There is no reason the institutions could not distribute blank calendars as a matter of course, and circulate the responses to the parties for comment before confirming a tribunal’s constitution. That would make parties think twice about appointing arbitrators whom they should know are phenomenally busy. And it would make potential arbitrators examine the parties’ concrete scheduling needs, instead of falling back on a knee-jerk reaction that there is always enough time for one more appointment.

Institutions also could do more in forcing arbitrators to render decisions promptly. The ICDR Rules contain no specific deadline, the way the AAA Commercial Rules do — they just urge tribunals to be prompt. The ICC has a stated deadline of six months from the Terms of Reference, but it is honored often in the breach, although the new Rules do require tribunals to indicate when a draft award may be submitted to the ICC Court. For ICSID, there’s a stated 120 day deadline, extendable by another 60, but it runs from the “close of proceedings,” an all too malleable concept. I have seen ICC cases where the award was issued more than a year after final hearings. I have seen ICSID tribunals instruct the parties that no further submissions are needed, but still wait 18 months to declare the proceedings closed — coincidentally just when they are finally ready to render their ruling. This is game playing. It is a fairly transparent way to simply stop the clock even from beginning to run. There is no reason institutions should not police this more actively. They should regularly ask tribunals after the hearing whether they have requested additional submissions, and if answer is no — or as soon as the last scheduled submissions are received — they should urge tribunals to declare the record closed, reminding them of their responsibility to move quickly on the award.

But even with these changes, there is a limit to how fast the institutions can move proceedings along, unless the parties and their counsel also step up to the plate. Institutional reforms always will be a mere drop in the bucket, unless the users of the system also reform their expectations and practices.

The 2011 Chartered Institute of Arbitrators cost survey revealed that fully three-quarters of the costs of arbitration were spent on outside counsel. Users agree that the system takes too long, but in the same breath, they are generally determined to have three arbitrators, which invariably increases time and cost beyond using just one. They also too often revert to the easy presumption that the “safest” choice will always be to appoint the world’s most prestigious arbitrators, regardless of the scheduling implications. In part this is a function of a perceived need to “race to the top,” to appoint an arbitrator who is more famous than the other side’s, and then to appoint a chair who is even more esteemed than the first two. But the result is predictable. No matter how much the institutions work to broaden their own pools of arbitrators — and they are doing this — cases will not proceed more efficiently if the parties themselves continue to appoint only those candidates whose schedules predictably are the most burdened.

But there is more involved than simply daring to think outside the box in arbitral appointments. When faced with an important dispute, many users demand — or at least acquiesce in their outside counsel’s recommendation — that they leave no evidentiary stone unturned, and no remotely plausible point un-argued. There is all too often a tendency to seek every possible procedural advantage, rather than working together to achieve a result that is efficient as well as fair and reasonable.

The challenge for parties and their counsel, therefore, is to recognize that they too have a responsibility of self-discipline. Arbitration is a flexible process, and like all such processes, it involves choices. The new ICC Rules oblige the parties, and not just the tribunal, to conduct proceedings in an expeditious and cost effective manner. But words alone will not do the trick, when parties perceive their self-interest lies in fighting every possible battle and briefing every possible issue.

There is no easy solution for this challenge. Some parties seek to tie themselves to the mast in advance of a dispute, by agreeing to arbitration clauses with extremely expedited timetables and rigid limits on document exchange. This can work, but it can also lead to regret, when the parties discover that the dispute that arose is not the one they anticipated, and the constraints they negotiated no longer suit the circumstances of the case. Another option is to leave the clause simple, but to negotiate reasonable procedures immediately after the dispute has arisen. One of the real tools arbitrators have is to promote such negotiations, asking the parties to confer on an expeditious schedule even before coming to a case management conference. Having the underlying clients at such conferences can help, because often delays are driven more by outside counsel’s schedules than by inherent case requirements. And self-restraint by counsel also should be rewarded. The Debevoise & Plimpton Protocol to Promote Efficiency in International Arbitration is more than just good marketing. It also sends a message internally, within a counsel team, that efficiency is an important policy goal separate and apart from winning at all costs.

Where, then, do I end up, in my progress report on efforts to control time and costs? It is to recognize that the hardest tasks lie ahead. I admire the ways the ICDR, ICC and ICSID have risen to the occasion, and I hope they will do more. But there is a limit to what institutions can do to restrain a system that by its very nature is largely controlled by parties and their counsel — and by the very arbitrators they themselves select. The next chapter must involve internal reflection by the users of the system. That is essential if we are ever to move beyond the mere tightening of institutional rules, to restore the image of arbitration as efficient and cost-effective, and not just as neutral and enforceable.

