INT ERNAT IONAL ARBI TRAT ION
IF ANYWHERE I S THE CRADLE OF REGIONAL ARBI TRAT ION, I T I S A S I A .
THI S I S SUE
MESS AGE FROM THE EDI TOR
SPECI AL REPORT THE CHANGING FACE OF INT ERNATIONAL ARBITRATION IN A SI A : INNOVATING TO S TAY AFLOAT
IN CONVERS AT ION WI TH NE IL K APL AN CBE QC SBS International Arbitrator
SUNGBAE J I President of the Korean Commercial Arbitration Board (KCAB)
MARKE T COMMENTARY T URK E Y: T HE L I NK BE T WEEN E UROP E A ND A S I A
K NOWN UNK NOWNS : F ORE I GN I N V E S T MEN T A ND A RB I T R AT I ON I N M YA NM A R THE EMIRAT ES MARITIME ARBITRATION CENTRE : BRIDGING THE GAP IN THE MARITIME MARKE T Q&A - AUS TRALI A : PERTH ’ S DEDI C ATED CENTRE FOR ENERGY AND RESOUR CES DISPUTES THE SUPREME PEOPLE ’ S COURT ISSUES GUIDANCE ON CIETAC ’ S JURISDI CTION
NEWS IN BRIEF PEOPLE MOVES MARKE T ACTI V IT Y NOTABLE C A SES
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FORTHCOMING E VENT S
INTERNATIONAL ARBITRATION 1/3LY
MESSAGE FROM THE EDITOR 01
ME S S AGE FROM THE ED I T OR It gives me great pleasure to present the fifth issue of the International Arbitration 1/3LY. This October, the international arbitration community will gather in Hong Kong to discuss on-going developments in the field during Hong Kong arbitration week. With this in mind, we turn our attention to the growth of new and developing centres in the Asia-Pacific region.
As the trail blazer of regional arbitral centres, Asia is at the forefront of developments in arbitration. With centres such as the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC) having set the precedent for regionally-focussed institutions, there has been a surge in regional arbitral centres across the continent seeking to cater for the idiosyncrasies of local disputes. The propensity of arbitrating parties to utilise regional centres in Asia is a trend that we can expect to see grow, as the number of countries in the region participating in international trade will undoubtedly rise. In this issue we take a look at the current status of arbitration in Asia, with an in-depth report on Asian arbitral centres, from the old to the new; Beth Cubitt talks procedures, costs and institutions with former Chairman of the HKIAC, Neil Kaplan CBE QC SBS; and June Yeumspeaks with newly elected president of the Korean Commercial Arbitration Board (KCAB), Sungbae Ji.
Elsewhere in this issue we cover developments in specialist arbitral centres with an article on the newly formed Emirates Maritime Arbitration Centre (EMAC) and an interviewwith director of the recently opened Perth Centre for Energy and Resources Arbitration (PCERA), Kanaga Dharmananda SC. We also take a look at arbitral developments inMyanmar and Turkey. On behalf of Clyde&Co, I would like to expressmy gratitude to Neil Kaplan CBE QC SBS, Sungbae Ji and Kanaga Dharmananda SC for sharing their expert opinions, and providing us and our readers with a unique insight into developments in the field. I also wish to thankmy colleagues from the firm’s global arbitration group for their interviews and articles.
PETER HIRST, CO-CHAIR, GLOBAL ARBITRATION GROUP, CLYDE & CO
BE TH CUBI T T TALKS TO NE IL K APL AN ABOUT CURRENT I SSUES IN ARBI TRAL PROCEEDINGS , CRE AT ING THE “ DRE AM” TRIBUNAL AND THE DEBAT E ON COS T S AND E THI CS .
NE I L K A P L A N
BE T H C UB I T T
INTERNATIONAL ARBITRATION 1/3LY
IN CONVERSATION WITH NEIL K APL AN CBE QC SBS 03
IN CONVERS AT ION WI TH NE IL K APL AN CBE QC SBS INTERNAT IONAL ARBI TRATOR Beth Cubitt, Partner at Clyde & Co, in conversation with Neil Kaplan, International Arbitrator.
