International Arbitration: Lecture 10

International Arbitration: Lecture 10
Dr. Matteo Zambelli
[email protected]
University of West London
School of Law
1
Overview
A. Construction Industry Arbitration.
B. Arbitration of financial disputes.
C. Maritime arbitration.
D. Arbitration at the Court of Arbitration for Sport.
E. Energy Arbitration.
F. Q&A.
2
Construction Industry Arbitration
Historically, the UK construction industry used arbitration to resolve disputes
between the parties. The introduction of statutory adjudication changed this.
In 1998, following the introduction of the AA 1996, the Society of Construction
Arbitrators published a set of arbitration rules. It also issued guidance notes. The
aim was to ensure a common approach to arbitration across the construction
industry. The rules and guidance notes were last updated in January 2002.
In 2005, the Joint Contracts Tribunal (JCT) published the Construction Industry
Model Arbitration Rules (CIMAR). A 2011 version and a 2016 version followed.
There are no differences between the 2005, 2011 and 2016 versions of CIMAR.
As a part of its mission to encourage best practice in construction arbitration, the
Society of Construction Arbitrators promotes the use of CIMAR.
3
(cont.)
The objectives of CIMAR (the “Rules”) are to:
Rationalise the process of arbitration.
Provide fair, impartial, speedy, cost-effective and binding resolution of construction
disputes.
The Rules aim to achieve this by:
Appointing a single arbitrator.
Agreeing to do all things necessary to achieve the Rules’ objectives.
Having the seat of the arbitration in England, Wales or Northern Ireland. This means that
the Arbitration Act 1996 applies to the arbitration.
Incorporating arbitrators’ powers from the Arbitration Act 1996.
Not allowing the parties to amend the Rules once an arbitrator is appointed.
Empowering the arbitrator to grant provisional relief, security for claims and make an
award of costs.
Providing for the joinder of disputes.
Providing a choice of three procedures, depending on the size and type of dispute, and
allowing the arbitrator (rather than the parties) to decide which procedure to adopt.
4
(cont.)
The construction industry’s standard forms of contract allow the parties to choose
between arbitration and court for settlement of disputes. The parties may also use
statutory or contractual adjudication.
The Housing Grants, Construction and Regeneration Act 1996 (Construction Act
1996) introduced a statutory right for parties to a construction contract to refer
their disputes to adjudication. Adjudication was designed to produce a cash-flow
remedy during the progress of a construction project. It was intended to avoid the
problem that previously beset the construction industry of long-running arbitration
or court litigation keeping one party out of its money, while having to fund
expensive legal costs to recover that money.
Litigation is the default position for dispute resolution in the SBC 2011/SBC 2016
and the JCT Design and Build Contract, 2011 Edition (DB 2011) and 2016 Edition
(DB 2016). However, if the parties complete the contract to use the arbitration
clause unamended, any arbitration will be in accordance with the Rules.
5
(cont.)
The parties are free to agree how they should “commence proceedings” for the
purposes of limitation (section 14(1), AA 1996). Any agreement must be in writing
if it is to be effective.
Some institutional rules do contain provisions that specify when, for limitation
purposes, an arbitration is commenced (see, for example, Article 3(2), UNCITRAL
Arbitration Rules (1976, 2010 and 2013), Article 1(2), LCIA Rules (1998), Article
1(4), LCIA Rules (2014 and 2020) and Article 4.2, ICC Rules (1998, 2012, 2017
and 2021)).
Usually, any agreement for these purposes will require some unilateral action,
such as the service of a notice of claim. Some agreements, however, require an
arbitrator to be “appointed” in order to stop time from running. If so, it is important
to complete the appointment in time, by securing the arbitrator’s confirmation of
appointment. It is not sufficient merely to notify an arbitrator of a dispute.
6
(cont.)
Under the Rules, the arbitration process begins when one party serves written
notice of arbitration on the other (rule 2.1).
The notice of arbitration must: (a) identify the dispute; (b) require the other party to
agree to the appointment of an arbitrator. The Rules do not prescribe a format for
the notice but, as this document defines the dispute referred to arbitration, it
needs careful drafting. The notice should:
Identify the contract.
State the identity of the parties to the contract.
Identify and set out the arbitration agreement. If it forms part of the contract, identify
which numbered provision contains the arbitration agreement.
State the dispute (or disputes) being referred to arbitration.
