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IN CONVERS AT ION WI TH CHI ANN BAO Secretary General of the Hong Kong International Arbitration Centre
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JACOMIJN VAN HAERSOLTE-VAN HOF Director General of the London Court of International Arbitration ALEC EMMERSON Clyde & Co Consultant in Dubai MARKE T COMMENTARY A NO T HER T I LT AT T HE W I NDMI L L : T HE HONG KONG C OUR T OF F I R S T I NS TA NC E C ONF I RMS ROBU S T S UP P OR T F OR A RB I T R A L I NDEP ENDENC E T HE B I R T H OF A NE W U A E F EDER A L A RB I T R AT I ON L AW –A L ONG A ND D I F F I C ULT L A BOUR YUKOS C APITAL SÀRL V OJSC OIL COMPANY ROSNEF T: THE SIGNIF I C ANCE PHILIP MORRIS V. AUS TRALI A - JURISDI CTIONAL CHALLENGES IN FORE IGN INVESTMENT ARBITRATION KE Y CHANGES IN THE LCI A’ S NEW ARBITRATION RULES
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MESSAGE FROM THE EDITOR 01
ME S S AGE FROM THE ED I T OR It gives me great pleasure to present the second issue of Clyde & Co’s International Arbitration 1/3LY. The launch of this issue coincides with the 3rd annual Hong Kong Arbitration Week, an event at which we look forward to learning, celebrating and networking with the world’s arbitration elite in one of the most vibrant and long-established centres for global trade and commerce.
Hong Kong has emerged in recent years as a dynamic hub for international dispute resolution. We chart its development and unique selling points as an arbitral centre in a conversation with the Secretary General of the HKIAC, Chiann Bao. Chiann talks us through the HKIAC’s user-orientated reforms and new rules, contributing to our continuing exploration of international arbitration as a constantly developing specialism. Contributions to this issue cover developments froma variety of regions and it’s clear that the pace of change varies significantly across jurisdictions and institutions. In London, a new set of LCIA Arbitration rules, the first for over 15 years, come into effect on 1 October 2014. While in the UAE, the new federal arbitration law continues its difficult birth – a labour that began eight years ago in 2006. Following Ben Knowles’ meeting with the outgoing LCIA Director General, AdrianWinstanley in the last issue, we feature an in-depth discussionwith his successor, Jackie van Haersolte. Jackie tells us about her ambitions for the institution, as well as sharing somemore personal insights into the arbitrationworld.
In a discussionwith Susie Abdel-Nabi, I also share some of my experiences of arbitration, both as counsel and as an arbitrator. I make some recommendations, of relevance to both parties and counsel, relating to howarbitrations are run; and share my predictions for the future of international arbitration. As the discipline continues to grow, I think we will see an increase in the number of regional centres and in the number of arbitrations conducted under their auspices. On behalf of Clyde&Co, I would like to expressmywarm appreciation to Chiann Bao and Jackie van Haersolte for giving us and our readers the benefit of their expert knowledge and experience. I would also like to thank all my colleagues in the firm’s global arbitration group for the interviews and articles. ALEC EMMERSON, CONSULTANT, CLYDE & CO
K IM BARTON AND CHI ANN BAO DI SCUSS HONG KONG ’ S UNIQUE SELL ING POINT S A S AN ARBI TRAL CENTRE AND RECENT ME A SURES BY THE HK I AC TO MAKE ARBI TRAT ION UNDER I T S RULES MORE COS T- EFFECT I VE AND USER- ORIENTATED. THI S USER- FOCUSED APPROACH REFLECT S THE NEED FOR DIFFERENT I AT ION IN AN INCRE A S INGLY COMPET I T I VE FORUM MARKE T.
