On 19 October 2018, the EU and Singapore have concluded three agreements that will shape the future of their trade and investment relations, namely the EU-Singapore Free Trade Agreement (FTA), the EU-Singapore Investment Protection Agreement (IPA) and the Framework Agreement on Partnership and Cooperation (FAPC). The agreements will now be submitted to the European Parliament for consent, while the EU-Singapore Investment Protection Agreement will also follow ratification procedures in each Member State.¹ For investors and states alike, these agreements are noteworthy for their potential to clarify and reshape mutual protection and the altered regime for the resolution of investment disputes.

Substantive protection

The substantive standards of protection are similar to those provided for in existing investment agreements, but more refined.

Fair and equitable treatment

The standard of fair and equitable treatment (FET) generally protects investors against adverse treatment by a host state. The IPA draws from a myriad of decisions by previous investment tribunals and academic works that have gradually given FET contours. Art. 2.4(2) IPA specifies the conduct qualifying as breach: denial of justice in criminal, civil and administrative proceedings; fundamental breaches of due process; manifestly arbitrary conduct; harassment, coercion, abuse of power or similar bad faith conduct. Naturally, these concepts require further clarification themselves. However, they now assure investors of greater certainty on what conduct may qualify as breach under the FET standard.

Full protection and security

As regards full protection and security, Art. 2.4(5) IPA merely clarifies that this encompasses only physical security, thus distinguishing it from FET. The provision ensures clarity, yet does not offer investors any additional protection compared to previous agreements.

Protection against expropriation

Art. 2.6 IPA protects investors against expropriation. Once again, familiar territory in international investment law: Neither party shall directly or indirectly nationalize, expropriate or subject to measures having equivalent effect investments by investors pursuant to the IPA, except:

• for a public purpose;
• in accordance with due process of law;
• on a non-discriminatory basis; and
• against payment of prompt, adequate and effective compensation.

However, the calculation of compensation receives far greater attention as was previously known in international investment law (Art. 2.6(2) IPA). The IPA addresses a practical need that has been subject to extensive discussions among scholars and practitioners and has, for a long time, left investors wishing for greater certainty. Compensation, Art. 2.6(2) and (3) IPA clarify, shall amount to the fair market value of the investment immediately before expropriation became public knowledge plus interest at a commercially reasonable rate. Valuation criteria may include going concern value, asset value including the declared tax value of tangible property and other criteria. The proper moment when "expropriation became public knowledge" is likely to be heavily disputed in practice.

Miscellaneous

To practitioners in the field, it will come as no surprise that states'"rights to regulate" have found their way into the new agreement (Art. 2.2(1) IPA). Practically, it is additional affirmation of state sovereignty that has always been and will always be a crucial element of every dispute between investors and states. Time will tell, if these "rights to regulate" affect investment disputes in providing states with extended grounds for justification of their conduct or, in turn, pose additional hurdles to investors seeking relief.

It is noteworthy that the agreement rules out the possibility of investment arbitration to decide on negotiated sovereign debt restructuring (Annex 4 Art. 1 IPA). Given the absence of an international sovereign insolvency regime, investment arbitration has, in some cases, appeared as a viable option for investors to seek relief from sovereign debt restructuring, even when the majority of creditors had accepted the restructuring. The IPA provides for a jurisdictional carve-out of this issue.

Resolution of investment disputes

The IPA distinguishes between disputes that arise between investors and states (Chapter 3, Section A IPA) and those among states (Chapter 3, Section B IPA). Two approaches operate simultaneously for disputes of different types, sometimes interconnecting, creating a complex yet, at times, familiar regime for the resolution of investment disputes.

Disputes between investors and states

Chapter 3 Section A IPA concerns treatment alleged to breach the substantive protections, with "treatment" including omissions. Here, investors may seek what the IPA terms "dispute settlement". Interestingly, the term "arbitration" is omitted altogether. As a general rule, the IPA, like most investment treaties, envisages amicable resolution of disputes between the parties (Art. 3.2 IPA). Likewise, other forms of dispute resolution such as mediation remain, at all times, open to investors. Failing such amicable or alternative resolution, an investor may initiate formal consultations by submitting a respective request to the respondent, setting out the general parameters of the alleged breaches of the IPA, the legal and factual bases for such and the relief sought.

After three months upon opening consultations, the investor may submit a notice of intent to either Singapore or the EU to initiate dispute settlement. Where the EU receives such request, within two months, it shall determine the respondent of the dispute. This new mechanism consists of two instances:

No earlier than three months from the date of the notice of intent, the investor may submit the claim to a newly established standing body under the IPA, the Tribunal of First Instance. The Tribunal will consist of six members, nominated by the EU and Singapore, each member appointed for an eight-year term and paid a monthly retainer fee for availability. Investors will thus no longer be able to select an individual member to that Tribunal. For the purpose of defending against a claim, the IPA provides additional grounds to states: a respondent state may file an objection that a claim is manifestly without legal merit between the constitution of the Tribunal and its first session (Art. 3.14 IPA). Likewise, a state may object that a claim, as a matter of law, may not be subject to dispute settlement (Art. 3.15 IPA).

In an award resulting from this first stage of dispute settlement, the Tribunal may not award punitive damages (Art. 3.18(2) IPA) and it is to apply the Vienna Convention on the Law of Treaties (Art. 3.13(2) IPA).

While the relevant provisions, as outlined above, omit the term "arbitration", the mechanism is hardly any different: the applicable rules in the First Instance are those commonly known in most investment treaties (Art. 3.6(1) IPA). Those of the ICSID-Convention, the UNCITRAL Rules or any other rules as the parties may agree upon. Further, Art.3.6(2) IPA contains the standing offer to submit a claim under the respective section of the IPA (or typically known as the standing offer to "arbitrate"). Again, it is clarified that such consent extends to the ICSID-Convention and the New York Convention.

Within ninety days of its issuance, both parties may appeal an award before another newly established body under the IPA, the Appeal Tribunal (Art. 3.19 IPA). The applicable standard for appeal is particularly interesting: (i) the Tribunal of First Instance has "erred" in the interpretation or application of the applicable law; (ii) the Tribunal of First Instance has "manifestly erred" in the appreciation of the facts; or (iii) one of the grounds in Art. 52 ICSID-Convention is met. On questions of the law, the standard for appeal is thus significantly lower than on questions of fact. This will give states and investors extensive recourse against decisions rendered in the First Instance. At the same time, such appeals are likely to increase the cost and time of proceedings.

Disputes between states

Chapter 3 Section B IPA uses a different terminology, applying to disputes between states concerning the interpretation and application of the IPA. While consultations and mediation, again, form part of the procedure, a state may now initiate "arbitration" proceedings (Art. 3.28(1) IPA). Here, states are less restricted than investors, as they enjoy greater freedom of choice to tailor the procedure to their dispute's individual needs. First and foremost, the Arbitration Panel will consist of arbitrators chosen by the parties (Art. 3.29(2) IPA). The Arbitration Panel is, in any case, to comply with a time limit of only 180 days to issue its ruling (Art. 3.32(1) IPA), a provision likely to prove of practical difficulty. Especially in complex disputes, rendering a well-reasoned decision is likely to prove challenging. The respective decision is then final and binding upon the parties (Art. 3.43(2) IPA).

Miscellaneous

The elevated role accorded to the public is noteworthy. The entire Annex 8 is dedicated to transparency in investment disputes between investors and states (Art. 3.16 IPA). Under it, hearings shall be open to the public, documents made accessible, non-disputing parties (Art. 3.17 IPA) and even third persons (Art. 3 Annex 8 IPA) may file written submissions.

Interestingly, the IPA considers third-party-funding to be acceptable. However, it must be disclosed to the other disputing party and the Tribunal (Art. 3.8(1) IPA). The provision may thus reflect Singapore's recent Bill No. 38/2016, allowing for third-party-funding for Singapore-seated international arbitrations.