If the notice defines the dispute too broadly, it may fail to satisfy the requirement
that the disputes to be referred must be specified. On the other hand, if it is
drafted too narrowly, a party may lose the opportunity to introduce other claims at
a later date because these will fall outside the scope of the tribunal’s jurisdiction.
7
(cont.)
The notice of arbitration should not be ignored. The defendant’s response does
not have to contain submissions relating to the dispute. It can be an
acknowledgement, either agreeing to the appointment of the arbitrator named, or
proposing other individuals (rule 2.2).
If the defendant wishes to challenge the arbitrator’s jurisdiction, it should do so as
soon as possible. If it fails to raise jurisdictional objections early, it may lose the
right to object under section 73 of the Arbitration Act 1996. Section 73 requires a
potential defendant to raise an objection “either forthwith or within such time as is
allowed by the arbitration agreement or the tribunal”.
If the dispute is related to another dispute on the same project, which has already
been referred to arbitration, the Rules expressly require the parties (and any
nominating body) to consider whether the same arbitrator should be appointed in
that dispute. The same arbitrator should be appointed unless there are sufficient
grounds not to (rule 2.6). This applies even if the parties are not the same parties
and appointment of the arbitrator is by different people (rule 2.7).
8
(cont.)
The tribunal forms when the arbitrator is appointed. The arbitrator’s appointment is
effective from the date of his agreement to act, even if it is conditional on
acceptance of his terms (rule 2.5). As soon as the appointment is effective, the
arbitrator must consider and select the procedure that is most appropriate for the
dispute (rule 6.1).
The tribunal derives its power to determine disputes from the arbitration
agreement. The tribunal has no power to determine disputes that fall outside the
scope of the arbitration agreement. In such a situation, the parties are not obliged
to refer a dispute to the tribunal, or to take part in the arbitration. Any “award”
issued by the tribunal for a dispute falling outside the arbitration agreement will be
ineffective.
The tribunal’s powers are the procedural tools that are used to determine disputes
within its jurisdiction. The sources of these powers are: (a) the arbitration
agreement; (b) the Rules; and (c) the Arbitration Act 1996. The Rules confer
powers on the arbitrator in relation to procedure and evidence, as well as
jurisdictional issues and interim measures.
9
(cont.)
An arbitrator may order the parties to take “interim measures”. Usually, the
arbitrator would make that order early in the arbitration. The order is “interim”
because the arbitrator may subsequently adjust it, or set the measures aside.
An arbitrator may order provisional relief in favour of any party (rule 10). In
practice, provisional relief may preserve the claimant’s cash flow in proceedings it
is bound to win, but where the arbitrator has not yet determined how much the
claimant will be awarded. The relief ordered may require a party to:
Pay a reasonable proportion of the sum likely to be awarded (an interim payment).
Pay an amount on account of legal costs, including the arbitrator’s costs.
Comply with another element of the provisional relief claimed.
Either party may apply for provisional relief (rule 10.2), but the arbitrator must not
make an order before considering the parties’ formal evidence and objections
(rule 10.3). Formal evidence is defined as evidence put on affidavit or some other
formal record (rule 5.7). The arbitrator may give reasons, as appropriate (rule
10.3).
10
(cont.)
The parties attend an initial procedural meeting with the arbitrator (rule 6.3),
unless the parties and the arbitrator agree it is unnecessary (rule 6.6). The Rules
do not provide a time frame for this meeting. In practice, the sooner it takes place,
the better.
After considering the parties’ submissions, the arbitrator will direct which
procedure is appropriate for the dispute. Subject to the parties’ right to agree
procedural matters (rule 5.1), the arbitrator will also give directions on the future
conduct of the arbitration at this hearing (rule 6.3 and rule 6.4). The directions will
depend on the procedure adopted. When giving directions, the arbitrator must
consider any specific amendments to the Rules in the contract (rule 6.5).
At the preliminary procedural hearing, the arbitrator should:
Determine which procedure to select.
Give directions for the arbitrations’ future conduct.
Seek to gain a better understanding of the dispute.
Encourage the parties to try and settle the dispute.
11
(cont.)
The Rules adopt the general principle that costs follow the event and the loser
pays (rule 13.1). However, the arbitrator has wide discretion when dealing with
and allocating costs. The arbitrator:
Should consider all material circumstances, such as whether any claim was
unreasonably exaggerated, or one party’s behaviour led to substantial unnecessary costs
(rule 13.2).