K IM B A R T ON
CHI A NN B A O
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IN CONVERSATION WITH CHIANN BAO 03
IN CONVERS AT ION WI TH CHI ANN BAO SECRETARY GENERAL OF THE HONG KONG INT ERNAT IONAL ARBI TRAT ION CENTRE Kim Barton, Counsel in our Hong Kong construction arbitration practice in conversation with Chiann Bao, Secretary General of the Hong Kong International Arbitration Centre (HKIAC)
HONG KONG : A V I BR A N T CEN T RE F OR IN T ERN AT I ON A L D I SP U T E RE SOL U T I ON K IM You’ve been Secretary General of the HKIAC for slightly longer than four years now. What was your pathway to becoming Secretary General in Hong Kong? CHI ANN I started out as a legal assistant at New York firm, Cravath, Swaine&Moore LLP, and during that time I decided I wanted to live abroad. At college I had studied abroad in Beijing, and I was keen to return to Asia so I applied for a Fulbright scholarship to Hong Kong. It was through researching my proposal to Fulbright that I first came across international arbitration. I incorporated Hong Kong’s status as a cross-cultural hub for dispute resolution intomy proposal. A year later I foundmyself starting aMasters in Arbitration and Dispute Resolution at the City University of Hong Kong. While there, I met many of the great and the good of the Hong Kong arbitration community, including Neil Kaplan. And I participated in the VisMoot competition in Vienna, whichwas a game changer for me. It was in Vienna that I got my first taste of the community and energy of international commercial arbitration. A fewyears later, I was looking tomove to London and found an advertisement in theMoot Alumni Association newsletter for an arbitration assistant position to Neil Kaplan. I was offered the job andmoved to London, where I stayed for a year as Neil’s assistant. In January 2010, I learned about the position of Secretary General of the HKIAC through Neil Kaplan. Within fivemonths, I received the offer andmoved to Hong Kong.
K IM That was quick. So you obviously felt the pull back to Hong Kong as a dynamic venue for international arbitration. In your view, what is it that makes Hong Kong such a popular place for people to bring their disputes?What does it have to offer? CHI ANN Aside fromhaving everything that people want out of a city, Hong Kong is one of the places that has really bought into the whole arbitration process. Hong Kong ticks all of the boxes when it comes to being an ideal place for dispute resolution. Hong Kong was one of the first jurisdictions in the region to adopt the UNCITRALModel Lawand has since been influential in establishing the jurisprudence under the UNCITRALModel Law. The natural market growth it has enjoyed is particularly attractive. High calibre experts, accountants and engineers are all here too. Hong Kong’s a proper “one stop shop.” On top of that it’s an excellent arbitration community which spans several generations now. K IM Sure, HKIAC has been around for 30 years now. CHI ANN Exactly, HKIACwill be celebrating its 30th anniversary next year. K IM There’s certainly a lot of expertise available close at hand in Hong Kong that you don’t always get in other centres. Since you’ve been Secretary General, there’s been quite a lot of change at the HKIAC. What do you see as themost important changes during your time at the helm?
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CHI ANN I have to admit that when I first arrived in post I didn’t really knowwhat to expect. Generally, I feel we’ve come a long way as an arbitration community over the last four years. We have always had a lot to offer but I believe that Hong Kong is putting itself forwardmuchmore confidently than it might have done previously. We’ve also been able to generatemore support for the Centre, both fromwithin and outside Hong Kong. I think that’s the key to its sustainability. The profile of our secretariat has changed quite a bit during my time, as demands have changed. For example, with the establishment of our Administered Arbitration Rules in 2008, we necessarily requiredmoremulti-lingual, multi-qualifiedmanpower. K IM There seems to be a lot of support from the government in Hong Kong for making arbitrationwork the way it’s designed to work. There have been several recent legislative developments which strengthen and support the arbitral regime, for example, the emergency arbitrator back up provisions. CHI ANN The government has been incredibly supportive in the ways that matter, and nowwith the legislation properly in place, we do really have excellent arbitration infrastructure.
