In a decision handed down last week, Michael Wilson & Partners Ltd v John Forster Emmott [2019] EWCA Civ 219, the Court of Appeal has reviewed the authorities relating to removing, following judgment, the so-called Angel Bell exception in a freezing order; that is, the carve-out that allows a respondent to deal with assets in the ordinary course of its business. The Court confirmed earlier guidance that "it will sometimes and perhaps usually be inappropriate"¹ to exclude the Angel Bell exception in a post-judgment freezing order, but that each case should turn on its own facts.

"Only the briefest of reference needs to be made to the seemingly interminable, unhappy, background saga"

The present appeal originated from the recognition of two London-seated arbitral awards, resulting in a judgment debt to be paid by the Appellant (MWP) to the Respondent (Emmott).

Emmott sought, and at first instance obtained, a post-judgment freezing order to replace an earlier Mareva injunction obtained several years earlier. The terms of the original injunction contained an exception allowing MWP to deal with its assets in the ordinary course of business (the Angel Bell exception, from Iraqi Ministry of Defence v Arcepey Shipping Co SA (The Angel Bell) [1981] Q.B. 65). The exception was then removed by Sir Jeremy Cooke at first instance, and MWP appealed its removal.

The Court of Appeal was asked to determine whether the first instance judge erred in law, most significantly by: (i) holding that "the starting point" in the case of a post-judgment freezing order is that there should be no ordinary course of business exception; and (ii) concluding that the ordinary course of business exception should be removed from the freezing order in circumstances where it did not serve the order's legitimate purpose of being in aid of execution (but was rather in terrorem).

The Angel Bell

The Courts have long acknowledged that freezing orders are not intended to prevent a defendant from carrying out its ordinary business dealings, according to the principles laid down by Goff J in the Angel Bell. This exception now forms part of the Commercial Court standard form freezing order (at paragraph 11(2)). In a pre-judgment environment, where a respondent's liability has not been established, that must normally be the appropriate approach: the claimant's claim may ultimately fail, and interim relief should not render the defendant unable to meet its ongoing business obligations.

The approach to freezing orders post-judgment is less clear. Certainly, the law weighs heavily in favour of the enforcement of judgments, and preventing the judgment debtor carrying on its business while deliberately refusing to pay the outstanding judgment debt (so, a "won't pay" rather than "can't pay" scenario). There has nevertheless been some conflicting judicial comment as to how restricted the Courts should be in their approach to removing the exception.²

The decision

Giving the leading judgment, Gross LJ considered the case law regarding post-judgment freezing orders:

1. Whether awarded pre-or post-judgment, a freezing order is not intended to confer a preference in insolvency and does not form a part of execution itself. The Court grants post-judgment freezing orders to facilitate execution of a judgment by guarding against a risk of dissipation in the period between judgment and execution, where the judgment would remain unsatisfied if injunctive relief was refused (§53). They are not rare.
2. By their very nature, post-judgment freezing orders will increase the pressure on a defendant to honour the judgment debt (§54). However, the mere increase in pressure does not in itself make the order illegitimate or in terrorem.
3. In view of the Court of Appeal's reasoning in Mobile Telesystems Finance SA v Nomihold Securities Inc [2011] EWCA Civ 1040, it cannot be said that the Angel Bell exception would always (i.e., "without more") be inappropriate in a post-judgment freezing order. However, in line with what the Court nevertheless concluded in Nomihold, "it will sometimes and perhaps usually be inappropriate" to include the exception in a post-judgment freezing order (§56). Gross LJ endorsed that test (of Tomlinson LJ) as representing "helpful and appropriately nuanced general guidance" (§57).
4. Thus, the starting point or presumption should not be to remove the Angel Bell exception, but nor should it be a remedy of last resort. Rather, each case should turn on its facts.

In this case, the Court of Appeal held that the judge at first instance had not made an error of law in ordering the exception to be removed; indeed, this was a paradigm case for doing so.

"Pathological litigation"

Somewhat unusually, the Court of Appeal also made several comments as to the questionable conduct of the litigating parties. Emmott and MWP had been engaged in litigation in several jurisdictions relating to a dispute over a quasi-partnership agreement, in which neither party covered themselves in glory. Jackson LJ went as far as to highlight the "shameful waste of time and money" caused by the "pathological litigation" between the parties, who were both solicitors: "[i]t appears that Mr Wilson will stop at nothing to prevent Mr. Emmott from receiving the award, to which, for all his deceit, he is entitled" (§70).

Conclusion

The Court of Appeal's guidance is indeed "nuanced" and deliberately avoids creating any default rules for the removal (or not) of the Angel Bell exception. The lack of specific guidance reflects the varying nature of these types of cases, and the burden that the Mareva injunction places on a respondent, even in a post-judgment context. Nevertheless, the Court's clarification does – without saying so in terms – continue to suggest that freezing orders in a post-judgment context that allow a judgment debtor to deal freely with assets in the course of business will remain exceptional.

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¹ Mobile Telesystems Finance SA v Nomihold Securities Inc [2011] EWCA Civ 1040, §33.
² Masri v Consolidated Contractors [2008] EWHC 2492 (Comm); Mobile Telesystems Finance SA v Nomihold Securities Inc [2011] EWCA Civ 1040.

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Unreliable, expensive power supplies have been key obstacles to commerce and industry in the region—and as a result, to economic growth.

According to the OECD, "Investment treaties were developed to protect investors of one country when investing in another country, to lower non-commercial risk for such investors, and overall to promote a sound investment climate."¹ Although some commentators have opined that the network of bilateral investment treaties among African countries and between African countries and third countries is rather "underdeveloped, irregular and fragmentary,"² African regional organizations have, in fact, entered into a variety of multilateral agreements to promote and protect intra-African foreign investment. These agreements, which include the Investment Agreement for the Common Market for Eastern and Southern Africa (COMESA) Common Investment Area and the Supplementary Act adopting Community Rules on Investment and the Modalities for their Implementation with the Economic Community of West African States (ECOWAS³, see Figure 1) give investors the opportunity to bring international claims against countries for wrongful measures impacting their investments.

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Energy sector investors will be pleased to know that, parallel to these multilateral "generalist" agreements, some African regional organizations have concluded sector-specific regional agreements for the energy sector. These include the ECOWAS Energy Protocol A/P4/1/03 signed by members of ECOWAS in 2003 (the "Energy Protocol"). This is an important development, given increasing demand for electricity in the ECOWAS countries and consequent emerging opportunities for investment (Figure 2). The Energy Protocol was inspired by the Energy Charter Treaty (ECT), a multilateral sector-specific international agreement allowing for investor-state claims that took effect in 1998. The ECT had some success with 51 countries worldwide becoming contracting parties. Its influence is apparent in the Energy Protocol, which likewise provides for investor-state dispute resolution.

250,000 ^GWh
Projected annual electricty demand for ECOWAS countries in 2030
_IRENA

West Africa has long suffered from large energy deficits (both in supply and distribution). Unreliable and expensive power supplies have been significant obstacles to commerce and industry in the region and, as a result, to economic growth generally. The Energy Protocol forms part of a suite of measures adopted in the region to attract power sector investment. The challenges in the sector remain significant. The poor state of energy markets and national grids makes regional network integration difficult, and generation is highly dependent on expensive thermal power based on fossil fuels. The ECOWAS Centre for Renewable Energy and Energy Efficiency, established in 2010, seeks to encourage investment in more sustainable energy infrastructure through "the sustainable economic, social and environmental development of West Africa by improving access to modern, reliable and affordable energy services, energy security and reduction of negative environmental externalities of the energy system.⁴

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Given a recent trend toward reduced investment protection in some African countries such as Tanzania and South Africa,⁵ the Energy Protocol offers potentially valuable and often overlooked protection to energy sector investors in West Africa.

Based on information provided by ECOWAS, 13 out of 15 ECOWAS member states have ratified the Energy Protocol. At the time of publication, Côte d'Ivoire and Sierra Leone had yet to ratify. Pursuant to Article 39 of the Energy Protocol, since more than nine instruments of ratification have been deposited, the Energy Protocol has entered into force. Thus, investors from contracting parties to the Energy Protocol can now invoke the investment protections set out in Chapter III in relation to their investments in other contracting parties, which are summarized below.

