ENGLISH NATIONAL ARBITATION LAWS, THE NEW YORK CONVENTION & THE RULES OF THE LONDON COURT OF INTERNATIONAL ARBITATIOIN: INTERPHASE & APPLICATION Valentine Ataka* TABLE OF CONTENTS INTRODUCTION ..……………………………………………………………………………………....1 PRE-ARBITRATION PROCEDURES…………………………………….……………………….1 Establishment of ‘a dispute under the Contract’..…………………………....…………..1 Identifying the Dispute Resolution Forum ……………………..………….……………..…….2 Negotiation as required under the Contract …………………………………..………………..2 Initiation of Arbitration ………………………………………………………………………………….. 3 PROCEDURAL ISSUES DURING ARBITRATION ……………………....………...5 Appointment of Arbitrators …………………………………………………………………………..5 Conduct of the Hearing ….…………………………………………………….……..………..…….6 Confidentiality.. ….……..………………………………………....…………………………..……...7 Application for Interim and Conservatory Orders …………………………………………. 7 Application for Supplementary Orders of Court …………………………………………...8 PROCEDURAL ISSUES POST-ARBITRATION ……………………………………..….9 Challenging the Award ………………………………………………………………………………......9 Enforcement ………………………………………………………………………………………………….10 CONLUSION …………………………………………………………………………………………….11 BIBLIOGRAPHY…………………………………………………………………………………………..……………..14 INTRODUCTION This article discusses the procedural issues that disputants need to take into account where they have subjected their disputes to the jurisdiction of the London Court of Arbitration and have elected London as the seat of their arbitration. The issues to be considered are: Pre-arbitration procedural issues – what are the procedural requirements before commencement of arbitration in view of the terms and conditions of the Contract, the LCIA Rules (the Rules)and the Arbitration Act, 1996 (the Act); and what are the relevant issues that the disputants need to address themselves to even as they embark on these preliminary procedures? Procedural issues during the arbitration - What would be the procedural imperatives as the arbitration progresses considering the terms of the contract, the salient features of the dispute, the Rules and the Act? Procedural Issues post arbitration- what are the procedural issues that ABC has to watch out for in anticipation of the conclusion of the Arbitration? PRE-ARBITRATION PROCEDURAL ISSUES Establishment of a ‘dispute under the Contract’ The disputants cannot proceed to adjudication unless there is indeed a ‘dispute’ between them arising from the contract Always Associates, ‘Judicial Guidance on the Meaning of Dispute’, January 2005) http://www.alway-associates.co.uk/legal-update/article.asp?id=71 accessed 4th March 2013 . A problem presents itself where the contract does not define what amounts to ‘a dispute under the contract.’ However, according to the High Court of England in case of Amec Civil Engineering Ltd v The Secretary of State for Transport [2004] EWHC 2339 (TCC) which concerned the challenge of the jurisdiction of an arbitrator, a dispute comes to be when there was notification and rejection of the claim. Identifying the Dispute Resolution forum The Contract will often be explicit on the form of dispute resolution mechanism that the parties are to pursue. The Contract may sometimes provide for a multi-tier procedure in dispute resolution; for example. Informal Negotiations before An ADR process of choice Court as default recourse in the event that the above two fail Negotiation where required under the Contract In some Contracts there may be an escalating negotiation procedure before recourse can be sought in ADR or Courts; for instance Informal Negotiations by parties’ representatives; failing which Formal Negotiation by nominees of the respective parties The nominees of either party are may be predetermined e.g. by an Appendix to the Contract or agreed to before negotiations start ; failing which Executive Negotiation by Managing Directors of the companies. Under English law, such an agreement to negotiate is not enforceable Contrast with the position in the USA and Singapore where the Courts have upheld parties’ pre-arbitration procedural requirements. See the cases of Argentina vs BG Group D.C. Court of Appeals, No. 1:08-cv-00485 and International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd [2012] SGHC 226 in the USA and Singapore respectively . This was the position