Conclusion

The FTA and the FAPC, together, constitute a major milestone for the economic, political and legal relationship between the EU and Singapore. It provides for a modern, sophisticated trade environment between the parties. The legal framework of the IPA supporting such environment is of an evolutionary, rather than a revolutionary kind: the applicable standards largely do not provide for any additional protection. However, they do provide a higher degree of certainty and clarity. States and investors are likely to appreciate that part of the evolution. The means for resolving investment disputes were altered, but not replaced. They bear striking resemblance to the investment arbitration regime well-known to investors, states, practitioners and academics, but encountered several adjustments, clients must take note of when faced with a possible investment dispute. The major milestone thus brings about increased complexity. However, it is testament to the dynamics of international investment law.

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¹ See our Client Alert, with related background, here.

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© 2018 White & Case LLP

BREXIT COUNTDOWN ›
Our Brexit countdown illustrates the key dates and milestones on the road to Brexit. Discover more.

London has long been a hub for cross-border commercial litigation. The prevalence of English law, the size of the London legal market, the calibre of the English judiciary, and even London's geography, amongst many other factors, have contributed to that status. The UK's membership in the EU, and the resulting close cooperation between the UK and other EU Member States in judicial matters, has contributed to the popularity of the English courts.

Brexit, and the potential impact it may have on the relationship between the UK and EU Member State court systems, has been a catalyst for the emergence of new English law and language international commercial courts and tribunals in EU jurisdictions. Will these pose a threat to London?

Introduction

London has a longstanding and well-established reputation as a "go-to" destination for cross-border commercial litigation. The reason for its popularity is attributed to the strength and breadth of expertise of its commercial judiciary, access to the English Courts' appellate system, the ability to apply common law directly (including, where necessary, to push for the development of the common law), as well as many other factors, not least the prevalence of English as the lingua franca in international commerce.

Currently, two-thirds of cases fought in London's Commercial Court involve non-UK litigants. According to the Commercial Courts Report 2018, the number of commercial cases heard in London, which involved one or more international parties, rose by 7% in the year to April 2018. The number of international litigants increased by 22%, with 656 parties from 69 different countries represented in 158 cases in London.¹ Significantly, the most important region for growth was Europe, with the number of litigants growing from 340 in 2016-2017 to 423 in 2017-2018.

As with most other topics, the structure of judicial cooperation post-Brexit remains unclear at this stage. The existing framework for jurisdiction and mutual recognition of judgments is found in the Recast Brussels Regulation.² As matters currently stand, the Recast Brussels Regulation will not apply between the UK and EU post-Brexit. The UK Government has announced its intention to agree a successor regime aimed at replicating the Recast Brussels Regulation; however, if that is not possible, at a minimum, the UK will accede – in its own right – to the 2005 Hague Convention on Choice of Court Agreements (the "Hague Convention").

The uncertainty over whether or not an effective successor regime will be agreed presents a challenge currently to the English courts. Several EU Member States are positioning themselves to capitalise on any reduction in the appeal of the English Courts by offering their own alternatives.

Specialised commercial courts and tribunals have been emerging (or are being heralded) in several other European jurisdictions. To varying degrees, these tribunals offer to conduct English language proceedings, with specialist judges presiding over cases, and in one case, even to apply English common law. These developments follow in the path of other nascent international commercial courts in centres outside the EU, such as Dubai (which opened the Dubai International Financial Centre Court in 2004), Qatar (the Qatar International Commercial Court in 2009), Singapore (the Singapore International Commercial Court in 2015) and Kazakhstan (Astana International Financial Centre earlier this year). Will these offer a credible alternative to London as venue for litigants to resolve their international commercial disputes?

Potential solutions for recognition and enforcement of English judgments post-Brexit

These new European courts and have been designed, at least in part, on the assumption that English judgments will not be recognised and enforced throughout the EU post-Brexit as easily as they are currently under the Recast Brussels Regulation. However, on 13 September 2018, the UK Government announced that in the event of a "no deal Brexit", the UK would take the necessary steps to rejoin the Hague Convention in its own right (and that the Convention would come into force on by 1 April 2019).³ The UK is already a member of the Hague Convention by virtue of its membership of the EU (as the EU is a signatory). The Convention ensures the effectiveness of exclusive jurisdiction agreements and provides for the recognition and enforcement of judgments which emanate from such exclusive jurisdiction agreements.

In the event of a no-deal Brexit, the Convention would apply as between the UK and the other contracting states (i.e. the EU, Mexico, Montenegro and Singapore) where there is an exclusive jurisdiction clause in favour of one of the contracting states.

However, there remains uncertainty over non-exclusive jurisdiction clauses. Furthermore, it is unclear whether the Convention would apply to jurisdiction agreements concluded before it enters into force for the UK in its own right, as opposed to by virtue of EU membership.

There are many solutions which the UK Government could adopt before Brexit (note the English Bar Council Brexit Working Group has recommended⁴ that the Government implement all the below):

(i)The UK could endeavour to replicate the Recast Brussels Regulation as closely as possible via a separate agreement with the EU, similar to the jurisdiction agreement between the European Community and Denmark.⁵

(ii)The UK could sign and ratify the Lugano Convention⁶ alongside Norway, Switzerland, Iceland and the EC. This might not be ideal, as the Lugano Convention has not been updated to reflect the Recast Brussels Regulation.⁷

It is worth bearing in mind, however, that even if these solutions were not to be adopted, one would still expect English court judgments to be enforceable by EU Member State courts according to their domestic regimes, in the same way that they will already enforce non-EU judgments, such as those emanating from the US.

Developments

France

As of March of this year, the international division of the Paris Commercial Court (International Chamber of the Paris Commercial Court)⁸ and the Paris Court of Appeal (International Chamber of the Paris Court of Appeal)⁹ have been open to hear international business law disputes.¹⁰ Minister of Justice Nicole Belloubet has stated that "[b]ilingual judges who are familiar with the principles of common law" will render judgments that "will circulate freely and be enforceable throughout the EU" (playing on one of the key areas of uncertainty regarding the automatic enforceability of English court judgments post-Brexit).

The courts will have jurisdiction (i) over disputes which are of an economic and commercial nature, with an international dimension (in particular in disputes where a foreign law applies); and (ii) if the parties elect to give jurisdiction to the Paris Commercial Courts by way of contractual clause.

The courts are composed of experienced English-speaking judges with commercial experience and English common law capabilities. In an apparent distinction from the other initiatives considered in this piece, the proposed French courts could apply French law, or any other rules of foreign law applicable to the merits of the case (including English common law). Other changes to the (previously) conservative French courts include the use of oral hearings (potentially including cross-examination of witnesses and experts), and a potential for more reasoned judgments, all in the model of English litigation.

A particular stumbling block in setting up this court was the constitutional requirement under French law for court proceedings to be conducted in French.¹¹ To meet this requirement, all procedural documents (e.g. procedural applications, submissions and orders) will have to be submitted in French (although exhibits can be submitted in English without translation). Further, the default language for the conduct of oral pleadings will be French, with an option for foreign parties, witnesses, experts and counsel to use English if they wish to). There will also be an option for simultaneous translation. Decisions will be published in French, together with an English translation. Non-French lawyers will be granted rights of audience to appear before the International Chamber, as long as they are accompanied by a member of the Paris Bar.

Belgium

On 27 October 2017, the Belgian Minister of Justice announced the approval by the Federal Government of a new English-speaking court named the "Brussels International Business Court" (the "BIBC"). The BIBC will be able to assume jurisdiction over (i) international disputes (i.e. with a cross-border elements, such as if one of the parties has its seat in a foreign jurisdiction, performance of the contract takes place in different states, or the applicability of foreign law), (ii) between enterprises, i.e., any legal or natural person pursuing an economic purpose, (iii) which have agreed to the BIBC's jurisdiction.

The draft bill was introduced on 15 May 2018 before the Chamber of Representatives, and is currently being reviewed by the Justice Commission. Given the parliamentary agenda, the final vote by the Chamber of Representative is only expected to take place this Autumn, with the government's expectation being that the BIBC will be up and running no later than 1 January 2020.