K IM And have you found so far that arbitrators are receptive to these caps on fees and the standard terms? CHI ANN This was certainly a very sensitive issue as you might imagine. But we consulted awide range of users and arbitrators, and ultimately chose a rate that could be tolerated by themarket. I think it’s worked. For example, we have had an instance inwhich an arbitrator refused to accept the cap and, interestingly, the Claimant refused to agree to go beyond the cap. HKIAC then proposed a different arbitrator, of equal stature, who would accept the capped rate. This was accepted by the parties and the arbitration proceeded accordingly. K IM I think a lot of our clients would be pleased to hear that! Youmentioned before that one of themajor rule changes was in relation to consolidation and joinder. What sort of disputes were coming before the HKIACwhere that was an issue? CHI ANN Well, as you know, consolidation is often an issue in construction disputes. But it can also become an issue with other types of disputes involvingmultiple parties and possibly multiple contracts. For example, with corporate and commercial disputes, parties would seek to join a party or consolidate arbitrations prior to the constitution of the tribunal. Under our previous rules (and this is true of many other institutional rules), HKIAC did not have the power to assist parties with this; it was a power that restedwith the tribunal. Having these newprovisionsmakes for a significantlymore efficient and cost-effective process. And, importantly, you can achieve a certainty of outcome between the different disputes, rather than inconsistent outcomes which can cause a lot of difficulties.
From the Secretariat perspective, I was keen to establish systems that facilitated the efficient handling of complex arbitrations. Previously, we encountered numerous instances where arbitrations would stall prior to the constitution of the tribunal because there were no proper rules in place for the institution to address issues such as joinder and consolidation. Of course times have also changed since we introduced our Administered Arbitration Rules in 2008. The international trend towards emergency arbitration procedures has prompted many institutions, including HKIAC, tomake available similar procedures. We have also established tools bywhich to control time and costs, including allowing parties to choose how theywant to pay their arbitrators. K IM Just on that issue, within the newHKIAC Rules, parties can choose between the schedule and paying arbitrators based on an hourly rate. Is that themain provision you are referring to, in terms of the ability to control time and cost? CHI ANN Exactly. There are four major sets of fees associatedwith arbitration: the registration fee; the institution’s fees; the arbitrator’s fees and the lawyers’ fees. Arbitrator remuneration is definitely an areawhere institutions can play ameaningful role. Since our 2008 rules, we have given parties the choice of how theywish to remunerate their arbitrators. This can be an important choice because disputes with high value claims and/or counterclaims are not necessarily themost complex disputes. As such, they don’t necessarilywarrant parties paying on a percentage of value of claimbasis. In 2013, we included a cap for hourly rates as well as a set of standard terms of appointment. This was so that parties would not have to negotiate terms of appointment once they had identified a suitable arbitrator.
USER - F OC USED CH A NGE A ND INNO VAT I ON
K IM You’vementioned rule changes and, in particular, the Administered Arbitration Rule changes. There was amajor re-issue of those rules in 2013. What was the impetus for that? CHI ANN While we are not an institution that desires rule change for the sake of change, we felt there was a real need by users for certain amendments.
WE ’ VE ALWAYS HAD A LOT TO OFFER BUT I BEL IE VE THAT HONG KONG I S PUT T ING I T SELF FORWARD MUCH MORE CONF IDENT LY THAN I T MIGHT HAVE DONE PRE V IOUSLY.
WE NEED TO L I ST EN TO OUR END USERS – THE IN- HOUSE L AWYERS – WHO RE ALLY HAVE A STAKE IN THE PROCESS BEC AUSE THE Y ’ RE PAY ING FOR I T.
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IN CONVERSATION WITH CHIANN BAO 07
PR I OR I T I S ING S T RONG INF R A S T RUC T URE , PROCE S SE S A ND T R A INING K IM The Secretariat has amuch greater and amore visible role than it used to. What is being done at the HKIAC tomake sure that you can support the new rules? CHI ANN We ensure that we have qualified staff at the Secretariat to administer these rules with efficiency, accuracy, and appropriate responsiveness. We’ve also established a Proceedings Committee to specifically handle rule interpretation, challenges and applications for consolidation and joinder. Where appropriate, we also draw on our International Advisory Board or fromoutside the relevant community to ensure proper neutrality of all decisions being made by HKIAC. K IM And howwill emergency arbitration provisions work in practice? Do you have a pool of experienced arbitrators that you can turn to deal to with these sorts of applications when they arise (whichwill invariably be on a Friday afternoon, I would imagine)? CHI ANN Our EA procedures apply prospectively, unless parties agree, so we don’t expect that many initially. So far, we have had one application but then parties decided not to go forwardwith it. However, we have the infrastructure in place to take appointments. We’ve identified a panel of Emergency Arbitrators who are experienced, generally independent practitioners or otherwise conflict free, and come fromaround the world so that we can have access to possible emergency arbitrators 24 hours a day. We are also holding emergency arbitrator training so that we can further expand the possible arbitrators on hand to appoint. Within the Secretariat, we’ve also established an internal system to administer EA applications. This requires staff to be on-call and to knowhow to deal with such applications immediately upon receipt.