held by the Court in Wah (Aka Alan Tang) & Another v Grant Thornton International Ltd & Others [2012] EWHC 3198 (Ch) where the contract had required executive negotiation before formal procedures. The High Court (Hildyard J) held that such contractual negotiation clauses are ‘too equivocal ….. and too nebulous in terms of the content of the parties' respective obligations to be given legal effect as an enforceable condition precedent to arbitration’ Ibid, Paragraph 72 Disputants should however note that negotiation processes are much simpler, cheaper and more time effective compared to formal ADR processes such as arbitration Brown, Henry J. & Marriott, Arthur L., “Choice and timing of Process Use" in, Brown, Henry J. & Marriott, Arthur L., (eds) ADR Principles and Practice, (Sweet & Maxwell Ltd, 1999) See also Margaret L Moses, The Principles and Practice of International Commercial Arbitration, (Cambridge, 2008) pg4 where she notes that the myth that arbitration is cheap and time saving is fading due to tendency by parties who have ‘increasingly incorporated many litigation tactics into arbitration’. . For instance, institutional arbitration greatly limits party autonomy in resolution of disputes Section 1(b) of the Arbitration Act recognizes this freedom of parties ‘to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest’ . In such arbitration the parties are bound by the Rules of the institution with minimal exceptions. See the Preamble to the LCIA Rules which provides that ‘Where any agreement, submission or reference provides in writing and in whatsoever manner for arbitration under the rules of the LCIA or by the Court of the LCIA (“the LCIA Court”), the parties shall be taken to have agreed in writing that the arbitration shall be conducted in accordance with the following rules (“the Rules”) Initiation of Arbitration Notices of arbitration under the Act If the contractual negotiations fail, the next step is for the disputants to commence arbitration proceedings. To do so, they have to first comply with Section 14(3) of the Act. The Section provides that Where the arbitrator is named or designated in the arbitration agreement, arbitral proceedings are commenced in respect of a matter when one party serves on the other party or parties a notice in writing requiring him or them to submit that matter to the person so named or designated. Where the contract does not stipulate the procedure for triggering the arbitration process, either party will have to issue a S.14(3) notice. This Step is important in among other things forming basis for raising or defending objections on limitation of time prescribed by Clause 29.2 of the Contract As read with Appendix 1 to Section 1 -Form of Agreement which contains the actual limitation period . The notice, as was pointed out in Bulk & Metal Transport v Voc Bulk Ultra Handymax Pool LLC, [2009] 2 All E.R. (Comm) 377 needs to be clear that the arbitration agreement is being invoked and that the respondent is required to take steps accordingly. In the event that time has lapsed, the initiating party may proceed under Section 12 of the Act to obtain an order of Court extending time within which to lodge the claim. This is one of the Mandatory provisions of the Act Schedule 1 of the Act meaning irrespective of any other agreement, the right under this provision can still be exercised Guy Pendell and David Bridge, “Arbitration in England & Wales” in Torsten Lörcher, Guy Pendell and Jeremy Wilson, (eds) CMS Guide to Arbitration (CMS Legal Service, 2012) . Request for arbitration under the LCIA Rules At the lapse of the Section 14(3) notice, the next step is to comply with Article 1(1) of the LCIA Rules which requires Any party wishing to commence arbitration under these Rules (“the Claimant”) [to] send to the Registrar of the LCIA Court (“the Registrar”) a written request for arbitration (“the Request”) The Request is to be accompanied by the Statement of Claim describing the nature and circumstances of the dispute, and specifying the claims. The other documents to accompany the Request include a copy of the Arbitration Agreement and contract, proof of service. PROCEDURAL ISSUES DURING THE ARBITRATION The conduct of institutional arbitration procedures is predominantly