The terms of the draft bill set out the BIBC as a hybrid, combining the features of a regular national court with those of an arbitral tribunal. While the BIBC will be a Belgian state court with its seat in Brussels, it will not form part of any existing Belgian court division (in contrast with the equivalent proposals in Paris and Amsterdam). The BIBC will have specific procedural rules:

(i)The UNCITRAL Arbitration rules have been incorporated into the draft bill, and will, in principle, apply to proceedings before the BIBC. However, where explicitly stipulated, Belgian general procedural rules will apply, such as those regarding electronic communication with courts;

(ii)Recourse against decisions of the BIBC will be limited: appeals will only be possible on points of law to the Belgian Supreme Court (which can be done in English);

(iii)The proceedings will be conducted in English;

(iv)The panel of judges will be made up of professional judges from the Court of Appeal of Brussels and lay judges (including lawyers) from both domestic and foreign jurisdictions, who are specialised in international trade law.

The stated goal of the BIBC is to capitalise upon Brexit and establish Belgium as a new hub for international commercial disputes. The BIBC aims to be an alternative to arbitration, with the advantage of being less costly than arbitration, whilst the resolution of claims is intended to be quicker and more cost-effective than national court proceedings due to the limited circumstances in which a decision may be appealed. That said, confirmation of the real costs of the proceedings will come only at a later stage, by Royal Decree. Since the BIBC will be self-funding, court fees will likely be higher than the usual standard fees applicable in Belgian proceedings, which are comparatively low (the maximum amount in the BIBC being EUR 36,000).

Germany

On 30 March 2017, the Minister of Justice of the Federal State of Hessen presented the Justice Initiative Frankfurt. As part of that Initiative, the Chamber for International Commercial Disputes was established as a specialist division of the Regional Court of Frankfurt on 1 January 2018.¹² The stated aim is to strengthen the existing specialisation of the Frankfurt courts in areas of financial and banking disputes, in anticipation of the relocation of financial institutions' centres from London to Frankfurt and other European cities. It also aims to strengthen arbitration in Frankfurt in parallel through the creation of a Centre for International Dispute Resolution.

The new Chamber will be composed of judges who are experienced in business law, have good English language skills, and who will work in consultation with experts from the fields of finance and banking, international commercial matters, and auditing.

The Chamber hears international commercial disputes on application of the parties, if the lawsuit has a bearing upon an international matter and the parties declare before the end of the deadline for the statement of defence that they would like to plead in the oral hearings in English and waive the right to have an interpreter. Importantly, this includes allowing documents in the proceedings to be filed in English, allowing witnesses to be heard in English and the speedy translation of judgments into foreign languages.

The Netherlands

A Netherlands Commercial Court ("NCC") is expected to launch in the beginning of 2019 (with the draft bill having passed through the House of Representatives, and currently being discussed by the Senate). It is intended to be a specialised court in hearing complex international commercial cases, with specialised commercial judges and the option of proceedings being conducted in English. The NCC (which comprises of both a court of first instance and a court of appeal) will be part of the Amsterdam Court, and will be located within the modern Amsterdam Court of Appeal building.

The NCC will have jurisdiction if (i) the dispute is international in nature (which we understand will be given a wide interpretation to include, for example, disputes regarding an English language contract), and (ii) the parties have explicitly agreed to it (or if both parties are domiciled in the Netherlands). Appeals will be allowed to the Supreme Court; however, they will have to be conducted in Dutch at that level. A potential stumbling block for this initiative is that Dutch civil procedural law, which is known to be complex and prone to delays, will apply to the proceedings.

Ireland

Like the UK, Ireland is a common law jurisdiction, which uses the English language, specialist lawyers and has an established commercial court that has the ability to fast track business cases. In 2018, it was announced that the Irish bar entered into talks with the solicitors' professional body and large solicitor firms in Dublin in order to decide how best to market the Irish legal system abroad, following the courts in Belgium, France, Germany and the Netherlands in trying to seize the opportunity to capture market share from the English Courts.

Party Choice

A crucial factor in the success of these emerging commercial courts will be parties' willingness to choose to submit their disputes to the forum (whether at the contract negotiation stage, or after a dispute has arisen). Given how new the courts are, the extent to which contracting parties will do so remains to be seen. In this regard, the courts will be competing not only against the English Courts, but also international arbitration and other court systems generally.

The choice will turn upon the criteria, upon which, counterparties place the greatest emphasis. For example, if parties place a greater emphasis on the ability to enforce a decision in as many jurisdictions as possible, they will be attracted by the potential for universal enforcement offered by the New York Convention. However, enforcement – while of obvious importance – is not the sole factor dictating the choice of forum. For example, if the parties prioritise the possibility of having access to the appellate courts, currently only the Paris proposal would offer a route of appeal (although, self-evidently, not one that would ultimately give access to the UK Supreme Court).

Offering proceedings conducted entirely in English may well be a powerful enough factor to attract litigants to these new European courts. As matters stand, however, the language capability is the only "stand out" (and common) benefit. Of course, in offering English language capability, these courts are coming up to the same level as the English Court. However, they do not (and arguably cannot) offer certain of the other key advantages of the English legal system.

Conclusion

The emergence of new alternatives to the English Courts highlights the challenges the UK and its judiciary may face in a post-Brexit landscape. Beyond this, however, it would be premature to draw firm conclusions as to the extent of their success, or indeed the demise of the English Courts; the most developed of these initiatives (in Paris) remains very much in its infancy.

From the European perspective, Brexit undoubtedly presents a real opportunity for the EU's commercial centres, and by extension, their competing commercial courts.

However, the English Courts' position as a leading venue for complex cross-border dispute resolution is not solely attributable to the UK's adherence to EU regulations promoting judicial cooperation between Member States. (Had it been, all EU commercial courts would have enjoyed the same success in recent times.) Many other factors are at play. The English Courts have developed in parallel with the UK's role as a commercial centre. Even in a "no-deal" scenario, there is nothing so material as immediately to transform that status quo.

¹ See: https://portland-communications.com/pdf/Portland-commercial-courts-report-2018.pdf
² Recast Brussels Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Recast Regulation).
³ See: https://www.gov.uk/government/publications/handling-civil-legal-cases-that-involve-eu-countries-if-theres-no-brexit-deal/handling-civil-legal-cases-that-involve-eu-countries-if-theres-no-brexit-deal
⁴ See: https://www.barcouncil.org.uk/media/574617/brexit_paper_4_-_civil_jurisidiction_and_judgements.pdf
⁵ [2005] OJ L/299/62.
⁶ L339/3.
⁷ 1215/2012.
⁸ For procedural rules, see: http://www.avocatparis.org/system/files/editos/protocoles_signes_creation_juridiction_commerciale_internationale_2.pdf
⁹ For procedural rules, see: http://www.avocatparis.org/system/files/editos/protocoles_signes_creation_juridiction_commerciale_internationale_1.pdf
¹⁰ To date, no decision has been issued by this tribunal. Hearings are expected to begin as of September 2018.
¹¹ This rule is provided for by the Villers-Cotterêt Order of 25 August 1539 (Art. 111) which is still applied by the French Cour de cassation (See for instance Cour de cassation, Civil Division, 22 September 2016, No. 15-21.176). This requirement is also provided in Art. 2 of the French Constitution ("The language of the Republic is French").
¹² See: https://ordentliche-gerichtsbarkeit.hessen.de/ordentliche-gerichte/lgb-frankfurt-am-main/lg-frankfurt-am-main/chamber-international

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2018 White & Case LLP

Originally published in Corporate Dispute Resolution Magazine

Independence and the absence of bias on the part of decision-makers are seen as fundamental tenets of any adjudication process. Despite this, the way courts and tribunals approach questions of actual and perceived bias are very different. The recent English High Court decision in (1) Zuma's Choice (2) Zoe Vanderbilt v Azumi Ltd, which held that the mere fact that a judge had decided an earlier application or issues adversely to a litigant was not generally a reason for that judge to recuse himself at further hearings, confirms the practical stance taken by the English courts.

The approach taken in arbitration is often a contrasting one, and questions of bias are arguably approached from a more circumspect standpoint for a variety of reasons including the way in which the tribunal is appointed. In domestic court systems, judges are selected without input from the parties, whereas in arbitration the parties frequently have a say in which arbitrators are appointed.

The benefits of greater party autonomy and flexibility make arbitration an appealing form of dispute resolution but, by providing a degree of choice in tribunal selection, the door is opened for questions of bias relating to these choices.