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I’m honored to join today the fine ranks of contributors to this blog. For my first two posts, I thought I would offer a progress report of sorts on the critical task of controlling time and costs in international arbitration. This Part 1 focuses on the good news about various institutional reforms by the ICDR, ICC and ICSID that already are helping to reduce the average duration of cases. The next Part 2 offers suggestions for further action by these institutions, as well as a more sober “reality check”: that institutional reforms (no matter how vigorous) always will be a mere drop in the bucket, unless the users of the system also reform their expectations and practices.

My reflections in these posts draw on remarks I offered at last week’s AAA-ICDR/ICC/ICSID Joint Colloquium, at which I was asked to address the topic of time and costs from the institutions’ perspective. That might seem an odd task for someone who has never worked at any of these organizations. But I’ve been fortunate to have a good view of all three, sitting as arbitrator and appearing as counsel. It has been said that from the outside looking in you can never understand — but from the inside looking out you can never explain. So as some sort of hybrid of outsider and insider, I have tried both to understand and explain the institutional perspective, while pressing nonetheless for further action both by the institutions and by other key stakeholders in the arbitral process.

I begin with a few basic principles.

First, there’s no denying that users of international arbitration are frustrated. Arbitration is still seen as the best mechanism to ensure neutrality and enforceability for international disputes. But a 2010 study of the Corporate Counsel International Arbitration Group found that 100% of participants believe that it “takes too long” and also “costs too much.” These complaints are of course related. It’s a truism that a given task — whether presenting a case as counsel, or resolving it as arbitrator — will take as much time as one realistically has available to accomplish it. Without limits on the duration of arbitrations, therefore, it is practically impossible to control their cost, short of fixed-fee arrangements at every level in the process.

Second, there is a disconnect between the root sources of delay and cost, and users’ expectations for a solution. The 2010 Queen Mary Survey of “Choices in International Arbitration” found that users believe the parties (and not the institutions) are largely responsible for cost and delay — but they nonetheless look to institutions to guide the solution. That is not surprising: in sport, we expect the umpires to ensure proper play. But at the end of the day, it is the players who will either take the game to new heights, or leave the fans despairing of the game.

Third, the institutions have stepped up to the plate — to continue the sports metaphor a little longer. Over the last five years we’ve seen an extraordinary number of studies and task forces on this topic, but it has not been just talk. There have been numerous real initiatives. From the ICC, we’ve seen the 2007 suggested Techniques for Controlling Time and Costs, and now the revised 2012 Rules. From the ICDR, we’ve seen the 2009 Rules amendment and before that the 2008 Guidelines for Arbitrators Concerning Exchanges of Information — which was a particularly welcome initiative, given the perception that it is American lawyers who are chiefly driving the explosion of “discovery” in arbitration. From ICSID, we’ve seen numerous efficiency initiatives in recent years, which have resulted in a remarkable reduction in the average duration of cases. The statistics show that disputes concluded during ICSID’s 2011 fiscal year on average took 12 months less than cases concluded during the previous year — whether one measures from the time of registration or from tribunal constitution. That’s an extraordinary result. The ICDR also has seen a dramatic reduction in the length of its international cases, from 395 days in 2006 to 304 days in 2010. I don’t have similar statistics from the ICC, but I would expect its initiatives also to bear fruit.

Since institutions nonetheless are an easy target for criticism, let me highlight some of the practical steps they have taken, in four basic areas.

First, at the outset of a case. ICSID has started to put its own house in order. It has reduced the average time to register a case to 27 days. The new ICC Rules require parties to provide more information upfront to expedite early processing of a case, and has introduced a “gateway” procedure so prima facie challenges to the agreement to arbitrate can be referred directly to the tribunal, rather than awaiting formal review by the ICC Court.

Second, constitution of the tribunal. Much of the time here is driven by the parties themselves, since most appointments are made directly and not through the institutions. But when the institutions are needed to play a role, they are doing so faster. The ICC Court now has direct powers of appointment if a national committee fails to do its job promptly, or where one of the parties is a State entity. The ICDR is turning around its lists of prospective arbitrators more quickly than in the past. And ICSID has reduced the average time to constitute a tribunal to 6 weeks from the date it is asked to do so.

Third, case management conferences. The ICDR has long required a preliminary conference, and suggested agendas that include early identification of preliminary motions or sequencing of issues. The new ICC Rules now make case management conferences mandatory. ICSID has always required First Sessions to organize proceedings, but no amount of planning at that stage could prevent delay, when the old rules required automatic suspension of merits proceedings for any and all jurisdictional objections. The 2006 Rules revision empowered tribunals to decide for themselves whether suspending the merits would or would not increase efficiency.

Finally, document exchange. As the Queen Mary survey found, this is one of the stages most likely to result in delay and added cost. But both the 2008 ICDR Guidelines and the new ICC Rules remind arbitrators of their responsibility to carefully police this stage, and that they can use their discretion in cost assessment as a possible control mechanism.