governed by the rules of the chosen institution Michael Pryles, ‘Limits to Party Autonomy in Arbitral Procedure’, (ICCA, 2008) http://www.arbitration-icca.org/media/0/12223895489410/limits_to_party_autonomy_in_international_commercial_arbitration.pdf accessed 28th February 2013 accessed 2nd March 2013 which in this case is the LCIA and the law of the seat of the arbitration. Going by the decision in C vs. D, [2007] EWHC 1541 English Law will be the lex arbitri since the parties have elected London as the seat of the arbitration Annex to the Contract . Appointment of Arbitrators The mandate to appoint the Tribunal under the Rules lies with the LCIA with limited input by the parties. Under Article 5.4 of the LCIA Rules, the Tribunal to conduct the arbitration is to be constituted once the Respondent files their reply to the Claim or not later than 30 days after the Claim had been served. Party contribution is limited. For instance a reading of Article 7.1 of the Rules also indicates that party autonomy may extend to nomination of an arbitrator. However, the actual appointment is at the discretion of the Court. Article 5.4 allows the parties to agree on whether they want more than one arbitrator to form the Tribunal. Under Article 5.5, the appointment of arbitrators is to be done with ‘due regard for any particular method or criteria of selection agreed in writing by the parties’. Further, in exceptional urgency, a party may under Article 9 apply to the Court for the expedited formation of the Tribunal. Where the parties have agreed to participate in the appointment of the arbitrators it will be important for each party to cooperate and comply with the timelines of agreements otherwise they will be treated as having passed up the opportunity. This was the case in Minermet SA Milan v Luckyfield Shipping Corpn SA [2004] EWHC 729 (Comm) where one of the parties was in default. Conduct of the hearing Under Article 19.2 of the LCIA Rules, the Tribunal has the discretion to ‘fix the date, time and physical place of any meetings and hearings in the arbitration’. Article 14 however permits (and encourages) the parties to ‘agree on the conduct of their arbitral proceedings’. Such agreement is however subject to the Tribunal’s duties:- to act fairly and impartially as between all parties, giving each a reasonable opportunity of putting its case and dealing with that of its opponent The Courts in England as was the case in Stretford v The Football Association Ltd & Another[2004] EWHC 729 (Comm) consider arbitration procedures to be subject to constitutional requirements of fairness ; and to adopt procedures suitable to the circumstances of the arbitration, avoiding unnecessary delay or expense, so as to provide a fair and efficient means for the final resolution of the parties’ dispute Indeed it is a mandatory duty of the parties pursuant to Section 40 of the Act as interpreted by the High Court (Aikens J) in Elektrim SA v Vivendi Universal SA [2007] EWHC 11 (Comm) to act in a manner that promotes expeditious and proper conduct of the arbitration proceedings. In any event this is another opportunity for the parties to exercise their autonomy, albeit limited to secure a speedy hearing and determination of the dispute. Laying down the rules on and Observation of Confidentiality The general rule is that the proceedings at the LCIA are to be conducted in private and matters therein treated with confidentiality Articles 19.4 & 30 . In light of Article 30, confidentiality covers the awards, materials used in the proceedings and deliberations of the Tribunal. The only exception is where the parties have agreed otherwise Ibid The Court of Appeal in England has had occasion in the case of Emmot vs. Michael Wilson & Partners [2008] EWCA Civ 184 to emphasize that ‘the parties [are] under an obligation of confidence to use documents disclosed or generated in an arbitration only for the purposes of the arbitration even if the documents did not contain anything which was in itself confidential. The obligation [arises], not as a matter of business efficacy, but [is] implied as a matter of law. Such documents could not be disclosed to a third party without the consent of the other party or pursuant to an order of the court’ The parties will therefore