Chapter 1 – Introduction I.1.

c – Arbitration and Mediation • World Intellectual property Organization (WIPO) Guide to Mediation Mediation – 2 main ways mediators assist: 1) facilitative mediation – facilitate commo, perspective, etc 2) evaluative mediation – makes a non-binding assessment of the dispute Process: 1) Request Mediation 2) Appoint Mediator 3) Initial Contact btwn Mediator & Parties - meet, exchange documents 4) Later Meetings - agree to ground rules, gather information, develop options for settlement, look at options 5) Conclusion How does mediation differ from Arbitration? Arbitration – (3 Party) Parties cede decision-making power over the dispute to an arbitrator. Decisions are made based on an OBJECTIVE STANDARD. o How does arbitration differ from mediation?  Objective standard  Goal: a final judgment  Authority: Can determine THE outcome.  Must be neutral & impartial Mediation – (2/3 party) Non-Binding. Confidential. Parties retain responsibility & control of the dispute & do not cede the power to an intermediary a. Role of mediator is to assist parties in reaching their decisions. (1) Facilitative Mediation - mediator endeavors to facilitate communication btwn parties. (2) Evaluative Mediation - mediator provides a non-binding assessment or evaluation of the dispute and parties are free to accept or reject it. Advantages: - minimizes costs - parties maintain control over the process - speedy settlement - confidentiality Other forms of dispute settlement o Conciliation (Vienna): Settlement of a dispute in a friendly manner. If parties agree, parties can agree to allow conciliator to become the arbitrator. If it fails, the conciliator cannot become the arbitrator. o Med/Arb – Where parties go into mediation, but if mediation fails, the mediator becomes the arbitrator (umpire) and there is a small ‘trial.’ It allows parties to determine whether they like the future arbitrator, and cut out if they don’t like him. o Mini-Trial (Zurich) – One Umpire & 2 associate members (senior officers of the 2 companies) – can mediate, meet, listen to evidence, etc. The panel can make a settlement decision, or if the panel can’t agree, the umpire makes a decision. Outcome: JUDGMENT I.1.d – Technical Expertise o ICC Rules on Expertise • In addition to an arbitration clause, parties should include in Ks an expertise clause for the appointment of an expert through the International Centre for Expertise. • ICC Expertise Rules Art 8 §3. • ICC Expert’s opinion is normally NOT binding (unless they agree it will be) I. 1.e – Adaptation of Contracts • Frydman v. Cosmair Inc •


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Facts: Defendant, L’Oreal, entered into an agreement to arbitrate the value of plaintiffs’ Paravision shares. Later they also agreed to buy plaintiff’s Paravision holdings at a price to be determined by the arbitrator under 1592 of the French Civil Code. Rules Although the parties may label something as an “arbitration” – it must be a real arbitration (involving a dispute with a judgment). In this case, the 1592 price appraisal called for in the K was not an arbitration. Arbitrations have:

1) a dispute (there was none in this case – they had come to an agreement – no longer making arbitration necessary – and replaced the question with a 1592 price appraisal)  2) involve a judgment (the 1592 price appraisal does not constitute a judgment) I.1.f – Arbitration and Litigation • Learned Hand: o “Arbitration may or may not be a desirable substitute for trials in courts; as to that the parties must decide in each instance. But when they have adopted it, they must be content with its informalities; they may not hedge it about with those procedural limitations which it is precisely its purpose to avoid. They must content themselves with looser approximations to the enforcement of their rights than those that the law accords them, when they resort to its machinery.” • Advantages of Arbitration in International Disputes o Predictability - dispute resolved in one place, not race to courts in two nations. o Competence - arbitrators will have applicable specialized commercial and legal expertise. o Party participants - procedures shaped by parties & arbitrators o Finality - arbitration awards are final and more often than not are enforced. o Enforceability - if party to NY Convention, a foreign arbitral award is easier to enforce than a foreign judgment. o Costs (to some extent) - Cost of arbitrators is high, but don’t have other costs incident to litigation e.g. depositions, appeals etc. o Privacy (up to a point) - during arbitration there is confidentiality, but proceeding may become known due to ancillary litigation or regulatory filings. o Neutrality o Expertise - arbitrators will be experts in their field more than federal judges. o Procedural Flexibility - can tailor rules to fit your case o Representation - can have your own lawyer represent you, doesn’t have to be a member of the bar somewhere. • Disadvantages of Arbitration in International Disputes o Speed - unlikely since arbitral panel must be chosen and nothing substantive can be done before that. o Provisional remedies  not all courts will provide provisional remedies in aid of arbitration.  Those that do, are reluctant to go beyond the maintenance of the status quo. o Double Proceedings - sometimes will have litigation and arbitration. o Finality - if you lose, can’t appeal o Type of relief - can’t get intermediate relief e.g. injunction, have to wait until arbitration is over. Can’t get punitive damages either. • Advantages of Litigation over Arbitration in International Disputes o No Agreement - parties might not agree on the procedures of arbitration o Lack of joinder provisions - can’t join multiple provisions. o Lack of discovery - might want broader judicial discovery, particularly the broader discovery available as to non-parties. • Factors to consider when selecting a dispute resolution mechanism o What sorts of disputes most likely to arise?  Who is the likely claimant?  Who will be holding the money or goods?  Who will be holding the records and other evidence? o Will there be other leverage at the time of a dispute, such as dependence by one party on another for spare parts or service? o Where are the parties’ assets?


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In what language will the parties be dealing? What will be the governing law of the contract? Does either party have a substantial base of operation in a third country and familiarity with its legal system?

I.1.g – Institutional and Ad Hoc Arbitration Institutional - Proceedings administered by an organization, usually in accordance with its own rules of arbitration. • Advantages: o Ease - of incorporating by reference the institution’s rules in an international contract. o Validity of Arbitration: Institutional rules have proven valuable in preventing parties, after a dispute arises, from successfully asserting in national courts that the claims are non-arbitrable. o ICC - available in seven major languages o Arbitrator Selection  One of the most important services an institution can provide  ICC can draw on its wide resources to find suitable arbitrators  Having neutral party select arbitrator eases the process of tribunal formation.  Institution’s role in engaging the service of an arbitrator spares the parties from having to negotiate the fees of the arbitrator.  Administrative Referee provided by the institution to ensure that arbitrators are truly independent. o Professional Administration - Professional staff to guide disputants through arbitration process. o Judicial Deference to Institutional Arbitration  National courts are much more comfortable in confirming commercial awards where there is some assurance that a neutral body, such as an arbitral institution, has fairly referred both the procedural and substantive controversies which invariably arise during the course of arbitration proceedings. o Default Award - Ability to proceed in the absence of a defaulting party.  Example: ICC Art. 15(2) “If one of the parties, although duly summoned, fails to appear, the arbitrator, if he is satisfied that the summons was duly received and the party is absent without a valid excuse, shall have the power to proceed with the arbitration, and such proceedings shall be deemed to have been conducted in the presence of all parties.”  In ad hoc arbitration, may be more difficult to enforce a default award because the enforcing party does not have the same degree of assurance that due process was accorded the defaulting party. • Disadvantages o Takes more time o Fees are higher than ad hoc. Ad hoc - no formal administration by any established arbitral agency; instead the parties have opted to create their own procedures for a given arbitration. • Ad hoc rules can be created by: o Drafting a set of ad hoc procedures in contract, or o Reference to the UNCITRAL Arbitration Rules, or o By allowing the arbitration tribunal to fashion it’s own procedures after the dispute has arisen. • Advantages o Flexibility - arbitration can be shaped to meet the wishes of the parties and the facts of the particular dispute. But need cooperation in order to ensure this. o Cost - save administrative fees of institution. o Speed - avoid sometime cumbersome internal proceedings e.g. selecting arbitrators, filing documents. o UNCITRAL rules make ad hoc arbitration much easier by providing a set of rules w/out the institutional fees or administration. • Disadvantage o Lack of cooperation: The parties, their counsel and arbitrators must work together to reap the benefits of ad hoc arbitration, this is hard to do when there are two sides fighting for different


results. o Flexibility - have to fill in the rules, hard to do when disputes arise. o Cost- still have to pay arbitrators, lawyers etc. o Speed - in theory it is faster, but might not be in practice. I.3 – On the sources of relevant Norms Sources of Relevant Norms I. Arbitration relies on party autonomy to set the decision-making process free of municipal law and formal procedure; yet at the same time it relies on court assistance when party cooperation is lacking, and hence the partydriven process faces a road-block. a. Party Autonomy (1) The basis of the jurisdiction of an arbitral tribunal is the will of the parties, while courts owe their competence to procedural norms of a state or of an international convention. b. Institutional Rules – What rules apply (1) Apply if the parties subscribe to the institution’s system of rules. (2) Ad hoc rules are more flexible, but it is hard to come up with a complete set of rules for each dispute. Therefore, many rely on UNCITRAL rules which emphasize that “the establishment of rules for ad hoc arbitration that are acceptable in countries with different legal, social and economic systems would significantly contribute to the development of harmonious international economic relations.” (3) Parties may also combine pre-established institutional rules with solutions designed by themselves. Though problems may emerge if the rules contradict each other. c. National Statutes - national law / municipal law (1) Generally, parties may follow procedural rules drafted or chosen by the parties as long as they observe due process. (2) May also apply when referring parties to arbitration, constituting the arbitral tribunal, or challenging the arbitrators, etc. (3) UNCITRAL Model Law on International Commercial Arbitration created to provide a set of uniform rules acceptable throughout the world and which could be adopted by national legislatures. Accepted by 8 states in the US and numerous countries worldwide. Model for national statutes on arbitration. Lex Arbitri – the law that governs the arbitration proceeding (but NOT the facts themselves). Ex/ Arbitration in Paris – Fr law; in NYC, -- the US law d. International Agreements - ICA is supported and guided by a network of international conventions and bilateral agreements to aid the recognition and enforcement of arbitral awards. (1) 1958 NY Convention: most countries are party to it. (2) 1961 Geneva Convention on ICA (3) 1965 ICSID Convention I.3.b – Party Stipulation v/s Institutional Rules • By agreeing to arbitrate in accordance with the rules of an arbitral institution, the parties have agreed that the proceedings shall be conducted in accordance with the rules established by the institution. • Preliminary Award Made in Case No. 2321 in 1974 (ICC) o Facts: The K provided for arbitration according to ICC rules. An annex to the K stated that the arbitrator was to be chosen by an authority (“the Chairman”) other than the Court of Arbitration of the ICC. When the Chairman refused to appoint an arbitrator, the Court of Arbitration of the ICC nominated an arbitrator pursuant to ICC rules. o Rule: ICC Rule 8(2) – if there is a failing agreement between the parties, the arbitrator will be appointed by the court. The arbitrator found that since the parties had failed to come to an agreement, it was proper for the ICC Court to appoint an arbitrator. o CRITIQUE: Unenforceable under NYConv V(1)(d) - a nation’s court may not enforce an arbitral agreement if not the intent of the parties.  The parties did not fail to agree; they agreed to appoint the “Chairman” who was supposed to appoint the other arbitrators. Since they did not fail to agree, ICC rules should not have been relied on to appoint the arbitrator.  Furthermore, arbitrator needs to worry about enforceability. NY Convention V(1)(d) “Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked . . . [if] The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties . . .”


look to the laws of the nation the proceeding took place in. Sally (Queen’s Bench. the 3rd to be appointed by the 2 chosen by the parties. Diakan. o Rule: To determine enforceability of an arbitral award. submits to arbitration a dispute against Al Haddad for unpaid charter hire and gives AH notice. a sole arbitrator appointed by one of the parties may decide a dispute when the other party fails to appoint an arbitrator under the agreement. was not in accordance with the law of the country where the arbitration took place. was not in accordance with the law of the country where the arbitration took place.” Tarmarea v. Since the court has discretion to recognize and enforce the award. v.  Further. The arbitrators did not appoint a third arbitrator reasoning that under English law (lex arbitri).3. V(1)(d) “failing such agreement. After 20 days. the award was enforceable. English law stated that where an  • • 5 . V(1)(d). English law applied. or failing such agreement.  Under the British arbitration statute. NY Convention Art. Daikan. the law of the country where the arbitration took place applied. or  Could argue that since there was no agreement. Arbitration clause provides for a board of 3 arbitrators. Sally appointed an arbitrator but Termarea did not. the court may refuse to recognize and enforce the award. then they would have avoided the whole problem in this case.  This rule is supported by Van Den Berg’s article that V1d was designed to limit the law of the lex arbitri – that the law of the place of arbitration should not overrule party agreement. Sally v.c – Party Stipulation versus State Norms • Al Haddad Bros Enterprises Inc. o Rule: An arbitration tribunal’s decision to follow the lex arbitri does NOT supersede the intent of the parties. An award was given in favor of Sally. the third arbitrator was the equivalent of an umpire and an umpire was only needed when there was disagreement btwn the two arbitrators.  NY Conv. the arbs decision is a valid J. (Conv. The ship owner (D) . M/S Agapi o Facts: Al Haddad brought an action against ship owner. . for damage of its goods (salt & detergent) during transportation from Wilmington to Turkey.000 for excess time at the loading and discharging ports. Since English law was complied with. Sally appointed another arbitrator pursuant to the arbitration agreement. it can do so even when the arbitral tribunal was not set up in accordance with the parties’ agreement. Italy) o Facts: Sally began arbitration against Termarea in England for $US 41. Sally tried to enforce it but the Court of Appeals of Florence refused to enforce it. after being called upon to do so. complied with the laws of the country where the arbitration occurred. although not in accord with the parties’ agreement. If the parties had gone to a Swedish Court. Since there was no disagreement there was no need to appoint an arbitrator.”  Court says that the NY Convention allows recognition of an award which. Since under UK law if one party fails to appoint an arbitrator – an arb appointed by the other party is valid. Fr law says if there is any problem determining the arbitration – go to the local court – and the local court would make the decision. “ Therefore. England) o Facts: As above o Rule: Since the parties agreed to arbitrate in London and under English law. Under V(1)(d) if the arbitral authority was not in accordance with the agreement of the parties. “the conformity of the composition of the arbitral tribunal with the law of the country where the arbitration takes place must be observed for the enforcement of the award only if the parties have not provided for a different composition of the arbitral tribunal. the agreement to appoint a third arbitrator was overridden by English law. Al Haddad does not appoint an arbitrator and the sole arbitrator entered an award against Al Haddad. o Critique: A better reasoning would have been as follows. I. Diakan raised as an affirmative defense the existence of an arbitration provision. . Termarea (Courts of Appeals of Florence. V(1)(d) “the recognition of a foreign arbitration award is to be refused where “the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties.

the Italian decision is different from the UK review of the arb decision b/c the NY convention applies. Van der Berg – NY Convention – Toward a uniform Judicial Interpretation o The purpose of V (1) (d) is to restrict the role of the law of the country where the arbitraiton took place. NY Convention Art. The failure was only a ““procedural mishap” without any consequential effect upon the award. Two situations when parties bring arbitration cases to courts (1) Independent . The final word on the issue of arbitral competence belongs to the courts. if there is a valid arbitration agreement.e. • But we also know that set aside doesn’t automatically mean that it can’t be R&E (Ex/ France under Art VII) Chapter 2. Moving party seeks damages from a court (in spite of an arbitration clause). c.  Moral of the Salley/Tamarea cases is that parties have to be VERY careful in drafting agreements. I.” o Res Judicata? Arb decision was in UK. Similarly.  However.e.  What will most likely happen is that the arb decision will be set aside.g. In addition.  Dicta: It would have been better to appoint an umpire. Therefore. contests the jurisdiction of the court. and no party seeks any other relief.Arbitrators have competence to decide upon their own competence.a party has sought some relief other than an order requiring or prohibiting arbitration (typically some relief concerning the merits of the allegedly arbitrable dispute). o Cyrilla & Caribdus Problem  Where the parties agreement says one thing and the lex arbitri law of the country mandates another. 1. Proceedings to enforce an award as a judgment are not appropriate for raising the issue of misconduct. Easier to negotiate agreement to arbitrate when there is no dispute. • Referring the parties to arbitration a. Enforcement in the UK for an arb decision in the UK – domestic -. E. In Sally. If there are doubts about the validity of the arbitration agreement. and the respondent. if arbitrators had appointed a third arbitrator they would have been in violation of English law and an English court could have set aside the award thereby making it difficult to enforce it in Italy pursuant to V(1)(e). since the two arbitrators (correctly appointed) agreed. I.  Why can’t you just go to another country to enforce the arb award? • V(1)(e) – can’t be enforced if it has already been set aside in the country it was made in. if we don’t take into consideration mandatory law.agreement that submits to arbitration already existing disputes ii)Clause Compromissoire .not the same case b/c the NY convention doesn’t apply. upon the request of one of the parties. there is conflict. but failure to do so did not render the award unenforceable. Other countries national laws mandate a referral to arbitration if the court finds that the parties are bound by a valid arbitration agreement even without party request. an umpire would be appointed instead. Kompetenz-Kompetenz principle .agreement that covers disputes that may arise in the future. may have problems of enforcement. Therefore the 2 decisions are different.P seeks an order compelling or prohibiting arbitration or a declaration that a dispute is arbitrable or not arbitrable.• agreement provided for the appointment of a third arbitrator.  If Tarmarea wanted to dispute the failure to appoint an umpire. DILEMMA: Can a court decide the issue of the existence or validity of the arbitration agreement before an arbitral tribunal hears the issue? 6 . However. More frequent 2. II(3) compels a court to send the parties to arbitration. the conclusion of the arbitrators on this issue can be reviewed by courts in recognition of setting-aside proceedings. it should have done so within six weeks of publication of the award on the basis that the failure amounted to technical misconduct. the umpire does not have to be appointed if the two arbitrators agree. b. there was no need to appoint an umpire. (2) Embedded . one of the parties may wish to clarify this before seeking another form of dispute settlement. On the authority of Arbitration Tribunals Notes • Variations of the arbitration agreement i)Compromis . relying on the arbitration agreement.