K IM I noticed on your website that recently you appointed in-house lawyers onto the Council. What was the purpose of that? CHI ANN The idea of bringing in-house people onto our Council has long been on the table. It was just amatter of finding the right people. We were lucky to identify those who have both law firmand arbitration experience and are now working in-house on arbitration. Having both perspectives is particularly useful for arbitration institutions because ultimatelywe need to listen to our end users – the in-house lawyers –who really have a stake in the process because they’re paying for it. Recently, I sat on a panel at an in-house conference where the in-house panellist kept referring to itsmanagement and how to communicate withmanagement regarding the business implications of arbitration. That really resonatedwithme. No companywants to engage itself in arbitration and so you have to think about it from that perspective. Keeping that inmind helps HKIAC understand how to assist withmaking the process as painless it can be. K IM Again that’s something our clients will be very pleased to hear because disputes are lossmaking ventures for most companies. It’s good to know that the HKIAC is looking at it from a client’s perspective.
K IM Fromwhat you’ve said and from the institutional perspective, parties seemnow to prefer administered arbitrations for commercial disputes? CHI ANN Yes, I think institutional arbitration has received a big push in Asia generally. Having an institution involved gives users comfort. We’re starting to seemore corporate disputes as well. K IM Andwhat about the nationalities of the parties and the locations of the dispute where Hong Kong is chosen as the seat? Howmuch diversity are you seeing in these areas? CHI ANN Chinawill always be amajor player for obvious reasons. American parties are also a frequent user. East Asian parties are another often-seen party on one side of our disputes. We are now starting to see South Asian parties. And, with the investment fromEast Asian companies to Latin America and Africa, we have started to seemore parties come from these jurisdictions as well. K IM And relating to that, what split do you see these days between domestic and international arbitration at HKIAC?
E V OL U T I ON IN T HE HK I A C ’ S C A SEL O A D
K IM I’d like to turn now to the sorts of cases that HKIAC sees these days: Have you seen a big change in the types of cases being brought to the centre in the last four years? CHI ANN I think what changedmost is the shift from ad hoc arbitration to administered arbitration. There has been a reduction in the number of ad hoc cases, particularly construction cases. We’re still seeing them, but not in the same numbers as before. General commercial arbitrations are probably our bread and butter nowandmost of those are administered arbitrations.
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WE S TRI VE TO MAKE I T E A S IER FOR THE PART IES AND THE ARBI TRATORS TO GE T ON WI TH WHAT THE Y NEED TO DO TO RESOLVE THE DI SPUT E QUI CKLY.
CHI ANN I don’t know the exact split but it’s generally in the range of 75 per cent international and 25 per cent domestic. K IM I know that the HKIAC does a lot of promotional road trips around the world and I was wondering: What are your current main areas of interest?Where have you been visiting, not somuch to set up shop but tomake your presence felt? CHI ANN We spend themost time in Asia as youmight expect. But we are also frequently further afield in Europe or the Americas. Over the last couple of years, we have rolled out a few events programmes where the idea is to add value to the dialogue rather than just to promote HKIACwholesale. For example, we held a series of state-owned enterprise events all over the world, partly because there’s been interest in how state-owned enterprises operate and how to arbitrate against them. We have a good bit of experience in that regard so we thought it would be useful to share this information. We also know that industries are now seekingmore tailored information as to howarbitration can cater to their industry, and have beenworking to establishmore bespoke services to individual industries. K IM Which sorts of industries are the focal point? CHI ANN It’squitebroad,butconstruction,maritime, financiaI,andintellectualpropertyareallonourradar. K IM Youmentioned before that numerous China-related arbitrations conducted at HKIAC. Do you knowwhat the record is for enforcement of HKIAC or Hong Kong awards in China?