There is more, however, that the institutions can do. Two areas stand out: arbitrator availability at the outset, and arbitrator diligence in rendering awards at the end. In my next post, I’ll offer some concrete suggestions in both areas, as well as a cautionary note about the limits to which any institutional reforms can fully address the related problems of time and cost, without greater self-discipline (and a modicum of internal reflection) by the users of the system themselves.

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In an emergency, swift and effective action is required. Yet in international arbitration proceedings, it can take weeks or months to constitute an arbitral tribunal. What options, then, are open to a party in need of urgent interim relief before an arbitral tribunal has been formed? In many circumstances, applying to the national courts of the relevant jurisdiction will be an unattractive prospect – for all of the reasons the parties chose arbitration in the first instance.

Arbitral institutions have devised a range of different solutions to this problem – from summary arbitral proceedings for interim relief (e.g. NAI) to expedited formation of the arbitral tribunal (e.g. LCIA) – but many have alighted on the use of “emergency arbitrators” to determine applications for interim relief before the arbitral tribunal is constituted (e.g. SCC Rules, SIAC Rules, new ICC Rules). In this blog, we examine some of the practical issues raised by the use of emergency arbitrators, as an increasingly popular tool of (pre-)arbitral procedure.

The first of these is: who to call in an emergency? In order to determine whether a party is entitled to rely on emergency arbitrator procedures, it is necessary to look at how those procedures are incorporated into the applicable arbitral rules and when they are to be invoked.

In contrast to the approach of previous regimes, most modern provisions for emergency arbitrators apply to a dispute automatically, by virtue of the parties selecting the relevant arbitral rules (indeed, the “opt in” nature of the ICC’s 1990 Rules for a Pre-Arbitral Referee Procedure is often cited as a reason for their limited use). Typically, where arbitral rules offer emergency arbitrator procedures, parties must therefore expressly “opt out” of those provisions if they do not wish them to apply. The SCC Rules go one step further, by applying the opt out feature in respect of the emergency arbitrator provisions retroactively (i.e. parties arbitrating under the SCC Rules can use the emergency arbitrator procedures even if their arbitration agreement was concluded before those procedures came into effect, on 1 January 2010). By contrast, and in recognition of the dramatic change introduced by the new provisions, the new ICC Rules contain ‘transitional provisions’ exempting the application of the new Emergency Arbitrator Provisions where the arbitration agreement was concluded before the new Rules come into force (i.e. on 1 January 2012) (Article 29(6)(a) of the new ICC Rules). It is anticipated that this automatic inclusion / opt out formulation will encourage the uptake of emergency arbitrator procedures under the arbitral regimes in which they appear.

A divergence may be seen, however, in the approach of arbitral institutions at the stage at which parties may seek to invoke emergency arbitrator provisions. For example, under the rules of certain institutions, parties are required to submit a Notice of Arbitration before (or concurrently with) a request for emergency relief (e.g. Schedule 1(1) of the SIAC Rules). Others, in contrast, offer even greater flexibility, allowing a party to apply for interim relief before a Request for Arbitration has been filed (e.g. Appendix V, Article 1(6) of the new ICC Rules). However, in those instances, the party seeking interim relief is typically required to submit a Request for Arbitration within a certain time period after their application for relief, failing which the emergency arbitrator proceedings will be terminated.

Another issue of interest is the impact of emergency proceedings on the concurrent jurisdiction of a competent court or the arbitral tribunal. As for court proceedings, emergency arbitrator procedures are not envisaged to represent an exclusive remedy and, in general, the option of (or indeed submission to) those proceedings does not operate as a waiver of judicial authority over the matter. Indeed, certain arbitral rules expressly recognise the preservation of judicial remedies despite the availability of emergency arbitrator procedures (e.g. Article 29(7) of the new ICC Rules; Article 32(5) of the SCC Rules). However, the provisions of mandatory local law may curtail recourse to the courts where parties have an option to seek relief from another source (such as an emergency arbitrator). For example, under the English Arbitration Act (1996), the English courts will grant orders in support of arbitration “if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively” (section 44(5) of the English Arbitration Act). (It is noted, however, that the qualification of “unable…to act effectively” may dilute the restrictive effect of this provision on the English courts’ jurisdiction as a consequence of emergency arbitrator procedures.)

In respect of the arbitral tribunal, jurisdiction is entirely protected. Arbitral rules are clear that orders or awards of emergency arbitrators do not bind the subsequently-constituted arbitral tribunal, and that those tribunals are empowered to reconsider, modify, terminate or annul the order or award (e.g. Article 29(3) of the new ICC Rules; Schedule 1(7) of the SIAC Rules).