(c) UNCITRAL Model Law Art. telexes. telegrams or reference in the contract to a document containing an arbitration clause.  In Phase 2.  In phase 3. Formal Requirements . if one has not been.”  Query .” a)Ontario court found that court scrutiny only applied if arbitration had not started. alternatively. standard a minimum standard? Different countries have different opinions. i. it can always review the issue during set aside proceedings after the award has been rendered. unless the arb agreement is manifestly null. Courses of Action and Waiver of the Right to Compel • Tennessee Imports v. Further issues pertaining to the range and limits of the arbitration agreement o Separability NY Conv. can it be regarded as valid (or invalid) notwithstanding the invalidity (or validity) of the main contract? o Imperfections in arbitration agreement . the question as to who should decide also arises. Art. for lack of subject matter jurisdiction pointing to an arbitration agreement btwn the parties. can be exchange of letters. b)Furthermore. Scope . II (2) obliges each Contracting State to recognize “an agreement in writing.what constitutes a written agreement is quite flexible. unless it finds that the agreement is null and void. o Written Agreement . the issue of arbitrability arises.• • • • • (a) US Law If a ‘container-contract’ = JUR belongs to the arbitrators If the issue regards a specific arbitration clause itself = American courts have JUR (b) French law: Negative Competenz-Competenz If the arbitration tribunal as already seized. the parties can still challenge the jurisdiction of the arbitrators. but is to retain jurisdiction only if the arbitration agreement is manifestly general there are few legal restraints and requirements. o NY Conv.b – Compelling the Reluctant party to arbitrate. 7 .does the arbitration clause have its own destiny. then the court has the duty to send the dispute to arbitration Decision at 3 Stages: o Phase 1 – In court before arbitration occurs (parties disputing if arbitration can even go ahead) o Phase 2 – in Arbitration o Phase 3 – In court after Arbitration – Award enforcement  In all three stages.e. The Court may say that under certain circumstances. Filippi and Prix Italia o Facts: Tennessee Imports sued Filippi in US district court for breach of K (Prix) and tortious interference with the contract (Filippi). the court may undertake a limited scrutiny. Filippi moved to dismiss for lack of proper venue do you deal with them? o Transformation of arbitral institution Arbitrability – whether the arbitrators have jurisdiction to decide the issues o Boils down to 3 issues  Existence of Arb agreement  Validity of the Arb Agreement  Scope of the Arb Agreement o If the answer to these three criteria is yes. even though a court refuses to here the jurisdictional question in the beginning. II.Arbitration agreements determine not only whether there will be arbitration but also what issues will be submitted to arbitration o Should avoid splitting related claims btwn arbitration and litigation since it is difficult to consolidate claims btwn arbitration and litigation is difficult. Art. the arbitrators are to decide if the arbitration can even go ahead. signed by the parties or contained in an exchange of letters or telegrams.” and explains that: “The term ‘agreement in writing’ shall include an arbitral clause in a contract or an arbitration agreement. the dispute arises in 2 circumstances – set aside (Model Law Set Aside provision) or R&E (V (1)(a) of the NYConv). inoperative or incapable of being performed. In Phase 1. the court will defer to the arbitrators. 8 states that “A court before which an action is brought in a matter which is the subject of the arbitration agreement shall refer the parties to arbitration. 16 states that an arbitral tribunal may rule on its own jurisdiction.

o Critique: that the Chamber of Commerce in Venice did not have an arbitration tribunal – they didn’t say specifically that they wanted the ICC Court in Venice & were unspecific – the court never actually came into existence -. . First Options v. wholly owns Pespsi-Cola a Venezuelan corporation. Which refers to the NY Convention. As part of the K. and  3) scope of the arbitration agreement. Pepsico v. ..S Supreme Court granted Certiorari to review the determination that the Kaplan’s dispute with First Options was arbitrable.therefore the agreement was incapable of being performed.  Held: Court found that the validity of arbitration needed to be decided under Venezuelan law and the arbitration would be governed by NY substantive law.  2) validity.o Rule: When language is broad the court should “focus on the factual allegations in the complaint rather than the legal causes asserted. Since this is a dispute for a container K it goes to arb. 2 & 3) that there are certain requirements for it to be able to be enforced. Cisneros had to pay Pepsi-Cola liquidated damages for early termination o Rule: A US Court will defer to the court of another country to compel arbitration where the question of arbitrability falls within the law of that country.  Q: What’s the source of the law that the Court is to use here in the Federal Court? (Either FQ or Diversity) CH II of the Fed Arb Act. a NC corporation.”  When we have a claim about the arbitration agreement it goes to the Court. Venezuelan law would apply to any issue that went before courts and NY would govern the arbitration. Cisneros terminated the K early. Ten Imports could have won this case. Cisneros had a 15 yr exclusive right to bottle Pepsi-Cola in its respective area of Venezuela. the arbitrability dispute was subject to independent review by the courts. o Need to know whether Venezuela will enforce the award. Oficina Central o Facts: Petitioner is PepsiCo Inc. What if in stage 3 they said there was a Q as to the existence of the K at all. and in stage 2 they get an arb agreement. the arb decision can effect the litigation in the US. o Critique: Two readings of “This Agreement shall be governed by the laws of . • In favor of the decision to delay: o The Venezuelan courts are better equipped to decide arbitrability under Venezuelan law.  What happens to the claim? There are issues of non-mutual collateral estoppel – issue preclusion – where the decision by the arbitrators in Venice is recognized in the US. The NY convention says in Art I (1. they could say there was no meeting of the minds as to the arb clause – and it would have been held invalid. But their decision is based on the arb agreement. • Is there an arb agreement? Is it valid? What’s it’s scope? o Held: ARBITRABILITY: Since the Kaplans did not agree to submit the question of arbitrability to arbitration. o Rule: •   • 8 . If you can’t show the agreement you can’t show that a K existed. or incapable of being performed. inoperative. Then in ART II (3) says that if the parties request arb and there was an agreement then the Court will refer to arb UNLESS the agreement is null & void.  In US the review of existence of an agreement is de novo. Ironically. Respondent is a Venezuelan corporation that manages the Venezuelan Cisneros bottling cos. then those claims must be arbitrated. In a 2nd case in the US on the validity of the whole K. o Existence v Validity  What if there was no challenge in stage 1. Thus.  Under Art IV of the NY convention – you have to show the original award & the agreement. Arbitrability means the  1) existence..  If the allegations underlying the claims ‘touch matters’ covered by the parties’ contract. Venezuela: Venezuelan law would govern the arbitration provision only. this way will know earlier. Kaplan o Facts: U.

Courts will presume that they DID NOT intend to arbitrate. then the court apply a de novo review. Dean Witter o Facts: Dean Witter (P) recommended that Howsam (D) buy & hold particular interests in partnerships. Once waived. but the presumption for scope is that the issue is included. INX moved to dismiss claiming that there had to be arbitration. When Menorah tried to enforce the judgment in Puerto Rico. District Court found that INX had waived arbitration.”  Whether an arbitrator has Jurisdiction to determine whether a condition precedent to arbitration has been fulfilled. Dean Whitter files lawsuit un US courts to issue a declaratory J that the dispute was ineligable for arb b/c passed a clause stating that “no dispute will be eligible for submission where 6 years have elapsed since the occurrence of the event giving rise to the dispute. setting aside his or her decision only in certain narrow circumstances. waiver.000 against INX but INX replied that it owed only $178. An arbitrator has Jur to determine whether conditions necessary for an arbitration panel to meet have been met. o Rule: Issues of substantive arbitrability are for courts to decide. whether Howsam’s claim meets the 6-year time limit stipulation in the arbitration agreement? • Held: Yes. Menorah Insurance v. • Courts decide existence & validity de novo. After failed negotiations. notice. When INX did not appear. Inx Reinsurance o Facts: Menorah made a claim for $750. then the court should give considerable leeway to the arbitrator.  Issue: Whether a party can waive its right to arbitration? • Held: Yes.907. Menorah told INX that it was going to commence arbitration and asked INX to appoint an arbitrator.  Courts should not assume that the parties agreed to arbitrate arbitrability unless there is “clear and unmistakable” evidence that they did so • Standard of Review of a CA of a FDC review of an arbitrator’s decision that the parties agreed to arbitrate a dispute: (ordinary standard used by CAs) o 1) Facts – Cannot be “clearly erroneous” o 2) Law – de novo • SCOPE: Determining questions of whether the dispute or decision is within the SCOPE of the Arbitration Clause is the Opposite of the Arbitrability Standard: • Courts will use a rebuttable presumption that the decision or issue IS WITHIN the SCOPE of the Arb clause. ARBITRABILITY: Unless there is “clear & unmistakable evidence” the parties agreed to arbitrate. P argues D misrepresented the virtues of the partnerships. time limits. Issues of procedural arbitrability (i. Menorah would “fell free to pursue all legal and judicial measures available. estoppel. • First Options says that validity. o If the parties did not agree to submit the arbitrability question itself to arbitration.e.” INX replied that it would not arbitrate. Such a decision is enforceable in another nation’s court (Puerto Rico)  1st Circuit – Affirmed. Howsam made a claim against Dean Witter in arbitration. i. Menorah filed suit against INX in Israeli court. the other party can litigate in a nation’s court (Israel). • Standard of Review of FDC of an arbitrator’s decision that the parties agreed to arbitrate a dispute: o Have to ask first: Did the parties agree to submit the arbitrability (scope of submission) question itself to arbitration?  If the answer is yes.) are for arbitrators to decide. existence – are for the courts to decide.000. • BUT Howsam says that these issues of procedural arbitrability are for the arbitrators to decide. Howsam v. if INX failed to do so. Reasons:    • 9 .e. etc. scope. Menorah won a default judgment for $812.

and wait until stage 2 at arb to make a decision. • DECISIONS BY COURTS & ARBS o A Court that determines Jur will ONLY send a case to arb after it establishes that there is a valid arb agreement. b/c only valid arb agrmts “oust” the Jur of the Courts. here Menorah) to prevail on their claim of waiver. If as a prima facie matter the conclusion is that there is no arb agreement – the courts decide. In France.” in an arbitration proceeding. and the invalidity of the k doesn’t necessarily mean the invalidity of the arb clause. • 16(1) of the Model Law – “ A decision by the arbitral tribunal that the K is null & void shall not entail ipso jure the invalidity of the arb clause. Libya o Facts: Texaco notified Libya that it was submitting their dispute to arbitration and designated an arbitrator.  Separability .(as to restriction of court jur) . and possibly different rules under which each scrutiny is conducted. pursuant to the arbitration agreement.c – Kompetenz-Kompetenz and Separability • Texaco v.not only a customary rule. o Rule: Arbitrators DO have competence to determine their jurisdiction. they must show prejudice. the “tag hauer. then they get to decide o Negative . for damage in an accident that occurred to a ship. In Fr the courts can relook & review fully in stage 3.not necessary here. where prejudice is but one factor.” o Critique: What’s the difference between K-K and Separability?  K-K: • 2 consequences -o Positive – If before the arbs. ABS.  Totality of circumstances .Arbitrator can decide his or her own jurisdiction .  Kompetenz-Kompetenz .  Separability: • Arbs decide whether the container K is valid or not. Is it arguable that based on Howsam case that Menorah is wrong?    Was the issue in Menorah procedural or substantive? Howsam should say that this should go to arbitrators –the question of whether INX waived the arbitration agreement or not is procedural. o Notes: 10 .other circuits apply a totality of the circs test for the determination of waiver. But if there’s a question of validity – if it’s not manifestly null – then the arbs decide. require that the Sole Arbitrator should be competent to decide his own jurisdiction. Q. • NB: Separability simply means separate scrutinies. Libya failed to appoint an arbitrator and rejected the demand for arbitration. Texaco. despite whether the arb provision is applicable to the Ps. The arbs have KK.Court’s initial review is restricted as to allow the arbs to decide. but in order for plaintiffs (persons asking for waiver. an insurer (D). Jules Verne o Facts: JV (P) sues Amer Bur of Shipping. it restricts the court’s decision as stage 1.INX’s entire conduct implicitly waived arbitration.• o Rule: • 1) INX waived the arbitration 2) This issue is not within the scope of the arbitration clause (First Options) o Express Waiver . (JOC Oil) • ABS v. The trend is moving more towards Howsam in the American Courts – the more that courts make decisions the more that they interfere with the arbitration tribunals.  Implicit Waiver .INX explicitly waived arbitration when it refused to submit to arbitration when asked. but also the terms themselves of the clause by virtue of which the Sole Arbitrator has been appointed. asked the President of the ICJ to appoint a Sole Arbitrator. II.  Showing of prejudice .Arbitration Clause remains valid even if the contract is held to be invalid or canceled.1.

no arbitration agreement could have come into existence either. • Two times when arbitration agreement is invalid: o If there is no contract at all (as opposed to an invalid contract).” 11 . This allows an arbitration tribunal to declare a contract invalid and yet retain its jurisdiction to decide a dispute as to the consequences of such invalidity provided that the arbitration clause is valid as a separate entity and is sufficiently broad in its wording so as to cover non-contractual disputes. Remember that arbs are entitled to give an initial J / prelim award on jurisdiction – UNCITRAL rules say this. (i. Arguably – the law is moving more towards the French law. b/c the UNCITRAL Model Law Art. “A claim that a contract is invalid for lack of the required two authorized signatures does not raise any issue as to whether or not the parties agreed to the terms of the contract.e. but under the doctrine of separability (which existed in Russian law which was the law used by the arbitrators) – the Arb tribunal could declare the K invalid BUT STILL RETAIN ITS JURISDICTION. the arbitration agreement was also invalid and the FTAC lacked jurisdiction. Art 16(3)) • If the arbitration tribunal as already seized. 16 (p. but the parties did agree to terms of a K for which JOC Oil was held responsible for restitution and under UE. Courts can make a Prima Facie review – is the arb agreement manifestly null? o Otherwise – goes to arb. That J can be taken immediately for an annulment proceeding – and that the award can’t be enforced in that Jur. There is a clear distinction in principle btwn a contract that is void ab initio and one that is non-existent. Non-existence  o   The doctrine of separability does not apply to a non-existent contract. but is to retain jurisdiction only if the arbitration agreement is manifestly null. and lex arbitri – arbs can decide J by preliminary award. o Arbitration agreement itself might be invalid because it did not conform to the requirements for the conclusion of a valid arbitration agreement. Invalidity v. JOC Oil o Facts: SNE (a Russian Co that sold Oil) began proceedings in arbitration against JOC Oil (An Oil reseller in Bermuda) for breach of contract as a result of JOC’s failure of payment to SNE. • Steps: o Fr. 2 signatures were needed to allow for a valid K. o Reviewed by the French courts after arb decision. French Law: French law: see similar to UNCITRAL Art 16 (esp. unless the arb agreement is manifestly null. They did enter into a K.  Whether the Arb had Jur where the K was invalid. as a result. there is no arbitration clause either. But if it had to do with the existence or validity of the container K – goes to the arbs. the court may undertake a limited scrutiny. If no contract came into existence. if one has not been. Burden of proving no K is very heavy. but their agreement gave rise to no enforceable contractual rights or duties. The K was invalid. • Held: Bermuda Court of Appeals – Reversed the Bermuda Trial Court – The Arb had J.    • US law: What would have been the outcome of this case in the US? It’s a question of the existence or validity of the arb clause – then it would have had to have been decided before a US court. 28-29) SNE v. JOC contended in its defense that the contract was invalid because it didn’t have the two requisite signatories for SNE and. The French allow cases to go to arb when it’s not completely clear that the arb clause is valid? Why are the French so pro-arbitration? To protect arb from the potential of obstruction. de novo. but not for a valid arb agreement within the K) o Rule: Validity of arbitration agreement – The concept of separability means that the validity of the arbitration clause does not depend upon the validity of the remaining parts of the contract in which it is contained. the court will defer to the arbitrators.

arbitration clause came into existence.  First Options is the basic USSC opinion. then it goes to arbitration (Howsam). an issue as to the initial illegality of the K is also capable of being referred to arbitration. o Rule: US Law – (First Options) – Courts presume that arbitrability is for the US Courts. Republic of Nicaragua v. scope) (i. where the parties indicated that there was an arb agreement despite the fact that there was not a contract (because it was specifically a memo of intent). but the arb clause was valid.says q s of arbit go presumptively to courts – and arb includes did the parties intend to arbitrate – Qs of validity. Standard Fruit o Facts: Nicaragua & Standard fruit entered into an agreement as a “memo of intent” over replacing sale of good Ks. scope. o Critique: The general English rule has been that if the k was void from the beginning (ab initio). Harbour Assurance v. Then if the arb say there’s an agreement it can be challenged in court. There are cases where the invalidity of the K should automatically eliminate the validity of the arb clause. Although we know from Howsam that o 12 . provided that any initial illegality does not directly impeach the arbitration clause. then so must also the clause in the K. The memo of intent has clause 4. and that it will go to the London Arbitration Association (there is none – but there is a London Court of International Arbitration). is in fact void ab initio(from the beginning) for illegality? • Held: Yes. and is surprised when the K is decided by an arbitrator. all go presumptively to a court and not to the arbitrator.  Reasoning: • Policy reason – we are allowing the wishes of the parties – the parties DID agree to arbitrate if there were any problems.  In this case.  Issue: Does the principle of separability extend so as to enable the arbitrator to determine whether or not the contract. o Rule: Principle of separability . But normal US law seems to be that arbitrability is a Q for the courts… This is why the case seems to be wrongly decided. the question was whether the dispute should go to an arbitration panel. if the question is about the validity of the arbitration clause.• •  K was invalid.  Court held that the arb clause was separable. in which the arbitration clause is contained. ex nihi nihi fit. This is one such case. if the dispute is about the whole K it goes to arbitration. Why do we look to see if Russian law has the doctrine of separability? The K has a clause that says that the USSR is the place for the fulfillment of the K – therefore the Soviet law governs the K. • The dispute over invalidity of the K are disputes arising out of the agreement. which says that any disagreements will (2 interpretations)  1) go to arb or  2) the parties will write an arb clause. • There’s no reason to force parties to add additional words in Ks to secure ordinary words • The parties DID agree to arbitrate if they had problems – even though the K was invalid b/c it was fraudulent. not non-existent.  Under French case – could think this is a prima facie case of an agreement – on that basis the arbs would be allowed to decide if there’s an agreement. (Qs of validity.  Further. Kansa General International o Facts: P argues the K was fraudulent. where the arbitrator may have found that the K was invalid b/c it was fraudulent. therefore. and therefore the clause should be decided by the arbitrator. the arbitration agreement is capable of surviving the+ invalidity of the contract so that the arbitrators could have jurisdiction under the clause to determine the initial validity of the contract. If the question is of procedural arbitrability. o Critique:  Too far.e. if a K is invalid b/c of fraud doesn’t mean that the arb clause in the K was invalid & the arb therefore had jur to make a judgment.Provided that the arbitration clause itself is not directly impeached. • Ps were wrong in their argument that ex nihi nihi fit – from nothing comes nothing. it goes to the US Courts).