A K E Y F I GURE IN A RB I T R AT I ON : HOW I T A L L BEG A N
BE TH So who do you consider to have been your role models in arbitration over the years? NE IL I suppose if there’s anybodywho got me really interested in arbitration it would be David Hunter, the first chairman of the HKIAC. He wasmy immediate predecessor andwas also inmy chambers in London in the 1960s. He was a lovelyman and a very keen arbitrator. We worked together on setting up the HKIAC.
BE TH You have been recognised as a key figure in international arbitration for a long time. Howdid you develop an interest or become involved in arbitration? NE IL I startedmy career as a barrister in 1965 and became interested in arbitration after being introduced to the Chartered Institute of Arbitrators (CIArb) by one of my pupils in 1978. He came intomy roomand said, “Sign here” and showedme an application to become a Fellow of the Chartered Institute of Arbitrators. I replied, “I don’t knowanything about arbitration!”, and he said “Oh, don’t worry; it’s a good career move”. So I signed it. Two weeks later I was interviewed by two elderly gentlemen from the Chartered Institute. They invitedme into the roomandwelcomedme as the next Fellow of the Chartered Institute. I said, “Don’t youwant to askme any questions?” and they said, “Oh no, we knowyou barristers knowall about arbitration!”. I left for Hong Kong at the very end of 1980. Arbitrationwas then a big topic in Hong Kong. The Arbitration Act at that time was an Ordinance based on the English Arbitration Act 1950. The Attorney General, a friend of mine, wanted to amend it into something newand advanced, similar to what they had in England. The Attorney General set up a sub-committee to look at the viability of setting up an arbitration centre. I got involvedwith the committee and ended up as Chairman of the Hong Kong International Arbitration Centre (“HKIAC”) in 1991. I was on the committee looking into the viability of adopting the UNCITRAL Model Law in Hong Kong. My first international arbitration came in 1987when the ICC askedme to chair the first ever ICC arbitration in Korea.
DE V EL OPMEN T S IN IN T ERN AT I ON A L
A RB I T R AT I ON : C URREN T I S SUE S IN PROCEDURE S
BE TH As someone who has been instrumental in driving arbitration in Hong Kong, youmust have seen the practice go throughmany developments. What would you likemost to change about international arbitration? NE IL I think the appointment systemwhich applies at the moment can be improved. First of all, I don’t believe that any of the arbitrators should be of the same nationality as any of the parties. I’ve seen cases where arbitrators of the same nationality as one of the parties have been appointed and have had a clear bias towards that party. Fortunately, I have not encountered that scenario often, but I have seen it and I know that it happens, which is wrong. I think there is also a slight problem in the Bilateral Investment Treaty fieldwith themultiple appointments that some arbitrators get, which leads to thembeing labelled as either ‘pro state’ or ‘pro investor’. I amquite uncomfortable about all the research that lawyers do to look at whether an arbitrator is pro this or anti that.
I T ’ S A QUEST ION OF TRA INING AND EDUC AT ION ; EXPL A INING THAT L I T IGAT ION I S NOT A MIRROR IMAGE OF ARBI TRAT ION. THE Y ARE T WO VERY DIFFERENT PRACT I CES AND DIFFERENT SK ILLS ARE REQUIRED FOR E ACH .