Should deal with the claim and any counterclaim separately (rule 13.3).
May impose a limit on recoverable costs, either for the whole or part of the proceedings
(rule 13.4 and rule 13.6).
Should take into account any offer of settlement or compromise.
The JCT rule 7 procedure is an exception to the general principle that the “loser
pays”. If the parties use the JCT Rule 7 procedure, the parties bear their own
costs and share the arbitrator’s costs.
The Rules do not expressly allow the arbitrator to make a summary assessment
of costs on an interim application. In practice, an arbitrator may follow the modern
court practice of making a costs assessment for hearings that last for less than a
day.
12
Arbitration of financial disputes
Arbitration is sometimes seen as better suited to resolving disputes in some
industry sectors than in others. While it has long been used in shipping, insurance,
construction, and the energy sector, it has traditionally been less popular with
banks and other financial institutions. Reasons for this include:
The absence of a binding system of precedent in arbitration, which is thought to lead to
inconsistent decision-making, in contrast to the judgments delivered by courts in leading
jurisdictions, such as England and New York.
A perception that tribunals of three arbitrators have a tendency to render compromise
decisions which offer something to both parties, whereas it is perceived that the courts of
leading jurisdictions are more likely to take a more robust approach to enforcing legal
(and especially contractual) rights and obligations.
A belief that arbitration does not offer any expedited processes, such as summary
judgment, by which simpler or unmeritorious claims can be dealt with quickly.
13
(cont.)
Since the late 2000s, there has been significant growth in the use of arbitration in
the finance sector. This is principally the result of the expansion of financial
institutions into the emerging markets and the greater ease of enforcing an arbitral
award in those jurisdictions as opposed to a court judgment.
For many finance parties, litigation remains their preference if it is an acceptable
choice from an enforcement perspective. However, arbitration benefits from the
application of the New York Convention. The national courts of each of the 165
contracting state parties must recognise an arbitral award as binding and enforce
it, subject only to a limited number of exceptions. Although the practice of
enforcement is not always as easy as it looks on paper, no comparable regime
exists globally for court judgments.
14
(cont.)
The 2001 Brussels Regulation (Regulation 44/2001) and, subsequently, the
Recast Brussels Regulation (Regulation 1215/2012), have, however, enabled
court judgments within the EU to be enforced with relative ease.
The Brexit transition period ended on 31 December 2020, but there continues to
be a regime for the mutual enforcement of court judgments where the judgment is
given pursuant to an exclusive jurisdiction clause pursuant to the Hague Choice of
Courts Convention 2005, to which the UK and the EU are parties.
However, in general terms, enforcing a court judgment in another state (even in
the US) becomes considerably harder outside Europe. This may change if there
are more accessions to the Hague Choice of Courts Convention or the Hague
Judgments Convention July 2019. The only parties to the former, other than the
EU member states and the UK, are Mexico and Singapore, while the latter is not
yet in force. Anecdotal evidence suggests that Brexit was a factor leading to a
greater use of arbitration clauses by certain financial institutions in Europe.
15
(cont.)
Parties can either choose an institutional arbitration or an ad hoc arbitration. The
ICC Commission’s Report on Financial Institutions and International Arbitration
suggests that a majority of financial institutions opt for institutional arbitration to
benefit from the settled rules and available experience in administering complex,
high-value disputes.
An alternative approach to using a “generalist” arbitration institution is to provide
for arbitration under the rules of an institution with a specific focus on arbitration in
the finance sector: the Panel of Recognised International Market Experts in
Finance, or P.R.I.M.E. Finance. The premise of P.R.I.M.E. Finance is that
complex financial disputes require specialist arbitrators. P.R.I.M.E. Finance
maintains a list of experts vetted by it, from which it is proposed that arbitrators in
P.R.I.M.E. Finance cases would be drawn. However, this innovative approach has
not found much support to date. This is perhaps because the “generalist”
arbitration institutions have proven increasingly capable of making suitable arbitral
appointments for cases involving complex financial transactions.
16
(cont.)