An agreement is in writing if it is • contained in a document signed by the parties or • in an exchange of letters. telex. Robobar Limited v. Finncold SAS o Facts: Finncold (supplier) supplied Robobar (buyer) with refrigerating units for the manufacture of refrigerators for European and US hotels. o Rule: See NY Conv and UNCITRAL Model Law above. At one time. o The Model Law expands on but is consistent with Article II(2) of the NY Convention which provides:  The term “agreement in writing” shall include an arbitral clause in a contract or an arbitration agreement. if there is an oral agreement. In US courts we’d say that the courts should decide.  NY Convention Art. Mediterranean Shipping  • • 13 .  procedural arbitrability issues go to the arbitrators. II(2) says arbitration agreement not enforceable unless in writing Compagnie De Navigation (CNT) v. o UNCITRAL Model Law Article 7(2): Definition and Form of Arbitration Agreement The arbitration agreement shall be in writing. IV(1) of the NY Convention which states that the party seeking enforcement has to present to the court the original agreement referred to in Art. signed by the parties or contained in an exchange of letters or telegrams. This is different with separability – the validity of the container K. Can the presumption be rebutted? How would that happen? What if the parties put into the arb agreement that the arbs are hereby approved to decide their own jurisdiction. II or a duly certified copy thereof.  Does this mean that an arbitration agreement will not be accepted unless it meets all the requirements? What does the inclusion of “shall” do? Can courts interpret the writing requirement liberally?  The formal writing requirement of Art. in German law if we had a clause like that – we thought we wanted the arbs to decide Jur and there was no court review. One other thing about this case – presumptively arbitrability is for courts. or • in an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by another o Each party must consent to arbitration in writing. • Court rejected that Finncold’s conduct of adhering to the terms of the contract estopped them from denying the arbitration agreement because the arbitration agreement was an independent agreement (separability) the validity and efficacy of which must be ascertained independently of the K.  However. But if arbs had CC reversed the presumption for courts in the US – a bootstrapping problem. II. The purchase confirmations sent by Robobar contained an arbitration clause.1. A dispute arose over the quality. That such a requirement must be satisfied if enforcement and recognition is sought adds a consideration bearing on the possible interpretation of the agreement in writing. it may be accepted by the arbitration tribunal if an objection to the oral agreement is not raised early in the arbitration proceedings.Ct. II(2) is reinforced by Art. So this case seems questionable. telegrams or other means of telecommunication which provide a record of the agreement.  Issue: Whether the arb clause was invalid under the NY Convention where the clause was only contained in D’s confirmations but where P did not seem to have agreed in writing? • Held: Yes. of Italy held that the arbitration clause was invalid under the NY Convention because the clause was only contained in Robobar’s confirmations upon which Finncold did not seem to have agreed by letter or telegram. Clause was invalid. Chicken before the egg problem. But that doesn’t exist in Germany now – but look at the illogical argument of that principle. The S.d – The form of the Arbitration Agreement • Writing Requirement o NY Convention:  Arb Agreements will be “in writing” in an arb agreement signed by parties or contained in an exchange of letters or telegram.

ship owner. and then segregated. it’s not in writing IAW the NY Convention). There is a valid arbitration agreement under Art. v.  Held: Court found that there was a valid arbitration agreement under Art. a cargo owner. They do NOT need to be signed. Sphere Drake Ins v.e. a boat sank.e – Jurisdiction by virtue of Tacit or Post-Agreement Submission or Estoppel • William Co. letters. ZAE (shipper) fills the bill of lading. The bill of lading provided by D to P said that all disputes would be resolved through arbitration or litigation in China. sends it off. P argued that the court did have jurisdiction b/c there was NO arb agreement (b/c ZAE didn’t sign). II(2) of the NY Convention read in light of Art 7(2) of the UNCITRAL Model Law and Art. CNT. Marine Towing says there’s no arb provision b/c they never signed the K. signed by the parties or  contained in an exchange of letters or telegrams. etc. o Rule: – A written agreement – signed later by another related CO -. Guangzhov o Facts: P. for damage to cargo. insurers for ZAE. P didn’t want to arb or lit in PRC. 178 PILA1 despite the fact that Somatrans ZAE did not sign the bill of lading. P was simply concerned that a PRC court or arbitrator would not apply mandatory Hague-Visby rules regarding carrier liability. so didn’t want to go to the PRC despite the clause. o Rule: If an arbitration agreement is in a written contract. but the arb provision wasn’t signed? • Held: Yes. Marine Towing wants to sue in US courts – but Sphere Drake says there’s an arb provision. the carrier (Reunion) then signs it. o Critique: Other courts may not accept the Hong Kong court’s interpretation of the writing requirement. In correspondence btwn P and D. a signature is not required •  Was the arb agreement valid where the NY Convention requires arb agreements be in writing. The MSC pays off ZAE.1. II(2) of the NY Convention because the definition of “agreement in writing” includes: o an arbitral clause in a contract or o an arbitration agreement. Between time the policy was delivered but in policy period. it is questionable whether an arbitration award in China would be enforceable under Article IV(1)(b) of the NY Convention where the parties have to produce the agreement if the enforcing court disagrees with the Hong Kong court’s interpretation of the  1 Swiss arbitration law 14 . II.  Note: This case expands the normal rule which was that the exchange of letters was to be before the agreement was made in order to meet the writing requirement. As a result. P wanted to follow the Hague-Visby rules that said that an arb clause was invalid if it reduced liability beyond certain minimum amounts. Arb agreement exists. or other means of comm. (i. or mention the arbitration agreement.o Facts: Somatrans ZAE (Marsailles) did not sign a bill of lading btwn it and MSC but Somatrans Reunion did sign. telexes. o Rule: Chinese Court recognizes the existence of an arb agreement where a party doesn’t sign a bill of lading but does have a later exchange of letters following the date of the agreement. filed suit against MSC for the damage of some goods (transporting 2 sealed containers from Marseilles to Ile of Reunion). Marine Towing disputes the existence of an agreement to arbitrate disputes about insurance coverage. MSC argued that the court did not have jurisdiction b/c there was an arbitration agreement.  Guide to the UNCITRAL Model Law: The Writing Requirement is an “exchange” of letters. brought an action in the High Court of Hong Kong against D. telegrams. it was clear that both sides recognized the existence of the arbitration clause. Marine Towing o Facts: Marine Towing contacted Shade Co to provide insurance for its vessels. Shade secured a policy from Drake (London marine insurer). D wanted to arbitrate in PRC.  NY Convention must be interpreted in light of the UNICTRAL Model Law. a written agreement & in accordance with the NY Conv and UNCITRAL Model Law  NY Convention requires that the arb agreement is signed by the parties or contained in an exchange of letters or telegrams.  Art 7(2) of the UNCITRAL Model Law requires that the arb agreement be in writing. then they bring claim in Swiss court.

quantum meruit and conversion) were not governed by the K. as a result. Other issues (7. II(2) of NY Convention requirements are met if “the addressee replies in writing to the acknowledgment of an order in such a way that need only conclusively show that he accepts the acknowledgment of the order together with the arbitration clause mentioned therein. Ssangyong o Facts: Ssangyong and MEI (CA Corp) enter into an agreement (NOT a K) to form a joint venture in Saudi Arabia to build modular housing projects and enter into an agreement with Trac to serve as their agent.” o Rule:    When an arbitration clause “refers to disputes or controversies ‘under’ or ‘arising out of’ or ‘arising hereunder’ the contract.” • “Arising under” is narrower in scope than “arising out of or related to” (recommended by the AAA) Court found that certain issues(1. D did so by noting the exact K numbers in his letters to P. Jianxi Provincial v.1.2. etc. OR:  The writing requirement of the NY Convention is met if the addressee replies in writing that he acknowledges the order in such a way that it shows that he accepts acknowledgement of the order along with the arb clause. and conversion. • Estoppel requires reliance by the opposing party on the other parties actions. In this case. these were stayed pending the arbitration results.the phrase “arising hereunder” meant any disputes between the parties.. even after an agreement is formed.&4) (breach of agreement and fiduciary duty created by agreement) were governed by the K and therefore arbitrable.” the arbitration is restricted to “disputes and controversies relating to the interpretation of the contract and matters of performance. and MEI is out of the picture. o Rule: Only an exchange of letters. quantum meruit. Sulanser contested jurisdiction invoking the arbitration clause. • Good faith does not require reliance and is a broader doctrine. Sulanser o Facts: Jiangxi and Sulanser entered into a K with an arbitration agreement that was in writing but not signed. Ssangyong argued that the matter should be settled in arbitration -.  Note: This case expands the normal rule which was that the exchange of letters was to be before the agreement was made in order to meet the writing requirement. Arbitration agreement was in writing but it was never signed by respondent. II.. o Note: Difference btwn estoppel and good faith. Sulanser challenged the jurisdiction of the arbitrators claiming that there was no valid arbitration agreement due to the lack of signatures.MEI sues in FDC for breach of K.” o Rule: An arb clause within a K signed by the 2 parties is sufficient to meet the writing requirement. Agreement falls through. A dispute arose. MEI argued that the phrase “arising hereunder” meant “arising under the contract itself” and was not intended to cover “matters or claims independent of the contract or collateral thereto.  A party is estopped from claiming an arb agreement doesn’t exist where the other party reasonably relied on their promises. Normally. However. Arbitral tribunal said that Sulanser was estopped from claiming invalidity of the award because it confirmed the arbitration agreement in writing in its written defense invoking arbitration submitted to the Wuhan ct. • Note: Article V(1)(c) of NY Convention allows for setting aside arbitration awards for things that were not part of agreement. Jiangxi commenced legal proceedings against Sulanser in Wuhan Admiralty Ct.• • letters. Claimant (Austria) v. (and even if not between the P and D) is necessary to meet the writing requirement.8 & 9) (inducement to breach agency K. Art. FDC ---. Ssangyong ends up working with Trac alone. inducement to breach agency contract.f – Scope of Arbitration Clause – Settlements and Renewals • Mediterranean Enterprises v. so perhaps the court here felt that it was allowed to sever issues outside the scope of the arbitration clause 15 . the provision of an exchange of statements of claim and defense assumes that the exchange will occur before an arbitral tribunal and not a court. Respondent (Germany) o Facts: P sues for D’s failure to deliver sheets of metal. Arb clause: “any disputes arising herunder … shall be settled through binding arbitration”.

Anhui o Facts: Anhui entered into 12 contracts with Hart (to sell yarn) which contained an arbitration clause. o Rule: Presumption of Scope: It’s within the scope of the arb clause unless you can say for sure that the language is out of the scope of the arb clause.2.  Held: Case should be sent to arbitration because the issues raised “arose out of and about” the original K in that they all arose in the course of and during the on-going relationship btwn Becker USA and BAW. The agreement had an arbitration clause which covered all disputes arising “with respect to rights. the parties never actually settled – P never paid D. Therefore. Therefore. the arbitration tribunal or a court? • American approach says that it is for the court to decide unless the arbitration agreement is clear that the parties intended the scope of the arbitration clause is to be decided by the arbitral tribunal. Only an actual settlement (rather than a settlement agreement) bars arbitration  In this case.before sending to arbitration rather than just waiting for a set aside proceeding later. Does the arbitration agreement in the original K cover the oral agreement to renew? According to the court yes b/c it “arose out of and about” the original K. duties and obligations” of the parties -. Hart did not respond so the FTAC in Beijing appointed an arbitrator on Hart’s behalf. v. A dispute arose but was settled through negotiations and resulted in a settlement agreement whereby Hart was to make certain payments. & obligations” of the parties. Becker Autoradiowerk o Facts: Becker USA and BAW entered into a K for a period of two years (’74-’76). Italian law changed (liberalized use of surnames in TMs) and Italian Zegna wanted to change part of the agreement (by arbitration) b/c it felt the new law made parts of the agreement unfair in Italy. (3) and art V (2)(a) 16 . Becker USA is only alleging that a failure to renew constituted a breach of the oral agreement. D argued the dispute is within the scope of the arb clause – dealing with the “rights.there is arbitration. • Ermenegildo Zegna Corp.” Becker USA argued that the breach did not arise out of the original K.  Modification of the agreement doesn’t affect a no-contest clause • Hart Enterprises v. P argued this violated the no-contest clause (that the parties will not contest the validity of the agreement). Since any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. US Zegna refused and sued in the US for a permanent injunction to stop IT Zegna from using the TM.  First Option: Who should decide whether an issue is within the arbitration clause.” o Critique: Problem in Becker is that there was only an allegation of an oral agreement. Agreement had an arb clause & no-contest clause. and the underlying dispute concerns the “rights. o Rule: “The applicable federal standard requires that doubts are to be resolved in favor of arbitration unless one can state with “positive assurance” that arbitration of the dispute was not intended by the parties. Negotiations were entered and the parties had an oral agreement to renew. Mario Zegna SPA o Facts: US Zegna and Italian Zegna had a settlement agreement about the use of their trademark name globally. 192/193 o (GET NOTES) II. BAW wanted to compel arbitration.a – Notes • See NYConv Art II (1). which relationship was created and governed by the original K. duties. IT Zegna asked for arbitration in Milan. Becker USA brought this action for BAW’s breach of K on the basis that an oral agreement to renew the K for a 5 year period was reached. o Rule: A settlement to a dispute (where there was an arb clause) bars arbitration. the dispute did not arise out of the agreement. Limits on Arbitrability II. but a renewal agreement was never signed.2. The agreement also had a “no-contest” clause which said that the parties would not contest the validity of the Agreement or attempt to set it aside. duties and obligations” under the agreement. The K provided that there could be an extension if negotiations were entered into 6 months prior to termination.  Held. • Becker Autoradio v. Hart commenced an action in SDNY. • Review Problem – p. Hart failed to make the payments and Anhui submitted the case to arbitration. The original K provided for arbitration of “all disputes arising out of or about this agreement.

Areas that are sometimes non-arbitrable: Antitrust. Soler o Facts: Mitsubishi is a Japanese corporation and it entered into a joint venture with Chrysler International (CISA). The issue was not arbitrable b/c if any possible outcome would go against the embargo. political embargoes. which is invalid under the Embargo. and Soler Ch Ply. European Union and Italy issued embargoes against Iraq in 1990 after the invasion of Kuwait. a Swiss corporation. There was an agreement to arbitrate. • The lower court was wrong in determining that the case was arbitrable (because the rights effected were only based on Ps claims seeking damages) because in order to allow only damages. Language interpretations on Arbitrability France: Can arbitrate only those things parties agreed to freely Cannot arbitrate divorces. wholly owned by Chrysler Corporation. Since there was a possibility of violation of Italian mandatory law. The NY convention and UNCITRAL model law implicitly recognizes this. then it would be a violation of Italian mandatory law.c – Arbitrability Tested in Court Practice • Mitsubishi Motors v. you have to recognize the K. public entities. Italian party said that couldn’t arbitrate this due to the embargo.What can be arbitrated? There are still some areas in which public interest is high in which countries will not allow the decisions to be made by arbitration panels. The arbitration provision said the arbitration was to be in Japan. securities. bankrupcy. Iraq objected to the court’s jurisdiction and sought arbitration. etc. a Puerto Rican Co. o Rule:  Even where it is possible that an arbitral decision will contradict mandatory law. The K had an arbitration agreement. or matters that concern the public order Italy Parties may arbitrate disputes.b – Statutory definitions of Arbitrability and their interpretation • Fincantieri v. administrative Ks. if the arb clause is null and void then it cannot go to arbitration. the Italian law against the embargo). except those of marriage and things that personal status Etc. A dispute arose in 198 (recession) (Soler couldn’t sell in PR and told Mitsubishi it wanted to cancel some orders. Iraq o Facts: Republic of Iraq entered into a K with Fincantieri (Italy) for the supply of corvettes for the Iraqi Navy.S. the US court will send the case to arbitration.  The Court of Appeals held that the antitrust claims were nonarbitrable but the USSC finds that the claims are arbitrable. which Mitsubishi and CISA refused to do) and Mitsubishi brought an action against Soler in district court seeking compel arbitration & tried to start arbitration at the Japan Arbitration Association.2. there could be no arbitration. using the laws of Switzerland.  Under the principle of diritti indisponibili. Italian parties commenced proceedings against Iraq in an Italian court alleging frustration of K and seeking termination and damages. o Rule: An arbitration tribunal does not have jurisdiction (a case cannot go before an arbitration court) if there is a possibility that the decision would go against mandatory Italian law (i. Soler counterclaimed that Mitsubishi’s actions were a violation of the Sherman Act (antitrust) (Mitsubishi and CISA conspired to divide the market by refusing to allow Soler to resell to buyers vehicles it had obligated itself to purchase from Mitsubishi). 17 . Security Council.2.e.  Under Art II(3). II. but tried to transship cars from the U. a case cannot go to arbitration if it does not deal with rights that the parties can freely dispose.  Issue: Whether the dispute is arbitrable where the dispute arose out of an embargo b/c of the Iraq war? • Held: No. damage to cargo under a bill of lading. Cannot send to arbitration something that would be against mandatory law. II.

 Parties chose Swiss law. implied that it would enforce the award only if US antitrust law was applied. o Art. arbitral awards.. If the arbitration contradicts mandatory US law. when the AT issues weren’t brought up in the original arb proceedings?  Held: Yes. a Moroccan fruit supplier. o Issue: Must the decision be set-aside (or recognized or enforced) if it violates EU AT law. so how come US antitrust law is being applied? S. a NY fruit wholesaler. • NY Convention allows to refusal arbitrability of antitrust claims. Dissent: Problem with Arbitration: Arbitration awards are only reviewable for manifest disregard of the law and the rudimentary procedures which make arbitration so desirable in the context of a private dispute often mean that the record is so inadequate that the arbitrator’s decision is virtually unreviewable.” • Benneton Case – A license agreement between 2 parties – but neither side raised any AT issue. Sky Reefer o Facts: Bacchus. V (1)(c) and (e) o Art. and there’s no violation.THE us COGSA applies to all shipments to and from a US port. o Notes: Note: Different from Fincantieri which said that as long there was a possibility that the arbitration court’s decision would violate mandatory law then the case would not be referred to arbitration. So a US court might allow the arbs decision even if it’s a bad interpretation of US law. and time-chartered to a Japanese co. and US doesn’t apply. there appears to be DEFERENCE in REVIEW. then the US courts will hopefully be able to relook on the 2nd look – enforcement of the award. In 1800s the carriers had clauses that exculpated them from damage to good in transport. Vimar v. II (b) •   Domestic public policy interest is so great that it overrides concerns of international comity. In set-aside proceedings the court found that a party violated EU AT law. to purchase a shipload of fruit and chartered a ship to transport it from Morocco to Mass. contracted w/ Galaxie. 226-7) is to “remain minimal” – i.2. • Main Reason: Federal Policy in favor or arbitration In the 2nd Look: What is the US Court’s standard of review? Suppose Soler can’t resell the cars below a minimum price (a per se AT violation).Ct. o Under the 1936 Carriage of Goods by Sea Act (COGSA). (46 USC §1312) .c..ii – Arbitrability of Cargo Damage (COGSA) Claims • Notes o Common Carriers Carrier is responsible for goods damages. o But what about an arbitration clause in a bill of lading?  See Sky Reefer… Reverses invalidity of foreign forum selection clauses. This sort of review is bad when antitrust claims are so fundamental to US public policy. So then the case comes to the US – should the ab award be enforced or not? The standard of review (p. II. Only if the error was manifest might the US courts not accept the arbs decision. and the arbs say that Swiss Law applies.  Criticism by Jacques Warner (Swiss Layer): “The perceived advantages of the arbitrability of antitrust claims simply pale into insignificance when compared with the substantial disadvantage of creating an additional ground for setting aside. Maritima. This created confusion – solved by Brussels convention in 1924 – established minimums of liability for damage to goods.e. The ship was Sky Reefer owned by a Panamanian co. o Choice of law and choice of forum clauses in bills of lading have been held invalid by US courts. rather than to the goals of public policy. There’s arbitration in Japan. those goals could be compromised. And even if US law applies. or denying enforcement to. Decision went to set-aside proceedings.  The argument against allowing antitrust claims to be arbitrated stems from the importance of antitrust law’s public policy goals and suspicion that arbitrators will see themselves as beholden to the parties and the parties’ agreement. If the arbitrators either fail to apply the relevant antitrust law or misapply it. •  • 18 .