be bound to uphold confidentiality throughout the proceedings or otherwise agree in writing on the exceptions. Application for Interim & Conservatory orders As the arbitration progresses, there may be need to preserve the subject matter Raymond Werbicki, “Arbitral Interim Orders: Fact or Fiction” in AAA Handbook on International Arbitration & ADR (Jurisnet, 2010) . For instance on the basis of apprehension as to the financial liquidity of the Respondent , it may be necessary to ensure that in the event that the Claimant gets an award in its favour, it is able to realize it. By way of an application for a conservatory order as permitted by Article 25 of the Rules, the Claimant may approach the Tribunal by way of an application for a conservatory order requiring the Respondent to tender security for the amount in dispute and for costs. Under Section 38 of the Act, this power is viewed as a preserve of the Tribunal. Sandip Adhipathi, ‘Interim Measures in International Commercial Arbitration: Past, Present and Future’ (University of Georgia, 2003) http://digitalcommons.law.uga.edu/cgi/viewcontent.cgi?article=1000&context=stu_llm accessed on 13th February 2013 Applications for supplementary orders of Court Court’s will not intervene in arbitration proceedings except to offer necessary supportive orders. Sandip Adhipathi, (above n19) pg 18 Under Section 44 of the Act the High Court may issue supplementary orders for:- the taking of the evidence of witnesses; the preservation of evidence; permitting collection of evidence from the subject property The exercise of this power by court is however restricted. For instance in Assimina Maritime Ltd v Pakistan Shipping Corporation [2005] All ER (D) 202 (Jan) the Court (Colman J) rejected the invoking of Section 44 to obtain ordinary disclosure of documents from a non-party to the arbitration. However See Gordon Blanke, “Supporting Role: Arbitration and the Courts” where in discussing Section 44 he argues that, ‘non-parties can nonetheless be forced to disclose documents in arbitral proceedings provided that the individual application for disclosure is sufficiently specific and the documents to be disclosed are crucial to the questions which have been submitted for determination in the arbitration proceedings’ http://www.sjberwin.com/Contents/Publications/pdf/100/240707012642.pdf accessed on 2nd March 2013 PROCEDURAL ISSUES POST ARBITRATION The arbitration process is substantively concluded when the Tribunal makes its decision (the award) Article 26 of the Rules . Generally, the award is deemed final and cannot be challenged by the parties. Margaret Tofalides & Clair Athurs “Mission impossible? Challenging Arbitration Awards In England” (Arbitration Newsletter, September 2012) http://www.manches.com/Content/Resources/files/Margaret%20Tofalides%20Article%20IBA%20Newsletter%20September%202012.pdf accessed on 2nd March 2013 Challenging the award Section 58 of the Act renders the decision of the any Arbitration Tribunal conclusive and binding on the parties. It provides that Unless otherwise agreed by the parties, an award made by the tribunal pursuant to an arbitration agreement is final and binding both on the parties and on any persons claiming through or under them However, subsection (2) permits appeals or review but only where it is provided for elsewhere in the Act. Arising from the exception Section 67 of the Act permits the challenging the award for want of jurisdiction. This provision is mandatory Schedule 1 of the Act and hence it overrides the provision of the LCIA Rules. Appeal on question of law to the High Court is permitted by Section 69 As would be read with Article 29.2 of the Rules . Such an appeal must be lodged within 28 days of the award Section 70(3) of the Act . In fact the High Court (Blair J) in Guangzhou Dockyards Co Ltd v Ene Aegiali I [2010] EWHC 2826 (Comm) has even held that the parties cannot agree (party autonomy notwithstanding) to appeal the award on a question of law. The Rules do not allow an appeal. Under Article 26.9 of the Rules, the decision of the Tribunal (award) is final and binding. Article 29.2 goes ahead to provide that To the extent permitted by the law of the seat of the arbitration, the parties shall be taken to have waived any