Further, given the relatively small pool of experienced international arbitrators, it can be hard to escape from relationships between arbitrators, parties, counsel, chambers, law firms and the like. Experienced arbitrators with previous legal careers (or who are indeed still practising, unlike most judges) will have a wealth of relationships throughout the legal sphere. As independence and a lack of bias are crucial requirements of any judge or arbitrator, it is interesting to note the different perspectives of courts and tribunals on this question.

Basis for a challenge

Under English law, the test for establishing bias is as set out in the 2002 decision in Porter v Magill – whether a "fair minded and informed observer", having considered the facts, would conclude that there was a "real possibility" of bias.

In arbitration, most institutional rules provide the institutions with the competence to decide on the removal of arbitrators (eg Article 12(2) of the UNCITRAL Model Law) and most national laws provide that a challenge to an arbitrator is within the competence of the supervisory national court of a seat (e.g. Section 24.1 of the English Arbitration Act).

The International Bar Association guidelines on conflicts of interest in international arbitration have also gained wide acceptance as establishing an international guideline for questions of bias, and Article 12 of the UNCITRAL Model Law has also received wide-ranging legislative approval. Under this article, an arbitrator "may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence".

Despite rooting itself in national legal systems at various stages, arbitration takes place on a widely international stage: the meeting of many legal cultures across the world marketplace contributes to the different thresholds when considering actual or perceived bias. Although the starting point may objectively be the same in most jurisdictions – in that an arbitrator must not be linked to either of the parties and must not have any interest in the outcome of the dispute – what could be perceived as a risk to independence is more subjective.

Practitioners from different jurisdictions may evaluate the dangers differently, and any international rules or guidelines must be general enough to cover multiple scenarios in multiple jurisdictions, leaving them open to interpretation. In comparison, the test for actual or perceived bias in English law has come before the courts many times.

Challenges in practice

A commonly occurring type of conflict of interest is a professional relationship between a judge or arbitrator and the parties or counsel. This was the question that arose in Zuma's Choice. An infringement claim had been brought by Azumi, which operates Japanese restaurants under the name "Zuma", against Zoe Vanderbilt and her company, Zuma's Choice Pet Products.  Vanderbilt had applied for summary judgment before a recorder who happened to also be a practising barrister in the same chambers as counsel for the respondents. She sought for the recorder to recuse himself due to a perception of apparent bias, which he did not, and Lord Justice Floyd upheld this decision. Vanderbilt also unsuccessfully applied for Floyd LJ to recuse himself as he had refused two previous applications. It is interesting to note the strength of the position of the English courts in maintaining that connections such as chambers, or law firms, in most circumstances do not compromise a judge's ability to maintain independence.

Arbitration starts from a more cautious standpoint when considering professional relationships. For example, in an London Court of International Arbitration decision from 2009, a challenge regarding an appearance of bias was upheld against the appointment of an arbitrator who was a commercial barrister specialising in insurance matters, and was regularly instructed by one of the respondents.

Those instructions comprised 11% of all his instructions over the previous five years. The decision stated that it "did not follow that a fair-minded and informed observer […] should be as fully attuned with local traditions and culture as a member of the community, or wholly uncritical of it". So, despite the fact that the test under English law was the starting point (and the arbitration was seated in London), emphasis was placed on the fact that the challenge related to an international arbitration and therefore different considerations had to be taken into account.

In direct contrast to Zuma, it is also worth noting ICSID's decision in Hrvatska Elektroprivreda dd v Slovenia, where the tribunal itself disqualified a lawyer from appearing in the proceedings due an apprehension that the lawyer's involvement might lead to an "appearance of impropriety" on the part of the president of the tribunal.

At a late stage in the proceedings, the respondent had appointed counsel of the same chambers as the president, and the claimant objected as they feared this would compromise the perception of the president's independence and impartiality even where it was accepted that there was no actual bias.

Although the unusual facts perhaps make this an outlier, it is also interesting to note that counsel for the claimant contended that their client (a Croatian entity) was unfamiliar with the chambers system and derived no comfort from the status of English barristers as separate, self-employed legal practitioners. In this case, a mere appearance of potential bias was enough to uphold the challenge. Another example where difficulties can arise is in the degree of overlap between arbitrators and their law firms. For example, in another ICSID case, Blue Bank v Venezuela, an arbitrator was disqualified on the basis that an office of his law firm based in another jurisdiction was acting against Venezuela in a different arbitration. The arbitrator had no direct involvement in the parallel case, but was a member of the law firm's international arbitration steering committee and it was felt that the shared corporate name and the existence of the steering committee at a global level implied a degree of overall coordination between the different firms comprising the international firm as a whole.

Conclusion

The relatively small world of arbitration specialists and subsequent wealth of relationships, coupled with the freedom of choice parties are given in appointing arbitrators and choosing institutions, provides a variety of potential grounds for a challenge on bias.

In that context, independence and impartiality exist as pillars of natural justice, with questions of actual or apparent bias relating to both. Rules and guidelines establishing these principles can be found throughout international arbitration, and they are also firmly established in English law.

However, the various decisions by both courts and tribunals on these questions illustrate the issue is often approached differently by international tribunals and the English courts. The test in Porter v Magill under English law creates a practical threshold which has been widely tested over the years. In comparison, the standard under international arbitration is influenced by institutional rules, guidelines and national laws, all of which must exist within the framework of the jurisdiction in which they operate. As a result, it is no surprise that the results under the two regimes vary on similar issues.

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.

Jonathan is an associate in White & Case's International Arbitration Group, based in New York. He is trained in both civil law and common law, and represents states and corporations in investor-state and commercial arbitration proceedings.    

This year, White & Case partnered with the School of International Arbitration at Queen Mary University of London to conduct a survey of participants in the field of international arbitration, including private practitioners, full-time arbitrators, in-house counsel, experts and other stakeholders.

These survey results hold intriguing findings for Taiwanese companies interested in international arbitration as a dispute resolution mechanism.

A CLEAR PREFERENCE FOR ARBITRATION

The vast majority (97 percent) of the survey respondents stated that international arbitration is their preferred method of dispute resolution, either on a stand-alone basis (48 percent) or in conjunction with alternative dispute resolution (ADR) (49 percent).

Arbitration is a go-to resolution mechanism for many Taiwanese cross-border business disputes.

However, our survey found that many companies worldwide are increasingly resorting to various forms of ADR in the hope of finding even swifter and more cost efficient resolutions to disputes before conducting arbitration.

Globally, corporations—through their in-house counsel—displayed a strong preference for international arbitration (either as a stand-alone method or in conjunction with ADR) over litigation for several reasons. Our survey respondents perceived the enforceability of awards as arbitration's most valuable characteristic, followed by arbitration's utility in avoiding specific legal systems/national courts, flexibility and the ability of parties to select their own arbitrators.  They viewed arbitration's costs and lack of effective sanctions as its worst features.

PREFERRED ARBITRATION SEATS AND INSTITUTIONS

Survey respondents globally stated that their five most preferred seats of arbitration are London (64 percent), Paris (53 percent), Singapore (39 percent), Hong Kong (28 percent) and Geneva (26 percent). This gives Taiwanese companies two highly respected arbitration seats nearby in the Asia-Pacific region.

These preferences were primarily determined by each location's general reputation and recognition, followed by users' perceptions of the neutrality and impartiality of their legal systems and their track records in enforcing agreements to arbitrate and arbitral awards.

The five most preferred arbitral institutions were the International Chamber of Commerce (77 percent), the London Court of International Arbitration (51 percent), the Singapore International Arbitration Centre (36 percent), the Hong Kong International Arbitration Centre (27 percent) and the Arbitration Institute of the Stockholm Chamber of Commerce (16 percent).

Again, Asia-Pacific arbitral institutions performed well among global perceptions.

THE PERCEIVED FUTURE OF INTERNATIONAL ARBITRATION

International arbitration generally has not been supported to the same degree in all industries and sectors.

Generally, survey respondents said they believe the use of international arbitration will likely increase in several key industries, including energy (85 percent) construction/ infrastructure (82 percent), technology (81 percent) and banking and finance (56 percent).

For example, respondents expect the technology sector would become more inclined to arbitrate disputes if more industry and sector-specific arbitral rules are introduced to reflect the specificities of disputes in this sector (such as enhanced rules regarding confidentiality of proceedings and proprietary information).