The bill of lading required arbitration to be held in Tokyo and governed by Japanese law. The liability that may not be lessened is “liability for loss or damage . • Problem with this is if the carrier wins. V(2).. Art.’ Notwithstanding this silence. Arb clause is valid • Court must o 1) determine what law applies to the arb agreement o 2) determine whether the dispute is capable of arbitration . o Rule: Where there is an arb clause in a Bill of Lading which calls for arb in another country.  COGSA §3(8): There is a minimum level of liability. Belgium party started court proceedings in Tribunal de Commerce of Brussels.” • The statute thus addresses the lessening of the specific liability imposed by the Act. the Convention refers in Art. wouldn’t it have been better not to go to arbitration b/c won’t be able to enforce the award in Belgium. it must be presumed that the for the enforcement of the arbitration agreement also the lex fori governs the question of arbitrability. the subject matter of the difference was not capable of settlement by arbitration. and will increase the money to P. the lex fori. US cts will be able to invoke public policy as a ground for refusing to recognize or enforce the award. void. inoperative. w/out addressing the separate question of the means and costs of enforcing that liability. Swiss party objected to jurisdiction on the basis of arbitration clause. or incapable of being performed. • For the enforcement of the arbitration agreement the Convention is silent on this point.Nichiro. Once the ship set sail.”  Issue: Is the arb clause valid where Belgian law says the issue cannot be arbitrated? • Held: Yes. arising from negligence. V(2)(a) to the law of the country where the enforcement is sought i. NOT when examining the validity of the arb agreement. • Given this result. the possibility that the decision of the arbitration tribunal will not be IAW COGSA §3(8) is not enough to prevent the court from keeping the dispute within the US and going to arbitration.d – Laws applicable to Arbitrability • M. Company M o Facts: The agreement contained an arbitration clause and explicitly stated that Swiss law applied. If it is not been. or failure in the duties or obligations provided in this section. sues. there will be no occasion to enforce the award in the US.e. o Rule: The arbitrability of the dispute under the law of the forum (i.2. court reads “lessening of liability” to exclude increases in the transaction costs of litigation  Second Look Doctrine (US courts will have an opportunity at the award-enforcement stage to ensure that mandatory US law has been respected. CHAPTER 3. Albert Jan van den Berg: • For the enforcement of the arbitral award. . ct has retained jurisdiction while the arbitration proceeds.e.): B/c Dist.S. . so who will the “second look” occur?  Suppose the award is too low? Goes to US Court.  “The state MUST refer to arbitration unless it finds the agreement is null. US court will say public policy violation. the court refused to enforce on the grounds that under Belgium law.A v. Thus. the insurer would cover the ship (in admiralty law the ships can continue and J is paid by an insurer). an arb decision that would be contrary to mandatory law) must be taken into consideration ONLY at the stage of recognition & enforcement. Since this was an in rem action.Since Swiss law says this subject matter is capable of settlement by arbitration. Galaxie tendered the bill of lading to Bacchus. After a dispute arose. The goods were damaged upon receipt. or out of their application of COGSA. II(1) merely states that the agreement must concern a ‘subject matter capable of settlement. any claim of lessening liability that might arise out of the arbitrators’ interpretation of the bill of lading’s choice of law clause. o Notes:   In Audi-NSU: When a German party tried to enforce a Swiss arbitral award with same facts in Belgium. When Nichiro received the cargo from Galaxie. P argued the arb clause was not valid under Art II(1) and Art II(3) as read in conjunction with Art. II. must go to arbitration. it issued a form bill of lading. is premature. fault. The Arbitrators 19 .

They can be associated with the corp o Ex/ Vantage v. Differences between the AAA (ABA) and IBA Rules of Ethics o Neutrality  IBA – Arbs MUST be neutral. nationality must be considered UNCITRAL art 6(4). • • • • • 20 . an award can only be rarely be vacated for an arbitrator’s improper or unskilled behavior. Arbs are not strictly neutral. o Withdrawal  AAA – If all or one of the parties requests an arb to withdraw. o Communication with counsel  Unilateral commo • AAA – MAY BE OK.  BUT in some circumstances. 9(5) (Just Right)  The sole arb will be of a different nationality other than the parties. then he should withdraw  IBA – nothing. Rights & But even though not precluded. SS Corp (US case finding no misconduct where the arb was an attorney for the party. the arbs have to meet minimum ethical stds Nationality Requirements o LCIA – Art. Rights and Responsibilities Arbitrators – 1. Neutrality o Partiality – One cannot be even “innocently” partial and still be an arbitrator o Neutrality – One COULD be non-neutral (not have the same intellectual beliefs) as one of the 2 sides and still be an arbitrator  Examples showing non-independence • 1) If an arb has written a prior opinion on such a case • 2) If and arb has written an article on such a case When independence is carries too far: the Arbitrator-Dictator o Must balance independence and desire to ensure parties receive equal opportunities Neutral v Non-Neutral Arbs o Even if the parties say they want non-neutral arbs. Leaves arb in a quandry as to whether they should withdraw. 3. o ICC – Art. etc). 6(1) (Too Hot)  The sole arb CANNOT have the same nationality as any party (unless ABP) o UNCITRAL Model Law -. and 3 arbitrators only if the two didn’t agree. Neutrality Qualification UNCITRAL Art 11(1) – Arbs can be from ANY country. Number of Arbitrators Default Numbers ICC = 1 Arbitrator UNCITRAL = 3 Arbitrators Even Number of Arbitrators .III. if neither party objects. Ex/ French Court – Declared NULL AND VOID an arbitration decision where the parties wanted 2 arbitrators. Checks on Arbitrators The NY Convention does NOT govern vacation. • In international arb – there is a recognition that the arbs must be neutral. a stockbroker for the party. 2. the sole arb or chairman may be from the same nationality.Most countries require that there be an odd number of arbitrators. Thus.  AAA – Party appointed arbitrators do not necessarily have to be neutral. • But Even though not precluded.Art 11(1) (Too Cold)  No person shall be precluded by reason of nationality from acting as an arb. Partiality v. unless the parties stipulate otherwise s. Responsibilit ies ICC – Usually tries NOT to have an arbitrator from the same country. where the decision was only made by 2 arbitrators.1 – The Arbitrators – Qualifications. nationality must be considered UNCITRAL art 6(4). etc.

AC must treat arbitrator with respect has to reimburse arbitrator must provide arbitrator with technical assistance to facilitate completion of task. ICC – Neither arb nor ICC can be liable. that the arb should not receive his money. Requires arb to answer questions by counsel regarding impartiality or independence o But how can the arb answer Qs from counsel in an interview without discussing the merits of the case or the “issues in dispute”? o Also.unless there is an unforeseeable circ or lack of independence. (Complete waiver of liability) Is this a good thing for the ICC? My force some away FEES: France Court – Because the arb had gone beyond what the arb agreement had allowed. in the hope the other side will lose and have to pay. Is it a BofK or an Agency relationship? How do Arbs get paid? In institutional or ad hoc arb: Institutional – parties give an advance. Ex/ ICC. arbitrator agrees to comply with rules of center. if there’s anything that hasn’t been paid.until final award is rendered . Arbitrator has right to meet with faithful and cooperative behavior from parties Relationship btwn arbitrator and arbitral tribunal K btwn the two that results from twofold consent: i) consent of center which appoints or confirms arbitrator and consent of arbitrator when agrees to accept rules etc. one party (petitioner) puts up the whole amount for the deposit. (d) Must carry out task until completion . Content of the Reciprocal Rights and Obligations of the Arbitrator and the Arbitration Center arbitration center is bound to carry out its functions of organization etc. 210. 21 . If there are further developments. (4) (a) (b) (c) (d) (e) Liability: ---------Liability of Arbitrators – British Law has a provision that says that an arb is liable only for bad faith. Often. At the end.• IBA – NOT OK.Judge by virtue of K   o Fouchard – Relations hips Between the Arbitrato r and the Arbitral Institutio n Effects of this Relationship (1)Arbitrators obligations towards parties (a) Bound to behave equitably and impartially and treaty parties equally. (e) Duty to respect confidentiality (2) (a) (b) (3) (a) Parties’ obligations towards arbitrator Must remunerate arbitrators but shouldn’t have unilateral financial arrangement btwn arbitrator and appointing party. the arb will refuse to give the award has been made. (b) Fulfill tasks w/in legal or contractual time limits laid down for him. The award doesn’t just decide the issues but will allocate costs. (as in civil law). the institution will give a further advance. (c) Fulfill tasks with due diligence. P. no independent communications between the arb and the parties o Fees AAA – party-appointed arbs can negotiate compensation with party unilaterally IBA – No unilateral arrangements should be made for arbs fees or expenses Settlement Disputes  AAA – • If the arb is neutral – cannot suggest a settlement • If the arb is party-appointed – arb CAN suggest a settlement  IBA – NO arb can propose settlement Relationship btwn arbitrator and parties .

(in order to guarantee they’d get money if the parties settled).” Norjarl opposed dismissal and sought declaration that if Hyundai was unwilling to accept the commitment/fee arrangement. therefore. If no majority… III. • Norjarl CANNOT have a unilateral commitment fee arrangement – would create imputed (but not actual) bias. can remove them? NO. without valid cause. Is there a difference whether the arb is party-appointed or not? o Legislative Solution  British Statutory provisions (DS p. 171) – When an arb fails. Juvonovich. the arbitrators had the right to request a fee. 97 §25) • IMPORTANT STATUE – (3) indicates that an arb WOULD be LIABLE if they resigned. in general. (Art.not good to get into discussions about fees.b – Appointment by Courts • Issues regarding court assistance – What power does a court have to investigate the validity of the arb agreement? o If court derives power from the parties – the court cannot refuse to appoint an arb just b/c there is doubt about the validity of the arb clause. to participate in the determination of an issue by the arbitration tribunal. Then the other 2 arbs say they’re going to render an award.  Issue 1: In seeking to persuade the parties to agree to a commitment fee have the arbitrators committed misconduct? NO. Which means that it would be unlikely an arb would want to resign (in order to avoid liability). Would create imputed bias.  Once arbitrators have accepted appointment -. The parties requested the arbitrators to reserve 12 weeks beg. ICC refused to accept Prof Y’s resignation. the opinion agreed upon by the majority of the arbitrators participating in the determination shall prevail. o Rule: The Court can’t accept all of the money from one party where one party contests the fee arrangement o Note: Pt of case: Negotiations btwn the arbitrators and the parties as to the services that the arbitrators are to render and the terms upon which they are to render them should take place at the time of the appointment of the arbitrators. Situations may arise where have to. should avoid such discussions. Hyundai Heavy Industries o Facts: Three arbitrators accepted their appointment without any reference to fees. o Issue: Is that award enforceable? Swiss tribunal determined that 3 arbs were required – and the award could not be enforced. 2 arbs disagreed with Prof. o If court derives power from a NATIONAL PROCEDURAL LAW – • 22 . Unless the parties have decided otherwise. Hyundai began action to remove arbitrators on the ground that arbitrators’ proposed commitment fee arrangement constituted “technical misconduct. Then Prof Y.2. provided that they were paid a portion of fees in advance. o It was reasonable for the arbs to ask for a commitment fee if the length of the hearing was so long. Prof Y resigns. Is that sound? Suggests that we have to have a replacement arbitrator who refused to participate. But that means the whole process starts again. Arb was coming to a close when Prof Juvonovich disagreed with other arbs as to whether the P could bring in past witnesses on an issue critical to Yugoslavia. And what if this happens again? One argument is that they should have allowed the decision to be enforced. but. the arbitrators were free w/out impropriety or imputation of bias to conclude fee arrangement w/ Norjarl. said the arbs acted unethically – that the other 2 were only interested in expediency.Norjarl v. such failure will not prevent the other arbs from ruling on the matter. Norjal said they would pay the entire commitment fee in order for the arbitration to continue. If so.  Swedish Act (DS p. 1992 for the hearing. • Arbs conduct is NOT misconduct fit for removal b/c parties’ request that they keep 60 days open for the hearing was beyond the arbitrators duty.  Issue 2: If the arbitrators conclude an agreement for a commitment fee w/ Norjarl alone.  A failure to agree or FEES CAN lead to the arb agreement invalid • Under Art II – Arb decision invalid “if inoperative or incapable of being performed” • Arbitrator Resignation – Milutinovic Case o Facts: German v Yugo(P) in Zurich. will this constitute misconduct? YES. April 28. 12 (1)). Arbitrators agreed.

The arbitrator cannot review a decision that has the effect of res judicata and therefore. NIOC acknowledged receipt of documents etc.  23 . • (ex/ Portugal) . • Issue: If a court refuses to appoint a tribunal.2. Iranian Oil o Should the French Courts be allowed to appoint an arb even where the tribunal is not in France and the lex arbitri is not applicable? o Rule: A judge may intervene in a case where a denial of justice has taken place in another country. After a “preliminary investigation” to see if conditions under national law were met. and at all times objected to the arbitrator’s jurisdiction. should it also declare that the arb agreement is invalid? o Problems:  A declaration that the arb agreement is invalid is contrary to the arbs CompetenceCompetence principle (arb tribunals CAN determine their Jur)  Such a declaration could impede arbs o Rule: Whenever a court refuses to appoint an arb does NOT mean that a party can declare the arb clause invalid. because: • Public Policy (ensure justice) • The rules were ICC rules. but did not introduce a memorial.  Held: The arbitrator declared that he had jurisdiction in accordance with the agreement and decided the case against NIOC. France) – the court CANNOT proceed if the court determines the arb clause is manifestly null. NCOIC considered the arbs appointment by the court null b/c the notice to D had originally come from SP. the Swiss court appointed Pierre Cavin.i – The Nature of the Decision of the Appointing Authority • Saphire Petroleum v. and the ICC is a legal person in France under French Law III. refused to participate in hearings.c – Appointing Authorities Chosen by Parties III.Formal validity STD • (ex/ Swiss) – the court CAN not proceed if a summary exam shows the arb clause is invalid.  General Rule: Courts only have JUR to offer assistance if: • A) the lex arbitri is the law of the forum state • B) the seat of the tribunal is in the forum state  The above stated French rule applies even when these 2 criteria are not met. Iranian Oil o Facts: SP requested arbitration and appointed as their arbitrator Mr. Tippet and invited NIOC to appoint an arbitrator.  Substantive Validity STD: • (ex/ Belgium) – If one party had a “privileged position” the arb agreement is no good and invalid  “NO COMMENT” • (ex/ Germany) – the court’s decision to send to arb does NOT necessarily mean the arb clause is valid  No Standard (unusual) • (ex/ Dutch) – Will send to arbitration automatically o Most states – Courts only have JUR to offer assistance if: A) the lex arbitri is the law of the forum state B) the seat of the tribunal is in the forum state Exception – Netherlands – (Art 1027) – radical clause – allows for jur regardless of whether there was a valid arb clause.c.2.the court CAN not proceed if the arb is not manifestly void • (ex. BECAUSE HE HAD NO POWER TO REVIEW THE COURT’S DECISION (b/c it was res judicata) o Rule: The decision reached is a judicial decision/judgment and has the full force of res judicata. SIP then requested a Swiss court to appoint a sole arbitrator pursuant to the arbitration agreement. assuming the case has some ties with France. must accept appointment. NIOC refused. NOT SIP. • Israel v. stating that b/c all of SP’s rights had been assigned to SIP that only Saphire International Petroleum ( SIP) could take advantage of the K and the arbitration clause.

A dispute arose. since its authority is being derived from private agreement.a . AAA Rule Art. so its decision is not res judicata (if acted as judicial authority (pursuant to mandatory law. changes were made. the President of the Danish S. It’s the same old rule – default of 3. o Notes: As a result of this case.Challenges III. III. In case of any objective doubt as to impartiality. The Danish SC appointed Prof.o Critique: Barceló disagrees:  Thinks that arbitrator was wrong to think that he could not question his own appointment b/c Swiss Court said arbitration was OK.) then res judicata). it requested. Elf DID find oil but NIOC didn’t pay Elf. but arbitrator should have made a decision on merits whether appointment by parent co. to appoint a sole arbitrator. Doesn’t look like it’ll help.Ct. See     ICC Rule Art.3 . Dutco sent the dispute to a SINGLE case for arbitration – against the 2 Ds separately. • Some argue that a Court that appoints an arbitrator ACTS AS A PRIVATE PERSON. Avoidance of Challenge 24 . III. All they do is appoint someone. Bernhard Gomard as the sole arbitrator.Ct. Report 3.”  Does a court’s decision to appoint an arbitrator indicate the arbitrator has competence? • There is scholarly dispute. 2 appointed by the parties. arbitrator may not act.  Thinks that Swiss Court was not acting as a judicial authority. their differences are not realized. the constitution of which is requested by the French co. These questions should be resolved by the arbitration tribunal.Introduction • See Van den Berg – p. NIOC objected on the ground that the arbitration agreement was invalid due to the nationalization law  Issue: Did the Danish SC have the authority to appoint an arbitrator? • Held: Yes. President of S. or what were the consequences of the Iranian legislation. If they have to jointly appoint an arbitrator. • Siemens and BKMI v. DUTCO o Facts: Dutco (P) entered into a K with Siemens (D) and BKMI (D) where Ds were to construct a cement factory for P in Oman. was proper. The parties had an arb clause – 3 arbitrators would be appointed under ICC rules..d – Multi-Party Arbitration and Selection of Arbitrators • Note: In multiparty arbitration. 10 – joint nomination of all 3 arbs by all parties OR (if no agreement) the Court will appoint LCIA Rule Art. 379 – 388 Van den 2. but most say that the court’s decision DOES NOT automatically indicate competence. 6(5) – the administration will appoint the arbs What if this is AD HOC arbitration. • Elf Aquitane v. Would the UNCITRAL Rules be adequate? Look at Art 11.  Principle of Equality & public policy concerns are such that it is unfair to force competing Ds to not be able to compete in an arbitral tribunal’s creation. National Iranian Oil o Facts: Elf (in a 1966 K) was to explore and produce oil and in return NIOC. pursuant to the arbitration agreement. not as a court of law of that country o Rule: It’s not up to the appointing authority (in this case the Danish SC as indicated in the arb agreement) to determine whether the arbitration tribunal has competence or not.2. multiple Ds may have different interests.3. 8 – if parties have not decided that they represent two different sides (P and D) the Court will appoint without regard to any party’s nomination. They’re appointment does not indicate. would refund the exploration fees and sell oil at a favorable price to NIOC. Elf went to arbitration but after NIOC refused to comply. said “It is not for me to determine whether the arbitration agreement became void with respect to the French Co. one way or the other. whether the arbitrator has competence or not. One of the 3 persons on the arb tribunal was JOINTLY designated by the 2 Ds (under their protests) o Rule: An arb decision where there are Ds with competing interests who are forced to jointly nominate an arbitrator is not valid. Introduction Berg a. only if oil was found.

on the Challen ge Procedu re a.public policy includes lack of impartiality and independence . this is rarely used. New parties from new countries misconceive the definition of impartiality c. Most arb institutions have their own challenge procedures. institutional procedures of challenge.g. 7. Compliance with impartiality and independence is subject to court control.) b. V(2)b) – (“if the recognition or enforcemen of the award would be contrary to the public policy of that country”) -. Institutional Challenge Procedures a.not sure if it is binding on courts (2) (a) (3) Challenge to be decided by arbitral institution with a possibility of recourse to a court against the institutional decision on the challenge. (An avg challenge takes 1-6 months—and can go to SC. Can challenge an arbitrator’s partiality in court during arbitration (1) Advantage . Another system is to challenge an arbs partiality before the arbitral tribunal. 4. Issue: To what extent can an arbitral institution provide its own challenge proceedings in the context of the arb law? 3 Different Systems: (1) (a) Challenge to be decided exclusively by a court Some arbitration acts provide that courts have exclusive jurisdiction for challenge of an arbitrator. party can re-challenge in court only after award is made in enforcement or set aside proceedings. Mandatory law v. if the challenge rejected. Possible reasons for the recent increase of challenge procedures a. SUBJECT of the PRESENTATION: The two issues concerning challenge procedures a.decide immediately (2) Disadvantage . Interpretation as to what constitutes impartiality and independence is stricter b. 5.however. (Sweden) (1) Advantage: delay is minimized. To what extent are institutional challenge procedures compatible with the applicable arbitration law? 6. Institutional challenge procedure should be compatible with applicable arbitration law (arb law of the place of arbitration). At what point can court control be exercised? b. Challenges can be a powerful delaying tactic. or place of enforcement (award) -. etc.can be used as delay tactic. for ICC arbitration. (a) UNCITRAL Model Law (Art 13). uniformity of concept of impartiality and independence ii) disadvantage: legal status of institution’s decision on the challenge may be uncertain .waste of time (a) direct discussion with arbitral tribunal will have impact on further proceedings. has a psychological effect on challenged arbitrator (will be more impartial and independent in order to avoid more allegations). likely that court will 25 . International arbitration is growing more litigious. should disclose to parties and institution. A prospective arbitrator can avoid challenge at two stages (1) When the party first comes to him (2) If at any time there are circumstances that might give rise to doubt about impartiality or independence. French) E. c.(NY Conv. (Swiss) i) advantage: arbitral proceedings not delayed ii) disadvantage: court may have views on the impartiality or independence of an arbitrator which differ from the views of courts in other countries Challenge to be decided exclusively by arbitral institution (e. -. d. arbitration doesn’t continue (2) Disadvantage: court may accept challenge and refuse to enforce or set aside .g. ICC Court of Arbitration is the sole judge for challenges brought against ICC arbitrators if the place of arbitration is situated in France i) advantage: limits challenge procedure to one instance and minimizes delays. if challenge is accepted. i) advantage: arbitral institution has opportunity to decide challenge. Court Control a. Note: Court control can take place in place of arbitration.