There are, however, important limitations on the interim relief emergency arbitrators are able to grant. For example, since the same principles of jurisdiction apply to emergency arbitrators as to the arbitral tribunal, they are not able to grant interim orders over third parties to the (eventual) arbitral proceedings. This rule is expressly recognised in the new ICC Rules, which state that the Emergency Arbitrator Provisions apply only to signatories to the arbitration agreement or their successors (Article 29(5) of the new ICC Rules). (It is noted that this particular provision also precludes the use of ICC emergency arbitrators in investor-state disputes.) In addition, ex parte applications – where the element of surprise is vital to their success – are not suitable for submission to emergency arbitrators (e.g. Mareva or freezing injunctions). This important limitation on the powers of emergency arbitrators partly reflects the centrality to arbitration of the opportunity for each party to present its case, but also the draconian nature of ex parte orders, such that they ought to be reserved solely for the national courts.

As a side note, one concern that has been voiced in relation the powers of emergency arbitrators to grant interim relief in arbitral proceedings is the potential damage their orders may cause if wrongly granted against innocent parties. However, arbitral institutions go some way to addressing this concern by giving emergency arbitrators the power to require the applicant to provide “appropriate security” as a pre-condition for the granting of relief (e.g. Appendix V, Article 6(7) of the new ICC Rules).

Assuming that the basic threshold requirements have been met (e.g. standing, urgency, prima facie entitlement to the relief sought, threat of irreparable loss), and a party is awarded the relief it seeks, the next key issue that arises is enforcement: how may provisional measures ordered by an emergency arbitrator be enforced and what are the sanctions for non-compliance? The form of the relief granted by an emergency arbitrator varies across arbitral institutions: some require provisional measures to be granted as “orders” (e.g. Article 29(2) of the new ICC Rules), whilst others permit interim “awards” to be rendered (e.g. Schedule 1(6) of the SIAC Rules; Article 32(3) of the SCC Rules). However, questions remain regarding the applicability of national arbitration laws to pre-arbitral procedures and the extent to which courts will enforce orders or awards made by emergency arbitrators. Ultimately, this is likely to turn upon whether emergency arbitrators are deemed to be “arbitrators”, for the purposes of arbitration legislation, granting relief in the course of “proceedings”. Unfortunately, there is a paucity of case law with which to illuminate this question. However, a purposive approach – which recognises that the primary purpose of arbitration legislation is to respect the parties’ agreement to arbitrate their disputes – would appear to lend support in favour of the enforcement of emergency arbitrators’ orders and awards.

Separately, claims may lie in breach of contract where parties are required by the governing arbitral rules to give an undertaking to comply with the orders of emergency arbitrators (e.g. Article 29(2) of the new ICC Rules; Schedule 1(9) of the SIAC Rules; Appendix II, Article 9(3) of the SCC Rules). Accordingly, arbitral tribunals are empowered to reflect non-compliance with the orders of emergency arbitrators in the final Award of damages (e.g. Article 29(4) of the new ICC Rules). (Added incentives derive from provisions which allow arbitral tribunals to revisit an emergency arbitrator’s decision about the costs of the emergency proceedings.)

In addition (and of greater practical effect than might, at first, be imagined), orders granted by emergency arbitrators are “morally binding” on the parties. Whilst it may be true that parties are less incentivised to comply with the orders of emergency arbitrators (on the basis that those arbitrators are usually prevented from sitting on the arbitral tribunal, and consequently the risk of adverse inferences from non-compliance may be perceived to be lessened), in practice, arbitral institutions report very high levels of voluntary compliance with those orders.

As the rules of arbitral institutions evolve to reflect modern practice and respond to commercial pressures, there appears to be an increasing convergence in approaches to the provision of pre-arbitral emergency relief. Although there may be certain practical limitations on the operation and enforcement of these provisions, the ultimate aim of emergency arbitrator procedures is the same: to increase party autonomy and reduce the role of the courts in arbitral proceedings, taking arbitration one step further to becoming a one-stop shop for the comprehensive and effective resolution of disputes. The proven track record of parties who have deployed these procedures successfully to date is an encouraging sign of the utility of emergency arbitrators and a likely indicator of future trends. Those institutions whose rules are currently silent on the use of emergency arbitrators are bound to follow suit.

Justin D’Agostino and Ula Cartwright-Finch
Herbert Smith

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In its 4 August 2011 Decision on Jurisdiction and Admissibility, the majority of the Tribunal in Abaclat and Others (Case formerly known as Giovanna a Beccara and Others) v. Argentine Republic affirmed that it had jurisdiction to hear the claims of over 60,000 Italian investors against Argentina arising out of Argentina’s default on various sovereign bonds.  The Decision is historic in its holding that there is no impediment to mass claims under the ICSID Convention and Arbitration Rules and that ICSID tribunals have the power under ICSID Arbitration Rule 19 to adopt procedures to handle mass claims.

Although the Tribunal’s finding that it can hear mass claim has garnered the most interest, various aspects of the Decision have sparked debate.  The Tribunal held that the Claimants’ security entitlements in Argentinean bonds are investments for the purposes of Article 25, ICSID Convention and protected under the Argentina-Italy BIT.  Another controversy arises from the fact that the Decision was issued by the majority of the Tribunal without the simultaneous release of the dissenting opinion. The dissenting opinion, which the Decision states is “Forthcoming”, has yet to be released.