"INVESTMENT" IS BROADLY DEFINED

Under the Energy Protocol, "investment" is broadly defined to include "every kind of asset, owned and controlled directly or indirectly by an Investor." It covers, among other things, tangible and intangible property, a company or business enterprise, shares, stock, or other forms of equity participation in a company or business enterprise, claims to money and claims to performance pursuant to a contract having an economic value and associated with an investment as well as any right conferred by law or contract or by virtue of any licenses and permits granted pursuant to law to undertake any economic activity in the energy sector.

In addition, the Energy Protocol extends "to any investment associated with an Economic Activity in the Energy Sector and to investments or classes of investments designated by a Contracting Party in its Area as "efficiency projects" and so notified to the Executive Secretariat of ECOWAS."⁶ This further provision means that an oil concession granted by virtue of a contract or law or a shareholding in an oil extraction joint venture company are investments under the Energy Protocol.⁷

"INVESTOR" IS DEFINED TO PROTECT THE TREATY'S INTENDED BENEFICIARIES

An investor is defined as a natural person having the citizenship or nationality of, or who resides or establishes an office in the area of, a contracting party or a company or other organization organized, or registered, in accordance with the law applicable in that contracting party. This definition is similar to the definition of investor under Article 1(7) of the ECT. However, under Article 17 of the Energy Protocol, each contracting party has, among other things, reserved the right to deny the investment protections of the Energy Protocol to a legal entity "if citizens or nationals of a third state own or control such entity and if that entity has no substantial business activities in the Area of the Contracting Party in which it is organized." This provision, which is generally referred to as a denial of benefits clause, is designed to exclude from treaty protections nationals of other countries that, through mailbox or shell companies, seek to benefit from provisions that the contracting parties to the Energy Protocol did not intend to afford them. The drafters presumably sought to ensure that the treaty's protections reached only the intended beneficiaries: West African companies. At the same time, local subsidiaries of multinationals will also benefit from the treaty's protections unless Article 17 of the Energy Protocol is triggered.

INVESTORS ARE ENTITLED TO FAIR AND EQUITABLE TREATMENT

Each contracting party undertakes to accord fair and equitable treatment at all times to investments of investors. While there is no universally accepted definition of the exact meaning and/ or scope of treatment that is "fair and equitable," investment treaty tribunals have typically condemned measures that frustrate an investor's legitimate expectations (e.g., decisions taken in violation of guarantees provided to investors in an attempt to induce their investment, such as in the context of privatizations) or measures that are arbitrary, lacking in due process, or taken in bad faith (e.g., prejudicial interference in the activity of an operator on spurious or pretextual grounds). For example, tariff-setting decisions issued by an independent regulator that cannot be traced back to an operator cost analysis or that are issued to implement political directives in violation of the regulator's duty of independence may constitute a breach of the fair and equitable standard.

INVESTORS ARE PROTECTED FROM ILLEGAL EXPROPRIATION

Article 13 of the Energy Protocol prohibits nationalization and expropriation, or measures having equivalent effects, except where they are justified by a purpose that is in the public interest, are not discriminatory, are carried out under due process of law, and are accompanied by the payment of prompt, adequate and effective compensation. A measure of expropriation that does not respect these conditions is considered an "illegal" expropriation in breach of the Energy Protocol. Investors should also note that Article 13's broad wording does not restrict their claims to direct takings of their investment by the state. Rather, Article 13 allows for claims of indirect expropriation (an expropriation that does not affect the legal title of the owner) or creeping expropriation (an expropriation that is achieved through a series of measures). Examples of indirect expropriation include the revocation of a permit resulting in the total loss of value of the investment. A creeping expropriation can occur, for instance, after a series of adverse regulatory decisions lead to the bankruptcy of the regulated operator. For example, a series of decisions to end or reduce subsidies to operators in renewable energies, which amount to a loss of the investments, may constitute a creeping expropriation.

INVESTORS BENEFIT FROM A MULTI-TIERED DISPUTE RESOLUTION MECHANISM

The Energy Protocol provides for essentially the same multi-tiered dispute resolution mechanism as the ECT. Article 26 of the Energy Protocol provides that disputes between a contracting party and an investor regarding an investment of the latter should be settled amicably if possible. If the dispute cannot be settled amicably within three months from the date either party requests amicable settlement, the investor benefits from an option to submit the dispute for resolution:

• To the courts or administrative tribunals of the contracting party to the dispute
• According to a previously agreed dispute settlement procedure or
• In arbitration before the International Centre for Settlement of Investment Disputes, a sole arbitrator or ad hoc arbitration tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law, an arbitral proceeding under the Arbitration Institute of the Stockholm Chamber of Commerce or an arbitral proceeding under the organization for the Harmonization of Trade Laws in Africa

To the extent there is no prior agreement on a dispute settlement procedure, arbitration before an international arbitral tribunal should be an investor's preferred choice of forum to prosecute claims against states for breaches of the Energy Protocol. The Energy Protocol provides an important new avenue for redress for energy sector investors in West Africa.⁸ In this connection, it is worth noting that there have been 114 investor-state arbitrations registered under the ECT.⁹

Although the Energy Protocol has not yet served as a basis for an international arbitration claim, its contracting parties should be aware of the international obligations they enter into under the Energy Protocol, and of their potential international liability if they violate these obligations. Similarly, energy sector investors should keep this potential avenue for redress in mind when investment planning as well as during the life of their investment. If their investment is adversely impacted by state measures taken in violation of the Energy Protocol, investors may be able to claim damages for any resulting loss.

¹ OECD Business and Finance Outlook 2016, Chapter 8: The impact of investment treaties on companies, shareholders and creditors, p. 224 (https://www.oecd.org/daf/inv/investment-policy/BFO-2016-Ch8-Investment-Treaties.pdf).
² E. Denters, T. Gazzini, "The Role of African Regional Organizations in the Promotion and Protection of Foreign Investment," Journal of World Investment and Trade, 2017, Vol. 18, pp. 449-492, spec. p. 451.
³ ECOWAS is composed of: Benin, Burkina Faso, Cape Verde, Côte d'Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.
⁴ ECOWAS website: http://www.ecowas.int/specialized-agencies/ecowas-centre-for-renewable-energy-and-energy-efficiencyecreee/
⁵ South Africa terminated its bilateral investment treaties. Tanzania recently adopted legislation in the natural resources sector that, among other things, prohibits international dispute resolution in relation to the exploitation or extraction of natural resources.
⁶"Economic Activity in the Energy Sector" means an economic activity concerning the exploration, extraction, refining, production, storage, land transport, transmission, distribution, trade, marketing or sale of energy materials and products (e.g., nuclear energy, coal, natural gas, petroleum and petroleum products and electrical energy) or concerning the distribution of heat to multiple  premises.
⁷ Article 1(13) of the Energy Protocol.
⁸ The Energy Protocol would be an additional remedy where there is already an intra-ECOWAS bilateral investment treaty or an alternative multilateral investment treaty.
⁹https://energycharter.org/what-we-do/dispute-settlement/cases-up-to-18-may-2018/

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Africa Focus: Spring 2019

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Mining is one of Africa's flagship industries and a growth engine for many of the continent's countries, such as Angola, Côte d'Ivoire, the Democratic Republic of the Congo (DRC), Ghana, Mozambique, Namibia, Nigeria, South Africa, Tanzania and Zambia. The nature of the mining business, which involves significant long-term capital investments, high potential returns and sensitive political issues, makes disputes inevitable. It is worth exploring if and to what extent international arbitration offers a suitable and effective dispute resolution mechanism for typical mining disputes.

TYPICAL MINING DISPUTES

While each dispute is unique, from a systematic perspective, Figure 1 represents an attempt to classify typical mining disputes.

We consider the suitability of (international) arbitration as a dispute resolution mechanism in each of these relationships (see Figure 1):

922

Bilateral Investment Treaties (BITs) in Africa, most of which refer to investment arbitration in case of dispute, very often under the ICSID Rules

• Disputes with the host state: Interaction between the mining company and the host nation (or its state-owned companies) is inherent to the mining business. With few exceptions, the host nation will own the mineral resources. This interaction can generate a variety of disputes that may be suited to international arbitration. These disputes can relate to the mining company's exploration and exploitation rights under a mining concession agreement, mining title, mining right, or mining license conceded by the host nation and regulated under the host nation's mining legislation (together, "concession agreement"). Violations of these rights can include safety issues, such as receiving inadequate protection from the host nation, the outbreak of war and similar force majeure situations preventing performance, as well as incursions on the mines by illegal miners. Disputes may also arise because of adverse measures from the host nation, which may or may not qualify as a breach of the concession agreement. Such adverse measures may include expropriation, discrimination, or unfair treatment by government agencies or national courts, violations of stabilization clauses or withdrawals of tax exemptions.
  