• Qatar v.  N/a here and award not set aside due to the court’s factual findings AT&T v.  Maintenance of arbitrator must be authorized by the will of the parties.  Held: Award upheld. o Rule: ICC decision to remove an arbitrator will not be overturned even though no grounds were given. at institution and court. (alleviates any doubt as to the correctness of the institution’s decision) 8. Other Procedural Aspects a. Saudi Cable o Facts: Fortier was chosen as an arb. that the linkage is not enough to raise the scepter of bias. Fortier ended up (by mistake) not disclosing that the was an executive director of Nortel. Sub-k’tor) involving same project  Creighton arbttr made independent inquiries about Qatari law • Is this different from consulting law professor colleagues to discuss K theory. c. Time limits . and (ii) Arnold served as arbttr with Nelson 19 times. o Held: Court made factual findings – No alleged bias Andros v. who was president of company that performed services for the vessel. refused even to allow Marc Rich discovery • On voting. except on a ground which came to that party’s attention after such appointment. Most of the time they voted the same. challenge and replacement of arbitrators. Should court review de novo or just marginal review? De novo seems to prevail. ct takes into account institution’s decision as persuasive authority but nevertheless engages in its own examination.some arbitration acts contain time limits for bringing a challenge. o Rule: Famous Supreme Court precedent stating the law in this area – Commonwealth Coatings: Arb set aside because an arbttr failed to disclose he had rendered significant paid consulting services to a party on the project in dispute. in all but one case. ICC o Facts: Syrian party challenged ICC decision to remove arbitrator in French court. Dutch has discretionary power to suspend. Marc Rich o Facts: Award for Andros. ii) disadvantage: delays arbitral proceedings in two instances. here they vested the ICC Court of Arbitration with the power to resolve disputes relating to nomination.  Was the arbitrator biased where he was a director of Nortel.a) follow institution (increasing uniformity) and court can exercise final control. the parties conferred that power by choosing ICC as the institution and ICC followed its procedures. Also. Often.e. Challenge of a party-appointed arbitrator: MOST abr acts provide that a party may not challenge an arbitrator whom he has appointed. Creighton o Facts: Qatar’s complaints Creighton arbttr had helped Creighton find attorney for the arb (this is the most serious ground according to Barceló) • This can be more of suggestion that there was some connection between the arbttr and the parties. (ex/ Swiss – “without delay”) b. However. the grounds for set aside are the same grounds for R&E. o Dealing §1502(5) and §1504 of the French Civil Code. b/c ICC rules say no reasons will be given and parties agreed to ICC rules. Suspension of arbitral proceedings: UNCITRAL allows proceedings to continue before tribunal while there is a challenge in court. the panel was unanimous • Arnold had served just as many times with March Rich’s appointed arbttr (common in maritime arb) • Arnold’s affidavit says he and Nelson were not friends and had never visited each other’s homes. one of the companies that did not receive a bid on the contract. Rich seeks set aside in N.3. that courts can have a certain control over the arbitral institutions. I. Barceló agrees with the Cour de Cassation. 12 times Nelson was one of the arbttrs who chose Arnold as presiding arbttr. confirmation. III.  Creighton chose same arbttr in another arb (Creighton v. one of the companies that did not receive a bid on the contract and he failed to disclose this?  • • 26 . Burden of proof rests on the party asserting bias.b – Challenges and Court Control • Homs and Banias v. Other rules are silent.Y Fed Court on the grounds that (i) Presiding arbttr (Arnold) was claimed to be a close friend of Nelson.

lex arbitri will apply when institutional rules and/or party created rules fail to provide for the circumstances at hand. • External norms (Lex arbitri) consist of o appointment/challenge of arbitrators o set aside procedure o jurisdiction o scope of mandatory law • Internal precedure consist of o time limits o sufficiency of evidence o depositions o discovery o I.  However. Note that the arbitration process is predominately molded by institutional rules and party autonomy. Focal Points in the Arbitration Process • Notes o Lex Arbitri  Lex arbitri refers to the procedural norms of the municipal law governing arbitration. more procedural rules.e.o Rule: • Held: No. In other words. according to the McDonnell Douglas case.  Following issues are generally governed by the lex arbitri (though differences exist in various countries): P. such as rules concerning interest and attorney’s fees.Whether there is a real danger of bias where the judge may be pre-disposed against a party’s case • Sub Test: Was the connection a significant part of his professional life Chapter 4.Automatic disqualification of a judge • who has a direct pecuniary interest that he can be truly said to be a judge in his own cause • who would lead to the promotion of a cause in which he was involved with in connection with one of the parties (Amnesty Int’l) Test for Apparent Bias . interference in. there is a distinction btwn internal and external procedural norms. • Sometimes governs: o interpretation and enforceability of the parties agreement (including issues of nonarbitrability) o conflict of law rules applicable to the substance of the dispute o quasi-substantive issues. • Parties • Autonomy to agree on substantive and procedural issues in arbitration • Procedural issues o type of hearings o administration of oaths o discovery o evidentiary matters • Appointment and removal of arbitrators • Extent of judicial supervision or. It is quasi-mandatory in nature and acts as a kind of supervisory (external) law which functions as a gap-filler.  Who’s Lex Arbitri Applies? 27 . rather than lex arbitri. 552 fn 20. the arbitration proceedings (such as ordering provisional relief or discovery in aid of arbitration) • Arbitrators’ liability and ethical standards • Form and making of the award.   Test for Actual Bias .

UNCITRAL Model Law o Art. P argues that the parties overwrite the seat of arbitraiton by the specific clause that says that the procedural law would be from India. Arbitration is in London. then the Court will consider whether they have made an implicit choice. the English law should apply in India. the parties did not expressly state what the lex arbitri for procedure would be – the implicit choice is the seat of arbitration. and thus.  Some arbitration laws require that if the seat of arbitration is in that country. • Law to govern commercial bargain • Law to govern arbitration agreement (internal) • Law to govern arbitration procedure (external/supervisory . Most jurisdictions follow this approach in the absence of party choice. 19 o Art.  Held: UK law applies to external/supervisory procedure (lex arbitri). however. forumless. o Rule: Where parties do not explicitly state what the lex arbitri is. In the absence of explicit selection. Because the seat can change. then the tribunal may conduct the tribunal in the manner it considers appropriate. Presumption of arbitration law of the seat of arbitration. IV. Here.  • 28 . • Seems that judge is ignoring express language for the sake of convenience since English lex arbitri would be more practical to apply b/c on some issues are going to have to apply English mandatory law anyway. 18 – The parties shall be treated with equality – DUE PROCESS overrides Art. the lex arbitri is the law of the seat of arbitration. The modern view maintains that any court with jurisdiction can apply its own lex arbitri. o Modern: regards arbitration as anational. Traditional Approach to lex arbitri o Traditional: favors the application of law of the seat of arbitration. their lex arbitri applies. most courts agree that the parties are free to choose the lex arbitri as long as the choice is explicit and not contrary to mandatory law.• • In general.b – The scope and the Relative Importance of the Lex Arbitri • India v. o Notes:  Parties may make three separate choice of law decisions (subject to mandatory law provisions). UK. makes party choice subject to mandatory law (usually) of the site of arbitration (in this case England). seat of arbitration.” D argues that the parties chose London as the seat not merely the place of arbitration. autonomous. should not look at implicit choice .  Example of implicit choice: Choice of seat of arbitration implies that lex arbitri will be from the law of the seat as well. Modern v. A separate arbitration clause stated both that “arbitration shall be conducted in accordance with the procedure provided in the Indian Arbitration Act of 1940" and “the seat of the arbitration proceedings shall be London. Makes a distinction between internal & external procedural norms. McDonell Douglas o Facts: The parties chose the law of India to govern the agreement. Traditional courts regard the place of arbitration as a kind of forum.i. Note that the McDonnell Douglas (UK) case employs this approach. views the place of arbitration merely as a convenient location for the parties and maintains that the law of the forum is irrelevant to the arbitration proceeding.lex arbitri)  If parties don’t make an express choice of procedural law to govern their arbitration. o Criticism: Since parties made an express choice of lex arbitri by choosing Indian law. o Importance: Traditional approach: favors principle of party autonomy in selecting lex arbitri. 19 –  1) The parties are free to choose the procedural law of the arbitration  2) But if the parties don’t agree to the procedural law. most courts will apply the lex arbitri of the place of arbitration.e.1. This approach advocated by Von Mehren. Indian Law applies for internal procedural issues.

a . as long as it doesn’t violate mandatory law. o “The proceedings bf the Arbitral Tribunal shall be governed by these Rules and. 15 mandates application of its own procedural rules despite selection of lex arbitri. 1 and Sept.” • WIPO o Unless the parties have agreed otherwise & as long as not against mandatory law. Art 19(2) trumps Art. Haupl seeks enforcement in Italy in an Italian court. IV. 15. o Substance (Law governing the Arb Agreement)  What if the arb agreement itself is invalid?  29 .d – Party Discretion.  Whether the lower Italian court’s decision that D must appear before the Vienna arbitral tribunal in less than the required time in Italy allowed the D sufficient notice? • Held: No. Arbitrator didn’t treat the parties equally where 1) The sole arbitrator did not forward a letter it received from the US firm to the German firm who had no knowledge of its existence. the Italian legal period is 90 days and that all time limits for proceedings bf Italian cts were suspended btwn Aug. materiality. the Arbitral Tribunal may settle. and 2) German firm submitted a letter which contradicted the American letter. notwithstanding the fact that the violation might not have affected the outcome. o Held: Held: German court refused to enforce the award on the basis of violation of public policy. D was not given enough time / notice. o Rule: The German court would only not enforce a US Court’s decision that an award was enforceable in extreme circumstances – ex/ the party was not able to present his case (as in this case). Discretion of the Arbitrators. F (F. Award rendered in Vienna favoring Haupl. failing them.  Written to prevent trap of having a lex arbitri and seat of arb not in the same place. Due process must be observed. whether or not reference is thereby made to the rules of procedure of a national law to be applied to the arbitration. • P (USA) v. and Due Process • Abati v.3 Choice of Law Issues before the Arbitrators IV. 18 & 19  Parties can decide whatever they want for procedural law.3. Haupl o Facts: Abati was given two months by the arbitral tribunal to appear bf the arbitral tribunal. The arbitrator did not take this into account.  If there is conflicting (ex/ Italian) substantive law that conflicts with the procedural law. 28! • ICC Art 15 o Note that ICC Art. the law applicable to arbitration WILL BE The PLACE of Arbitration  Note that WIPO supports the presumption that the seat of arbitration provides the lex arbitri unless parties explicitly choose otherwise. Particularly. Lex arbitri can only function as a gap-filler. any rules which the parties or. D argues that it had not been able to present its case. where these Rules are silent. o Comments:  There is some conflict between Art.3) The tribunal can determine the admissibility. the tribunal can follow the procedural law. Ex/ they don’t have to have the procedural law determined before the arbitrators are appointed.Note • How do arbitrators determine: o Procedure  Institution – institutional rules  Ad Hoc – parties intent or lex arbitri (arbs might look to the lex arbitri to determine choice of law issues). relevance. and wright of evidence.G) o Facts: Arbitration under AAA rules. Sort of like Judge in McDonnell Douglas.R. IV.1. these two months coincided with the summer months during which most Italians take vacations. However. o Rule: Parties can determine lex arbitri except if against DUE PROCESS or Mandatory Law.  There is NO TIME LIMIT for parties to determine a procedural point. Due Process (Fair chance to present its case & equal treatment by the arbitrator).

 Egyptian local authority – only case we have where … lex arbitri of Switz is the law we look at. Then the arbitrators choose. Lex Arbitri. the tribunal will decide choice of law questions as appropriate & take into account trade usage & the K. When would this apply? If the SEAT of the country is a signatory – the the lex arbitri here applies. etc. If trying to decide what’s going • In choosing what law applies. admin of oaths. Ex/ ad hoc. (Ch 2 in the course). What the choice of law is.  Ex/ • a) parties autonomy to agree on sub and proc issues • b) procedural issues (ex/ type of hearings.). o Material validity: this is s subject matter you can’t submit to arb. 2 types of validity issues: o Formal validity: ex/ are the writing requirements met  Look at Art IV (referring to Art. b/c their on nation’s laws a re less strict & requires it. • If this issue is before courts – the question is whether the courts will determine at first. etc. evidentiary matters) • c) appointment & removal of arbs • d) the form & making of the award 2 Constraints on Parties Choices: o 1) Due Process o 2) Mandatory Law 1) In absence of agreement of an actual law.  Court uses Choice of Law Rules to determine. Or the attempt to arb undercuts national (?) law. Usually the lex arbitri is also the law used for set aside proceedings. NY convention rules apply.  What if not about non-arb. but no procedural rules. II)  Often will look to the formal requirements of NY Convention for formal validity OR the lex arbitri. COL rules will often be looked at for the arb agreement. may rely on the whole K itself. Role of the Lex Arbitri o Lex Arbitri – the law governing the arbitration: The national law that can supervise the arb proceedings. ICC Rules Art 17. In the US the fed arb act implements the NY convention – and the NY Convention says when there’s a formal validity (Art 2) then they must send to arb on a formal validity issue. o See Sub Law Section BELOW in NOTES – Geneva Convention. or not (Fr v US. But eventually it can come back to a court.  Can look at (5)(1)(a) –  Non-arbitrability examples: • One approach is forum law (Mitsubishi) (Contierei – IT) • (Company M – Belgian) – says it depends. • 30 .• • 1961 Geneva Convention on Int’l Arb Art VII Art. Could the parties adopt a set of rules that were never adopted as law? No. The lex arbitri of the country will be the governing law.” • This is not quite a substantive question.  What if there are disputes about the merits? • Normally the parties have decided in the arb agreement what the law will be the law that’s to apply is what the parties choose. Strange outcome. More dominant result is forum law determines non-arbitrability. But if it doesn’t meet NY convention – on the basis that their own law requires it. Can says according to formal validity. V(1)(a) – “a contracting state can refuse to enforce an award if the arb agreement :is not valid under the law to which the parties subjected it or law of the country where the award was made. etc. 2) The arb tribunal will assume a role as amiabel compoitu only if expressly stated by the parties.

Dutch etc. 31 . o Issues:  Where the arb clause says the arb will take place in Switz. the arb tribunal shall decide IAW the terms of the K & usage of trade. parties had valid reasons for choosing English law: neutrality. In addition. o a choice of law to determine the validity and effect of the arbitration clause. they must do so explicitly and clearly. IV. If parties want to choose a specific procedural law (which is rare). 28. o “Law known” not the typical phrase but it is not ambiguous. o In addition. well accessible.”  Arbitrator interpreted clause as a VALID choice of English substantive law. 3) The arb tribunal will decide ex aequo et bono (don’t have to follow any law.Swiss . Applies in other parts of the Model Law Ex/ Art 19(2) would not be affected by the choice of law applicable to the substance of a dispute under Art. Usually if specify only one law. but decide based on equity) or amiable compositeurs only if the parties have expressly authorized it to do so. Seller (Netherlands) o Facts: Seller sells Potatoes to Buyer. provisions well adapted to needs of international commerce. would have made it clear. “law applicable” usually means substantive law not procedural law.ICC Rules Art. unless the parties agree otherwise. which substantive law applies? • Held: The plain unambiguous meaning indicates that the choice of law is the substantive law of England.External Norms – Lex Arbitri (McDonnell Douglas) . the Tribunal will apply the rules of alww it deems appropriate in choice of law questions 2) In all cases the Tribunal will take into account the K and usage of trade 3) The arb tribunal will assume a role as amiabel compoitu only if expressly stated by the parties. but the applicable law is England. • Arbitrator reasoned that the choice of Switzerland as the place of arbitration implies the application of Swiss procedural and mandatory law.3.g. but the arbs will not. o Barcelo suggests that this provision could mean choice of lex arbitri but the arbitrator rejected it to avoid complications btwn the seat of arbitration being in one place and lex arbitri being from another country. known to foreign lawyers and more common than other laws e. o “Law applicable” and “the law which applies” usually means substantive law. 4) In all cases.Internal Norms – (McDonnell Douglas) o a choice of choice of laws rule – English (codified in the Model Rules – where if they say “law” the parties are assumed to mean the substantive law). o Also. 28 1) In absence of parties determination. Dispute regarding interpretation of arbitration clause: “The arbitration will take place in Switzerland. • The arbitrator concludes that the clause may mean o a choice of substantive law . one for K and one for arbitration agreement. • Wouldn’t choose conflict of law rules over substantive law. unless expressly stated by the parties. usually mean law applying to K. if wanted to do so. the law applicable is that known in England. use the substantive law to determine problems with conflict of laws. 1) The Arb tribunal will use the sub law decided by the parties. Follows the rule of depecage – that parties have the rightr to select different laws for different paets of the relationship. • If want separate laws to apply to K and arbitration agreement must designate both laws.c – Interpreting Choice of law Clauses and the Role of the Lex Arbitri • Buyer (Mozambique) v. 17 UNCITRAL Model Law ON Conflict of LAWs Art.England o a choice of procedural law . 2) The arbs will determine conflict of law questions as they choose.