A significant number of respondents believe that arbitral proceedings could become more efficient through an increased use of technology. A large majority believe that videoconferencing (89 percent), cloud-based storage (91 percent) and hearing room technologies (98 percent) are tools that arbitration users should use more often. 66 percent of respondents suggested an increased use of virtual hearing rooms, and 78 percent indicated that artificial intelligence is a form of technology worth using more often in arbitration. These trends reflect the fact that respondents expect that technology can streamline the arbitration process and save significant costs by conducting hearings and meetings via videoconferencing and similar tools that do not require parties to be physically present.

FULL MAGAZINE
Strategies for protecting Taiwanese businesses from cross-border risks

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© 2018 White & Case LLP

Current approaches for managing global growth.

The Hong Kong International Arbitration Centre Administered Arbitration Rules 2018 have been introduced to increase procedural flexibility and cost-effectiveness, setting a new standard for international arbitration practice.

On 18 October 2018, the Hong Kong International Arbitration Centre ("HKIAC") announced that the new version of its Administered Arbitration Rules (the "2018 Rules") have been adopted by the council of HKIAC. The 2018 Rules have taken effect from 1 November 2018, and are accompanied by a practice note on appointment of arbitrators that is effective from the same date.

The previous version of the HKIAC Administered Arbitration Rules were well-received by users since their introduction in 2013, and are widely recognised as one of the leading sets in the market. The 2018 amendments do not represent a wholesale revision of the previous rules, but are focused on reflecting the latest market developments, with the aim of addressing needs in international arbitration and keeping the competitive edge of HKIAC administered arbitrations.

We set out below some of the significant amendments introduced by the 2018 Rules.

Use of Technology

According to the 2018 International Arbitration Survey carried out by the Queen Mary University of London in partnership with White & Case (the "QMUL Survey"), a significant number of respondents believe that arbitration proceedings could become more efficient through an increased use of technology. Such populist view is indeed reflected in the 2018 Rules, which included a number of provisions on the use of technology in arbitration:

Online delivery of documents (Articles 3.1(e), 3.3 and 3.4)

Parties may now deliver any written communication through the use of a secured online repository that they have agreed to use. Where this method is used to effect communication, the date of receipt is determined according to the local time at the place of receiving a notice of the upload.

Use of technology for determination of procedures (Article 13.1)

In adopting suitable procedures for the conduct of the arbitration to avoid unnecessary delay or expense, an arbitration tribunal should consider the effective use of technology.

Third Party Funding

Following the legalisation of third party funding in Hong Kong in 2017, the 2018 Rules have also introduced amendments to accommodate the change in the Hong Kong legal landscape:

Disclosure of third party funding (Article 44)

Reflecting the relevant amendments to the Hong Kong Arbitration Ordinance, provision has been included to the effect that a funded party must disclose the existence of a funding agreement, the identity of the third party funder and any subsequent changes to such information.

Confidentiality (Article 45.3(e))

While arbitration-related information remains confidential, a funded party is not prohibited from disclosing or communicating such information to its existing or prospective funders.

Costs of arbitration (Article 34.4)

The arbitral tribunal may have regard to any third party funding arrangement in determining the costs of an arbitration.

Streamlined procedures

In the QMUL Survey, lack of power in relation to third parties and lack of speed have been quoted as two of the worst characteristics of international arbitration. The 2018 Rules introduced some new provisions that could address these issues:

Single arbitration under multiple contracts (Article 29)

Provisions for single arbitration under multiple contracts have been expanded to allow a party to bring a single arbitration under more than one arbitration agreement if: (a) a common question of law or fact arises under each arbitration agreement; (b) the relief claimed are in respect of, or arising out of, the same transaction or a series of related transactions; and (c) the arbitration agreements are compatible.

Multiple arbitrations (Article 30)

Tribunals are expressly empowered to conduct multiple arbitrations concurrently, consecutively, or to suspend any of the arbitrations until the determination of any other of them. An arbitral tribunal may do so where: (a) the same tribunal is constituted in each arbitration; and (b) a common question of law or fact arises in all the arbitrations.

Early determination procedure (Article 43)

An early determination procedure is introduced to allow a tribunal to determine certain points of law or fact. Any request for early determination must be made promptly, and the tribunal shall issue a decision within 30 days of such request on whether the request is allowed to proceed.

Emergency Arbitrator Procedure (Article 23.1 and Schedule 4)

Parties are allowed to file an application for the appointment of an emergency arbitrator to HKIAC before, concurrent with, or after filing a Notice of Arbitration. All time limits under the Emergency Arbitrator Procedure have also been shortened.

Time of delivering awards (Article 31.2)

The tribunal is required to inform HKIAC and the parties of the anticipated date of delivering the arbitral award, which shall be within three months from the closure of the proceedings or relevant phase of the proceedings. This time limit may be extended by parties' agreement or HKIAC.

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© 2018 White & Case LLP

Theresa is an associate based in White & Case's London office and is qualified to practice in England and Wales and India. She has a broad practice in complex cross-border commercial litigation and international arbitration. Her experience includes representing companies and individuals on construction disputes and other cross-border arbitrations under the LCIA and ICC Rules.

Before joining the Dispute Resolution group, Theresa also gained experience in bank finance and structured finance transactions. She has also completed a secondment to the Firm's Dubai office where she gained experience in corporate/M&A transactions.

She is actively involved in a number of the Firm's pro bono projects, including the Royal Courts of Justice Advice Bureau, and Lumos (an international NGO founded by author J.K. Rowling, which promotes an end to the institutionalization of children worldwide).

Jim East is an associate in the Firm's International Arbitration practice. He advises foreign sovereigns and private entities involved in complex investment and commercial disputes.

Mr. East has represented clients in arbitrations before the International Center for the Settlement of Investment Disputes (ICSID) and the International Chamber of Commerce (ICC).

Sandra is an associate in the Firm's International Arbitration and Litigation groups. She represents and advises private companies and foreign sovereigns in the resolution of international disputes. Sandra has represented clients in arbitrations under the UNCITRAL rules, as well as in commercial arbitrations before the International Chamber of Commerce (ICC). She also is active in the firm's pro bono matters.

During law school, Sandra interned with the U.S. Department of Justice and the Legal Aid Society. She also was a Production Editor for the Columbia Journal of Gender and Law.

Prior to attending law school, Sandra worked for a public policy think tank as a researcher on social and economic policy issues.

Agnieszka is an associate in White & Case's International Arbitration group based in London, acting for clients in variety of sectors, including oil & gas and telecom. She has particular experience in representing private individuals, companies and States in investment treaty arbitrations under the ICSID, UNCITRAL, and SCC rules, applicable bilateral and multilateral investment treaties and foreign investment laws. Agnieszka also advises clients on corporate/nationality planning for investment treaty protection. She has experience serving as a secretary and assistant to arbitral tribunals. Agnieszka joined White & Case in 2018 from another leading international law firm based in London.

Agnieszka regularly speaks and publishes on international arbitration topics. She has been invited as a speaker at events hosted by GAR Live, ICDR Y&I, and DIS, among others.

Marie Talašová is an associate of our Dispute Resolution team whose primary focus is on litigation and arbitration.

Marie is an extremely knowledgeable expert in the field of international investment law who enjoys respect and recognition at home and abroad. She has vast experience from both the world of litigation and public administration and possesses a wide range of skills and competence in a variety of legal fields.

Before joining White & Case in October 2018, she held the position of the Head of International Legal Services Department at the Czech Ministry of Finance.

In her role, she was in charge of a sizable legal team responsible for defending the Czech Republic in more than twenty investment arbitration proceedings in various jurisdictions, and served as the lead negotiator of bilateral investment agreements on behalf of the Czech Republic. As a part of her role, Marie also assisted government officials in negotiations with strategic investors and provided advice to the finance minister and the prime minister on issues concerning international law and EU law, especially in the area of state aid and regulation of the energy and gambling sectors.

Marie also advised government officials who are responsible for the representation of the Czech Republic in litigation matters before European courts, i.e., in particular, the Court of Justice of the European Union and the European Court of Human Rights, and other courts outside the jurisdiction of the Czech Republic. In a previous role, Marie was a member of the appellate body for renewable energy sources at the Energy Regulatory Office. Prior to her work for the state she interned at the ICC Court of Arbitration in Paris and worked in the area of class actions and international disputes in the U.S.