On 15 September 2011, the Argentine Republic filed a request for the disqualification of the majority of the Tribunal (Professors Pierre Tercier (President) and Albert Jan van den Berg), alleging that the two arbitrators could not be relied on to exercise independent judgment.   The disqualification request criticizes the two arbitrators in particularly strident language, arguing that the transmission of the Decision: “(a) without the dissenting opinion of the other arbitrator, (b) without his consent, and (c) without even waiting for a draft of said opinion” together with the majority’s rejection of Argentina’s request for provisional measures “is a manifestation of an absolutely inappropriate conduct” (para. 20).

Although the Decision raises a series of interesting issues (for example, see Sarah Ganz‘s post on the Decision’s treatment of the 18-month litigation requirement in the BIT), in this post I focus on the majority’s distinction between jurisdiction and admissibility, a subject of one of my previous posts.  In its Decision, the majority of the Tribunal (the Tribunal) states that it is appropriate and necessary to distinguish issues relating to jurisdiction and admissibility (para. 248) and that the “guiding thought of the Tribunal for distinguishing issues of jurisdiction from issues of admissibility has been the following cornerstone consideration:

 If there was only one Claimant, what would be the requirements for ICSID’s jurisdiction over its claim? If the issue raised relates to such requirements, it is a matter of jurisdiction. If the issue raised relates to another aspect of the proceedings, which would not apply if there was just one Claimant, then it must be considered a matter of admissibility and not of jurisdiction.” (para. 249)

The Tribunal’s analysis thus takes a two-fold approach.  First, it analyzes the mass claims issue within the context of the Parties’ consent to arbitration (a question of jurisdiction) and second, it analyzes the admissibility of mass claims.

The Decision is perhaps the clearest example of an investment treaty tribunal distinguishing between jurisdiction and admissibility.  The Tribunal highlights at para. 247 that:

 (i)            While a lack of jurisdiction stricto sensu means that the claim cannot at all be brought in front of the body called upon, a lack of admissibility means that the claim was neither fit nor mature for judicial treatment;

(ii)            Whereby a decision refusing a case based on a lack of arbitral jurisdiction is usually subject to review by another body, a decision refusing a case based on a lack of admissibility can usually not be subject to review by another body;

(iii)            Whereby a final refusal based on a lack of jurisdiction will prevent the parties from successfully re-submitting the same claim to the same body, a refusal based on admissibility will, in principle, not prevent the claimant from resubmitting its claim, provided it cures the previous flaw causing the inadmissibility.

With respect to consent, the Tribunal rightly held that if, in principle, it had jurisdiction over one claimant, “it is difficult to conceive why and how the Tribunal could loose such jurisdiction where the number of Claimants outgrows a certain threshold.” Further, it highlighted that “the collective nature of the present proceeding derives primarily from the nature of the investment made.”:

The ICSID Convention aims at promoting and protecting investments, without however further defining the concept of investment and leaving this task to the parties through relevant instruments such as BITs … Thus, where the BIT covers investments, such as bonds, which are susceptible of involving in the context of the same investment a high number of investors, and where such investments require a collective relief in order to provide effective protection to such investment, it would be contrary to the purpose of the BIT and to the spirit of ICSID, to require in addition to the consent to ICSID arbitration in general, a supplementary express consent to the form of such arbitration. In such cases, consent to ICSID arbitration must be considered to cover the form of arbitration necessary to give efficient protection and remedy to the investors and their investments, including arbitration in the form of collective proceedings.  (para. 490).

In conclusion, the Tribunal, rightly held that “the “mass” aspect of proceedings relates to the modalities and implementation of the ICSID proceedings and not to the question whether Respondent consented to ICSID arbitration. Therefore, it relates to the question of admissibility and not to the question of jurisdiction.” (para. 492).

The Tribunal took a purposive approach to the interpretation of the ICSID Convention’s “silence” as to mass claims, holding that it would be “contrary to the purpose of the BIT and to the spirit of ICSID to interpret this silence as a “qualified silence” categorically prohibiting collective proceedings, just because it was not mentioned in the ICSID Convention” (para. 519).

With respect to the adaptations, the Tribunal identified the need to adopt mechanisms to allow a simplified verification of evidentiary materials with respect to each individual claim (para 531) and the manner of the representation of the claimants (paras. 531-532).  In finding that it had the power to adapt procedures to address the “mass claims” aspect of the case, the Tribunal states that adaptations must consider the principle of due process and a must seek a balance between the procedural rights and interests of each party (para. 519).  In assessing that balance the Tribunal considered: (i) under what conditions is it acceptable to change the method of examination from individual to group treatment; (ii) to what extent are Argentina‘s defense rights affected in comparison to 60,000 separate proceedings; and (iii) is it admissible to deprive Claimants of certain procedural rights (para. 539).