Choice of law is valid. If local courts do interfere. two instances where arbitral tribunal should make substantive law choice: • when party fails to designate • when enforcement would be impossible with party choice (Mandatory Law) or (DP)  When choice of law problems. Also.” ICC art 26(old). ICC Art. Would there be a different result in McD D if they were more anational? Yes. arbitrator is forced to take into consideration the mandatory law of the countries of enforcement in order to “make every effort to make sure that the award is enforceable at law. • validity of the choice of law clause: here tribunal looks at Swiss law b/c it’s lex arbitri. When Pabalk attempts to enforce the award in France. Award rendered in favor of Pabalk. Local courts’ lex forti cannot intrude on the decisions of the parties in arbitration tribunals. No connection is required in either system. Von Mehren argues that this view no longer works (practically & theoretically). Pabalk o Facts: Arbitration agreement lacks a choice of law clause. Issue: How can arbitration tribunals have authority without a soverign? “Jurisdictional” theory of arbitration -Says the lex fori is based on the jurisdiction of the state in which the arbitration tribunal is placed. • Held. a lex mercatoria. Ex/ the fact that arb tribunals rely on the power of the parties to decide.3. and there’s no indication that award based on English law would not be enforceable in one of these 2 countries. • mandatory rules: here choice of English law was not made to escape some mandatory provisions of the laws of Netherlands or Mozambique. Main Argument: Favors the Anational (as opposed to the Jurisdictional) approach to Arbitration Lex Fori – Arbitrators require a lex fori – an explanation of the source of his power and a method of establishing the rules and principles in terms of which the tribunal will adjudicate. There would not be any reason to go to Mozambique law at all? IV. Other theories: There is an international order of consensus. Norsolor contends that the arbitrators exceeded their authority by acting as amiables 32 . Arbitrator consults both Swiss and UK law to determine validity. New thinking: selection of place should have no effect on the intent of the parties in their arbitration tribunal. 17 was amended in 1998 to allow arbitrators to apply “law”). but different reasoning. then it will cause arbitration tribunals to move elsewhere. o Von Mehren Final Report on Arbitration between States & Foreign Enterprises There. 35(new). According to ICC 1988 rules. o Rule:  Arbitrator questions validity of this choice since defendants contend that English substantive law bears no relation to the K (Barceló thinks this inquiry is irrelevant). Would there be a different result in Seed Potatoes? Same result.d – The Role of Lex Mercatoria • Norsolor v. arbitrators had to select an appropriate conflicts of law rule to decide applicable substantive law (Note that as a direct result of this case. The English view is no longer valid (where the English courts had cases while arb tribunals were going on). collateral issues arise: • interpretative law: here tribunal applies Swiss rules of interpretation b/c it’s the law of the seat. some lex arbitri will require a sufficient connection b/e the K and the chosen law. The arbitration trib doesn’t represent a permanent relationship with any national legal system or place.

which lead to the law.” • French Art 1502 (p. an enforcing court can enforce an award that has been set aside because NY Conv. .o compositeurs in violation of ICC rules which prohibits arbitrators from acting in equity unless authorized to do so by the parties. or law of the K (which is certainly not Jordanian law). inoperative or incapable of being performed under the NY Conv.83) – Is more lenient than the NY Convention for enforcement of arb awards. . arbitrators apply appropriate conflict of law rules. VII of NY Conv. o Rule:  Arbitrability: the Law does not compel the distributor to bring his dispute bf a Belgian court. Jordanian.Lack of Notice. but IAW the K. IV. Arb in Cologne. o “Provisions of [NY Conv. o Rule: ICC method of choosing conflict of law rules . claiming that arb clause was invalid under Jordanian law. Art V(1)(a) and Geneva Convention art VII(1). Buyer (Jordan) o Facts: Korean Seller and Jordanian Buyer go to arb. Distributor (Belgium) o Facts: Exclusive Distributorship. or general principles of law.e – Applicable Law in the Absence of Party Choice • Seller (Korea) v. French. Art.  2) General principles of conflicts of law: substantive law most closely connected with the K should be applied and that the ‘home law’ of the seller is such substantive law. requires a court to enforce the award if national law is more liberal than the law of where the arbitration takes place and where award is set aside. Two issues – arguing that Belgian mandatory law imposes invalidity of the arbitration: (1) On the Merits .” Distributor claims art 4 renders the arbitration clause null and void. • Furthermore. Rules:    Also. The Austrian courts set aside the award. clearly does not apply to arbitration clauses and is not 33 . recognition and enforcement of arbitral awards . • Current version of ICC (Art 17) say if parties haven’t chosen. Norsolor moves to set aside award in Austria. as a result of their termination of a distributorship . Although Rome Convention permits the application of mandatory law of another country when the dispute has a close connection with that country. Principal only gave notice of termination 3 months in advance. V(1)(e) language is optional not mandatory. . and thus were not acting in the capacity of amiables compositeurs. . French court enforces it.] shall not affect . may always initiate court proceedings in Belgium. . [if the laws of the enforcing country give a party a right to avail himself of an arbitral award]. Pabalk seeks enforcement in France and Norsolor seeks stay until set aside proceedings in Austria. In order to act as amiables compositeurs need express consent from parties Lex Mercatoria really is law and can be applied. Iraqi conflict of laws rules) provide that Korean law should apply. Distributor argues that the dispute is not arbitrable according to Belgian law Art 4: “the agent . such conflict of law rules being in harmony with each other. • Old version of ICC rules say you have to go to choice of law first. GE. . only gives him the possibility to do so. .3.  Mandatory Law: Contractual autonomy of the parties is recognized by NY Conv. the arbs can decide choice of law. and (2) Not valid – b/c the subject matter is not arbitrable. Buyer refuses to appoint arbitrator. the Rome Conv.3. K said the supplier only needed to provide 3-months notice before stopping supplies to distributor. Arb clause in K provided for application of Italian law.f – The Problem of Mandatory Law • Principal (Italy) v. Interim award says that Korean law governs the merits of the dispute (a) law of the arb agreement is either law of the seat (French law). Lower French court concludes that arbitrators decided according to lex mercatoria (good faith and reasonableness). IV. Uses a cumulative approach: all countries that are connected w/ the transaction (Korean. and (b) ICC rules provide that failing agreement on the parties as to applicable law to the substance of the dispute. .two approaches:  1) Seat of Arbitration (in this case France used…) • Cumulative approach: conflict of law rules of the states most closely connected with the sales K.

Lex contractus is determined by the arbitrator. their very aim is to disallow parties from excluding them by making their contract subject to a law foreign to the legal system from which they stem. Mandatory rules “of the forum” . Two different mandatory rules for judges: e. Italian law allows arbitration of this dispute. but doesnot apply the Swiss AT law). Thus. Foreign mandatory rules . Since have to try and make sure that award is enforceable. instead. f. Belgian law doesn’t affect this. or a judge or arbitrator preventing them from coming into effect by deciding to apply such a foreign law to the contract. d. Should the arb choose Swiss or German law? Should be Swiss law. it is only if a mandatory rule of the place of performance is incompatible with truly international public policy that an arbitrator can exclude its application. as a result. (However. then apply mandatory law. Lex contractus chosen by the parties: (1) their choice will include mandatory law as well. (3) (a) (b) The lex contractus is determined by the arbitrator Since all laws have the same weight. (a) If mandatory law was contrary to “international public policy” then apply parties’ intentions. Mandatory rules foreign to the lex contractus (1) The parties have chosen the lex contractus i) The principle where arbitrators are bound to apply the law chosen by the parties is sometimes all that is needed for them to set aside a mandatory rule foreign to that law. does the arbitrator have to apply the mandatory rules of a law other than the lex contractus when that law was chosen so as to preclude the operation of the mandatory rules in question? h. Some arbitrators like to apply the mandatory rules of the parties’ respective laws. in Festschrift fur Konrad Should apply mandatory laws when can reasonably claim application to the issue. The parties do not contest that they agreed on the application of Italian law in the K. there is nothing to prevent the application of a mandatory law foreign to the law designated by the arbitrator as the lex contractus. and arb in Geneva. Parties say we choose Swiss law. arbitrator should attempt to render awards which do not violate the public policy or the directly applicable rules of the country in which enforcement. Hypo: If we have a K that violates EU antitrust law. arbitrators will rarely expressly provide that this is the reason for excluding mandatory rules that are foreign to the lex contractus) (2) The question is whether an international arbitrator is mandatorily bound to respect the will of the parties as to the choice of rules applying to their K even at the expense of a deliberate fraud against a national law. makes distinction btwn mandatory rules of the lex contractus and mandatory rules of another legal system.preclude application of applicable law. Say the German party says the K is not valid (AT law violation. Conflict of Law Rules for Arbitrators. Mandatory rules are important in the interests of a given national society and. g. As mandatory rules. (1) Unless parties have chosen lex contractus all laws that claim to affect the K have a priori equal right to be applied. they intervene despite the fact that they do not belong to the lex contractus.not sure if always apply Int’l arbitrator doesn’t apply the above distinction. i. (b) If parties trying to avoid mandatory law for purposes against int’l public policy. 34 . of an award is likely to be requested. i) majority tend towards favoring the application of mandatory rules of the place of performance of the K. (a) Party cannot exclude any provisions of mandatory law once choose certain lex contractus (2) however. if any.Public Policy & the Law Applicable to the Distribute in International Arbitration in force.

It’s a little simplistic to say we shouldn’t think about what the parties think when the arbs make a decision. There’s a belief in morality that exists in international accordance w/ NY Convention. Merger into Judgment.1 Confirmation. Finality & Enforcement a. Don’t apply mandatory law. International Public Policy: Q 6 (605) – Embargo in Yugo & embargo to supply arms to Serbs. you should apply mandatory law. NY Convention (1) Pre-Conv. Varady thinks public policy should have a more of an influence. Recognition and enforcement can take place in all contracting states w/out prior confirmation in the country of origin. anyway). But generally doesn’t like enforcing mandatory law not in agreement by the parties. There may be many systems if you didn’t follow this international moral public policy. ENFORCEMENT OF AWARDS V. c. UNCITRAL Rules – Arbs sometimes think it’s implicit that the award that it’s enforceable. no rules. But again. b. Difference btwn confirmation and recognition & enforcement (1) confirmation .draft recommendations on the law applicable to int’l Ks. Position of the award in its country of origin depends on local procedural law.p. 581 There are no rules that actually require that the award be enforceable. Von Mehren – Thinks it’s almost impossible to apply mand law where the parties didn’t agree. (of course UNCITRAL is ad hoc. You could also say this ties into the enforcement of an award. Is it important the arb award should be enforceable (not following mandatory law)? ICC Rules . Concurrent and Consecutive Proceedings 1. the convention does not bestow effects on an award until recognition or leave to enforce is granted by the court. 201 of Supplement -. 35 . There’s a difficulty with the argument that you shouldn’t apply mandatory law unless the parties agree – how mandatory law may effect the outcome. CHAPTER courts of country hosting arbitration or courts of country providing law to the arbitrators (lex arbitri or substantive law ) (2) recognition and enforcement . P. however. ICC Rules.Zweigert See ICC . Close to immoral to allow this. system required arbitral awards to undergo scrutiny of a court before enforcement (a) submitted to prove finality (b) two court proceedings (defeats the purpose of arbitration) (2) NY Convention eliminated requirement of double scrutiny (double exequatur). Possible options: (1) the award must be confirmed by domestic courts (a) to be enforceable and (b) to have preclusive effects (2) The award must be confirmed to be enforceable. Barceló – thinks if you can’t enforce the award.the rules don’t say the arbs can follow mandatory law. Arbitration goals (1) self-contained finality (2) what would constitute perfect finality (a) enforcement immediately following the completion of the arbitration (b) set-aside not possible (3) Present international status of arbitral awards has come very close to satisfying the first goal. but it has preclusive effects without court scrutiny (a) after it is rendered (b) after it is communicated (c) after the time limit for beginning set-aside proceedings has expired w/out action (3) The award is enforceable and has preclusive effects w/out court scrutiny d.

o Held: Enforcement of the arbitral award was sought and denied in Italy. Upon receiving confirmation in England. whereas judgment refusal to enforce is broader depending on country.S. Italian S. Under NY Conv. Only half the agreed quantity was shipped when India imposed a ban on the export of hot rolled steel sheet coils. therefore.Legal status of confirmation: does the award maintain (or lose) its identity after a confirmation judgment is rendered: does confirmation result in conversion (merger of the award into a judgment)? (1) merger doctrine: confirmation of award creates a court judgment that replaces and extinguishes the award (2) parallels: confirmation of award creates a court judgment that parallels the award (either can be used in enforcement) (3) confirmation yields a judgment with a distinct (and very limited) holding. o Held: Held no merger. Parties arbitrated dispute before ICC. COSID resorted to arbitration pursuant to agreement in London under ICC rules. it is meaningless to seek recognition of the judgment outside confirming jurisdiction. and the judgment denying enforcement has become final. Then went to English court to seek a declaratory judgment confirming the award. Seetransport sued to enforce the award but the statute of limitations to enforce under the NY Convention had run (need to enforce in 3 years). UK court says the J is confirmed. 36 .c – Confirmation and Conversion • Cosid v. Seetransport tried to sue on the “judgment” in the US. Steel Authority of India o Facts: COSID and SAIL had a K whereby SAIL would supply COSID with hot rolled steel sheet coils. So this case is clearly correct. • Seetransport v. • Damiano v. But now the German party takes that J into Italian court & tries to get enforced. Topfer attempted to get the English court’s judgment enforced in Italy.  Note: NY Convention only applies to arbitral awards. The award was not merged into a judgment. COSID received confirmation from English court and tried to enforce in India. not to court judgments.Ct.  Italian court did not allow because of 51d – not consistent with the beliefs of the parties. This confirmation should not be recognized & enforce – because the J was based on the award itself – which had already been rejected in Italy. the Q is: is the award is not available for enforcement b/c of SOL? Court says they’ll enforce the J where French SOL applies. As a result. Arbitral award in favor of Seetransport. V. e. Said it had merged. August Topfer o Facts: Award’s fate is the same as the Js fate. Seetransport argues that this dismissal of the set aside conferred exequatur on the award (creating a “judgment”). the request was refused. that award is enforceable in that jurisdiction.1. Parties entered into K for the sale of sugar with arbitration clause. the NY Convention still applies to its enforcement. Also dealt with whether the award was governed by the NY Convention and whether it was merged into the English judgment. (a) If adopt this understanding. In the U. India refused to enforce on public policy grounds stating that the ban was binding on SAIL. Which was inconsistent with the British J.  The mistake that the Germans seem to have made was trying to get it enforced in Italy first. Award was a foreign award and was governed by the NY Convention. Award in favor of Topfer (German). Navimpex tried to set aside the award in France but the French court did not set aside. o Rule: A judgment confirming an award will not allow a party to avoid res judicata effect if enforcement of the award was already refused. I. Because both parties are signatories to the ’61 Geneva convention – the agreement of the parties follows the Convention. Italian SC says won’t enforce it because the award’s not enforceable. refused to enforce. Therefore they didn’t follow the Convention. Navimpex o Facts: Award’s fate is NOT the same as the Js fate. before getting the confirmation and then trying to enforce it again. If you looked at the NY convention – can’t not enforce an award b/c it had been reduced to confirmation J somewhere would not be a valid reason. Award in favor of COSID.e. can only deny enforcement for five specific reasons. This is why the losing party wants it to be seen as a judgment b/c then it is harder to enforce. Topfer attempted to get the award enforced in Italy. Have an award for the Germans – treated as having been confirmed in France (actually the French court refused to set it aside – which means it’s an enforceable J in France).

isn’t there a res judicata / issue preclusion problem? No. Did dismissal of set aside proceedings set up by N confer exequateur status on the arbitration award thereby making it an enforceable judgment (i.. it is still enforceable as a foreign award under the Convention.  English court ruled that Stipulation did not bar Rosseel’s action and proceeded to grant enforcement. Don’t have to confirm to get enforcement in another country. Instead of moving to set aside the award. • NY will enforce a foreign decree if that decree is a “foreign country judgment which is final. conclusive and enforceable)? Yes. but Oriental argued that this action was barred by the Stipulation which required Rosseel to seek confirmation of the award in SDNY first. parties entered a stipulation stating “parties agree that any proceedings to confirm or vacate the arbitration award will be brought in the USDC SDNY.e. Oriental sought a declaratory judgment stating that Rosseel had to seek confirmation in SDNY before the award became binding. (Not all jurisdiction follow this view.see above)  Therefore. conclusive and enforceable when rendered . What the Romanian Companies did – attempted to set aside the award in France.” Arbitration award in favor of Rosseel. • Since this decision has already been decided in the UK. some say that the award is merged into the judgment . . . a party may often avoid relying on the Convention by applying in the rendering jurisdiction for an order confirming the award. Is this refusal to set aside in France the same as a confirming J? Held: Yes. • By Implication. • NY would recognize a French decree conferring exequatur on an arbitral award as the functional equivalent of a foreign money judgment. Oriental Commercial & Shipping v.  o Held:  • Rejection of a motion to set-aside functions as a confirmation (satisfying double exequatur).  Under the Convention.” • NY would consider the rejection of set aside as an exequator and thereby enforceable b/c the process of obtaining exequatur in France allows the losing party in an arbitration to challenge the award on the bases enumerated in the Convention. courts are now usually filed only where the prevailing party seeks to enforce the award in this country. making it enforceable as a foreign judgment. Refused to set aside the award in France. a court judgment can be used to get around NY Conv. which converts the award into a judgment which may be enforced abroad under the appropriate • Even after an award has been confirmed in the foreign jurisdiction. Rosseel o Facts: Big 1st arbitration – finished with order to arbitrate again. the foreign confirmation simply increases the options available to the enforcing party. Where the D didn’t set aside. it is no longer necessary to seek leave to enforce in the rendering jurisdiction: the party seeking to enforce an award may proceed directly to the jurisdiction in which it wishes to enforce the award and may apply directly to that jurisdiction’s court for an order of enforcement. D made a mistake by not attempting to set aside in the US. which can be enforced (sort of) in the UK b/c of res judicata. 37 . But recognition & enforcement of the French J is a question of STATE law (NY law in this case). final. when the Convention procedures would be of no assistance. • In addition. o Rule: Can Confirm an Award or Go to another Country & Enforce.o Issues:  Award cannot be enforced because they’re trying to enforce the award after the 3-year SOL in the US on the enforcement of the award. But if the enforcement was tried in the US.’s statute of limitations on awards • Note that the enforcement of foreign awards is governed by Federal US law (Ch 2 of the Int Arb Act – includes the NY convention). Before 2nd arbitration began. Rosseel sought to recognize & enforce the award in England under NY Conv. there would be a res judicata problem. confirmation proceedings in fed. the FDC decision created a final judgment. • In the English court – isn’t this issue an issue that should be looked at by the English? Enforcement of the J in the UK. .