right of appeal or review in respect of any such decisions of the LCIA Court to any state court or other judicial authority. Being that Section 69 of the Act is not a mandatory provision, the effect of Article 29.2 is to oust the right of appeal even on a point of law Guy Pendell and David Bridge, (above n16) . However, the rules permit Correction of any computation, clerical or typographical errors under Clause 70.1 of the Rules. An application for such correction must be done within 30 days of receipt of the award Enforcement Under the LCIA Rules the parties are under a duty to ensure that the award is enforceable. Article 32.2 A party wishing to enforce the award therefore has two options; enforcement pursuant to the Arbitration Act or Pursuant to the New York Convention UN, Convention on Recognition and Enforcement of Foreign Arbitral Awards (1958) http://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/XXII_1_e.pdf accessed 4th March 2013 By way of illustration if the Respondent has assets in Kazakhstan the enforcement is better pursued through the Convention. Under Article III of the Convention, the contracting states are obliged ‘to recognise arbitral awards and to enforce them in accordance with the Rules of procedure of the territory where the award is relied upon..’ Kazakhstan is a party to the Convention having acceded to it in 1995 hence is bound by Article III. New York Arbitration Convention, “Convention Countries”, 2009 http://www.newyorkconvention.org/contracting-states/list-of-contracting-states Pursuant to Kazakhstani Arbitration Courts Law and the International Commercial Arbitration Law a party may now approach the court of those countries for the purposes of enforcement of international awards Aigoul Kenjebayeva and Yuliya Mitrofanskaya, “Kazakhstan” in James Charter (ed), International Arbitration Review (Law Business Research Ltd, 2011) . CONCLUSION The principles It is important for disputants to note that on the basis of the principle of sanctity of contracts, any intended legal action to resolve their disputes must abide the Contract between the two and the supporting laws and Rules. Michael Pryles, (above n ) pg 17 Where the Agreement envisages the application of English law to the arbitration procedure, the disputants should also be aware of the key procedural matters highlighted which are rendered mandatory by virtue of Section 4 of the Act as read with Schedule 1. Most important among these is the general duties of a party to arbitration proceedings. Such duties including the duty to ensure expediting the process would not only amount to compliance with the law, but would also serve the commercial interest of business oriented entity Anthony Connerty, “Dispute Resolution In The Oil And Gas Industry - Recent Trends” (CEPMLP Vol 8) http://www.dundee.ac.uk/cepmlp/journal/html/vol8/article8-8.html accessed 12th February 2013 . The procedures The commercial interest of the disputants is also likely to be well served if they abide all the procedures provided by their Contract. Consensual negotiation albeit not enforceable under English law, even where not expressly provided for under the contract offers a cheap, simple and fast option as compared to the default processes of arbitration and litigation Mohammad Alramahi, “Dispute Resolution in Oil & Gas Contracts” [2011] 3 I.E.L.R. 78  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2159702 accessed on 5th March 2013 . The fact that some Contracts present litigation as the default Dispute resolution mechanism should be a further incentive to make adequate commitment to the ADR processes provided for under the Contract. Litigation portends a costly, time intensive and non-confidential forum for dispute resolution. Ibid The Steps With the foregoing considered the steps that disputants looking to present a dispute at the London Court of International Arbitration need to take may be summarized as follows:- Ascertain whether the claim is a ‘dispute’ under the Contract Undertake the Contractual Negotiations Issue Notice of Arbitration Lodge Request for Arbitration Participate in the appointment of the Arbitration Tribunal Seek Interim Orders e.g. for deposit of security for costs and Inspection if necessary Undertake discovery Participate