The ICC Commission’s Report on Financial Institutions and International
Arbitration revealed that the seats selected most frequently for finance disputes
were (in alphabetical order) Geneva, Hong Kong, London, New York, Paris and
Singapore. Those seats, along with Dublin, Frankfurt, Zurich, Stockholm, the
Dubai International Financial Centre, Vienna and The Hague, are all represented
in the model arbitration clauses published in the second edition of ISDA’s
Arbitration Guide, published in December 2018.
Seats in major financial centres like London, New York and Hong Kong have
proven particularly popular for financial transactions. Moreover, financial
institutions tend to favour seats where the courts have a reputation for being
willing, in appropriate cases, to order robust interim relief (such as freezing
injunctions and anti-suit injunctions) in support of an arbitration.
17
(cont.)
Financial institutions have tended to be concerned that arbitration is less likely
than a national court to deliver a predictable outcome. The concern is that, rather
than enforcing contractual terms on their face, arbitrators (especially on threemember tribunals) might have a tendency to offer something to both sides in their
awards – perhaps as a result of one member being appointed by the counterparty to the transaction.
A more positive view of the constitution of arbitral tribunals is that (subject to the
law of the seat and the terms of the arbitration agreement) the parties have
substantial input into the profile and identity of their decision-makers, in a way that
would never be available to them in a national court.
For parties choosing HKIAC arbitration, the HKIAC has a specialist panel of
arbitrators for financial services disputes. The parties may wish to control the
profile of the arbitrators further by specifying in the arbitration clause particular
characteristics that the arbitrators must display. I.e., they may wish to provide that
the arbitrators are qualified in the law governing the transaction or that they have
experience of a particular financial market (such as derivative transactions).
18
(cont.)
Although the use of arbitration in the finance sector continues to grow, there
remain sound reasons why arbitration is used less frequently in certain types of
financial disputes. The formalities required for a valid arbitration agreement,
issues of arbitrability (that is, whether the subject matter of a dispute is capable of
being submitted to arbitration), and rights that need to be enforced quickly, are all
reasons why arbitration can be less suited to financial disputes.
The law governing the arbitration agreement will typically impose certain formality
requirements for the arbitration agreement to be valid. So too will the law of any
place where enforcement of an award is sought. Those requirements may differ
depending on the laws of the relevant jurisdictions.
The New York Convention imposes a maximum formality standard for a valid
arbitration agreement. Specifically, it requires the national courts of contracting
states to give effect to an “agreement in writing” (Article II(1)). This “shall include
an arbitral clause in a contract or an arbitration agreement, signed by the parties
or contained in an exchange of letters or telegrams” (Article II(2)).
19
(cont.)
While the interpretation of this definition is controversial and varies among
contracting states, on its face Article II(2) only requires effect to be given to an
arbitration agreement if it is signed by all parties (unless the agreement is
contained in an exchange of letters or telegrams).
Contracting states may (and many major commercial jurisdictions do) give effect
to arbitration agreements that meet a lesser standard (for example, England,
Hong Kong, Switzerland and France). However, Article II(2) gives rise to a risk
that contracts in finance transactions that are not typically signed by all parties
may be regarded as unenforceable before national courts in jurisdictions where
arbitration is less established.
For example, the relationship between bondholders and other parties such as the
security trustee, the manager and other classes of bondholder may not be subject
to a signed arbitration agreement (although, for example, the relationship between
the security trustee and the issuer may be). A similar difficulty would arise if an
arbitration clause was contained in a deed poll.
20
(cont.)
Under national law, certain types of dispute are deemed suitable for resolution by
national courts alone. Typically, these include criminal and family law, intellectual
property and employment matters. These disputes are incapable of being validly
submitted to arbitration (that is, they are not “arbitrable”), and any tribunal
constituted will lack the jurisdiction to hear them. The policy behind the arbitrability
doctrine is that matters of public concern should not be submitted to a private
means of dispute resolution.
In major commercial jurisdictions, the categories of dispute that are not arbitrable
have become narrower over time – consistent with their private rather than public
nature. However, there are categories of financial dispute where the issue of
arbitrability may arise. Examples include securities trading, consumer finance, and
insolvency. In these cases, the relevant applicable law(s) should be considered to
determine whether (and if so, to what extent) jurisdiction has been reserved for
the national courts.
21
(cont.)
Limits on the use of arbitration in the finance sector can also arise from practical
concerns, as opposed to legal restrictions. For example, arbitration clauses are
less commonly found in security documents. Enforcing a security interest often
has to be done through a national court, or may be achieved by the party itself. It
may also be quicker to enforce a security interest through a court even where it is
not a legal requirement.