  If a dispute arises, the mining company will generally have three ways to resort to international arbitration. First, it may rely on an arbitration clause contained in the concession agreement. Some countries, such as Namibia¹ and Tanzania,² provide for model concession agreements that contain an arbitration clause.
  
  Second, absent such a clause, the mining company may be able to rely on the host nation's legislation (such as a mining code), which sometimes provides a standing offer by the host nation to arbitrate disputes with foreign miners (as is the case, for example, in the DRC and Ghana).³
  
  Third, depending on the type of governmental measure at issue, the mining company may have access to investment arbitration under an investment protection treaty. Africa accounts for 922 bilateral investment treaties (BITs), most of which refer to investment arbitration in case of dispute, very often under the International Centre for Settlement of Investment Disputes of 1965 rules.⁴ Having been ratified by 154 member nations (48 in Africa alone),⁵ the ICSID convention sets forth a self-contained enforcement regime, which requires mandatory recognition and enforcement of a valid award.⁶ Besides these BITs, there are regional investment agreements like the Investment Agreement for COMESA and the SADC Protocol on Finance and Investment, which also contain provisions for investment arbitration.
  
  International arbitration is not only available to mining companies and foreign investors. A host nation may seek recourse against a mining company under either the concession agreement or the applicable law, for example, for failing to perform the exploration or exploitation, not paying the concession fees, taxes and bonuses, or for environmental damages. In such cases, international arbitration is also an option, if the arbitration clause allows the dispute to be decided by an arbitral tribunal.
  
  Finally, the use of international arbitration to resolve disputes with the host nation is not universally supported on the continent. Tanzania recently modified its law to prohibit the use of international arbitration in mining/foreign investment contracts following the initiation of two large-scale arbitrations by foreign companies.⁷

The advantages of international arbitration include a neutral forum, decision-making by experts, a final decision that can be widely enforced and the potential to keep the dispute confidential.

• Disputes with contractors and service providers: Mining companies collaborate with many contractors and service providers at all stages of project development and operation. This can lead to construction and other commercial disputes, which are generally suitable for international commercial arbitration. Whether such disputes may be submitted to arbitration will ordinarily not depend on the laws of the nation where the project is developed, since contractors and financiers are most often located in third countries. In this respect, international commercial arbitration is traditionally used as a dispute resolution mechanism for construction disputes, since it provides for highly qualified arbitrators, counsel and experts.
• Disputes within the supply chain: Disputes may also arise with purchasers of minerals (usually commodity traders or processing companies), for example, because of pricing, quality issues or compliance issues (such as conflict minerals, child labor, alleged breaches of anti-bribery or anti-corruption legislation). These disputes can be heard in international commercial arbitration, based either on an arbitration clause in the purchase agreement or a subsequently concluded arbitration agreement. Procurement disputes are another common type of dispute. Mining companies regularly buy bulk industrial materials like heavy fuel oil, gas, tires and sulfur, often on the basis of long-term supply agreements, and arbitration clauses in procurement agreements are common. The advantages of international arbitration include a neutral forum, decision-making by experts, a final decision that can be widely enforced, and the ability to keep the dispute confidential.
• Disputes within a joint venture or joint operation: Mining operations are often structured as joint ventures or joint operations (sometimes with a state-owned company as mandatory partner). Consequently, disputes may also arise from the joint venture or joint operation agreement or regarding the operation of the joint venture company. Subject to the arbitrability of intra-company disputes, arbitration would seem to be a valid option for resolving these commercial disputes. Therefore, it is common to opt for a third-state substantive law for the joint venture or joint operation agreement and to provide for international commercial arbitration as the exclusive dispute resolution mechanism. In this context, the main advantages of international arbitration are again forum neutrality, a final and enforceable decision, and—last but not least—the ability to keep the dispute confidential.
• Disputes with employees and third parties: Finally, a mining company, just like any industrial operation, may face issues with its employees. Due to the often- remote location of the assets and the likely interaction with the adjacent areas, a mining company may also encounter disputes with groups such as indigenous populations claiming violations of their traditional, human and environmental rights. These disputes in general may be heard by local courts, and in some cases are mediated with involvement from local and international NGOs.

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OVERVIEW OF MINING ARBITRATION CASES IN AFRICA

Most reported mining arbitrations are investment arbitration cases, which often become public. Over the years, several reported investment arbitration cases have accumulated, helping mining companies to better assess their own prospects of success. Among these reported Africa-related mining investment arbitration cases, the following stand out:

First Quantum v. Democratic Republic of Congo,⁸ an ICSID arbitration related to the revocation of copper mining titles and permits of a Canadian mining company by the DRC. The case was complex and multifaceted. In 2009, the DRC cancelled First Quantum's exploration permit for a mine and ordered the site closed because of alleged contractual violations. First Quantum, together with its co-investors in the project, launched an ICC arbitration against the DRC's state mining entity in early 2010. Meanwhile, the DRC granted First Quantum's mining rights to another investor, who in turn sold it to a third investor in August 2010, prompting First Quantum to initiate litigation to halt the sale. After the DRC withdrew First Quantum's permit for another mine, the company also initiated an ICSID claim against the state through a subsidiary. Eventually, all claims were settled for US$1.25 billion in 2012 and the arbitration proceedings were discontinued.⁹

Miminco also involves the DRC.¹⁰ In this case, which also provided for dispute resolution under both ICSID and ICC, the investor, a Delaware-based mining company, alleged that DRC officials and soldiers seized the mine and confiscated its equipment. Moreover, Miminco was evicted from its office premises in Kinshasa. Miminco contended that during the war the mining concessions were invaded, pillaged and unlawfully operated by the Congolese civil and military authorities, and Miminco sought damages of more than US$35 million.¹¹ The parties eventually settled the case for US$13 million.¹²

Piero Foresti et al. v. South Africa arose out of the introduction of Black Economic Empowerment (BEE) provisions in the South African Mineral and Petroleum Resources Development Act of 2002.¹³ BEE provisions favored historically disadvantaged persons by requiring the divestiture of equity by the mining operators to allow the disadvantaged to access the mining sector. An ICSID tribunal dismissed with prejudice the Italian mining investors' claims under the Italy-South Africa BIT and the Luxembourg-South Africa BIT (one of the co-claimants was an Italy-based corporation organized under the laws of Luxembourg used by some of the Italian individual investors) and ordered the investor to reimburse South Africa €400,000 for fees and costs. Interestingly, South Africa retained the BIT with Italy,¹⁴ but not those of many other European states (including Luxembourg).¹⁵ This case is also relevant for the manner in which the tribunal handled the intervention of affected third parties in the proceedings. The tribunal drafted a set of rules for amicus intervention. The affected third parties were: (1) granted access to some of the parties' submissions; (2) authorized to make written submissions; and (3) invited to give feedback to the tribunal on the effectiveness and fairness of their participation in the case.¹⁶

In contrast, commercial arbitration proceedings are often confidential, and it is difficult to determine the number of commercial mining arbitration cases dealing with concession agreements, construction works, supply chains, joint ventures and operations. Still, the trade press and even general press have reported on some cases due to their public policy impact (especially if there were parallel investment proceedings). Among the reported commercial arbitration cases, Senegal v. ArcelorMittal (conducted under the ICC Rules in Paris) is notable. There, in a reversal of roles, the host nation sued the mining company.¹⁷ Senegal brought a claim for rescission of a US$2.2 billion contract against ArcelorMittal. The claim was based on ArcelorMittal's suspension of works for the development of an iron ore mine and related infrastructure projects. Senegal won the case and the company eventually paid US$150 million to settle.¹⁸

CONCLUSION

As the mining industry grows in many African countries, so does the potential for disputes. This holds particularly true in times of resource nationalism, when host governments try to act against investors to increase their control of, and the value derived from, developing natural resources located in their territories.¹⁹ For many of the potential disputes, international commercial arbitration provides an effective dispute resolution mechanism with features preferable to domestic court proceedings. In some cases with unlawful host nation intervention, investment arbitration will offer the only effective remedy. Mining companies are well advised to devise their dispute resolution strategy before disputes arise.

