34 SPECIAL REPORT
INTERNATIONAL ARBITRATION 1/3LY
PRACTIC AL PROBLEMS Lawlessness and unrest can have practical implications for the conduct of an arbitration: • The seat of the arbitration determines the lawand courts which support the arbitration, e.g. by compelling the attendance of witnesses or appointing an arbitrator where the Respondent refuses to participate. What if the Respondent is recalcitrant but the arbitral seat is a state which is in anarchy? Could an application bemade to another state’s courts to assist with the arbitration? If so, which state? • The seat also determines the nationality of the award, and its laws can prescribe rules for the validity of an award e.g. it must be signed in the jurisdiction. What if the seat is in a country to which the tribunal will not travel because of safety fears? • Many institutional rules provide for a scenario where a partywithholds documents, or a witness refuses to be cross-examined, but how should a tribunal deal with a keywitness or crucial documents being available/willing to assist, but cannot be produced because they are in rebel-held territory e.g. ISIS-held Syria or Iraq? Should less weight be given to such evidence, or would that amount to procedural unfairness?
S ANCTIONS Countries involved in civil unrest, and certain companies and citizens of those countries, can often be subject to sanctions which prevent trading with and payments to/from the subjects of the sanctions. That can cause problems for an arbitration: • If a party to an arbitration is subject to sanctions, can an arbitrator who is a citizen of a state which has imposed sanctions be paid his fee by that party? Can the arbitral institution receive its fee? • If an award ismade against the sanctioned party, can the award creditor enforce that award in a state which has imposed sanctions freezing that party’s assets? • Can the subject of sanctions seek relief from its failure to performa contract because doing so would breach the sanctions on it? Does it matter if the other party is willing to perform and not caught by sanctions? • Can one party seek forcemajeure relief because trading with the other partywould breach sanctions? Are sanctions a permanent bar to performance (frustrating the contract) or a temporarymeasure suspending performance? • Can a tribunal proceedwhen a party refuses to participate because of impecuniosity caused by sanctions? Could an award be challenged for unfairness?
A VERSION OF THIS ARTICLE WA S FIRST PUBLISHED IN THE L AWYER,JUNE 2016
It is important to bear these points in mind when dealing with matters concerning countries which are the subject of unrest, or could become unstable. It would also be wise to review any existing contracts with these issues in mind, and to consider them at the outset of an arbitration when procedures are decided upon.
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