Due process The NY Convention & the Model Law are the same – except for 51e on set aside. b. The Consequence of Setting Aside a.  b. c. 3. If setting aside occurs in a country in which. The Issue of Standard of Review a. 6. b. or under the law of which the award was made. (1) cannot be in a country where recognition and enforcement is sought. What decisions may be subject to setting aside? a. Grounds for setting aside are regulated by the forum’s general law. parties cannot waive their right to seek set aside though some countries allow a party to waive right to set aside. In Switzerland. Sweden – do allow such a clause as long as the parties are not parties from the country where that arbitration takes place. interim awards can only be disputed at the end with the final award. such setting aside may serve as a ground under the NY Conv. Are there relevant procedural standards superior to those of national courts? a. it does not require this result. Can set aside partial awards if they are understood as final. Which awards are domestic (and can therefore be set aside by domestic courts)? a.2 Judicial Control over the Award: Setting Aside V. 4. (1) While courts may refuse to refuse to recognize or enforce on these grounds. it is unclear. Judicial Control in the Country Where the Award is Considered to be Domestic Country Where a. If an award is set aside. Judicial review is limited and restricted essentially to a listed number of procedural issues. V. however. Under US & French law – such a provision would not be binding. Setting aside applies to arbitrations which have been completed b. but since they didn’t want to. Que. 5. it has no effects in the country where it was vacated. is whether they sacrifice minimum safety and control. V. Language & Pretty Serious Language Translation Difficulties: 38 . NY Convention. be Domestic (2) The claim for setting aside in the country in which the award was made or that considers the award domestic. Ex/ Parties from Fr and GE in Swiss Arb with clause waiving set aside is OK. Waiving right to set aside rests on considerations of expediency and efficiency.Stipulation only stated that if they wanted to seek confirmation. (See the Famous Kyocera case below) d. they had to do so in SDNY. or in the country under the law of which the award was rendered. for other countries to refuse to recognize or enforce the award. Belgium. Generally. they nonetheless are obligated not to refuse recognition or enforcement on grounds other than those stated in art. Grounds for recognition and enforcement are set out in the NY Conv. QUE: Does the latter relate to substantive or procedural or lex arbitri????? b. their enforcement proceedings in England are fine. Judicial Control over the award occurs in two settings: the Award is (1) Opposition to recognition and enforcement in a country in which the winner Considered to chooses to rely on the award. Where the parties try to expand set aside. 7. a domestic award is where the arbitration took place.a – Note Note – Judicial Control in the 1. Under the UNCITRAL Model Law.2. Also. Is the right to seek setting aside waivable? a. In principle before award is rendered. (2) can be a country where the award was rendered. although not exhaustive c. parties cannot expand options to judicial recourse. 2. c.

Technically where would you look? You would go to the Arbitration Statutory of a law that talks about set aside procedures.2.”  What law do you look at within a country regarding whether it can set aside? Is it right to say that V(1)e regulates what country has jurisdiction for set aside. Croatian court refused to set aside on the basis that cannot set aside a foreign award. Under V(1)e – a court MAY NOT recognize or enforce an award if “the award has not yet become binding on the parties. wanted to set aside in Croatia. or has been set aside or suspended by a competent authority of the country in which. In the US – FAA Ch. So in the US – it seems set aside can only be made if the award was made physically in the US. No. Award was for Western.” o Rule: In the NY Conv “[the country] under the laws of which that award was made” refers exclusively to procedural and not substantive law. Bridas cross-petitioned to dismiss the petition to vacate on the basis that the court lacked smj and petitioned the court to enforce the award pursuant to art. Croatian co. (It made the same argument that Bridas did. §10 (A)1-5.) o Issue: Whether the Croatian court can set aside an award made in Switzerland. • ONGC v.The Award WILL NOT BE REFUSED UNLESS … V.FN 26 (p.But the French terminology comes across as mandatory -. Arbitration was to take place in London. Western Company o Facts: Arbitration proceeding – lex arbitri -. Substantive law during the arbitration was Croatia. but where the substantive law of the arbitration tribunal was Croatian?  Held: Held: No.  Does the FDC have jurisdiction? No. ISEC filed in a USDC a petition to vacate and refuse recognition and enforcement. Bridas o Facts: Mexican procedural law was used and the site of the arbitration was Mexico. 39 . o Rule: It found that application for setting aside had to be submitted  1) to the court of the country in which the arbitral award had been made OR  2) under procedural law of arbitration (in this case Switzerland).  India – ONGC (India) starts a proceeding for set aside in India • Note: Set aside allowed because even though the arbitration was in London. o Note: Court gets the law correct: Court cites the local state law – and that they don’t have jurisdiction. Swiss Company o Facts: ICC arbitration in Switzerland award in favor of Swiss co.b – Domestic and Foreign Awards • ISEC v. o Critique: : NY Convention does not govern set aside proceedings. to a regimen or scheme of arbitral procedural law under which the arbitration was conducted. §10 (p.was to be governed by the Indian Arbitration Act of 1940. ICC arbitration award in favor of Bridas. that award was made. Mandatory -. or under the law of which (THE LEX ARBITRI). 650 ) – Language of the NY Convention in English is permissive – a country MAY refuse to recognize & enforce an award if any of the grounds are found. that substantive law was Croatian and under NY Conv V(1)e should be able to set it aside. ISEC Argues that the arbitrators used US substantive law. • §10A – The court in the district where the award was made has jurisdiction to determine set aside. I.Recognition & Enforcement of Awards ART V(1) -Permissive -. 75 in the supplement). III of the NY Conv. the lex arbitri was the Indian Arbitration Act (India). the national statute decides whether you take set aside jurisdiction and on what ground. and not the substantive law of contract which was applied in the case. • Croatian Company v. and therefore a US court should be able to set the award aside. and more precisely.

NTPC v. Indian law governs it too.  NTPC made an application to set aside the interim award in India.  Since Indian law governs the K and there is no express law chosen for the arbitration agreement. The only time that it would not be the law of the K is where the parties expressly state so. The court here is saying the substantive law was Indian – and using it to get to a domestic award. India has jurisdiction over all matters concerning the arbitration. Therefore the arbitration decision may be set aside. As a result. V(1) “recognition and enforcement of an award MAY be refused … because the award has been set aside. the substantive law of the arb clause was Indian. the NY Convention is not applicable. o Critique: Barceló criticizes this outcome saying it is overreaching by the Indian court b/c under NY Conv.  India .• US – Western proceeds with 1) recognition & enforcement of the award (under NY Convention) & 2) judgment against ONGC.  Procedural Law: • Not expressly given. it follows that courts do not have to stay recognition and enforcement proceedings when there are concurrent set aside proceedings in another court. It would not be in conformity with law. it is a domestic award. justice and equity for a US court to go forward with the recognition and enforcement in US while there is a set aside proceeding in India.  The courts of the country whose substantive laws govern the arbitration agreement are the competent courts in respect of all matters arising under the arbitration agreement. and the jurisdiction exercised by the courts of the seat of arbitration is merely concurrent and not exclusively and strictly limited to matters of procedure. All other matters in respect of the arbitration agreements fall within the exclusive competence of the Courts of the country whose laws govern the arbitration agreement.  Since non-recognition and non-enforcement is not mandatory if the award has been set aside.”  Courts do not HAVE to refuse enforcement and recognition proceedings if there is a set aside by another court.  40 . (but remember under French & Spanish interpretations it is mandatory). Interim award in favor of Singer. Since it is a domestic award. there is an implication that the procedural law of the seat of arbitration applies. Singer o Facts: ICC chose arbitration in London. If the parties have designated a procedural law for the arbitration. Since Indian proper law governs the arbitration agreement. Here it doesn’t seem that the parties intended for the lex arbitri to be Indian. But US Court has an injunction against moving forward with recognition and enforcement. Where the parties did not specifically state what the arb law was.Also requested an interim restraining order against the actions in the US Court o Issue: Whether the AC was correct in granting the interim restraining order (an anti-suit injunction) trying to keep the US party from recognition & enforcement?  Held: Yes.  A foreign award under Indian law is an award that is made in the territory of a foreign state and not governed by the law of India. The parties did not say (as in Western) that the lex arbitri is Indian. But does say ICC rules apply (internal rules).  Substantive Law: • K law said Indian law applied. that will apply so long as it is not contrary to the public policy or the mandatory requirements of the law of the country in which the arbitration is held. there is an implication that the proper law of the K applies to the arbitration clause as well. o Rule:  The proper law of an arb agreement (substantive law) is normally the proper law of the K. o Rule: A court cannot recognize & enforce an award while there are set aside proceedings ongoing in another country. o Held:  If proper law of the K is chosen and proper law of arbitration clause is not.  Normal Rule: If the procedural law of the arbitration law is not chosen.

We had arb in the US where the 2 parties were foreign. Paulsson – Critique of Indian Decisions Paulsson says: 1) Misundertands the NY Convention? No.  If the parties have specifically selected the lex arbitri. So enforcement could happen in the US under the US. and therefore the NY Convention applies.  The Model Law applies only where the arb was in the country. it will be followed unless contrary to the public policy or mandatory law of the country in which the arbitration is held. What happens in the US where we have an arb in the US but where the US wouldn’t consider it a domestic situation – the NY Convention should apply. 664 – Pauson says that if Indian sub law applies. But there are situations where what one party wants is set aside. • 41 . Art I of the NY Convention applues – where the award is not considered domestic. then the lex arbitri will be the law of the seat of arbitration. Indian Arbitration Act of 1996 o Does the 1996 Indian Foreign Arbitration Act prevent a Singer problem from happening?  It’s basically the same as the Model Law – Art II(2)  This seems to be a withdrawal of the older Indian law where the courts would take jur even if outside of India. Oriental could have challenged igf they had sought to set aside.e.  So this changes the law – India wouldn’t take Set aside Jur unless the arb was in India. Here it doesn’t seem that the parties intended for the lex arbitri to be Indian. whether the arb clause is wide enough to cover the dispute between the parties. the Convention applies. The US doesn’t consider every award as domstic. The winning party might take the awrdd in India and take it for Recog & Enforcement. Another case – Oriental v Rosseel. We see in Moran that … 2) Overreaching? Yes. So should be subjected to set aside jurisdiction.and want to know that … is it wrong for India to say they first want to do set aside rather than rec & enforcement? No. But the problem is that this creates a J. But R&E gives rise to refusla on the ground there is no binding arb agreement. i. Seems like it’s not reasonable for Indian lex arbitri here. the presumption is that law of the country where the agreement is held is the proper law. the Act will not apply. Paulson doesn’t agree – if you read the NY Convention in Art I the Convention applies to anawrd made outside of a country. BUT the other party said it should be set aside (IAW CH I of the AA). 676 – Q5. This issue arises in the US – in a different way. Was it able to do so? Because it was a non-domestic award. Is this against the NY Convention? If an award sub to set aside in India. But those countries who were not MODEL LAW countries. Where there were enough international elements that it was subj to NY Convention CH II of Fed AA applies. But if the lex arbitri has not been expressly selected by the parties. P. Specter v Thornerg. FN D on p. Chosen arb in the US.  But where (THIS CASE) the parties stipulated the arb will be conducted IAW ICC rules will govern. If there’s an award in London. not R&E b/c the STANDARDS ARE NOT THE SAME. then Indian law applies. minus mandatory & public policy concerns of the place of arbitration. Barcelo disagrees with Paulsoon’s interpretation of the Indian “foreign Awards act” – the statute intends that if there an award outside of Indian where indian lex arbitri applies. But this is a rebuttable presumption. Specter said it was possible – they could go forward with set aside OVER recognition & enforcement if both were brought at the same time. effect & interpretation of the ar agreement are governed by its proper law. Doesn’t seem to be radically different from NY Convention b/c NY Convention doesn’t go for set asides. and therefore the NY Convention does not apply.  Validity.• But where there is no express statement of what the law of the K or the arb agreement is. parties chose Indian lex arbitri. then even I it’s an award is outside of India.  If you look at the Act harder – not nec against the NY Convention. Indian cts would not allow. there are differences. But suppose they had filed a set aside. India would say that this is a domestic Indian award subject to set aside jurisdiction. Ex/ award outside Indian. BUT if it were a MODEL LAW JUR the standards are the same.

Subject to the An award that is not recognized (for res judicata purposes) or not enforced in national courts it no NY good.S.  French Court: Whether the Arb Tribunal had Jurisdiction over the case? • Held: No. Lapine v. Kyocera Rule: Federal courts can expand their review of an arbitration award beyond the FAA’s grounds. the party who initiated arbitration had to do so within thirty days after it was “agreed that the difference or dispute [could] not be resolved.3 Judicial Control over the Award: Recognition and Enforcement V3a – Awards A main purpose of the NY Convention was to ensure that awards can be enforced. “May be referred to arbitration” Furthermore. V. The arbitral tribunal found for LaPine.But the Indian Act doesn’t say “only” – so it’s possible that the same result in Singer could result. when (but only to the extent that) the parties have so agreed. o In France and Germany – courts would take set aside Jur where the parties intended the lex arb to be from their country.” exhibits a “manifest disregard of law. o French review of set-aside & enforcement of foreign awards: More limited than allowed in the NY Convention – can only look at:  1) if there was no valid arb agreement (and an arb made an award) or the arb clause was void  2) the tribunal was irregularly composed  3) the arb decided in an incompatible manner with his mission  4) DP not respected o Egypt v. Kyocera made a motion to vacate.  Issue in Arb Tribunal: Whether the Egyptian party was a party to an existing arb agreement. o BUT NOW in Fr and GE – will not take set aside Jur unless the arb was in the country. Convention Previous issue: What Arbitration Agreements are governed by the NY Convention? This issue: What Awards are governed by the NY Convention? 42 . Didn’t seem to give any deference to the arbs determination that they had jurisdiction. based on the K and facts. o Rule:  • •   Normal Standard of Review: A federal court may vacate or modify an arbitration award only if the award is “completely irrational. that Maran had commenced within 30 days o Rule: Standard of Review used by courts of an arbitration award during set aside proceedings:  De novo for the law  Deferential for the facts Egyptian Pyramids Case o Rule: Just because Arbs have Kompetenz-Kompetenz does NOT mean that courts can’t review whether an arb clause is BINDNG on all parties. THIS IS THE TREND.2. Motion approved.d – Standard of Review • Vekoma v. Southern Pacific  French Court set aside an arb agreement in France. Maran Coal o Facts: K was subject to Swiss law and provided for ICC arbitration in Geneva.C § 10. V.” or otherwise falls within one of the grounds set forth in 9 U. Arb Clause: Parties had provided for arbitration only as an option. LaPine and Kyocera arbitrated the dispute in the US pursuant to the arbitration clause in their agreement. rather than as a mandatory dispute resolution mechanism. • Note that the intrusive French standard only applies to questions of jurisdiction. Appears to use a de novo interpretation of the Terms of Reference  Suggests that Fr courts when looking at arb decisions – CAN REVIEW ARB DECISIONS (BOTH FACTS AND LAW) DE NOVO.” Arbs decided that. modify and correct the arbitral award in the US on the basis that the tribunal’s findings of fact were not supported by substantial evidence and the tribunal had made errors of law. Kyocera o Facts: LaPine brought suit in FDC – Kyocera moved to compel arbitration based on the arb clause in the K. Held: Yes.

Each one had an arbitration clause providing for arbitration in NY and the Chairman of the American Arbitration Association was given authority to resolve disputes in connection w/ appointment of arbitrators. PW claims that the FDC should not enforce the award b/c  (1) enforcement of the award would violate the public policy of US [V(2)b]. RATKA Seeks enforcement in FDC.  (3) the tribunal denied PW an adequate opportunity to present its case [V(1)b]. Rather. certain categories of claims may be non-arbitrable b/c of the special national interest vested in their resolution. Arbitration award held PW liable to RAKTA for breach of K. a Norwegian ship owner and JMC. Parsons says that this is force majeure. o Rule:  Art I of NYC applies to: • I(1) Awards “made in the territory of a State other than the State where the R&E of such awards are sought” AND o Art I(1) Simply put. but didn’t try hard. RAKTA o Facts: After 6-Days war. The mere fact that an issue of national interest may incidentally figure into the resolution of a breach of K claim does not make the dispute not arbitrable. The NY Convention applies. After a dispute. it is not a foreign award as defined by Art I(1) b/c it was not rendered outside the nation where enforcement is sought. o Rules:    Court says it takes narrow reading of public policy defense: Enforcement of foreign arbitral awards may be denied on this basis only where enforcement would violate the forum state’s most basic notions of morality and justice. the US calls out all Americans out of Egypt.i – An award rendered in the State where Recognition or Enforcement is sought • Bergesen v. SB sought R&E in Switzerland (for 2 years) but JMC successfully resisted.3. and  (5) the award is in manifest disregard of the law. an award rendered in the US btwn two aliens with substantial relations with foreign states is necessarily foreign.3. 70. V. 43 .  (4) the award is predicated upon a resolution of issues outside the scope of contractual agreement to submit to arbitration [V(1)c].  Thus. This is just an ordinary commercial transaction. 71.Art I of NYC: Applies to 2 categories of awards: 1) Awards “made in the territory of a State other than the State where the rec & enforcement of such awards are sought” 2) those “not considered as domestic awards in the state where R&E are sought” V. o Note: Some Civil Law countries consider an award “domestic” if the award was made abroad but their country’s lex arbitri was used. Could have gotten visas. SB then applied to SDNY for enforcement. No DP violation b/c you can’t expect arbs to accommodate every convenience of the parties. Joseph Muller o Facts: SB.a. a Swiss co.  (2) the award represents an arbitration of matters not appropriately decided by arbitration [V(2)a]. So these civil law countries would be able to “set aside” foreign awards that followed their lex arbitri Art V(1)e. entered into three charter parties in 69.” • I(1) those “not considered as domestic awards in the state where R&E are sought” o Art I(2) “We adopt the view that awards “not considered as domestic” o denotes awards which are subject to the Convention not b/c made abroad. An award was handed down in favor of SB.b – Grounds under the Convention for refusing Recognition and Enforcement – an introductory case • Parsons and Whittemore v.”  A Domestic award is: “an award arising out of a legal relationship exclusively btwn citizens of the US” without a reasonable relation with a foreign state. There’s no real issue of non-arb here. arbitration proceedings were initiated. but b/c made within the legal framework of another country.