The authors would like to thank Ms. Natalia Filandrianou, LL.M., for her valuable research contributions.

¹ Article 29 of the 1998 Model Petroleum Agreement (https://www.resourcecontracts.org/contract/ocds-591adf-0557496060/view#/).
² Clause 28 of the 2013 Model Production Sharing Agreement (https://www.resourcecontracts.org/contract/ocds-591adf-8006566420/view#/).
³ Article 319 of the DRC Mining Code (as amended in 2018); Section 27(3) of the Ghana Minerals and Mining Act 2006.
⁴ http://investmentpolicyhub.unctad.org/IIA/AdvancedSearchBITResults.
⁵ https://icsid.worldbank.org/en/Pages/icsiddocs/List-of-Member-States.aspx
⁶ Article 54(1) of the ICSID Convention.
⁷https://www.africanlawbusiness.com/news/8816-keeping-it-local-tanzania-curtails-investors-recourse-to-international-arbitration.
⁸ International Quantum Resources Limited, Frontier SPRL and Compagnie Minière de Sakania SPRL v. Democratic Republic of the Congo, ICSID Case No. ARB/10/21 cf. https://www.italaw.com/cases/567https://globalarbitrationreview.com/article/1030879/first-quantum-settles-congo-claims.
⁹ On April 12, 2012, the ICSID Tribunal issued a procedural order-taking note of the discontinuance of the proceeding, cf. https:// icsid.worldbank.org/en/Pages/cases/casedetail. aspx?CaseNo=ARB/10/21. According to a press release by the company all claims were settled in March 2012, cf. https://www.first-quantum.com/Media-Centre/Press-Releases/Press-Release-Details/2012/First-Quantum-Closes-Sale-of-Residual-DRC-Assets-to-ENRC-and-Finalizes-Settlement-of-All-Claims-in-Relation-to-DRC-Operations/default.aspx
¹⁰ Miminco LLC v. Democratic Republic of the Congo (Consent Award), ICSID Case No. ARB/03/14, 19 November 2007, Arbitration Intelligence Materials.
¹¹ Miminco LLC v. Democratic Republic of the Congo (Consent Award), ICSID Case No. ARB/03/14, 19 November 2007, Arbitration Intelligence Materials, pp. 4, 6.
¹² Miminco LLC v. Democratic Republic of the Congo (Consent Award), ICSID Case No. ARB/03/14, 19 November 2007, Arbitration Intelligence Materials, p. 4.
¹³ Piero Foresti, Laura de Carli and others v.  Republic of South Africa, ICSID Case No. ARB(AF)/07/1, cf. https://www.italaw.com/cases/446; Burnett/Bret, Arbitration of International Mining Disputes, OUP 2017, Appendix 2, p. 307, para. 60.
¹⁴ https://investmentpolicyhub.unctad.org/IIA/country/103/treaty/2122.
¹⁵https://investmentpolicyhub.unctad.org/IIA/mostRecent/treaty/537.
¹⁶https://www.italaw.com/sites/default/files/case-documents/italaw8035.pdf; see also de Paor, Climate change and arbitration: annex time before there won't be a next time, Journal of International Dispute Settlement, Volume 8, Issue 1, 1 March 2017, pages 179–215.
¹⁷ Senegal wins court case against Arcelor Mittal – government: https://www.reuters.com/article/senegal-arcelormittal/senegal-wins-court-case-against-arcelor-mittal-government-idUSL5N0H64EZ20130910.
¹⁸ Burnett/Bret, Arbitration of International Mining Disputes, OUP 2017, Appendix 2, p. 307, para. 65.
¹⁹ Burnett/Bret, Arbitration of International Mining Disputes, OUP 2017, p. 29, para. 5.01.

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Africa Focus: Spring 2019

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
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As part of Paris Arbitration Week, White & Case is pleased to invite you to a seminar and round table discussion focusing on key African arbitral institutions and jurisdictions. Please do join us for what promises to be a fascinating debate between our panel members as to the respective pros and cons of arbitration in their jurisdictions, and the work of their respective arbitral institutions.

Thursday, 4 April 2019

16h30: Registration
17h00: Welcome address by Christophe von Krause, Partner, White & Case
17h10: Overview of African arbitral institutions and jurisdictions

Participants:

• Narcisse Aka: Ivory Coast. Secretary-General of Court of Justice and Arbitration of OHADA (CCJA)
• Yemi Candide-Johnson: Nigeria. President of the Lagos Court of Arbitration
• Ndanga Kamau: Kenya. Vice-President, ICC International Court of Arbitration Africa Commission
• Dr. Mohamed Hafez: Egypt. Counsel & Legal Advisor to the Director of the Cairo Regional Centre for International Commercial Arbitration (CRCICA)
• Leyou Tameru: Ethiopia. Legal Consultant and Founder, I-Arb Africa

17h45: Panel: debate on the pros and cons of the respective African arbitral institutions and jurisdictions. Moderated by Elizabeth Oger-Gross, Partner, White & Case
18h30: Q+A
18h40: Closing remarks by Charles Nairac, Partner, White & Case
18h45: Reception

White & Case, Paris

19, Place Vendôme
75001 Paris
France

To register, please click here.

Global law firm White & Case LLP has continued to grow its market-leading practice in Iberian and Latin American Arbitration with the addition of Ignacio Madalena in the Madrid office, as highlighted in recent profile pieces in Latin Lawyer and Global Arbitration Review. Madalena has a range of experience in commercial and investment arbitration.

According to Latin Lawyer, "He is the third recent hire by White & Case with expertise in Latin American cases. In January the firm announced it had recruited Argentine arbitrator Silvia Marchilli from King & Spalding LLP at its Houston office. The Houston hub also received the addition of Portuguese national Jorge Mattamouros last August."

"Over the past year, we have supplemented our market-leading arbitration practice with smart growth, including internal promotions, relocations across the platform and redoubling the next generation of talent," says the head of White & Case's Latin American arbitration practice, Jonathan C. Hamilton, as quoted in Latin Lawyer. "Our strategy is to make sure we have the right people and the right skills available to clients in the right locations."

Latin Lawyer added, "White & Case was one of the first firms to establish a presence in Latin America. It has been in the region since the 1990s, when foreign investors began flocking. Since then, competition has increased and several global firms have upped their game, both in presence and expertise."

"White & Case is growing from a position of great strength as part of a longstanding strategy for Latin American arbitration," says Hamilton.

Global Arbitration Review highlighted that Madalena began his career at Spanish boutique B. Cremades y Asociados, and has worked in Allen & Overy's Madrid, Washington, DC, and London offices. "Qualified in Spain, New York, and England and Wales, Madalena speaks English, Spanish, and French. He holds LLMs from Georgetown University Law Centre and the Catholic University Leuven, and obtained a law degree from CEU San Pablo University in Madrid," summarized the publication. Madalena told GAR that he expects there will be many arbitration opportunities in Madrid, particularly in the energy and infrastructure sectors given the increased appetite of Spanish companies for investing in Latin America.

To read more about Madalena joining the Firm, read the Latin Lawyer and Global Arbitration Review articles (paywall for both articles).

Please join us for the Brazil launch event of the 4th Queen Mary University of London (QMUL) and White & Case International Arbitration Survey and a discussion focused on developments in arbitration in Brazil and Latin America. The QMUL-White & Case Survey is the most comprehensive empirical study of this field and uniquely brings together the views of private practitioners, in-house counsel, arbitrators, representatives of arbitral institutions and other key stakeholders across the globe.

Topics include:

• The Survey’s results relevant to Brazil and Latin America
• Arbitral Institutions in Brazil
• Diversity
• Technology
• Brazil as a growing market for litigation finance

Featuring:

• Jonathan C. Hamilton, Washington, DC
• Jorge Mattamouros, Houston
• Ed Attenborough, London
• Clare Connellan, London
• Luiz Aboim, London
• Michelle Grando, Washington DC

Special guests: 

• Eleonora Coelho, Secretary General of CAM-CCBC | Arbitrator
• Susana Amaral Silveira, Associate General Counsel, Mover Participações

Click here to RSVP

São Paulo: Wednesday, April 3, 2019
5:00 p.m. – 7:00 p.m.