INTERNATIONAL ARBITRATION 1/3LY
IN CONVERSATION WITH NEIL K APL AN CBE QC SBS 05
BE TH That could also address the conundrumaround whether to appoint one or three arbitrators in advance, as the appropriate number often depends onwhat kind of issues you’ve got. NE IL Yes, exactly. What else would I change? It’s hard to change the antics of lawyers but I must say, in recent years, I’ve seen some awfully bad cases of over- lawyering. It all becomes very destructive, very time wasting and expensive. In some cases the lawyers can be quite unpleasant to the tribunal and unpleasant to the other side. It’s not what arbitrationwas supposed to be. We get cases all the time where there are 40 or 50 lawyers on each side; and the billsmust be horrendous! BE TH Do you think that’s one of themost pressing challenges that practitioners have to address? NE IL These things shouldn’t happen. It seems tome that today somany things go onwhich irritate tribunals. If you’re unpleasant to the person that you’re trying to persuade, for example, writing rude letters to the other side, threatening the tribunal with a reservation of rights to pursue unwarranted challenges to purported due process violations and not being able to agree on the chronology of events, etc. It’s just not good advocacy. BE TH I suppose it has a lot to do with the rate at which international arbitration is developing. For example, arbitration in the Asia Pacific region is evolving at an incredible pace with new rules and new centres. NE IL Yes, and youwill know that it’s a question of training and education; explaining that litigation is not amirror image of arbitration. They are two very different practices and different skills are required for each. For many clients, arbitration is really the thirdmethod of dealing with international disputes. It’s just another limb of the litigation department. BE TH Do you think there’s enough training at that level?
NE IL It’s starting to increase – inmy day there was none at all.
For example, an arbitrator in investment arbitrationmay be thought to be pro state if he has ruled in favour of the state say two or three times in a row. However, the strong likelihood is that this is because the investor’s case has been poor and would have been dismissed by any tribunal. I really do object to this kind of speculation about what motivates people. BE TH Have you found that, in that context, there has been an increase in interviewing arbitrators as well? NE IL Not exactly, but there has been a big increase in using processes similar to a ‘beauty parade’. All that is really needed is for parties to choose an arbitrator who is able, honest and independent. I didwrite an articlemany years ago, for the Chartered Institute of Arbitrators, about an alternative systemof appointing arbitrators. It proposed that, at the time of agreeing the arbitration clause, parties should agree on a personwho is authorised by both to convene the appropriate tribunal, should a dispute arise. This thought came tome when I was sitting as arbitrator on one of your cases, Beth. Mymindwas wandering during a fascinating piece of evidence about welding or something. I looked tomy left and sawClyde Croft – a lawyer – and also onmy left wasMichael Pryles, another lawyer. If ever there was a case whenwe needed an engineer, accountant and a lawyer then this was it! So I came upwith the idea of parties empowering somebody to find out what the case was about and then to put together the dream team tribunal. We never get the dream team, though, because one party appoints a lawyer and then the other party reacts with another lawyer, and the two lawyers appoint another lawyer, and so on. BE TH Yes and they instinctively appoint an evenmore eminent lawyer. NE IL Exactly. So you end upwith lawyers deciding cases not really in their area of expertise and, therefore, finding it very difficult to resolve the case. The appointed person could also check on conflicts, availability, all sorts of things, and produce the team. As it stands, though, I’mnot aware of anyone really taking up the idea.
City University London has had aMasters course in arbitration for 25 years and there is nowa similar course in Hong Kong. King’s College London, where I went, has undergraduate and postgraduate courses in arbitration. So that’s very good. It’s the practical side of it that we need to concentrate on. Another thing – too often in arbitration – parties rely on solicitors, or attorneys, who are not necessarily trained as advocates to do the cross-examination. They don’t use barristers, and they aremissing a trick. Not every solicitor or attorney is trained to cross-examine. I have heard some very bad cross-examinations and I find themmost irritating to listen to. For example, when you ask a question and you get the answer youwant, move on to something else. But the inexperienced cross-examiners often come back to the same point, giving the witness the opportunity to wriggle out of their original answer. BE TH I imagine in those instances that they are trying to hammer the point home but instead they end upwatering it down. NE IL Yes, exactly. NEW CEN T RE S IN IN T ERN AT I ON A L A RB I T R AT I ON : WH AT MA K E S A N A RB I T R AT I ON - F R I ENDLY CEN T RE? BE TH With regards to the global development of international arbitration, we are seeing increasing competition in Asia. There’s always been the HKIAC in Hong Kong and SIAC in Singapore. What do you think centres need to do for them to stand out or attract users? NE IL First of all, centres should be located in an arbitration- friendly jurisdiction. That, inmost cases, is a given, for example the HKIAC and SIAC. However, not all centres are located in an arbitration-friendly environment.Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9
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