While arbitration provisions are often incorporated into a suite of contracts in
complex financial transactions, security documents are frequently carved out.
However, there is a risk in carving out security documents in this way, since
debtors have been known to commence litigation proceedings under the security
documents in a local court, and thereby seek to have all issues (not just those
arising under the security documents) resolved in litigation rather than arbitration.
Such initiatives should be unsuccessful but will at least cause unwelcome
complexity and cost.
22
Maritime arbitration
The LMAA is an association of practising maritime arbitrators whose objective is:
to advance and encourage the professional knowledge of London maritime
arbitrators and, by recommendation and advice, to assist the expeditious
procedure and disposal of disputes
“.
Maritime disputes are often referred to arbitration, particularly in London. In 2018,
the LMAA received an estimated 1,561 references, members received
approximately 2,599 new arbitration appointments and 580 awards were
published.
LMAA arbitration is governed by the LMAA Terms 2012 and the LMAA
Terms 2017, and LMAA arbitrators will usually accept appointments
subject to those terms. In addition, because the arbitration will invariably
be seated in London, the AA 1996 will apply.
23
1650s – coffee houses of London
World of local and foreign merchants
Became mature market place
Recognised as neutral location
Now the London maritime ‘cluster
Largest maritime cluster in the world
LMAA
The Baltic Exchange
Forum for London’s shipbrokers
World’s central market place for
fixing ships
Held list of shipbrokers who would
act as arbitrators
LMAA History
LMAA Terms 2017
large claims / ‘full’ procedure
flexible timetable
multiple submissions
multiple witness and expert evidence
Oral hearing (if required)
Right of appeal
No limit on arbitrators’ fees
No limit on parties’ costs
LMAA Terms and procedure
SCP – Small Claims Procedure 2017
claims up to US$ 100,000
strict short timetable
strict limited submissions
usually no witness or expert evidence
usually no oral hearing
No right of appeal
Cap on arbitrators’ fees
Cap on parties’ costs
(cont.)
ICP – Intermediate Claims Procedure 2017
claims from US$ 100,000 – US$ 400,000
limited timetable and submissions
some witness and expert evidence
oral hearing (exceptional)
Limited right of appeal
Cap on arbitrators’ fees
Cap on parties’ costs
(cont.)
Characteristics of LMAA Arbitration
flexibility – suits all claims big or small
established rules and procedures
quick appointment process
efficient and cheap (no administration or fees)
list or panel of expert arbitrators
certainty – established format with proven track record
(cont.)
Flexibility of LMAA Arbitration
takes the form of discretion, derived from statute
s.1 AA – general principles – parties free to agree
s.33 AA – general duty – act fairly and impartially, adopt suitable
procedures
s.34 AA – tribunal to decide all procedural and evidential matters
Reflected in Paragraphs 14 and 16 of the LMAA Terms
(cont.)
(cont.)
LMAA arbitration is commonly used to determine:
Charterparty disputes of all kinds.
Other commercial shipping disputes, such as cargo claims under bills of
lading or matters concerning contracts of affreightment.
Ship sale, shipbuilding and ship repair cases.
Maritime insurance disputes.
Disputes arising from the offshore and oil and gas industries.
LMAA arbitration is not, however, generally used for “wet” cases, that is, collision
and salvage matters. These tend to be dealt with by specialist admiralty barristers
acting as arbitrators.
The date that arbitration is deemed to have been commenced is determined in
accordance with section 14 of the AA 1996 (paragraph 4, LMAA Terms 2012 and
2017). Where the arbitrators (or sole arbitrator) are to be appointed by the parties,
the arbitration is commenced when one party serves on the other party(ies) a
notice in writing requiring appointment of an arbitrator or agreement as to the
appointment of an arbitrator (see section 14(4) of the AA 1996).
31
(cont.)
Unless the arbitration clause includes provisions governing the arbitral procedure,
all matters of evidence and procedure are at the discretion of the tribunal.
However, the normal procedure is set out in the Second Schedule to the LMAA
Terms 2012 and 2017. Parties are expected to agree procedural steps and
timetables between themselves before troubling the tribunal for formal orders.
The 2017 Terms incorporate the LMAA Checklist (which many parties were
unaware of) as Schedule 4, but the provisions of the Checklist should be followed
under both the 2012 and 2017 regimes.