White & Case LLP
Av. Brig. Faria Lima, 2.277 – 4th Floor
São Paulo – SP 01452-000
Parking access through Rua Prudente Correia, 432

"A powerhouse at the forefront of Latin American international arbitration" 
— The Legal 500

The international arbitration landscape continues to evolve, shaped by factors including legislation, jurisprudence and practice. For the fourth time, White & Case partnered with the School of International Arbitration – Queen Mary University of London to explore the arbitration community's preferences, perceptions and predictions. The 2018 survey, "The Evolution of International Arbitration," is the most comprehensive yet. It reflects views gathered from private practitioners, arbitrators, in-house counsel, academics and other stakeholders in a range of industries around the world.

Survey respondents considered topics including the pros and cons of international arbitration, preferred seats of arbitration, diversity among arbitrators and what will shape the field going forward. Key findings:

• Ninety-seven percent of respondents prefer international arbitration to resolve cross-border commercial disputes. Ninety-nine percent would choose or recommend international arbitration in the future
• As in the past, "enforceability of awards" was seen as arbitration's best feature, while cost was considered its worst
• London and Paris remain the most preferred seats for international arbitration, followed by Singapore, Hong Kong, Geneva, New York and Stockholm
• Fifty-five percent of respondents predict that Brexit won't have an impact on London's appeal
• While 60 percent of respondents feel progress has been made regarding gender diversity on arbitral tribunals over the past five years, a third or fewer believe this is true for geographic, age, cultural and ethnic diversity
• Technology is widely used in international arbitration, and respondents would like to see even greater use of hearing room technologies, cloud-based storage, videoconferencing, AI and virtual hearing rooms

Perhaps most important, 61 percent of respondents think increased efficiency, including through technology use, will have the greatest impact on international arbitration going forward. Interested parties should keep one eye fixed firmly on these trends, and the other on emerging technology that could alter the international arbitration landscape.

Read the source article

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© 2019 White & Case LLP

The ICC Commission has released a new report on construction industry arbitrations, providing recommended tools and techniques for effective management of construction arbitrations. The report is intended primarily for arbitrators acting under the ICC rules, but its proposals are expected to be useful for parties and counsel alike.

Introduction

The new report issued by the ICC Commission on Arbitration and ADR¹ entitled "Construction Industry Arbitrations: Recommended Tools and Techniques for Effective Management of Arbitrations" (the "Report") is an update of the "Final Report on Construction Industry Arbitrations" issued in 2001. The purpose of the Report is to provide updated practical guidance for the efficient handling of construction arbitrations, reflecting recent developments in construction arbitration, dispute avoidance, and the 2012 and 2017 revisions of the ICC Rules of Arbitration. The drafting group was co-chaired by Christopher Seppälä (FIDIC's representative on the ICC Court and Partner Of Counsel at White & Case Paris) and Aisha Nadar (Member of the FIDIC Board), and included experienced practitioners and renowned experts in the construction field from various regions.

The Report's main purpose is to set out recommendations for conducting arbitrations in the construction sector. The Report takes account of new and evolving forms of pre-arbitral dispute resolution mechanisms, which are intended to avoid disputes and reduce the number and scope of disputes that need to be arbitrated. The Report also describes case management techniques and procedural matters specific to construction arbitration, with a view to promoting expeditious and cost-effective proceedings. The Report seeks to accommodate the approaches of civil and common law systems, while also recognizing that, ultimately, arbitrators are responsible for deciding on the applicable procedural rules. This note provides a brief summary of the Report's main findings.

Selected Findings of the Report

Composition of the tribunal

The Report notes that construction arbitrations are "frequently more complex [than other types of commercial arbitrations]," that "they can generate difficult points of law and procedure related to specialised forms of contract" and that "they still seem to require many more documents to be examined than other types of disputes." The Report thus recommends that parties should consider the following key characteristics, among others, when selecting arbitrators for construction disputes:

• Familiarity with the construction industry;
• Familiarity with the main forms of construction contracts (such as FIDIC) and their interpretation; and
• Strong case management skills.

In addition, the Report refers to factors that are relevant to the selection of arbitrators in any industry, particularly availability and balance between the various members of the tribunal, including familiarity with the applicable system of law and diversity.

Interestingly, and although construction arbitrations may involve complex factual issues that are arguably best suited to a three-member tribunal, the Report suggests that the arbitration clause should provide for flexibility in the number of arbitrators ("one or more arbitrators"), and that parties should consider nominating a sole arbitrator in smaller value disputes (which, in the practice of the ICC Court, encompass disputes of a value of up to US$ 30 million). The Report adds that "[u]se of a sole arbitrator is understood to be common and to work well in England and certain other common law jurisdictions even for large disputes," while acknowledging that "this practice is not generally accepted in civil law countries which are more accustomed in their judicial system to having a panel of judges decide disputes."

Case Management Conference

The Report highlights that construction disputes require effective and disciplined procedural management and that, for this reason, the importance of the first case management conference² ("CMC") "cannot be overemphasised."

The CMC is usually conducted prior to the issuance of the first procedural order and the procedural timetable, which serve as the roadmap for the arbitration. The Report lists a number of issues that may be usefully discussed at the CMC:

• Written submissions and evidence that the parties consider necessary to establish their case;
• The need for expert evidence, which is often of crucial importance in construction disputes (as further discussed below);
• The sequence of the proceedings, including issues of bifurcation;
• Whether a site visit may be required;
• Issues relating to document management;
• Translation and interpretation issues; and
• Settlement discussions and sealed offer procedures (as also discussed below).

It is indeed advisable to consider these issues at the outset of the arbitration. Site visits, for instance, can be very useful in assisting the arbitral tribunal to understand the case, yet they are often not contemplated at the beginning of an arbitration. Failure to do so may be problematic should the need for a site visit only be identified lateras the members of the tribunal may have less availability, and/or the works may have progressed so as to fundamentally alter the appearance of the work site. The Report also cautions that "[w]hile often useful, site visits must be justified by their benefits and cost-savings."

Similarly, issues in connection with document management (such as access to project documentation databases) are frequent in large construction disputes, and it may be appropriate for the parties to consider and address these issues at an early stage of the arbitration. As stated in the Report: "It is recommended that tribunals should raise issues relating to documents early on with counsel, ideally at the first case management conference and, after consultation with the parties about their preferences, issue directions relating to document control and communication."

Procedural Timetable

The Report recognizes that, in establishing the procedural timetable, arbitral tribunals must balance two potentially contradictory goals, namely the expeditious resolution of the dispute and the need for each party to properly set out its case in the appropriate level of detail. To achieve the proper balance in the particular of construction arbitrations, the Report recommends that due consideration should be given to the following issues:

• Applicability of the Expedited Procedure Rules;³
• Preliminary determinations on issues such as jurisdiction and admissibility;
• Number and order (simultaneous or sequential) of written submissions;
• Procedure for document disclosure; and
• Hearings.

Bifurcation / Splitting the Case

Appendix IV to the ICC Rules (which sets out certain recommended case management techniques) provides that tribunals may decide to bifurcate the proceedings or render one of more partial awards "when doing so doing may genuinely be expected to result in a more efficient resolution of the case."

Consistent with this principle, the Report notes that construction arbitrations may be particularly appropriate for bifurcation as "[c]onstruction cases can involve parties having a matrix of claims and counterclaims by and against one another." It is indeed common for construction arbitrations to be divided in successive stages (e.g., liability / quantum, or multiple "tranches" of claims).

The Report refers to the following considerations, among others, as being relevant in ascertaining the appropriateness of bifurcation:

• Whether the relevant issues or claims are susceptible of being adjudicated separately;
• Whether bifurcation would result in potential cost savings;
• Whether bifurcating would expedite or, on the contrary, delay the proceedings; and
• The prima facie likelihood of success of the party seeking bifurcation.

The Report notes that "[d]ecisions about splitting a case into parts should be left until it is clear that it will be sensible and cost-effective to do so" and that "[i]n practice, it often makes sense to address any such decision after the parties have presented their statements of case." In certain complex construction disputes, it may indeed be difficult for the tribunal to evaluate the need for bifurcation prior to the first round of substantive submissions.

Time-Related Issues

Construction disputes frequently involve delay or other time-related elements. The Report observes that the Society of Construction Law's Delay and Disruption Protocol, the American Society of Civil Engineers' Standard ASCE 67-17 Schedule Delay Analysis and the Association for the Advancement of Cost Engineering International Recommended Practice No. 29R-03 Forensic Schedule Analysis are "helpful guides and sources of information." These guidelines are often referred to by parties and experts in the context of time-related disputes, although it is important always to remember the primacy of the applicable law.