For five years Marie was the main organizer of the Investment Treaty Arbitration Conference in Prague, an event that is annually attended by state representatives from more than 30 different states.

Global law firm White & Case LLP has promoted 21 lawyers to counsel and 21 lawyers to local partner.

"Spanning 21 offices and nine practice groups, these promotions reflect the truly diverse and global nature of our Firm while recognizing the exceptional ability and commitment to client service this group has demonstrated," said White & Case Chairman Hugh Verrier. "I am confident they will make a valuable contribution to White & Case and our clients as we continue to make progress toward achieving the goals of our 2020 strategy."

In addition to the internal promotions, White & Case has hired 14 counsel and nine local partners during 2018.

At White & Case, counsel is a role for senior lawyers with significant experience in a particular practice area. The title is used across the Firm, in all offices, as an alternative career path to partnership but does not preclude consideration for promotion to partner.

The position of local partner is offered in select White & Case regions and locations where it is a common market practice. At present this position applies to offices in Asia-Pacific, Central & Eastern Europe, Belgium, Germany, Mexico, Saudi Arabia and Turkey. The title of local partner is a recognized career step toward admission into Firm partnership.

The promotions are effective January 1, 2019, except where noted.

AMERICAS

Claudette Druehl has been named counsel in our Global Capital Markets Practice. Based in New York, her practice focuses on advising broker-dealers and investment advisers on SEC and FINRA compliance, including registration issues, trading issues and regulatory issues, as well as Blue Sky advice.

Joseph Furst III has been named counsel in our Global Banking Practice. Based in New York, he advises clients on commercial finance transactions, including asset-based and cash flow financings, first lien and second lien financings, first-out/last-out financings, acquisition financings and dividend recapitalizations.

Henrikki Harsu has been named counsel in our Global Capital Markets Practice. Based in New York, Henrikki advises financial institution clients on their funding programs and transactions, including international capital markets offerings and the establishment of US funding platforms for non-US banks.

Fan He has been named counsel in our Global Financial Restructuring and Insolvency Practice. Based in Miami, he advises chapter 11 debtors, cross-border debtors and secured and unsecured creditors on chapter 11 proceedings and out-of-court restructurings.

Karen Katri has been named counsel in our Global Capital Markets Practice. Based in Miami, she advises clients on a variety of cross-border corporate finance transactions, including securities offerings, credit facilities and project bonds.

Katherine McCullough has been named counsel in our Global Capital Markets Practice. Based in Washington, DC, she advises on emerging and developed market fund formation, innovative fund structures and a broad list of sector-targeted funds for sponsor and investor-side clients.

Sergio Márquez García Moreno has been named a local partner in our Global Mergers & Acquisitions Practice. Based in Mexico City, he advises clients on mergers and acquisitions and capital markets and banking transactions.

Mårten Olsson has been named counsel in our Global Project Development and Finance Practice. Based in New York, Mårten advises clients on equity and debt financing transactions, with a particular focus on energy, infrastructure and asset finance matters, including 4(a)(2) private placements and offerings of high yield and investment grade debt.

Juan F. Ruenes Rosales has been named a local partner in our Global Project Development and Finance Practice. Based in Mexico City, he advises clients on infrastructure development, project finance, asset finance and general corporate matters.

Mauricio Valdespino has been named a local partner in our Global Mergers & Acquisitions Practice. Based in Mexico City, he advises clients on mergers and acquisitions, real estate and corporate and commercial law.

EMEA

Angélica André has been named counsel in our Global International Arbitration Practice. Based in Paris, she represents clients in commercial arbitration relating to construction, energy, infrastructure and mergers and acquisitions, annulment proceedings relating to commercial and investment arbitral awards in France, and enforcement proceedings in France and worldwide.

Catherine Andrews has been named counsel in our Global Capital Markets Practice. Based in London, she advises clients on infrastructure capital markets transactions, including project bonds, private placements and corporate bonds.

Richard Blackburn has been named counsel in our Global Capital Markets Practice. Based in London, he advises clients on OTC derivatives, including credit, equity, interest rate, FX and Shari’ah-compliant derivatives, synthetic securitisations and structured products.

Tim Bracksiek has been named a local partner in our Global Tax Practice. Based in Frankfurt, he advises clients on international and domestic tax law.

Tobias Daubert has been named a local partner in our Global Banking Practice. Based in Frankfurt, he advises clients on acquisition financing, leveraged buy-out financing, real estate financing and corporate loans, as well as other types of syndicated lending transactions.

Zoran Draškovič has been named a local partner in our Global Mergers & Acquisitions Practice. Based in Bratislava, Zoran advises clients on mergers and acquisitions and regulatory matters, with experience in the energy, infrastructure, banking and real estate sectors.

Jan Ole Eichstädt has been named a local partner in our Global Mergers & Acquisitions Practice. Based in Frankfurt, he advises clients on mergers and acquisitions, joint ventures and corporate reorganizations in private equity and regulated industries, particularly financial institutions and energy.

Kelly Gibson, a professional support lawyer based in London, has been promoted to professional support counsel in our EMEA Banking Regional Section.

Paul Harrington has been named counsel in our Global Tax Practice. Based in London, he advises clients on transactional and advisory direct and indirect tax issues relating to mergers and acquisitions, finance and corporate structuring and restructuring.

Xuan Jin has been named counsel in our Global Capital Markets Practice. Based in Dubai, he advises clients on debt capital markets and Islamic finance, with a focus on Middle Eastern, Turkish and Asian financial institutions, sovereigns and corporates.

Adrian Lawrence has been named counsel in our Global Project Development and Finance Practice. Based in London, he advises clients on project finance, banking, corporate and capital markets transactions, with a particular focus on oil and gas and petrochemicals.

Tom Matthijs has been named a local partner in our Global Mergers & Acquisitions Practice. Based in Brussels, he advises financial investors and corporate clients on both public and private M&A transactions, joint ventures and capital market operations, in addition to having broad experience in infrastructure and energy transactions.  

Michal Pališin has been named a local partner in our Global Mergers & Acquisitions Practice. Based in Bratislava, he advises clients on competition matters, regulatory matters and corporate law, including related EU law aspects.

Estelle Philippi has been named counsel in our Global Tax Practice. Based in Paris, she advises clients on mergers and acquisitions, international and domestic tax planning and corporate tax advice.

James Pullen has been named counsel in our Global Mergers & Acquisitions Practice. Based in London, James advises clients on real estate transactions, including mergers and acquisitions, private equity and joint ventures.

Nicolas Rebel has been named counsel in our Global Financial Restructuring and Insolvency Practice. Based in Hamburg, he advises clients on insolvency administration and insolvency law.

Matthew Richards has been named a local partner in our Global Project Development and Finance Practice. Based in Johannesburg, he advises clients on project finance, construction and other commercial contracts, including power purchase agreements, with experience in the power, energy, mining and infrastructure sectors.

Sophie Sahlin has been named counsel in our Global Antitrust Practice, effective March 13, 2018. Based in London, she advises clients on a number of competition law issues, with a particular focus on assisting clients with complex EU and international merger control proceedings.

Daniel Schwartz has been named a local partner in our Global Financial Restructuring and Insolvency Practice. Based in Düsseldorf, he advises clients on insolvency proceedings and restructuring measures, particularly debtor-in-possession proceedings and the sale or acquisition of insolvent companies.

Alessandro Seganfreddo has been named a local partner in our Global Mergers & Acquisitions Practice. Based in Milan, he advises clients on cross-border and domestic transactions in a variety of sectors including financial services, retail and consumer products, infrastructure and transport, pharmaceutical, technology, media and telecommunications.

Ceren Sen has been named a local partner in our Global Banking Practice. Based in Istanbul, she advises clients on secured and unsecured financings including domestic and cross-border syndicated loan transactions, leveraged buyouts, corporate financings and restructurings.

Julia-Katharina Sieber has been named a local partner in our Global Mergers & Acquisitions Practice. Based in Frankfurt, she advises clients on stock corporation and corporate group law including the preparation and execution of shareholders’ meetings and corporate restructurings.