At any stage the tribunal can decide (independently or on a party’s application) to
hold a preliminary meeting to determine procedural matters (paragraph 15, LMAA
Terms 2012; paragraph 17, LMAA Terms 2017). Preliminary meetings are
generally appropriate only for complex cases, where the hearing is anticipated to
last more than five days. In very complex cases there may be several preliminary
meetings. The purpose of the meeting may be for the tribunal to give general
directions for the ongoing arbitration or to resolve procedural issues in dispute
between the parties.
32
(cont.)
The Second Schedule sets out the procedure and timetable for submissions in an
LMAA arbitration. Written submissions are usually required. Formal pleadings, as
opposed to submissions, may only be served with special permission of the
tribunal.
Unlike court litigation, supporting documents are expected to be served with
submissions. Failure to do this may be penalised in costs, but will not usually
entitle the receiving party to additional time for service of reply submissions
(paragraph 2, Second Schedule). Parties should ask the tribunal whether they
want to receive all of the supporting documentation at this stage. Typically, the
tribunal will only need sufficient documentation to enable them to identify the
issues in question (paragraph 1, Second Schedule).
The default timetable for submissions is set out in the Second Schedule. The
claimant should normally serve claim submissions, accompanied by all supporting
documentation relevant to the issues between the parties, within 28 days after the
appointment of a sole arbitrator or, if the tribunal consists of more than one
arbitrator, within 28 days after appointment of the second arbitrator.
33
(cont.)
The respondent must serve defence submissions, including any counterclaim,
with all supporting documentation 28 days after receipt of the claim submissions.
Reply submissions are served 14 days after service of the defence submissions,
unless there is a defence to a counterclaim, in which case the submissions are
served within 28 days from receipt of the defence submissions.
Any reply to a defence to counterclaim is served within 14 days thereafter.
Under the LMAA Terms 2017, parties must obtain the permission of the tribunal to
serve further submissions following the service of the Reply (or, where there is a
counterclaim, the Reply to Defence to Counterclaim) (paragraph 5, Second
Schedule).
34
(cont.)
Unless the parties agree to arbitration on a documents-only basis, both parties
must complete the questionnaire in the Third Schedule within 14 days of service
of the final set of written submissions (paragraph 11, Second Schedule, LMAA
Terms 2012 and 2017).
The questionnaire seeks summary information from the parties about the nature
of the dispute, including their views on procedural matters such as disclosure,
evidence, the ongoing timetable, the hearing and costs. It is seen as a
procedurally important step, and a properly authorised officer of the party must
sign the questionnaire, not the solicitors.
Following exchange of the questionnaires, the tribunal will allow the parties 21
days to agree directions or to make submissions as to the future procedural
course of the arbitration. If the parties cannot agree directions, then the tribunal
will make them.
35
(cont.)
Unless agreed or determined otherwise by the tribunal, the parties must exchange
witness statements and expert evidence in accordance with the arbitration
timetable set by the tribunal. The tribunal may limit the number of expert
witnesses and/or areas upon which expert evidence can be called (paragraph 14,
LMAA Terms 2012; paragraph 16, LMAA Terms 2017).
Where an arbitration proceeds to a hearing, it will be necessary to produce
bundles of documents for the tribunal and all witnesses. A set of bundles will also
be required for the witnesses of evidence and fact. Generally, the claimant will be
responsible for producing the bundles.
Skeleton arguments are invariably served where a hearing takes place, and
sometimes where an arbitration proceeds on a documents-only basis.
The LMAA Terms provide for the LMAA to publish particularly interesting awards
unless the parties object (paragraph 26, LMAA Terms 2012; paragraph 28, LMAA
Terms 2017).
36
Arbitration at the Court of Arbitration for Sport
The Court of Arbitration for Sport (CAS), also known by its French name, Tribunal
Arbitral du Sport (TAS), was established at the initiative of the International
Olympic Committee (IOC) when an increasing number of sports-related disputes
required a specialised method of adjudication by arbitration and mediation. The
CAS’ statutes came into force on 30 June 1984.
Arbitration is now the main method for resolving sports disputes and the CAS has
emerged as the pre-eminent institution for sports arbitrations. This note provides
an overview of the Ordinary Arbitration Procedure and the Appeals Arbitration
Procedure before the CAS, including the rules on appointing and removing
arbitrators, commencing and conducting an arbitration, challenging awards and
the costs of the arbitration.