Argentina’s had argued that there are strong policy reasons why ICSID is an inappropriate forum to address issues with respect to sovereign debt restructuring.   The Tribunal flatly rejected this argument, rightly stating that “Policy reasons are for States to take into account when negotiating BITs and consenting to ICSID jurisdiction in general, not for the Tribunal to take into account in order to repair an inappropriately negotiated or drafted BIT.”

It its disqualification request, Argentina suggests that the procedural mechanisms set out in the Decision are an unjustifiable limit on Argentina’s right of defence and further evidence of the Tribunal’s alleged lack of independent and impartial judgment (paras. 25 et seq.).   Although Argentina has characterized the majority’s Decision as “egregious” and various Tribunal statements as “shocking” and “absurd”, this hyperbole should seen for what is—a regrettable attempt to appeal a tribunal decision through the guise of a disqualification request.  The majority of the Tribunal’s approach to mass claims is correct in principle and practical, objective and fair-minded in practice.  International arbitration can be an effective and efficient system of dispute resolution because of its ability to adopt flexible procedures to address myriad claims and issues.  The majority’s Decision reflects this approach and will stand the test of time.

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The recent global financial crisis has had a significant effect on the types of disputes submitted to arbitration in the major Asia-Pacific financial centres. Arbitration centres have responded with various measures to cater to more cost conscious clients, and to increase the efficiency of proceedings and to speed up the way proceedings are conducted. Governments have introduced legislative, regulatory and procedural changes affecting arbitration.

One of the greatest concerns voiced by the international business community is that arbitration needs to provide means of granting protective measures, which are often needed urgently. At any stage of the arbitral proceedings, a party to a dispute may need to ensure that the other party takes or refrains from taking certain actions before the dispute has been heard. For instance, one party may wish to prevent the other party from dissipating its assets or destroying evidence, or it may seek to ensure that the other party continues to perform its obligations under an ongoing contract.

These measures may be necessary to ensure that the final outcome of the dispute process is not prejudiced or rendered ineffective because of the way a party behaves. Interim measures provide a remedy or relief aimed at safeguarding the rights of parties to a dispute pending its final resolution. The underlying principle is that no party’s rights should be prejudiced or affected by the duration of adjudication and protection is available through the right to seek interim measures of protection from the arbitral tribunal itself or from the courts.

In international arbitration, arbitral tribunals are generally empowered to grant interim measures of protection. However there are times when parties to arbitration require interim measures on an urgent basis, before the Arbitral Tribunal has been constituted. The constitution of an arbitral tribunal can take some time and during this time the status of things may change substantially and it cannot be taken for granted that disputed assets will not be dissipated. Although ordinarily the rules of arbitral institutions do not prevent a party from requesting an interim measure in court, parties that have agreed on arbitration are often hesitant to go to court, especially in a foreign jurisdiction. Thus, there is a need to provide parties with the option of having such a procedure available during the course of the arbitration, as well as before the constitution of the arbitral tribunal.

In response to this need, the ACICA has updated its Arbitration Rules to include a set of Emergency Arbitrator provisions. The emergency rules, which establish a regime for emergency proceedings, are incorporated into the ACICA Rules, which refers to Schedule 2 where the emergency rules are to be found. These new provisions enable the appointment of an Emergency Arbitrator in arbitrations commenced under the ACICA Rules but before the case is referred to an arbitral tribunal. It is hoped that they will provide businesses with a prompt and efficient option for obtaining urgent interlocutory relief in their cross-border disputes.

The latest version of the ACICA Emergency Arbitrator provisions comes into force on 1 August 2011. By accepting ACICA arbitration, parties accept not only arbitration according to the ACICA Rules, but also to be bound by any decision of an Emergency Arbitrator. By referring to the ACICA Rules, parties also adopt the emergency rules. The power of the Emergency Arbitrator applies to all arbitrations conducted under new ACICA Rules, unless the parties expressly opt out of it in writing. The ACICA Rules do not prejudice a party’s right to apply to any competent court for interim measures.

The ACICA emergency arbitrator rules are designed to be an effective alternative to seeking pre-arbitration emergency relief in court, prior to and after the commencement of arbitration, but before the constitution of the arbitral tribunal.

A request for emergency relief must be made concurrently with or following the filing of the Notice of Arbitration and be communicated to all other parties prior to or at the same time as making application. The party applying must include a statement certifying that all other parties have been notified, or explain the steps taken in good faith to notify the other parties of the application.

In addition to these threshold preconditions, the emergency procedure requires the application to indicate in writing the nature of the relief sought, the reasons why such relief is required on an emergency basis and why the party is entitled to such relief.

The party making the application is also required to pay ACICA’s Emergency Arbitrator Fee upon filing the application, together with the ACICA case registration fee. Payment is a condition for the appointment of an Emergency Arbitrator. ACICA may decide to reduce or increase the costs having regard to the nature of the case, the work performed by the Emergency Arbitrator and ACICA and other relevant circumstances.