CHI ANN Late last year, we held a panel in China and the PRC representativementioned that between 2010 and 2012, 20 awards saw enforcement and reached the enforcement stage at the Supreme People’s Court. Seven of themwere denied but not one of these was fromHong Kong.
HK I A C ’ S K E Y SEL L ING P O IN T S
K IM When it comes to drafting arbitration clauses, I’moften asked by clients which seat to choose andwhich institution. What’s HKIAC’s biggest selling point and howdoes HKIAC differentiate itself fromsome of the other well-known institutions either in this region or internationally? CHI ANN HKIAC has brought value to the arbitration process by thinking about it from the end user perspective. Our costs structures are intended to give parties a range of choices as to how theywant tomanage the process. Our aim is to appoint the right arbitrator and not interfere with the process after the right tribunal has been constituted. I think that many people like our “light touch” approach. My goal has been to get a high-quality secretariat in place so that we can strike the right tone when administering arbitrations. We are not in the business of interfering with the substance of the process but rather facilitating the arbitral process. We strive tomake it easier for the parties and the arbitrators to get onwithwhat they need to do to resolve the dispute quickly. I think this philosophy, along with our cost effective structure, puts us at an advantage. If we can continue to provide a high-quality service, hopefullywordwill travel. Then we will have establishedwhat we set out to do.
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W I T H T H A NK S T O T HE C ON T R I BU T OR S OF T HI S E XCH A NGE . . .
KIM BARTON, CLYDE & CO Kim is Counsel in Clyde&Co’s Hong Kong and China Construction group. She qualified as a solicitor in Australia in 1997 and in Hong Kong in 2003. Kimhas worked in Hong Kong for more than 12 years. She has extensive experience in the construction and engineering sector. Kimhas taken lead roles in numerous complex disputes in the Asian region involving highways, bridges, tunnels, power stations, wind farms and buildings. She represents both employers and contractors. Kimadvises clients on drafting contracts and is experienced in advising clients on a variety of matters that arise during the life of projects. Kimalso has experience representing clients in a variety of commercial disputes. She is aMember of the Chartered Institute of Arbitrators.
CHIANN BAO, HONG KONG INTERNATIONAL ARBITRATION CENTRE
Secretary-General of the Hong Kong International Arbitration Centre (HKIAC). Ms Bao functions as the chief executive officer of the HKIAC and oversees the administration of a full range of ADR support services. Ms Bao is a Councillor of the International Federation of Commercial Arbitration Institutions (IFCAI). In addition, she serves as a boardmember of the Practical Law Company, the Association of Corporate Counsel’s International Advisory Board, the Asian Dispute Review’s Editorial Board, and the NYIAC Board of Advisors. A New York qualified lawyer, Ms Bao practiced at an international law firm in New York before joining the HKIAC in 2010.
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MARKET COMMENTARY 11
ANO THER T I LT AT THE W INDMI L L :
The Hong Kong Court of First Instance recently gave judgment on a quixotic claim brought against the Hong Kong International Arbitration Centre (“HKIAC”) by the claimant in an arbitration which it was administering. The plaintiff, Mr Gong Benhai, a disgruntled party to an arbitration governed by HKIAC rules, made an application to the Court earlier this year, requesting that it set aside the HKIAC’s decision to reject his request to replace two members of the tribunal. Mr Dong had earlier unsuccessfully challenged their appointment, alleging bias and unfairness in an arbitration which the HKIAC was administering. In rejecting Mr Gong’s claims, the Court determined that it was prohibited from intervening because the claimwas time-barred. It also noted that HKIAC was not the proper defendant to the proceedings. The decision sits well with Hong Kong’s reputation as a non-interventionist jurisdiction and highlights the Hong Kong courts’ reluctance to interfere in matters concerning the administrative decisions of arbitral institutions. It also confirms the HKIAC’s immunity, afforded to it by section 105 of Hong Kong’s Arbitration Ordinance (Cap 609), when honestly performing its administrative functions. BACKGROUND TO THE CHALLENGE In August 2012 the Claimant, Mr Gong and Dan Dong, a Chinese tyre company, entered into a written arbitration agreement which provided that the HKIACwould act as administering body. Mr Gong commenced arbitration proceedings against Dan Dong the followingmonth and the HKIAC duly formed a tribunal of three arbitrators in February 2013. A fewmonths later, Mr Gongmade an application for disclosure. Although the order was granted, the tribunal allowed Dan Dong to redact certain confidential information, such as personal information belonging to employees. Mr Gong was so unhappywith this decision that he requested the replacement of two of the arbitrators, alleging bias and unfairness. The HKIAC Council considered the challenge to the arbitrators in accordance with the HKIAC Challenge Rules 2008, which provide the bases uponwhich an arbitrator before the HKIAC can be challenged. In August 2013, the HKIAC Council appointed a subcommittee to deal with the challenge, whichwas ultimately dismissed on the grounds that it was not supported by any substantial evidence. The parties were informed of the Council’s decision on 24 December 2013. On 14 February 2014, Mr Gong sought external relief by issuing an originating summons naming HKIAC as the sole defendant. He asked the Court to set aside HKIAC’s decision; order the HKIAC to re-hear the challenge and provide reasons for its decision; stay the arbitration proceedings and replace the two arbitrators who were the subject of his challenge.