Ateş Turnaoğlu has been named a local partner in our Global Banking Practice. Based in Istanbul, he advises clients on project financing transactions for Turkish banks and international financial institutions, particularly infrastructure and energy projects.

Tomislav Vrabec has been named a local partner in our Global Mergers & Acquisitions Practice. Based in Frankfurt, he advises clients on private equity deals and cross-border and domestic mergers and acquisitions.

Anne-Marie Wicks has been named a local partner in our Global Project Development and Finance Practice. Based in Doha, she advises clients on the development and financing of large international projects, particularly in the Middle East, Africa and Europe, with experience in the gas, petrochemicals, LNG and electricity sectors.

Václav Žaloudek has been named a local partner in our Global Project Development and Finance Practice. Based in Prague, he advises clients on commercial law, international private law, energy law and labor law.

ASIA-PACIFIC

Shino Asayama has been named counsel in our Global Mergers & Acquisitions Practice. Based in Tokyo, she advises clients on cross-border and domestic mergers and acquisitions and general corporate matters, including antitrust matters, data protection and employment.

Mark Montag has been named a local partner in our Global Project Development and Finance Practice. Currently based in Melbourne, he will relocate to Sydney and continue to advise clients on major international and domestic projects in the energy, infrastructure and transport sectors.

William Moran has been named a local partner in our Global International Trade Practice. Based in Tokyo, he advises clients on international trade and regulatory matters before various US government agencies and courts.

Takako Onoki has been named counsel in our Global Antitrust Practice. Based in Tokyo, she represents clients in antitrust/competition law matters, including those related to Japan Fair Trade Commission investigations for cartels and unilateral conduct.

Tabitha Saw has been named a local partner in our Global Mergers & Acquisitions Practice. Based in Singapore, Tabitha advises global clients on cross-border acquisitions, real estate private equity investments, joint ventures, strategic investments and restructurings.

Jiejin (Victoria) Yu has been named counsel in our Global Banking Practice. Based in Hong Kong, she advises clients on secured and unsecured, bilateral and syndicated and domestic and cross-border bank finance transactions.

During 2018, 14 counsel and nine local partners have joined the Firm.

AMERICAS

• Will Giles, counsel, Global Banking Practice, Washington, DC
• Morgan Hollins, counsel, Global Mergers & Acquisitions Practice, Houston
• Stephanie Kim, counsel, Global Mergers & Acquisitions Practice, Chicago
• Stanimir Kostov, counsel, Global Banking Practice, New York
• Jeremy Kuester, counsel, Global Banking Practice, Washington, DC
• Dianne Lu, counsel, Global Mergers & Acquisitions Practice, Chicago
• Gordon Mak, counsel, Global Banking Practice, New York
• Stacia Sowerby, counsel, Global International Trade Practice, Washington, DC
• Julia Winters, counsel, Global Commercial Litigation Practice, New York

EMEA

• Christophe Balthazard, local partner, Global Mergers & Acquisitions Practice, Brussels
• Sylwia Maria Bea, local partner, Global Financial Restructuring and Insolvency Practice, Frankfurt
• Stefan Bressler, local partner, Global Mergers & Acquisitions, Frankfurt
• Alexandra Diehl, local partner, Global International Arbitration Practice, Frankfurt
• Michael Leicht, local partner, Global Intellectual Property, Frankfurt
• Deborah Lincoln, counsel, Global Intellectual Property Practice, London
• Andreas Lischka, local partner, Global Banking Practice, Frankfurt
• Tom Matthews, counsel, Global Mergers & Acquisitions Practice, London
• Vincent Naveaux, local partner, Global Mergers & Acquisitions Practice, Brussels
• Hans-Georg Schulze, local partner, Global Mergers & Acquisitions Practice, Berlin
• Sébastien Seele, local partner, Global Capital Markets Practice, Frankfurt
• Peter Svanqvist, counsel, Global Banking Practice, Stockholm

ASIA-PACIFIC

• Andrew Cohn, counsel, Global Mergers & Acquisitions Practice, Hong Kong
• Andrea Reeves, counsel, Global Project Finance and Development, Melbourne

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Third party funding – by which a commercial fund finances the costs of proceedings in return for a share of any damages awarded – has recently seen an upswing globally with a number of jurisdictions legalising it as they look to increase their attractiveness as arbitral venues. Proposed amendments to the current law in Nigeria would allow it to join this global trend and to strengthen its position as one of the leading arbitration centres in Africa.

Global trend of legalising third party funding

Under third party funding ("TPF"), an independent commercial fund with no prior connection to the case will step in to fund the proceedings in the hopes of receiving a share of any damages awarded. Over the last decade, this practice has become increasingly prevalent in many jurisdictions around the world.¹ However, certain Common Law jurisdictions have encountered issues because of the old doctrines of champerty and maintenance that potentially criminalise the involvement of a third party funder.

The ability to take up TPF is frequently seen as an attraction by clients and prohibitions on it are seen as a disadvantage to using a jurisdiction for arbitration. It is therefore no coincidence that Hong Kong² and Singapore³ have recently legalised TPF in international arbitration. Both jurisdictions took a systematic approach to reviewing their laws and a "light touch" self-regulating approach to legalising funding. Under this approach, market practice and softer regulation from relevant institutions will influence how TPF will operate in the jurisdictions. Nigeria is now looking at allowing TPF, like Hong Kong and Singapore, but it is going about matters in a different way.

Indirect reform in Nigeria

Nigeria will amend its current legislation, the Nigerian Arbitration and Conciliation Act, via an amendment bill (the "Bill").⁴ The Bill, which has passed through the final stages of the Nigerian legislative process, effectively legalises TPF in arbitration (but not litigation) in an indirect fashion. It does so by including the costs of obtaining TPF as part of costs of arbitration. In other words, the Bill does not expressly state that TPF will be legal, but the consequence of including it as part of costs of arbitration logically means that the Bill has tacitly permitted TPF.

Since the Bill does not expressly state that TPF is allowed, it is unsurprising that it does not contain any more specific regulation of TPF. In Hong Kong and Singapore the new legislation and guidelines on the funding agreements contain certain provisions dealing with issues that can arise under TPF arrangements, e.g., confidentiality and conflicts issues. This is not the case in Nigeria.

The Bill in Nigeria is therefore likely more of a first conceptual step towards legalising TPF in arbitration, with more specific regulation to follow in order to address these concerns. How funding issues will be tackled in practice after the Bill has been passed remains to be seen. It is expected that market practice will gradually crystallise informally as funders engage with claimants in the market. Potentially, once a market practice has been established or court decisions made, specific legislation will likely be passed to enshrine it.

Potential issues arising out of the indirect reform and lack of regulation

Since the Bill does not contain any specific regulations of TPF, there will likely be a gap between its enactment and the point in time where a market practice has crystallised. The application of TPF will likely be, at least initially, uncertain. We identify two possible issues to future proceedings financed through TPF in Nigeria arising from this gap and the uncertainty:

• While the Bill should be understood to implicitly mean that parties may obtain TPF, it may be argued that it is not clear enough (since it does not explicitly state that TPF is legalised) to properly amend the Federal Law. According to the Nigerian Interpretation Act, English Common Law is applicable in Nigeria subject to a contrary provision by any Federal Law. Questions may arise as to whether the Bill does enough to overcome the rules against champerty and maintenance. It is unclear if the Bill in its current state reaches this threshold. On this basis, a party facing a funded opponent may seek to challenge the validity of the funding or even possibly any award obtained via a funded party.
• By leaving a number of issues unresolved or subject to dispute, there is a risk of more satellite disputes emerging. Unfortunately, the Nigerian Courts are busy and slow and the prospect of getting drawn into disputes in the domestic courts over funding may undo a great deal of the benefit of permitting TPF.

It will be interesting to see how Nigeria will seek to address issues like these (and more traditional issues connected to TPF such as confidentiality and conflicts) after the Bill has been passed.

Small first step but part of a larger trend

Although Nigeria’s approach is different to Hong Kong’s and Singapore’s and raises a number of issues, Nigeria’s reforms still form part of the same larger trend. Statistics from the ICC have shown a growing activity in arbitration in Nigeria recently.⁵ If TPF were legalised, the arbitration activity would likely increase even more, as it is expected to do in Hong Kong and Singapore.