Arbitrator goes forward. and that prelim award can be challenged in set aside proceedings in a court in France.somewhat possible . When arbs decide on jurisdiction. In France. o Rule: When reviewing an arbitrator’s decision for R&E of the validity of an arbitration agreement (V(1)(a)).court looks at reasonable possibilities Colorable . The Dutch court (the court in this case) allowed R&E of the award. a US Court will use a “manifest disregard” standard. Acme seeks R&E in the US. Egypt o Facts: Arbitration in favor of Southern Pacific in France. In P-J – if there’s any doubt as to whether it’s arbitrable or included in the arb clause – the US Courts will ASSUME that it’s part of the arb clause. And US law applies anyway. Southern Pacific v.e.  Arbitrator did not make a decision in manifest disregard of the law b/c considered both NY and Pakistani law.”  Note: when US courts initially look at separability question. MCP signed the Terms of Reference (required by ICC rules) thereby agreeing to arbitration but then argued that the arbitration was invalid under the laws of Pakistan because the supplemental agreement says that Pakistani law is to be applied. the preference is they decide in a prelim award on jurisdiction. The French court held there was no arbitration agreement binding Egypt. if the arbs are not yet seized. c. not the NYC. Says that either under US or Pakistani law the supplemental agreement is invalid. May be able to raise this defense under NY Convention if arbitrators decided as amiables compositeurs V. MCP petitioned court in Pakistan to invalidate both arbitration and arbitration clause. (Ex/ Egyptian Pyramids). Egypt argued that it wasn’t a party to the contract which had the arb clause. But here the clause was very broad.Arbitrary and Capricious . But under UNCITRAL Model Law the standards for review of set aside & R&E are the same – • Set Aside – Art 34 • R&E – Art. ACME obtained an arbitration award against MCP and tried to enforce in SDNY. i. This comes up in Negative Competenz – Competenz that exists in France. But the arbs determined that Egypt was a party to the K. o Rule: Netherlands: Standard of review for R&E of the validity of the arb clause (V(1)(a)) is reasonableness – was the arbitrator’s decision regarding the validity of the arbitration clause reasonable? o Note:   The French Court in set aside proceedings seems to have used de novo review for the validity of an arbitration agreement under a arbitration award.passes the laugh test. but it’s not manifestly null.are manifest disregard and colorable similar????? • ACME v. On the same day. is arbitration agreement valid. Manifest disregard of the law .Powerful presumption that the arbitral body acted within its powers. d. court finds that there was no manifest disregard of the law. V(1) grounds are invoked?  a. MCP o Facts: ICC arbitration in Geneva applying Geneva’s procedural rules but NY Substantive Rules (according to the main agreement). A Paris court of appeals set aside the arbitral award made in Paris btwn the parties. 36 44 . which requires a “mere colorable justification for the outcome reached. Awards in favor of Acme (US). a court in Amsterdam granted a request for leave to enforce the same award.  Not sure that Manifest Disregard applies in Int'l commercial agreement. the court stops. Pakistani court did so – found arb clause invalid.court looks at the case again Reasonableness -. it applies de novo review. but even assuming that the manifest disregard defense applies under the Convention. • Potential Standards of Review De novo . Under V1c – to succeed on that ground you have to show that the issue the arbs were considering was not one that was within the arb clause.c – Procedural Grounds under the Convention for Refusing R & E What should be the standard of review a court should exercise in deciding whether to recognize or enforce an award when art. b. But remember that set aside standards are based on national law.3.

following laws of Bermuda. there can be a higher std of review. but didn’t get the name of the city correct. Improper tribunal 45 . The Committee will pick a list of arbitrators but will not tell the parties the names of the arbitrators.3. Fr. So some think the standard of review should be more than the ACME standard of “manifest disregard / colorable justification. Such a waiver is violation of V(1)b. it’s all in writing. The parties entered into an agreement under which if PJ got the K with Iran and got a certain amount in gross billings it was to pay a certain amount to MTC. no notice.  Note that the Model Law uses the same standard for R&E and Set Aside – although it doesn’t specifically say what the standard of review is. and b/c set aside is still domestic. and Shenzhen.  V. There are no oral proceedings.) o Rule:  A Court can only refuse R&E of Art V(1) if the party furnishes proof. Procedure of Copenhagen Arbitration is that there is a list of arbitrators.iv – Improper Composition of Arbitral Authority or Improper Arbitral Procedure • China Oil v. Mr. Arbitrators went further and decided what MTC would get o Rule: Standard of Review by a Court as to whether a subject matter of an arb lay outside the SCOPE of the K: The court reviewed de novo the Art V(1)(c) contention that the subject matter of the arbitration lay outside the scope of the K.iii – Scope of the Parties submission to Arbitration • Management & Technical Consultants v. Danish buyer wins and tries to enforce in Germany. X then sought enforcement of the award in Spain before the S. Beijing. Provided for arbitration by ICC in Bermuda. some due process rights are not waivable & therefore cannot be enforced. Went to arbitration. X wins by default. parties can ask that certain arb can be eliminated. Got into dispute about gross billings and entered into a settlement agreement where Parsons paid MTC and also agreed that if gross billings exceeded 350 million then would pay MTC and would decide the terms etc.  Can a party waive its right to notice of appointment of the arbitrator & still have the award enforced in Germany? • Held: No. Parsons-Jurden o Facts: MTC helped PJ get a K with Iran. and is against public policy because it’s a violation of DP under V(2)b.interest in finding jurisdiction.85 million + as the amount due for the gross billings. Parties wanted CIETAC. This is supposed to enhance independence.Ct. V. Y does not appear. The S. Y (Spain) o Facts: Arbitration in Strasbourg.Ct.  If there’s any doubt as to whether it’s arbitrable or included in the arb clause (clause is valid under V(1)c – the US Courts will ASSUME that it’s part of the arb clause. The list is given to both sides. For MTC.  A Court can determine on its own whether V(2) requirements are met – there is no proof requirement V. But more countries are moving towards the same standard for R&E and set aside. And arbs can have a self. The award will be sent to the parties w/out the arbitrators signature. The parties don’t know who the arbitrators are. JP was to pay MTC $1.  When we’re talking about the validity of the arb agreement we’re talking about the jurisdiction of the arbitrators.c. V(2) grounds against R&E CANNOT be waived. PJ is to negotiate any additional payments that PJ would give to MTC.” • SA X (Belgium) v.ii – Notice of Appointment of the Arbitrator and Waivability • Danish Buyer v. granted leave for enforcement after verifying the existence of the arbitration clause (in accordance with Art II of the NY Conv) and the arbitrability of the dispute (in accordance with Art.3.  There are arguments that there should be more deference for R&E.  A broad “any dispute” arb clause logically implies that the scope of the K included a decision for any amounts of additional compensation. Got into another dispute as to what were gross billings.3. (although not stated as a violation of V(2)b).(2) of NY Conv.c.c. If gross billings exceed $350 million. V(1) grounds against R&E CAN be waived. o Rule: In Germany. Gee Tai o Facts: CIETAC has 3 locations: Shanghai. They had different arbitrators in the 3 cities.. German Seller o Facts: Arbitration in Copenhagen.Which approach (US – manifest disregard) or Dutch (reasonableness) or French Set Aside (de novo) is the best approach? • Reasonableness is more of a middle ground between the other 2.

o Rule:   NYC: Under V(1)(e) R&E is discretionary. Austria enforces the award. o Held: Court says that yes there was a technical violation. to the grounds for such a refusal enumerated in Art. sets it aside on the ground that it must follow the ’61 Geneva Convention – that an award may be set aside if contrary to public policy of the state in which the award was made – and the agreement violated the Slovenian public policy b/c it violated “antitrust” provisions of the Yugoslavian constitution. where enforcement is not discretionary. but court has discretion comes from the NY CONVENTION – “MAY” -. Company B (Slovenia) o Facts: Arb in Belgrade for A. but the outcome isn’t. Arbitrator submits award without putting in the legal costs. under Yugoslavian law. Remember where the AAA had refused to consider a letter form the German Ministry that the American party had submitted. Refuse to set aside. there was no violation and question of legal costs is something for the arbitrator to decide. o Held: Court says that there was no ICC procedure to review legal costs.  The court decided to exercise its discretion to recognize and enforce b/c there were no consequences for the violation and parties did not say how the decision would have been different. therefore. but if in a ground for refusing its enforcement. and modify the form. R&E of the award in the US. IX(1) of the European Convention. European Convention wants to limit this and doesn’t want set aside to be an arbitrary process. Therefore. arbitrators come from somewhere else.”  The standard of review is good. there is an appeal and the Slovenian S.3. Have to recognize and enforce unless • a) it is not valid under law applicable • b) not given proper notice/present case • c) award deals with difference not contemplated in arbitration or outside scope 46 . There is an attempt to set it aside in the territory that later becomes Slovenia. Austria & Slovenia are parties to the Geneva Convention. At the time of the award Yugoslavia was one country. the US court said that it was a procedural irregularity & it shouldn’t have made a difference – BUT the German Court said that it COULD have made a difference. sent to Hong Kong for R&E. However. This is being challenged that the ICC should also have reviewed the legal costs. Geneva Convention: Recognition and enforcement is not discretionary. Art 27 of the ICC Rules (’98) – the Court of Arbitration is entitled to develop the form of the award. set aside only works if given under the grounds given in recognize and enforce. There was no prejudice against the losing party. IN ’92 when Slovenia is its own country. Arbs sends letter to the parties – says please give me your attorney’s fees – that the form sent to the ICC was w/o that attorney’s fees. IX (a-d).  “The Court believes that a more appropriate standard of review would be to set aside an award based on a procedural violation only if such violation worked substantial prejudice to the complaining party. technically for anything and then can refuse recognition and enforcement on the basis of set aside. the court enforces the award b/c it decides the case under the European Convention.  Held: Under V(1)(e) enforcement is discretionary.v – An award set aside in “the country in Which.Ct. and therefore shouldn’t be enforced. V. Claimant says arb should have been in Beijing. In 1995 there is an attempt to enforce the award on Austria. made in Yugoslavia. The violation of public policy does not figure in this enumeration.  Under NYC. or Under the law of which.b/c arbitration was provided for in Beijing but took place in Shenzhen. that award was made” • Company A v. • Compagnie de Guinee v. Award for Shenzhen party. Slovenian court and court of appeals do not initially set it aside in ‘88. If arbitration in Beijing then arbitrators come from one list.  Austrian court was required to enforce the award. Hammermills o Facts: ICC procedure where ICC says award has to be submitted to ICC for approval.  European Convention restricts the application of the terms of V(1)e) of the NY Convention admitting the setting aside of an award . This allows irregularities coming into the arbitration process.c. can set aside. o Note: Decision seems troublesome. Argues there was a violation of procedure b/c the award with attorney’s fees wasn’t sent to the ICC.w/out restriction .

Relevance of Many Countries – esp. but more importantly that the national law of France allowed enforcement under Art VII. See New Code of Civil Pro §1502.if that law is more favorable to enforcement than is the NY Convention itself. Award was in favor of C. citing NYC V(1)e. Thus.if that law is more favorable to enforcement than is the NY Convention itself. a Judge cannot refuse enforcement where national laws permit it. Even if under NYC Art V(1)(e) set aside is a reason for nonenforcement of R&E. Egypt o Facts: Egypt terminated K with C. • NYC Art. Non-arbitrability (V(2)) is also not a criteria for non-R&E in France. Pabalik sought R&E in France. Austrian court did not allow set aside – “good faith” did not infringe on Austrian mandatory law did not go against its competence on a damage issue.Public policy does not apply as falling within Art IX – and therefore even id against the public policy of the country. State’s National This is in part because of French interpretation of NYC Art. o Issues:   1) Whether the arbs could disregard all national sub rules and use lex mercatoria? • Held: Yes. • Tribunal Grande Instance – Allowed R&E – arbs did not act as amiables compositeurs. Norsolor argued that should not be R&E because the arbs acted as amicables compositeurs.that is. a party is not limited to non-enforcement where NYC Art VII allows a party to use national laws. • d) procedure not followed.that is. Apply Egyptian Law. WILL R&E. C commenced arbitration in Cairo. o Fr law on non-enforcement of R&E: (New Code of Civil Pro §1502). French Law under NYC Art.Arb tribunal used international lex mercatoria. Found French party guilty of not having good faith. the law that would apply in that country in the absence of the NY Convention . Decided in equity – although the parties never said they wanted amiables compositeurs. Paris Ct of Appeals erred in refusing R&E because it had been set aside in Austria. • Cour de Cassation – Affirmed – but remanded to Amiens Ct of Appeal.R&E. VII gives the enforcing party a right to rely on the “national” law of the country of enforcement . France – have bypassed Art V(1)(e) – to allow R&E even though a country has set it the Enforcing aside. it must be enforced. the law that would apply in that country in the absence of the NY Convention .  French R&E – • Paris Ct of Appeals – Refused R&E – based on the Austrian lower court’s first decision to set aside.  In France. Norsolor o Facts: Award in Vienna under ICC. VII. unless: 1) absence or invalidity of arb agreement V1a 2) irregularities in appointment of arbs V1d 3) arbs exceeded their own authority V1c 4) violation of DP V1b 5) where R&E would violate international public policy • Pabalk v. set aside is not a criteria for non. VII: Relevance of the Enforcing State’s National Arbitration Law o Both the below cases interpret NYC Art. Egypt. Arbitration Law French National Law does not include set aside as a ground for non-enforcement. As long as there was no conflict between the lex mercatoria and the mandatory rules of the substantive law of the country with the closest connection (that would normally be the country’s sub law that applied) 2) Whether the French court can allow R&E even where a case has been set aside? • Held: Yes. o Rules: • NYC Art. Chromalloy v. VII trumps V1e. But never said they were ruling in amiables compositeurs. Egyptian court set aside the award on the basis that the arbs  47 . VII to give the enforcing party a right to rely on the “national” law of the country of enforcement . Norsolor brought set aside in Austria. Parties did not say what substantive law applied -.

Award confirmed.3. the issue of consequential damages was validly submitted to the arbitrators and V(1)c doesn’t apply.applied the wrong law – admin.3.3. IDI o Facts: K says no consequential damages will be awarded. Goes to arbitration. which is the place of performance of the K). IDI filed an action in Indian court to set aside the award. it also notes that Art. Art VII.3. nevertheless. o Rule: French Court must enforce the 1st award as long as it passes through the very limited filter imposed by the French national arbitration law – which does not ask whether an award has been annulled.d – Review of the merits under the Convention V. VII preserves all the rights to enforcement that a party wishing to enforce would have in the absence of the Convention. not civil law should have been used. C applied in US FDC for enforcement. FAA applies seems to apply to domestic arbitrations and not to international arbitrations. Hilmarton (Uk Court) 48 . o Held: FDC noted that pursuant to NYC it could in its discretion decide not R&E the award due to the Egyptian set aside.Arb Award in India – For FCI.” o Critique: Court recognizes and enforces on the basis that FAA allows enforcement of the award.d.i – Review of the merits under article V(1) Standards • Fertilizer v. H is a middleman.” “Article V provides a permissive standard. Therefore. under which this Court may refuse to enforce an award.000 pails of metal were damaged. FCI brought an action for recognition and enforcement in US of an arbitral award rendered in India in FCI’s favor. V. BIL moves for an order confirming the award.  Court found that “if the NYC did not exist. There is NO Manifest Disregard is read into the NYC. BIL refused the shipment. But the Arb awards consequential damages. Under Parsons. Arbitration in favor of BIL.  However. V. which was going to get a K in Algeria to build drainage in Algiers. on the other hand. submitted to the arbitrators in the Term of Reference signed by both parties. o Rule: Manifest disregard would be a merits-based review. Algerian law said there could not be any middlemen in connection with a public K. OTV (France) – 1st Cassation opinion o Facts: K – H agreed to be a tax & legal consultant to OTV to act as a middleman between the Algerian govt and OTV. however. the issue of consequential damages was. Calabrian o Facts: 35 of 1. For OTV. UK Court GRANTS R&E: deference to arbitrators under V(2)(b) as long as international public policy is not violated. FCI said that though it may not have been allowed in the K. V. • Brandeis v. including consequential damages. o Rule: The Standard of Review of an Arb Award by a US Court is very narrow – Cannot substitute it’s judgment for that of the arbitrators. At same time.  Court uses colorable justification standard of review o Note: Barceló thinks that merits are not subject to review. the FAA would provide C with a legitimate claim to enforcement of the award.  Def of Manifest Disregard – the arb was aware of the law and did not apply law to the facts found  Manifest Disregard – is something US courts have read into CH I of the FAA. US courts will not review merits based review.c.  Courts will only review the merits of an award when public policy considerations are particularly weighty: Parsons: “forum state’s most basic notions of morality and justice. and wants a new one. But Brandeis decides this – Manifest Disregard IS NOT read into CH II of the FAA for interpretation of the NYC. mandates that this Court must consider C’s claims under applicable US law.  R&E in – The limits of deference – The Hilmarton Triangle and the problem of conflicting awards • Hilmarton (UK) v. they say they don’t have to decide this.d.iii – Review of the merits under Article V(2)(b) – the public policy standard • OTV v. Award in Switzerland. Losing party argues that R&E should not be granted b/c such enforcement would be contrary to UK public policy (b/c K is illegal under Algerian law. Hilmarton bring claim that OTV only paid 50% Arb Clause – Swiss law would govern under ICC Rules in Geneva.

o Note: Van den Berg argues estoppel is a fundamental principle of good faith which overrides any formalities required by Art II(2). 49 . But doesn’t apply in this case. H is a middleman. o Rule: There is no requirement for a losing party to send to set aside. Rule: A courts review of an award is minimal – in this case (where the K violated a law of Algeria but not the mandatory law of the seat of arbitration – Switzerland) there is no public policy ground on which to not enforce a Swiss award. but then argue it during R&E. Hilmarton bring claim that OTV only paid 50%. and makes an award. But a losing party can be estopped from bringing a claim of invalidity of the agreement where they never brought up an argument that there was no jurisdiction during the tribunal. o o V. Didn’t apply in this case because there were no corrupt practices. But lawyer never made any official objection to the composition of the tribunal or CIETAC until after the tribunal in preparation for R&E. Brings up 2 years later in R&E. arbitrators come from somewhere else.Estoppel • Shenzhen v.  When there are 2 conflicting awards. Algerian law said there could not be any middlemen in connection with a public K. If arbitration in Beijing then arbitrators come from one list. R&E in Hong Kong. Note:  English law – would not have allowed enforcement of a K that violates the law of the country of the K. which was going to get a K in Algeria to build drainage in Algiers.3. But shows that if there were corrupt practices. Lawyer made an informal complaint to one arbitrator during the tribunal. an enforcing court will only consider the award at issue. The losing party is estopped from its challenge.e . and can then argue against R&E. 2nd Arbitrator found for H. Because under Art V(1) a court MAY refuse enforcement – which is a reason for R&E where a party estopped the other in violation of good faith. Arbs said they had jurisdiction. Gee Tai o Facts: Improper tribunal b/c arbitration was provided for in Beijing but took place in Shenzhen under CIETAC Rules.o Facts: K – H agreed to be a tax & legal consultant to OTV to act as a middleman between the Algerian govt and OTV.  UK Case of Solemany – UK court did not R&E where one party engaged in corrupt practices. But the judge in this case allowed R&E – R&E is discretionary. But would have worked upon R&E from an award in UK under public policy grounds. it would be unlikely under Public Policy grounds that the UK court would R&E. but if in Shenzhen.

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