THE HONG KONG COUR T OF F I RS T INS TANCE CONF I RMS ROBUS T SUPP OR T FOR A RB I T R A L INDEPENDENCE
BY JAMES MCKENZIE, REGISTERED FOREIGN L AWYER AT CLYDE & CO
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THE DECI S ION UNDERL INES HOW IMPORTANT I T I S FOR PART IES TO ADHERE TO THE RULES APPL I C ABLE TO THE IR CHOSEN PROCEDURE .
THE COURT ’S DECISION The Court first consideredwhether it had jurisdiction to intervene in the arbitral proceedings. Section 12 of the Arbitration Ordinance (Cap 609) prohibits intervention except in circumstances provided for either in the Ordinance itself or in the UNCITRALModel Law, to which it gives effect. Mr Gong’s applicationwas not made within 30 days of him receiving notice of HKIAC’s decision on his challenge, as required under article 13(3) of theModel Law (s.26(1) Arbitration Ordinance (Cap 609)). As a result, the Court decided that the claimwas time-barred and it could not render judgment. The Court went on to point out that even if the application had beenmade in time, it would have dismissed it on other grounds. The Court found that HKIAC is not the proper defendant in the context of this type of challenge, stating that the respondent must be a party to the relevant arbitration proceedings. The Rules of the High Court (O73, r.5) provide that the originating summonsmust be served on the challenged arbitrator(s), the tribunal and all other parties to the relevant arbitration proceedings. Mr Gong clearly failed to complywith these requirements. The Court also pointed out that errors of law or fact or alleged procedural errors relating to disclosure of evidence, do not qualify as proper grounds for the challenge of an arbitrator under article 12 of theModel Law (s.25 Arbitration Ordinance (Cap 609)). Further, the Court noted that arbitral institutionsmay only be held liable for administrative decisions where it is proven that they have been reached dishonestly (s.105 Arbitration Ordinance (Cap 609)). The Court highlighted that the absence of any evidence indicating any such dishonesty on the part of HKIACwas yet another reasonwhyMr Gong’s claimought to be dismissed. In rejectingMr Gong’s other demands, the Court noted that the HKIAC rules do not require HKIAC to provide reasons for administrative decisions of this nature (s.8 HKIAC Challenge Rules). It also noted that in the event of a challenge being brought in time under article 13(3) of theModel Law, the tribunal, including the challenged arbitrator(s), may continue the arbitration concurrently and render a decisionwhilst the challenge is pending.