The Report also recommends that the parties' respective delay / scheduling experts should meet at an early stage of the proceedings, particularly to identify – to the extent possible – a common baseline and methodology.

The Report also notes that critical path analysis methods are commonly used and that it would be reasonable to expect the parties to also use these methods in presenting their respective cases.

Experts

Because construction disputes frequently raise complex technical issues, they often require extensive input from various types of experts, which input may have a significant influence on the tribunal's ultimate decision. The Report sets out a number of recommendations regarding the use of experts in construction disputes.

First, the Report observes that "in construction arbitrations there can be confusion about whether or not expertise is required" and, consequently, recommends that the tribunal consult the parties at the CMC to whether expertise is needed and, if so, in what disciplines. One of the goals of this recommendation is to avoid resort to expert evidence if, for instance, the relevant matters could be proved in other ways.

The Report also recognizes that "it is now common for parties to use experts as consultants" and notes that the "tribunal will need to differentiate the testimony from truly independent experts and that from such consultants". This is an important point, especially in relation to claims consultants, whom contractors frequently use to prepare their claims during the project execution stage and/or before dispute boards.

Second, the Report recommends that tribunals and parties should seek to limit the potential for, and scope of, disagreement between experts by requiring that "experts should discuss their views with each other either ideally before or otherwise after preparing their reports, as most independent experts eventually see eye-to-eye on many things." The Report also notes, in this context, that expert conferencing (also known as "hot-tubbing") may be a useful tool, but that tribunals should only resort to this option after "careful consideration," particularly if such conferencing is intended to replace cross-examination. Such warning is appropriate as, in practice, expert conferencing has a number of pitfalls.

Hearing(s) on the Merits

The Report recommends that the parties should decide on the allocation of time for the hearing, or that the tribunal should "itself draw up and abide by a strict timetable, unless to do so would be unjust". Consistent with arbitral practice, the Report also states that "factual witnesses should be heard ordinarily before the experts' reports are considered, since the questioning of a factual witness may require an expert to modify or withdraw an opinion or provisional conclusion."

Settlement and Sealed Offers

The Report recognizes that parties are free to settle their dispute at any time during the proceedings and that they may also resort to other forms of ADR, such as mediation, to assist them in this goal.

A significant development in the field of construction arbitration is the new ICC procedure for the use of the "sealed offer".⁴ In this context, the Report highlights that "[t]he arbitral tribunal should also consider consulting the parties at an early stage (e.g. at the first case management conference pursuant to Article 24 of the ICC Rules) and inviting them to agree on a procedure for the possible use of sealed offer(s) in the arbitration"and that "[t]he [ICC] Secretariat may assist the parties to put information relating to certain unaccepted settlement offers, and related correspondence, commonly referred to as ‘sealed offer(s)', before an arbitral tribunal at the appropriate time (i.e. after the tribunal has decided the merits and is about to decide the issue of costs and how they are to be allocated)."

Conclusion

Arbitrations in the construction industry are frequently more complex than other types of disputes. They require, on the part of arbitral tribunals, strong case management skills in order to achieve an efficient and cost-effective resolution. The Report, which builds on the ICC Court's long experience in administering construction arbitrations and recent developments, provides a comprehensive set of recommended practices for arbitrators, parties and counsel to assist them in handling such cases.

Click here to download PDF.

¹ Alternative Dispute Resolution
² ICC Rules, Article 24
³ ICC Rules, Appendix VI
⁴ See C. Seppälä, P. Brumpton and M. Coulet-Diaz, "The New Assistance ICC Provides to Protect the Confidentiality of a 'Sealed Offer'", ICC Dispute Resolution Bulletin 2017 (issue 1), p. 84. The article describes the sealed offer procedure and its use in ICC Arbitration and includes as an Appendix a model form of sealed offer letter.

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2019 White & Case LLP

On the occasion of the 26th Annual Willem C. Vis International Commercial Arbitration Moot, CEPANI40 and White & Case have the pleasure of inviting you to a networking reception in the heart of the historical city centre of Vienna.

Saturday, 13 April 2019
5:00 p.m. – 7:00 p.m.

Planter's Club
Zelinkagasse 4, 1010 Wien, Vienna, Austria
(400 meters from the Juridicum)

Click here to RSVP

Free of charge.

Places are limited. All registrations will be confirmed a few days prior to the event.

We look forward to welcoming you in Vienna.

Sophie Goldman and Sigrid Van Rompaey
Co-chairs of CEPANI40

Nathalie Colin and Alexandre Hublet
White & Case LLP

See also: White & Case and the Vis Moot

Anil Tanyildiz is an associate in the Mergers and Acquisitions Group in the Firm's Houston office. His practice includes a broad range of business transactions in the areas of domestic and cross-border mergers and acquisitions, joint ventures, private equity, and project development across the energy sector. He also has experience in domestic and international dispute resolution both in the United States and Turkey.

Anil studied law in both the United States and Turkey, and he holds primary and master's degrees in law from both countries. His dual training and experience in the civil and common law jurisdictions allow him to understand the differences between various legal systems and advice accordingly.

He graduated in the top of the common law class from Loyola University New Orleans College of Law's Juris Doctor program, and he was the only student who graduated summa cum laude in his LLM class at Loyola. During law school, he was member of the Loyola Law Review, where his case note was selected for publication.

Frederic Akiki is an associate in White & Case's Dispute Resolution and Construction and Engineering groups based in London. He advises owners and contractors on the resolution of disputes arising out of complex international construction and engineering projects.

Frederic joined White & Case as a Trainee Solicitor in 2016, gaining experience in the Firm's Construction and Engineering, Intellectual Property, and Private Equity practice areas. Frederic also spent six months working in the Firm's Tokyo office with the Energy, Infrastructure, Project and Asset Finance Group.

The objective of any party facing the selection of a party-appointed arbitrator is to maximize its chances of winning. The ideal party-appointed arbitrator is an individual who, once convinced of the merit of the positions advanced by the appointing party, will be motivated and able to convince the presiding arbitrator and the other party-appointed arbitrator of this point of view. What kind of individual can best fulfill that role?

What to Avoid

AN APPEARANCE OF BIAS. It is imprudent to name an individual who, because of a visible link to either the appointing party or counsel, will be seen as predisposed in favor of the appointing side, whether or not the individual actually has such predisposition. For example, in the case of a government entity appointing an individual with links to and, therefore, knowledge of the government, any advantage that might be derived from the appointee’s knowledge would surely be offset by the risk that the two other arbitrators would regard the appointee’s independence with skepticism. The likelihood would be that any arguments made by this appointee in favor of the government party during arbitrator deliberations would have diminished impact on the other arbitrators.

THE RUBBER STAMP. Parties should avoid naming an individual so beholden or thankful for having been named that the appointee will act as a rubber stamp for the positions advanced by the appointing party. Such an individual will inevitably be perceived by the other arbitrators as a cipher for the appointing party, with the result that the tribunal will become, in effect, a two-person panel.

THE CUSTOMARY PRESIDING ARBITRATOR. It is dangerous to name an individual so accustomed or predisposed to being a tribunal chair that he or she will feel no need to fulfill what is commonly recognized to be one of the key roles of a party-appointed arbitrator in international arbitration; namely, assuring, insofar as possible, that the presiding arbitrator and the co-arbitrator adequately consider the arguments advanced by his or her appointing party. This function requires a certain effort by the party-appointed arbitrator, and there are individuals who, one can predict, will have no inclination to make such effort.

THE OVER-WORKED ARBITRATOR. There are terrific arbitrators who are over-worked. But it is a rare skill to be both terrific and over-worked. More often, it is overly risky to appoint an individual who is over-worked, or even worse, someone who is lazy or manifests no enthusiasm for taking on the case. Industriousness is a key characteristic of a good arbitrator. As between party-appointed arbitrators, the one who demonstrates both diligence with respect to mastering the factual record and activism with respect to drafting the award will likely be the one with greater input in the decision-making process.

THE CONTRARIAN. It is risky to name a contrarian; such a person might alienate the other arbitrators and might be eager to write a dissent. No party wants to see a brilliant dissent written in support of its position.