The CAS has its headquarters in Lausanne, Switzerland. The CAS also has two
permanent decentralised offices in Sydney and New York, which are competent to
receive and notify all procedural acts.
37
(cont.)
Since 1986 – when the first case was submitted to it – the CAS has steadily
gained importance in the resolution of sports-related disputes. According to the
most recent available statistical data, by the end of 2016, a total of 4,843 requests
for arbitration and appeals (including before the CAS Ad Hoc Divisions) had been
filed. CAS has not provided updated statistics since 2016, yet it is known that CAS
is currently handling approximately close to 500 cases per year.
As a rule, the CAS has jurisdiction over sports-related disputes that are subject to
an arbitration clause or agreement providing for recourse to the CAS. The
disputes may either be of a commercial nature (for example, sponsorship
contracts, sale of television rights, staging of sports events, player transfers and
agency contracts) or relate to decisions rendered by sports organisations, in
particular to decisions of a disciplinary nature. Most of these disciplinary cases
concern doping-related matters, although there have also been disputes over
other disciplinary matters, such as violence on the playing field or abuse of a
referee.
38
(cont.)
In 1993, the Swiss Supreme Court held that the CAS is an independent judicial
body rendering arbitral awards, provided that the IOC is not party to the
proceedings. As a result of this decision, the following major reforms were
undertaken to strengthen the CAS’ independence:
The establishment of the International Council for Arbitration for Sport (ICAS) as the
supervisory authority of the CAS.
The drawing of a clear distinction between cases where the CAS acts as sole instance
and cases where it hears appeals against decisions of a sports organisation or
federation.
The establishment within the CAS of the Ordinary Arbitration Division and the Appeals
Arbitration Division.
Following these reforms, the Swiss Supreme Court acknowledged in subsequent
decisions that the CAS is sufficiently independent from the IOC and that its
decisions are awards that have the same authority within Switzerland as court
decisions. In Mutu and Pechstein v Switzerland (Applications no. 40575/10 and
no. 67474/10) (ECHR 324 (2018), the European Court of Human Rights
confirmed that the procedures of the CAS are generally compatible with the right
to a fair trial under Article 6(1) of the European Convention on Human Rights.
39
(cont.)
There are four different types of CAS arbitration:
The Ordinary Arbitration Procedure.
The Appeals Arbitration Procedure.
The Anti-Doping Arbitration Procedure.
The Ad Hoc/ Procedure.
The Ordinary Arbitration Procedure applies to sports-related first instance
disputes, which are often of a commercial nature and relate, for example, to
sponsorship agreements or broadcasting rights. These cases are handled by the
Ordinary Arbitration Division and have accounted for about 17% of the CAS’
caseload in recent years (88 out of 498 cases in 2015).
The Appeals Arbitration Procedure applies to cases in which the CAS is called on
to resolve disputes arising from decisions rendered by the disciplinary tribunals or
similar bodies of sports federations or sports organisations. These cases are
managed by the CAS Appeals Arbitration Division and account for approximately
80% of the CAS’ caseload (458 out of 599 in 2016).
40
(cont.)
Since the 1996 Olympic Games in Atlanta, Ad Hoc Divisions of the CAS have
been established for each of the subsequent editions of the Olympic Summer and
Winter Games. The Ad Hoc Divisions provide the respective participants of these
sports events with a dispute resolution body capable of resolving, in a final
manner, disputes that occur immediately leading up to and during the event,
within time limits that respect the time schedules of each particular competition.
Effective 1 January 2019, the CAS established its third permanent division, the
Anti-doping division (CAS ADD), including a dedicated court office (CAS ADD
Office), which hears and decides on anti-doping cases as a first instance or as the
sole instance pursuant to the delegation of powers from the IOC, the IFs, the
International Testing Agency and any other signatories to the World Anti-Doping
Code.
The CAS ADD operates under a separate set of rules (the Arbitration Rules of the
CAS Anti-Doping Division – ADD Rules) and the parties must choose arbitrators
from a dedicated list of candidates specialised in anti-doping matters.
41
(cont.)
The Ordinary Arbitration Procedure governs sports-related first instance disputes.