BE ARING ON ARBITRAL INDEPENDENCE A necessary tension has always existed between the independence of arbitral proceedings and the involvement of courts. As Professor Jan Paulsson has noted: “the great paradox of arbitration is that it seeks the cooperation of the very public authorities fromwhich it wants to free itself”. 1 Although arbitral practitioners have long sought independence frompublic authorities, ultimately laws give effect to and govern arbitrations and courts play an essential role in giving effect to arbitral awards in any given jurisdiction. Courts also provide a necessary avenue for challenges to arbitral proceedings and their administration, as was the case here. Hong Kong has long been seen as an arbitration-friendly jurisdiction, and one inwhich there has been a notable reluctance by the courts to go beyond the limited scope afforded to them for intervention in arbitral proceedings. Although there was likely little worrywithin the HKIAC Council about Mr Gong’s challenge, given the state of the law, the decision of the Court is nevertheless awelcome recognition of the independence of the HKIAC in administering arbitrations and the limited basis uponwhich such administration can be challenged. The decision underlines how important it is for parties to adhere to the rules applicable to their chosen procedure, as theywill not be able to circumvent themby resorting to the Hong Kong courts when decisions go against them.
1 Paulsson, Jan “Arbitration in Three Dimensions” (LSE Legal Studies Working Paper No. 1 2.2010
DE V IK A KHANNA MEE T S JACK IE VAN HAERSOLT E-VAN HOF TO DI SCUSS HER NEW ROLE A S THE F IRS T WOMAN DIRECTOR GENERAL OF THE LCI A , INCLUDING HER PL ANS FOR THE INS T I TUT ION, THE NEW LCI A RULES AND SOME OF THE CHALLENGES FACING THE ARBI TRAT ION COMMUNI T Y.
J A C OMI JN VA N H A ER SOLT E - VA N HOF
DE V I K A KH A NN A
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IN CONVERSATION WITH JACOMIJN VAN HAERSOLTE-VAN HOF 15
IN CONVERS AT ION WI TH JACOMIJN VAN HAERSOLTE-VAN HOF LONDON COURT OF INTERNAT IONAL ARBI TRAT ION Devika Khanna, Partner at Clyde & Co, in conversation with Jacomijn van Haersolte-van Hof, the new Director General of the London Court of International Arbitration
NEW L E A DER SHI P, NEW V I S I ON
will be shipbuilding. Shipping and shipbuilding are potentially very interestingmarkets in India too. Energy, where we are traditionally a strong player, is also an important sector in India, as is telecom. DE V IK A Do you thinkmore could be done tomake parties appreciate that the seat of arbitration and the venue need not be one and the same? So, for instance, they can have a London seat but hold hearings in Cape Town, if that ismore convenient for the parties. JACK IE Separating seat and venue is something parties should consider more often. This especially applies where both parties need to travel; or where the formal seat may be seen to favour one of the parties; or if the seat is considered financially unattractive by both parties; in situations such as these, holding the hearing in a place other than the seat may be an attractive solution. Ideally, this is something parties consider early on, when they select a seat. Frommy discussions with users, it’s apparent that not all parties are sufficiently aware of this possibility. Parties should be encouraged to consider this option, which effectively requires creating awareness. We are working on “Notes for Parties” whichmay be one way of drawing parties’ attention to this option. DE V IK A That sounds like a good idea given that parties (and their counsel) should be doing all they can to tailor the arbitration procedure to suit their needs. That is after all one of arbitration’s unique features. It’s important to our clients that we focus on such practicalities, which can give thema much better experience of arbitration, including their ability to have hearings in a different jurisdiction to the seat if it’smore convenient to do so.
DE V IK A Congratulations on your new role at the LCIA. What are your main goals as its newDirector General? JACK IE I’mtrulydelightedwith thisnewopportunityand challenge. Mymaingoals areworkingon the international profile of the LCIA, while retaining its solidbase inLondon. Indoing so, diversity is oneof thegoals I will want to focus on. Diversity is adiverse concept, includinggender diversityandage, but also technical and legal expertise. DE V IK A We interviewed the outgoing head Adrian Winstanley OBE for our last edition of the 1/3LY. He said looking at the LCIA 10 years fromnow, he’d like to see the LCIA’s overseas offices standing on their own feet. The LCIA is present in Dubai, India, Mauritius and Seoul. Where next? As the new Director General, what is your vision for the LCIA in terms of its continued expansion? JACK IE Strengthening the position of the overseas offices in Dubai, India, Mauritius and the liaison office in Seoul is a key target for the LCIA. At the same time, we cannot overlook the regions and the industry sectors inwhichwe are currently a strong player. It’s important that we consolidate and preserve our significant roles in the UK, in the US and in cases involving Russian parties. Industries where we are traditionally strong include shipping and commodities, and energymore generally. Again, this is something we shouldn’t ignore in developing newmarkets. Of course, some of the overseas ventures in fact allowus to expand inmarkets where we’re traditionally strong. For instance, in Korea, where we will begin to implement the plans for a Seoul presence in September, one of the key focus areas
SEPARAT ING SE AT AND VENUE I S SOME THING PART IES SHOULD CONS IDER MORE OF T EN. . . FROM MY DI SCUSS IONS WI TH USERS , I T ’ S APPARENT THAT NOT ALL PART IES ARE SUFF I CIENT LY AWARE OF THI S POSS IBIL I T Y.