The emergency procedure calls for ACICA to use its best endeavours to appoint the emergency arbitrator within one business day of its receipt of an application for emergency relief. The arbitrator will be selected to the extent possible from ACICA’s panel of arbitrators, based on his or her expertise and immediate availability. While the Rules make no provision for the parties themselves to choose the Emergency Arbitrator, they do not preclude ACICA from appointing a person selected by the parties. If the parties agree on an emergency arbitrator, there is no reason for ACICA not to appoint that person subject to that person being suitably qualified and available and able to act in accordance with the Rules.

The ACICA emergency provisions also deal expressly with challenge procedures. A prospective Emergency Arbitrator shall immediately in writing disclose to ACICA any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. A party who intends to challenge an Emergency Arbitrator shall send notice of its challenge within one business day after being notified of the appointment of that arbitrator and the circumstances disclosed.

An Emergency Arbitrator shall not act as an arbitrator in any future arbitration relating to the dispute, unless otherwise agreed by the parties in writing. As a person has acted as Emergency Arbitrator may be considered biased in any ensuing arbitration, the ACICA Rules contain an express provision in this regard.

When the Emergency Arbitrator has been appointed, ACICA refers the application for interim relief to that Emergency Arbitrator. ACICA does not expressly provide rules about the conduct of the emergency proceedings but, the relevant ACICA Arbitration Rules could be applied to the emergency proceedings, taking into account the urgency inherent in such proceedings. The Emergency Arbitrator should conduct the proceedings in such manner as he or she considers appropriate in the circumstances, provided that the parties are treated equally, which will also cover the resisting party making submissions as and where appropriate as to why emergency relief should not be granted. Each party should be able to present its case as circumstances (and urgency) allow.

The ACICA emergency procedure provides for a time limit within which the decision must be made: any decision on an application for emergency interim relief must be made not later five business days from the date upon which the application was referred to the Emergency Arbitrator. ACICA may extend this time limit upon request by the Emergency Arbitrator.

The Emergency Arbitrator may grant any interim measures of protection on an emergency basis that he or she deems necessary and on such terms as he or she deems appropriate and it may take the form of an award or of an order and must be made in writing and contain the date when it was made and reasons for the decision.
The ACICA emergency procedure generally following the same approach as the ACICA Rules on interim measures.

The Emergency Arbitrator can order a party to:
(a) maintain or restore the status quo pending determination of the dispute;
(b) take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm;
(c) provide a means of preserving assets out of which a subsequent award may be satisfied;
(d) preserve evidence that may be relevant and material to the resolution of the dispute;
(e) provide security for legal or other costs of any party.

The Emergency Rules also require that the party requesting any Emergency Interim Measure satisfy the Emergency Arbitrator that:
(a) irreparable harm is likely to result if the Emergency Interim Measure is not ordered;
(b) such harm substantially outweighs the harm that is likely to result to the party affected by the Emergency Interim Measure if the Emergency Interim Measure is granted; and
(c) there is a reasonable possibility that the requesting party will succeed on the merits, provided that any determination on this possibility shall not affect the liberty of decision of the Arbitral Tribunal in making any subsequent determination.
This provision requires a three-stage test which an applicant must pass in order for the relevant emergency interim measures to be granted. The elements of a successful emergency application for interim measures are compound, meaning that if an applicant fails to establish one element, the Emergency Arbitrator must refuse to grant the emergency interim measure.

The Emergency Arbitrator can also require a party to provide appropriate security as a condition for granting any Emergency Interim Measure. This provision ensures that a respondent does not suffer irreparable harm as a result of the interim measures. It contemplates tribunal-ordered undertakings as to costs and damages, given by the party seeking interim relief in favour of a respondent at the direction of the arbitrator.

Emergency Arbitrator must also promptly deliver a copy of the decision on emergency interim measures of protection to each of the parties and ACICA.

The emergency decision is binding on the parties until the Emergency Arbitrator decides otherwise, a final award has been rendered or the Arbitral Tribunal once constituted, reconsiders, vacates or modifies it. The parties are contractually bound by the Emergency Arbitrator’s decision as long as it stands. As a practical matter, the Arbitral Tribunal subsequently appointed is in any event unlikely to look favorably upon a party that has failed to comply with any prior order or award granted by an Emergency Arbitrator.

After an emergency decision has been issued, the Emergency Arbitrator retains the power to modify or vacate the Emergency Interim Measure for good cause until the constitution of the Arbitral Tribunal. This provision could be significant because it potentially allows for sua sponte modification or vacation of any emergency interim measure ordered by the Emergency Arbitrator.