SUBSTANTIVE DISSONANCE. One should avoid naming an individual with a history of espousing positions adverse to those that will be advanced by the appointing party in the arbitration. The risk is not that the appointee likely would be hostile or unfair to the appointing party but, rather, that an individual with this background might be less able to identify arguments in favor of the appointing party. Arbitrators are typically not passive adjudicators who merely weigh the relative merits of the parties’ positions before choosing between them. Rather, arbitrators often take their own view of the facts and the law, and then develop their collective view during joint deliberations. It is during these deliberations that, a party hopes, its appointee, having been convinced of the merits of its position, will persuasively demonstrate an ability to summon arguments in favor of that viewpoint.

THE INEXPERIENCED ARBITRATOR. It is usually advisable to avoid an individual with no experience in international arbitration. The difficulty with an inexperienced appointee is not that there are secrets known only to the initiated. Rather, it is in part that familiarity breeds confidence and the lack thereof in a party-appointed arbitrator may limit the appointee’s effectiveness. Inexperience in the appointee also may be harmful when the two party-appointed arbitrators consult to name the chair. This is because the appointee may be less able to identify or obtain the agreement of the other arbitrator to suitable and experienced individuals willing to act as chair. Moreover, inasmuch as the presiding arbitrator usually will be a lawyer experienced in international arbitration, there is an obvious advantage in naming an individual who will be known to the presiding arbitrator or who, at least, will share some of the presiding arbitrator’s experience.

THE NON-LAWYER EXPERT. The preceding considerations may militate against naming non-lawyer industry experts as party-appointed arbitrators in most international commercial disputes. There are, however, exceptions to any rule, and in certain cases, the best course may be to name an individual who is an insider to the trade, even though an outsider to international arbitration.

What to Seek

The best party-appointed arbitrator would combine as many of the following traits as possible.

INTELLIGENCE/STATURE. The appointee should be an individual of intelligence and stature in his or her field, which may be as narrow as the one in question or as broad as the field of international commerce.

INDEPENDENCE IN FACT AND APPEARANCE. The appointee should be independent of the appointing party in fact as well as in appearance, and should have sufficient eminence and/or interpersonal skills to assure against being perceived as a rubber stamp. There should be no doubt in the minds of the other arbitrators that the appointee will, if the facts and law so require, vote against the appointing party.

SHARED VIEWS. Based on experience, the appointee should have an intellectual predisposition in favor of the positions to be advanced by the appointing party. This does not mean bias; this attribute would be undermined by bias. What this calls for is an individual inclined by experience to identify and sympathize with arguments and equities in favor of the appointing party.

MOTIVATION. The appointee should be motivated and have the time and ability to master the facts of the case and play an active role in drafting the award. There is no way to generalize about the type of individual who might possess these critical attributes. Some arbitration practitioners believe academics are best suited for this role because of their drafting ability and that attorneys are often unwilling to spend substantial time on cases that remunerate them at less than their usual hourly rate. Others find attorneys are able and willing to dive into fact-intensive files.

COLLEGIALITY. The appointee obviously should be capable of acting collegially with the other arbitrators.

COGNIZANCE OF ROLE. The appointee should be cognizant of the role required of a party-appointed arbitrator, i.e., to make the effort to assure that the rest of the tribunal gives due consideration to the facts and the law favoring the appointing party’s side.

KNOWN QUANTITY. As a practical matter, the appointee should either be known to the appointing party or its counsel or well known to others known to them. The appointment is usually the most important decision that counsel and the party will make during the arbitration, and common sense dictates that the selection should be made on the basis of either personal knowledge or a careful investigation of the individual’s capability to meet these criteria.

Conclusion

The fact that arbitrator appointments are made with the objective of maximizing one’s chance of winning does not mean appointments should be or are made in the hope of bias. An appointee can be both independent of the appointing party and faithful to the integrity of the arbitral process, as well as intellectually predisposed in favor of the appointing party. There is an inherent safeguard in the arbitral process:  the neutrality of the presiding arbitrator. No presiding arbitrator will find a rubber stamp party-appointee persuasive. This safeguard gives parties the incentive to name arbitrators of stature and independence, even as they look for an individual predisposed by experience in favor of the positions likely to be advanced by their side during the arbitration.

In Brief

SEEK OUT…

• Intelligence and high stature.
• Prior experience as an arbitrator in international cases.
• Independence of the appointing party.
• Interpersonal skills.
• A viewpoint that has commonality with that of the appointing party.
• Motivation and enthusiasm about participating in the case.
• A willingness to endeavor to have the appointing party’s arguments heard.
• Collegiality

AVOID…

• An appearance of bias.
• A tendency to rubber-stamp the views of the appointing party.
• Laziness or lack of motivation or commitment to the case.
• A contrarian temperament.
• Inexperience in international arbitration.

Click here to download PDF.

*This article is an adaptation of an article previously written by the author, published in the ARIAS U.S. Quarterly, Second / Third Quarter 1999. While change is the norm in international arbitration, the essence of party appointment strategy is unchanged.

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2019 White & Case LLP

The Legal 500 has recognized five White & Case partners on its 2019 "International Arbitration Powerlist UK," a directory of "200 of the UK's leading practitioners working in law firms and at the Bar" on international arbitration matters, according to research conducted by The Legal 500.

The White & Case partners in The Legal 500's International Arbitration Powerlist are Ellis Baker, Phillip Capper, Clare Connellan, David Goldberg and Aloke Ray QC, all from White & Case's London office.

Daisy is an associate in White & Case's Dispute Resolution group based in London. She focuses on commercial litigation and international arbitration. She has experience in the Commercial Court and the Upper Tribunal (Tax Chamber), as well as in regulatory investigations. She has worked on arbitrations under the ICC, LCIA and ICSID rules.

Daisy joined White & Case in 2016 as a trainee, gaining experience in the Firm's Capital Markets, Litigation and Arbitration and Construction Arbitration Groups in London, and the International Arbitration Group in the Firm's New York office.

For the fifth year in a row, White & Case has been ranked the top international arbitration practice in the world by Global Arbitration Review (GAR), which announced White & Case's top spot at its GAR 100 awards ceremony in Paris on April 4.

White & Case once again took the top spot in the GAR 30, a ranking of the "busiest practices, which is generated from the size and number of the disputes all the firms in the [GAR 100] have argued in the past two years," according to GAR.

GAR selects its GAR 30 firms following a detailed analysis of each firm's composition and activity, including such metrics as the number of merits hearings and jurisdictional hearings in a two-year period and the amount of money at stake, the number of hours billed to arbitration and the number of pending cases in which a firm’s members have been appointed as arbitrators.

White & Case's roster of more than 180 arbitration practitioners and its large case load, valued at US$202 billion (up from US$144 billion in last year's GAR 30), were both cited by GAR as factors that helped the firm retain the top slot.

In its ranking report on White & Case, GAR wrote "The US powerhouse won $650 million in an Angola-related case, settled a mammoth dispute over a nuclear power plant, secured more defence wins for Peru, and picked up new instructions from South Korea and Saudi Arabia…. White & Case is blessed with a list full of clients that return."

"For the fifth year in a row, we stand alone at the top of the GAR 30 rankings," said partner Paul Friedland (New York), White & Case global head of International Arbitration. "This attests to the confidence that our clients, including numerous repeat clients, place in us for the highest stakes cases."

White & Case hosted a roundtable on Brazilian and Latin American Arbitration on April 3, 2019, in the São Paulo office. The panel included Clare Connellan (Partner based in London ), Jorge Mattamouros (Partner, based in Houston), Michelle Grando (Associate, based in Washington, D.C.), and special guest speakers, Eleonroa Coelho (Secretary General of CAM-CCBC) and Susana Amaral Silveira (Associate General Counsel, Mover Participações). The discussion focused on the results of the QMUL-White & Case International Arbitration 2018 Survey and arbitration in Brazil and Latin America.  White & Case is a longstanding leader in Latin American Arbitration.

The ICC Task Force on Emergency Arbitrator Proceedings recently released its report, providing further guidance on emergency arbitrator proceedings. Its findings are expected to be useful for parties and counsel alike. Below is a brief overview.

Introduction

The demand by users of international arbitration for a mechanism to provide urgent and immediate relief in situations where the arbitral tribunal had not yet been constituted led to the addition of an emergency arbitrator ("EA") procedure in various arbitration rules, including those of the International Chamber of Commerce ("ICC"). The ICC was at the forefront of this movement, having introduced a Pre-Arbitral Referee Procedure (the pre-cursor to EA procedures) in 1990.¹ In 2012, the ICC adopted a set of detailed provisions on an EA procedure under Article 29 and Appendix V of the ICC Arbitration Rules ("ICC Rules"), which also find a place in the Rules' current 2017 iteration.