Following the ratification of the Bill, parties, practitioners and funders will certainly be watching the developments as the market will react to the indirect legalisation of TPF in Nigeria.

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¹ For the general perception of TPF, see further pages 24-26 of the 2018 International Arbitration Survey: The Evolution of International Arbitration conducted by the School of International Arbitration, Queen Mary University of London, in partnership with White & Case.
² See further our previous alert. See also our more recent alert on Hong Kong.
³ See further our previous alert.
⁴ In the proposed Bill, TPF is defined as "an arrangement between a specialist funding company, an individual, a corporation, a bank, an insurance company or an institution (the funder) and a party involved in the arbitration, whereby the funder will agree to finance some or all of the party's legal fees in exchange for a share of the recovered damages".
⁵ 2016 ICC Dispute Resolution Statistics showed that Nigeria fielded the largest number of parties. In 2017, there were 14 parties from Nigeria involved in ICC arbitrations.

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2018 White & Case LLP

The United Arab Emirates have repealed the potential criminal liability for arbitrators under the controversial Article 257 of the UAE Penal Code.

Arbitration in the UAE has developed considerably over the past 20 years, with the UAE establishing itself as a leading hub for arbitration in the region. The 2016 amendment to the UAE Penal Code provided for potential criminal liability for arbitrators, threatening to undermine the arbitration landscape of the UAE. However, the recent amendment to the UAE Penal Code has resolved this controversy, helping the UAE to realise its potential to become a major international arbitration hub.

A History: Article 257 of the UAE Penal Code

On 29 October 2016, Federal Law No. 7 of 2016 amended Article 257 of Federal Law No. 3 of 1987 (the "UAE Penal Code") to read:

"Anyone who issues a decision, expresses an opinion, submits a report, presents a case or proves an incident in favour of or against a person, in contravention of the requirements of the duty of neutrality and integrity, while acting in his capacity as an arbitrator, expert, translator or fact finder appointed by an administrative or judicial authority or selected by the parties, shall be punished by temporary imprisonment.

he aforesaid categories of persons shall be barred assuming once again the responsibilities with which they were tasked in the first instance, and shall be subject to the provisions of Article 255 of this law", (unofficial translation),

thereby introducing potential criminal liability for arbitrators in the UAE. The intention of this amendment was well-founded, as it sought to group arbitrators with court appointed experts and translators in ensuring they conducted themselves in an unbiased manner. However, this created a risk for arbitrators who could be potentially imprisoned if an allegation of bias was made against them.

The investigation process regarding an allegation of bias could take a number of years, during which the arbitrator would be required to surrender his/her passport. This uncertainty coupled with the potential damage to reputation, resulted in arbitrators withdrawing from existing appointments, refusing to accept new appointments in the UAE, and legal practitioners advising their clients to move the seats/places of arbitrations from the UAE to other jurisdictions.

The Amendment to Article 257 of the UAE Penal Code – repeal of criminal liability for arbitrators?

In October 2018, the UAE amended its Penal Code, with the new wording of Article 257 stating that:

"Any person who, while acting in the capacity of an expert, translator or investigator appointed by a judicial authority in a civil or criminal case, or appointed by an administrative authority, confirms a matter contrary to what is true and misrepresents that matter while knowing the truth about it, shall be sentenced to imprisonment for a minimum term of a year and a maximum term of five years. The punishment shall be temporary imprisonment if the mentioned individuals were assigned to mandate in relation to a felony."

This amendment clarifies the application of Article 257, stating that, instead of applying to "anyone who issues a decision, expresses an opinion, submits a report, presents a case or proves an incident", it applies only to "any person who, while acting in the capacity of an expert, translator or investigator appointed by a judicial authority in a civil or criminal case, or appointed by an administrative authority" (emphasis added), thus carving out arbitrators, arbitration experts and arbitration proceedings from the application of the Article 257.

The Future

The amendment to Article 257 of the UAE Penal Code and the recent adoption of the new UAE Arbitration Law are cementing the UAE’s status as a leading international arbitration hub and providing further security to investors.

Click here to download PDF.

Aimy Roshan, Associate, and Ivan Philippov, a trainee solicitor at White & Case, assisted in the development of this publication

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2018 White & Case LLP

Aimy is an associate in the Firm's Dubai office. Her practice focuses on international arbitration and construction disputes.

She represents clients in all areas of dispute resolution and has particular expertise advising clients on contentious issues arising from a wide variety of commercial and construction contracts.

She joined the International Arbitration and Construction group of the Firm in 2018. Prior to joining the Firm, Aimy trained as a solicitor in Sydney, Australia and practiced in the Dispute Resolution Group of a top-tier firm in Dubai.

Interest in third-party arbitration funding in Hong Kong and Singapore continues to grow. White & Case lawyers Melody Chan, Matthew Secomb and Adam Wallin have authored book chapters charting developments in the funding landscape since the introduction of new funding rules in 2017.

The chapters are part of the second edition of The Third Party Litigation Funding Law Review:

Click here to download the Hong Kong chapter.

Click here to download the Singapore chapter.

The chapters are also available online: Singapore, Hong Kong.

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.

In Who's Who Legal's recently released Arbitration 2019 analysis, global law firm White & Case ranked (tied for) first among all law firms surveyed for the most lawyers recognized (37).

Among the 37 White & Case arbitration lawyers who "come highly recommended for their expertise in resolving complex international disputes" by Who's Who Legal's research, 12 were recognized as "Global Elite Thought Leaders" in Arbitration, and four as leading arbitration lawyers. A further 21 White & Case lawyers were identified as "Future Leaders" in international arbitration, who "stand out as among the best of their generation for their exceptional counsel and arbitration work in complex international proceedings," according to Who's Who Legal.

Below is the full list of lawyers recognized by Who's Who Legal.

Lawyers and Thought Leaders

• Phillip Capper, London
• Paul Friedland, New York
• Carolyn Lamm, Washington, DC
• Andrew McDougall, Paris
• Andrea Menaker, London
• Charles Nairac, Paris
• Michael Polkinghorne, Paris
• Ank Santens, New York
• Anne Véronique Schlaepfer, Geneva
• Matthew Secomb, Singapore
• Christopher Seppälä, Paris
• Abby Cohen Smutny, Washington, DC
• Max Bonnell, Sydney
• Jonathan Hamilton, Washington, DC
• Anders Reldén, Stockholm
• Julia Zagonek, Moscow

Future Leaders: Partners

• Paul Brumpton, London
• Markus Burianski, Frankfurt
• Clare Connellan, London
• Rafael Llano, Mexico City
• Jorge Mattamouros, Houston
• Damien Nyer, New York
• Elizabeth Oger-Gross, Paris
• Hansel Pham, Washington, DC
• Petr Polášek, Washington, DC
• Aloke Ray, London
• Dipen Sabharwal, London
• Christophe von Krause, Paris

Future Leaders: Non-partners

• Luiz Aboim, London
• Angelica André, Paris
• Sylvain Bollée, Paris
• Luka Kristovic Blazevic, Dubai
• Piotr Bytnerowicz, Warsaw
• Alexandre Mazuranic, Geneva
• Marily Paralika, Paris
• Tuuli Timonen, Helsinki
• Oleg Todua, Moscow

White & Case Partners Anne Véronique Schlaepfer and Alexandre Mazuranic have recently authored a book chapter on the drafting of arbitration clauses in M&A agreements outlining the rules that apply to the drafting of arbitration clauses in general and their application in relation to M&A disputes in particular.

Click here to download the full chapter (PDF).

An extract from the first edition of The Guide to M&A Arbitration, first published by GAR in December 2018.

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.

William Obree is an associate in White & Case's Dispute Resolution group based in London. His practice focuses on commercial litigation and international arbitration, with a particular emphasis on contractual disputes, freezing orders and conflict of laws issues.

He has experience of English High Court litigation and arbitration under the LCIA, UNCITRAL and ICC rules.

Before joining the Dispute Resolution group, Will spent six months working in the Firm's international arbitration practice in Moscow.

Will is committed to pro bono work and regularly represents PIP appellants in the Social Entitlement Chamber in collaboration with legal charity, University House.