An Emergency Arbitrator will have no further power to act after the Arbitral Tribunal is constituted. The Emergency Arbitrator’s jurisdiction and powers cease forthwith on the appointment of the Arbitral Tribunal which is not bound by any decision or the reasons of the Emergency Arbitrator. As the Emergency Arbitrator has preliminary powers only, his or her award is contractually binding only as long as the Arbitral Tribunal does not decide otherwise.

Any Emergency Interim Measures issued by the Emergency Arbitrator cease to be binding if the Arbitral Tribunal is not appointed within 90 days from the date of the emergency decision, or the Arbitral Tribunal makes a final award, or the claim is withdrawn, or the Emergency Arbitrator or the Arbitral Tribunal so decides.

The ACICA Emergency Arbitration Rules offer an effective and efficient alternative to a court for the granting of interim measures before an Arbitral Tribunal has been constituted. Despite these new Rules, parties to ACICA arbitral proceedings will inevitably need to continue applying to courts for certain types of interim relief, such as orders against third parties, or where it is necessary for the application to be made ex parte without communication to other parties, for example to freeze funds in a bank account which might otherwise be dispersed. It is undeniable that these new rules will be useful for applicants in other cases, particularly if the courts where the same interim measures would otherwise need to be sought or if its judges are not known to be supportive of arbitration.

Andrea Sturini has been an Intern at Australian International Disputes Centre and the Australian Centre for International Commercial Arbitration in 2011. He has served as Counsel of Milan Chamber of Arbitration for 5 years. In early 2011 he also interned with Singapore International Arbitration Centre.

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by Laurence Burger

In a post dated March 2, 2011, I reported about a Swiss Supreme Court decision of February 20, 2009 where the Supreme Court had confirmed a CAS award which deemed an appeal withdrawn after the appellant had failed to pay the advance on costs.
I indicated that I did not know what had happened to the dispute afterwards.
As it turns out, about a month after this post, the saga continued with the Supreme Court rendering another decision related to this matter.
As a reminder, the dispute concerned the payment of an indemnity by a football coach to its former club following a transfer. The identity of the parties being revealed in this new decision, I will refer to the parties by their names. The name of the coach is Luis Fernandez; the name of the former club, Al-Rayyan Sports Club, in Qatar.
Shortly after the first decision of the Supreme Court, Al-Rayyan requested the FIFA to open disciplinary proceedings against Mr Fernandez for failure to pay the indemnity. The FIFA opened disciplinary proceedings and ordered the coach to pay the indemnity within 60 days. Passed this deadline, Mr Fernandez would be automatically suspended of any football-related activity upon request by the club. Mr Fernandez appealed this decision with the CAS, requesting however that the execution of the FIFA decision be suspended and that no decision be rendered before the criminal complaint that he was about to bring be instructed. Mr Fernandez filed shortly thereafter a criminal complaint against the president of the Beitar Jerusalem FC, the club that newly employed him, accusing him of fraud and false pretenses.
The CAS suspended the execution of the FIFA decision. However, it did not take into account Mr Fernandez’s request to wait until the outcome of the criminal proceedings and confirmed the FIFA’s disciplinary measure. It appears that thereafter, Mr Fernandez having not paid the indemnity, he was suspended from its football activities by the FIFA.
Mr Fernandez appealed the CAS decision before the Swiss Supreme Court. The first question that the Supreme Court had to consider was whether Mr Fernandez still had standing. Indeed, Mr Fernandez had paid the indemnity, albeit late, and as a result the FIFA had terminated his suspension. As a result, the Court had to consider whether Mr Fernandez still had a legally protected interest to see the CAS award overturned. The Supreme Court held that Mr Fernandez had standing, but dismissed the appeal on substantive grounds.
Clearly, the Supreme Court wanted to give Mr Fernandez his day in court, after what had happened in the first proceeding. The reasoning of the Supreme Court to grant standing to Mr Fernandez is however hard to follow. The Supreme Court held that the FIFA should not have rendered its decision before the outcome of the criminal proceedings was known, because the criminal proceedings could have revealed that the Al-Rayyan club had been paid twice, in which case Mr Fernandez could introduce a liability claim against the FIFA claiming that, had the FIFA not ordered him to pay the indemnity, he would not have unduly paid twice. I believe that the Court made a mistake in referring to the FIFA in this instance: the procedure was in the hands of the CAS, it is the CAS that should have stopped the procedure until the decision of the criminal court. Indeed, the Court then holds that the TAS’ errors grant standing to Mr Fernandez. On the whole, however, the reasoning of the Supreme Court is correct, in my opinion: the CAS should have waited until the outcome of the criminal complaint to render its decision. The criminal procedure would have determined whether Mr Fernandez was or not victim of a fraud, and presumably whether he had actually paid the indemnity twice.

I do not know the inside story behind this case, and in particular not what the criminal proceedings will reveal, but I find both cases highly unsatisfactory from a legal efficiency point of view. To the outside (legal) eye, it seems that the system, whether at the hand of the tribunals or of Mr Fernandez’s representative, has twice failed him.

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