As these disputes are often of a commercial nature, the applicable provisions
provide for classic arbitration proceedings and should be familiar to practitioners
who are accustomed to working with the rules of commercial arbitration
institutions.
The claimant initiates the arbitration proceedings by filing a request for arbitration
with the CAS. Article R38 of the CAS Rules provides that the request for
arbitration must state the following:
Name and full address of the respondent.
A short statement of facts, legal argument and a summary of the issue to be decided.
The prayers for relief.
A copy of the document containing the arbitration agreement or providing for arbitration
pursuant to the CAS Rules.
Any information regarding the number of arbitrators, in particular if the arbitration
agreement provides for it, and the name and address of the arbitrator chosen from the
CAS list.
42
(cont.)
If these requirements are not met, the CAS Court Office grants a short extension
of time. If the claimant fails to improve its submission within the extended time
limit, the request for arbitration is deemed withdrawn. Upon submission of the
request for arbitration, the claimant has to pay the CAS Court Office a fee of
CHF1,000.
The CAS Court Office sets the arbitral proceedings in motion, unless it is clear
that there is no arbitration agreement referring to the CAS (Article R39, CAS
Rules). The CAS Court Office communicates the request for arbitration to the
respondent and invites both parties to file legal briefs addressing the facts of their
dispute. It also sets a deadline for the respondent to provide information regarding
its choice of arbitrator, although the respondent may request a deadline not to be
set until after the claimant has paid the advance on costs.
43
(cont.)
The law applicable to the merits is chosen by the parties (Article R45, CAS Rules).
Absent an agreement between the parties, Swiss law applies. If so authorised by
the parties, the panel can decide ex aequo et bono (that is, according to general
equitable principles, rather than strict legal rules).
The award is to be made by a majority decision of the panel or, if there is no
majority, by the presiding arbitrator alone (Article R46, CAS Rules). The award
must be in writing, dated and signed. Unless the parties agree otherwise, it must
also be reasoned. The presiding arbitrator’s signature or the signature of the two
co-arbitrators is sufficient. As the CAS does not recognise dissenting opinions,
these opinions are not notified to the parties.
The award shall be final and binding upon the parties subject to recourse available
in certain circumstances pursuant to Swiss law within 30 days from the notification
of the reasoned award by mail or courier. Before the award is signed, it is
submitted to the CAS Secretary General for review. The CAS Secretary General
may make corrections of form and may also notify the panel of fundamental
issues of principle, for instance if an award shows discrepancies from existing
CAS precedents.
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Energy Arbitration
The Energy Charter Treaty (ECT) creates a legal framework for energy trade,
transit and investment among member states. The ECT, a multilateral investment
treaty, aims to unite its signatories behind the common goals of setting up open
energy markets, securing and diversifying energy supply and stimulating crossborder investment and trade in the energy sector.
The ECT has been signed or acceded to by 52 countries and the EU and
Euratom, with all but three (Australia, Norway and Russia) having also ratified it
and one, Belarus, which applies it provisionally. On 20 August 2009, the Russian
Federation notified that it did not intend to become a contracting party, which also
resulted in Russia’s termination of its provisional application of the ECT 60 days
later. Notably, Italy withdrew from the ECT, with effect from 1 January 2016.
The most commonly chosen forum for investor-state disputes arising under the
ECT is international arbitration. As at September 2019, 125 arbitration claims
were known to have been brought under the ECT, of which 6% were settled, 49%
are still pending, 2% were discontinued, 1 was withdrawn and 42% have resulted
in final awards.
45
(cont.)
Investor-state disputes under Part III of the ECT are governed by Article 26. This
provides that an investor may, following a cooling-off period of three months, submit the
dispute to resolution, at the investor’s option:
To the courts or administrative tribunals of the host state party to the dispute.
According to a previously agreed dispute settlement procedure.
To international arbitration.
Article 26(4) of the ECT provides that investors opting for arbitration may choose
any of the following:
ICSID arbitration (where both the host state and the investor’s state are a party to the
ICSID Convention).
Arbitration under the ICSID Additional Facility Rules (where either the host state or the
investor’s state, but not both, are a party to the ICSID Convention).
A sole arbitrator or ad hoc arbitral tribunal established under the UNCITRAL Arbitration
Rules.
Arbitration under the Arbitration Institute of the Stockholm Chamber of Commerce.
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Q&A
Any Questions?
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