The ICC Commission on Arbitration and ADR Task Force on Emergency Arbitrator Proceedings ("Task Force")² was set up in 2015 to study the initial years of experience of the ICC's EA provisions. The Task Force's report summarises what has happened in the EA applications made until 30 April 2018, offering practical insight and guidance on how to handle EA proceedings.³ The Task Force's findings are expected to be useful to parties, counsel and arbitrators in considering whether to resort to and how to manage EA proceedings. This note provides a brief summary of some of the Task Force's key findings.

Some Key Findings of the Task Force

Growing popularity of the EA procedure

The Task Force's findings reaffirm the growing popularity of the ICC's EA procedure. Of 80 applications brought in the first six years (1 January 2012-30 April 2018), 10 were made in the first two years,⁴ while 70 were made in the last four years, which is an average of 17.5 applications in each of the last four years. As of 1 March 2019, 95 EA applications had been filed under the ICC's EA procedure.

Out of the 80 applications analysed by the Task Force, the ICC Court President held the EA provisions to be inapplicable in two cases, while 78 proceeded. Of those that proceeded, 69 eventually resulted in an order, and in 23 cases, an emergency measure was fully or partially granted (i.e., in almost 30% of the applications made).

The amounts in dispute in the applications brought have ranged from as little as US$ 250,000 to as great as US$ 20 billion, with an average amount of US$ 190 million in dispute.

EA proceedings are expeditious and provide a timely response

The ICC Court President decided on whether an EA application could proceed within 24 hours of the application being received by the ICC Court Secretariat in all 80 cases, and as noted above, only two were rejected at this stage. Of the remaining 78, an EA was appointed on the day the application was received in two cases, on the day after in 49 cases, and within two days in 27 cases. This is an impressive achievement, since Article 2(1) of Appendix V of the ICC Rules states that such appointment would be made within as short a time as possible and "normally" within two days. In only four cases was the EA challenged, and all challenges were dismissed.

The Task Force also found that the EA proceedings almost invariably concluded within, or very shortly after, the 15-day deadline foreseen in the ICC Rules. Of the 78 applications that went forward, there was no order rendered in eight cases, while in the remaining 70 cases: the order was rendered within the 15-day deadline in 33 cases, the order was rendered between 16 and 19 days in 32 cases, and the order was rendered between 20 and 30 days in the remaining five cases.

No one size fits all approach to EA proceedings

A significant finding of the Task Force was that EA proceedings varied with respect to threshold issues, procedural matters, substantive standards as well as the considerations that came into play after an EA proceeding had taken place. This appears to be in line with the intention of providing flexibility to parties and EAs under the ICC Rules.

Threshold issues

Threshold issues of applicability of the EA provisions, jurisdictional and admissibility concerns were relevant in some way in most applications, with 70% of the EA applications (56 out of 80) involving them and more than 26% of the total EA applications (21 out of 80) being dismissed on these grounds.

Procedural issues

The Task Force highlighted the significance of the flexibility provided to EAs under Appendix V of the ICC Rules and found that, in practice, EAs had adopted procedures that best served the needs of the case before them. For example, there was a case management conference in 25 cases (out of the 78 that proceeded), while there were witness statements in only 18 cases and expert reports in only three cases. While there were hearings in 53 cases (by telephone in 33 cases and in person in 20 cases), oral testimony was only heard in a few cases.

Standards applied

Arbitration rules have been criticized for not clarifying the substantive standards applicable to assess EA applications.⁵ The Task Force's findings in this regard are thus timely and welcome, as they give a lay of the land in terms of the standards that EAs have applied in ICC practice.

The Task Force noted that most EAs (at least 49 out of 80 applications) applied the substantive criteria for the grant of interim measures in accordance with standards distilled from international arbitration practice rather than applying a specific domestic law. They identified the urgency criteria to be one of great practical significance, being a very common basis for the dismissal of EA applications. Apart from the requirements of Article 29(1) of the ICC Rules (i.e., that the interim measures cannot await the constitution of an arbitral tribunal), the Task Force found that EAs also considered factors such as the Applicant's contribution to the urgency or whether the Applicant had demonstrated that the relief requested avoided imminent or irreparable harm. In addition to the urgency criteria, the Task Force found that EAs considered (i) the likelihood of success on the merits, (ii) the risk of irreparable harm, (iii) the risk of aggravation of the dispute, (iv) the absence of prejudgment on the merits, and (v) proportionality/balance of equities. EAs tended to evaluate which elements were relevant and what weight each factor should carry in light of the particular circumstances of the case.

EAs also considered the provision of security from the Applicant and whether the relief requested was appropriate. With respect to security, in no case did the EA make the granting of emergency measures conditional on the provision of security. Indeed, parties requested security in very few cases (around nine) and EAs granted such a request in even fewer ones.

The Task Force noted that the issue of whether EAs may award declaratory relief remains unsettled.

Enforceability

The issue of enforceability of EA decisions has generated a fair amount of debate.⁶ The Task Force identified a number of trends in the enforceability of EA decisions, including that jurisdictions that have incorporated the UNCITRAL Model law tended to favour enforcement and that US case law is increasingly treating EA decisions at par with interim arbitral awards. The Task Force found that compliance issues (excluding costs) were only encountered in three out of the 23 cases in which an emergency measure was ordered, which is a nearly 87% compliance rate. It concluded from the increasing use of EA proceedings worldwide that users are not discouraged by enforceability concerns, as EA proceedings benefit from high levels of voluntarily compliance by the parties, the support of local courts, and the arbitral tribunal on the merits. Interestingly, the 2015 Queen Mary/White & Case International Arbitration Survey had found that 79% of respondents considered the concerns about enforceability of EA decisions to be the most important factor affecting the choice between state courts and EAs.⁷

Modification of the EA's order was requested in only eight cases: in five instances before the EA and in three instances before the arbitral tribunal, and in only one case was a modification of the EA's order granted (by a sole arbitrator). There was only one known case where the arbitral tribunal granted damages for failing to comply with the EA's order.

Conclusion

The conclusions one can draw from these key findings of the Task Force's report are that the ICC's EA procedure is growing in popularity, is expeditious, and leads to a timely result. It also has the procedural flexibility to adapt to the circumstances of the case and leads to a generally consistent application of substantive standards in accordance with international practice. EA decisions are complied with either voluntarily or with the support of local courts and arbitral tribunals on the merits. This bodes well for the continuing use of the EA procedure, the addition of which to the ICC Rules can only be described as a resounding success.

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¹ Andrea Carlevaris and José Ricardo Feris, Running in the ICC Emergency Arbitrator Rules: The First Ten Cases 25(1) ICC BULLETIN 25 at p.25.
² One of the authors of this article (Andrew McDougall) is a member of the Task Force and was the EA in the fourth application, which was the third that went forward and the first in which an emergency measure was granted.
³ The Task Force's report is available at: https://iccwbo.org/publication/emergency-arbitrator-proceedings-icc-arbitration-and-adr-commission-report/.
⁴ Carlevaris and Feris, supra note 1
⁵ Kyongwha Chung, Prima Facie Case on the Merits in Emergency Arbitrator Procedure, http://arbitrationblog.kluwerarbitration.com/2017/09/08/prima-facie-case-merits-emergency-arbitrator-procedure/.
⁶See, Ank A. Santens and Jaroslav Kudrna, The State of Play of Enforcement of Emergency Arbitrator Decisions, 34 (1) JOURNAL OF INTERNATIONAL ARBITRATION 1 (2017).
⁷2015 International Arbitration Survey: Improvements and Innovations in International Arbitration, https://www.whitecase.com/sites/whitecase/files/files/download/publications/qmul-international-arbitration-survey-2015_0.pdf at p.28.

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Céline Aka is an Associate in the International Arbitration Group in Paris. Her practice includes international commercial and investment arbitration. Céline also supports clients in the Intellectual Property and Information Technology Practice.

In addition to her international arbitration practice and technology related litigation experience, Céline has also been active in representing pro bono clients in a variety of civil rights matters. She was awarded the White & Case pro-bono award in 2017 and 2018.