in setting the procedural rules of engagement including regulation of confidentiality if need be and setting of timelines Attend Hearings through legal representatives Seek Court help in preservation of evidence and attendance of witnesses if necessary Challenge the award by review or for want of jurisdiction if necessary Enforce award on Kazakhstan under the New York Convention if necessary Pursue litigation should Arbitration fail BIBLIOGRAPHY Statutes Arbitration Act, 1996 (England & Wales) Arbitration Courts Law (Khazakhstan) International Commercial Arbitration Law, 2004 (Khazakhstan) Civil Procedure Rules, 1998 (UK) Case Law Argentina vs BG Group D.C. Court of Appeals, No. 1:08-cv-00485 Assimina Maritime Ltd v Pakistan Shipping Corporation [2005] All ER (D) 202 (Jan) Amec Civil Engineering Ltd v The Secretary of State for Transport [2004] EWHC 2339 (TCC) C vs. D[2007] EWHC 1541 Bulk & Metal Transport v Voc Bulk Ultra Handymax Pool LLC, [2009] 2 All E.R. (Comm) 377 Guangzhou Dockyards Co Ltd v Ene Aegiali I[2010] EWHC 2826 (Comm) Elektrim SA v Vivendi Universal SA[2007] EWHC 11 (Comm) Emmot vs. Michael Wilson & Partners [2008] EWCA Civ 184 International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd [2012] SGHC 226 Minermet SA Milan v Luckyfield Shipping Corpn SA [2004] EWHC 729 (Comm) Stretford v The Football Association Ltd & Another[2004] EWHC 729 (Comm) Wah (Aka Alan Tang) & Another v Grant Thornton International Ltd & Others [2012] EWHC 3198 (Ch) Treaties UN, Convention on Recognition and Enforcement of Foreign Arbitral Awards (1958) http://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/XXII_1_e.pdf Books AAA, Handbook on International Arbitration & ADR (Jurisnet, 2010) Brown, Henry J. & Marriott, Arthur L., (eds) ADR Principles and Practice, (Sweet & Maxwell Ltd, 1999) James Charter (ed), International Arbitration Review (Law Business Research Ltd, 2011) Margaret L Moses, The Principles and Practice of International Commercial Arbitration, (Cambridge, 2008) Torsten Lörcher, Guy Pendell and Jeremy Wilson, (eds) CMS Guide to Arbitration (CMS Legal Service, 2012) Articles Aigoul Kenjebayeva and Yuliya Mitrofanskaya, “Kazakhstan” in James Charter (ed), International Arbitration Review (Law Business Research Ltd, 2011) Always Associates, ‘Judicial Guidance on the Meaning of Dispute’, January 2005) http://www.alway-associates.co.uk/legal-update/article.asp?id=71 Anthony Connerty, “Dispute Resolution In The Oil And Gas Industry - Recent Trends” (CEPMLP Vol 8) http://www.dundee.ac.uk/cepmlp/journal/html/vol8/article8-8.html Brown, Henry J. & Marriott, Arthur L., “Choice and timing of Process Use" in, Brown, Henry J. & Marriott, Arthur L., (eds) ADR Principles and Practice, (Sweet & Maxwell Ltd, 1999) Gordon Blanke, “Supporting Role: Arbitration and the Courts” http://www.sjberwin.com/Contents/Publications/pdf/100/240707012642.pdf Guy Pendell and David Bridge, “Arbitration in England & Wales” in Torsten Lörcher, Guy Pendell and Jeremy Wilson, (eds) CMS Guide to Arbitration (CMS Legal Service, 2012) Margaret Tofalides & Clair Athurs “Mission impossible? Challenging Arbitration Awards In England” (Arbitration Newsletter, September 2012) Michael Pryles, ‘Limits to Party Autonomy in Arbitral Procedure’, (ICCA, 2008) http://www.arbitration-icca.org/media/0/12223895489410/limits_to_party_autonomy_in_international_commercial_arbitration.pdf accessed 28th February 2013 Mohammad Alramahi, “Dispute Resolution in Oil & Gas Contracts” [2011] 3 I.E.L.R. 78  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2159702 Raymond Werbicki, “Arbitral Interim Orders: Fact or Fiction” in AAA, Handbook on International Arbitration & ADR (Jurisnet, 2010) Sandip Adhipathi, ‘Interim Measures in International Commercial Arbitration: Past, Present and Future’ (University of Georgia, 2003) http://digitalcommons.law.uga.edu/cgi/viewcontent.cgi?article=1000&context=stu_llm Others New York Arbitration Convention, “Convention Countries”, 2009 http://www.newyorkconvention.org/contracting-states/list-of-contracting-states *The Author is an Advocate of the High Court of Kenya, the Executive Director of the African Centre for Rights & Governance (ACRAG) and an LLM Candidate (2013) in Oil and Gas Law at the Robert Gordon University 19