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IN CONVERSATION WITH JACOMIJN VAN HAERSOLTE-VAN HOF 17
F E AT URE S OF T HE NEW RUL E S
DE V IK A I think guidelines on the conduct of party representation are a positive development; we as practitioners all have a part to play inmaking sure arbitration delivers on its promise to be an efficient and transparent method of dispute resolution. Unfortunately some practitionersmay need to be reminded of that. Do you expect that the LCIA’s proposed new electronic filing system for case recordsmight be the start of a new “e-revolution” in arbitration? JACK IE E-revolution sounds a bit scary, perhaps. However, I do believe that proper use of electronic communication is essential in ensuring effective and efficient proceedings. For emergency proceedings, e-filing will definitely become the norm. In general, the use of email and electronic systems is something that I have no doubt will become standard practice – the international nature of arbitration demands it. As well as beingmore effective for all parties concerned, e-filing and e-communications facilitate archiving. DE V IK A What do you see as themajor challenges currently facing the LCIA specifically, and arbitral institutions more generally? JACK IE While the LCIA is a not-for-profit organization, it’s a reality that there are numerous other significant players in themarket. In order to preserve our market share, and to continue to play a leading role in themarket, wemust continue to offer an excellent product at adequate and acceptable rates. Arbitrator selection and effective and efficient administration is something we do well and should continue to work on. Wemust look at the services offered by others, including in some cases the increasedwillingness of courts to providemore tailor-made services. We should also look carefully at the areas, regions and industry sectors where we excel and ensure that we continue tomaintain our standards and improve in these areas. O V ERC OMING CH A L L ENGE S
DE V IK A The arbitrationworld, and particularly the perhaps limited pool of arbitrators, is sometimes criticised for being an “old boys’ club”. As the first woman (as well as the first non-UK national) to be appointed Director General in the LCIA’s history, have you faced challenges building a career in this field? JACK IE I think it’s fair to say that the arbitrationworld is not always an inclusive place and certainly not always seen to be that. This is something I intend to work on and I am very proud that the LCIA has dared to appoint awoman, and a non-English one at that, as Director General. Thismeans continuing and strengthening the LCIA’s practice of encouraging the participation of women as arbitrator and as speakers or co-chairs at events, ensuring regional, legal and other diversity, and finding a balance between appointing the great and the good and first-time appointees. Certainly I’ve faced challenges in building a career in this field; I think it’s always difficult with hindsight to attribute challenges to gender though. Some of the challenges are not necessarily specific to women, or to arbitration for that matter, but rather consist of the challenge of combining career and family life. Some challenges are verymuch specific to women, such as running a hearing in an arbitrationwhere one of the parties’ representatives was nursing a baby she had brought along!
Speaking of “the arbitration experience”; the LCIA has just announced its new rules which come into force on 1 October 2014. What do you expect the impact of the new rules to be andwill they give the LCIA any distinct features? For instance, we understand that the new rules contain an annex of general guidelines on the conduct of party representatives and a power for the arbitral tribunal to impose sanctions for breach of those guidelines. As the largest user of the LCIA, we’re keen to find out more... JACK IE I’mexcited about the adoption of the newRules, coinciding withmy arrival at the LCIA. They contain a number of distinct and attractive features, which I look forward to discussing with our users. One of the noteworthy features is the inclusion of emergency arbitrator provisions. The LCIA already has andwill retain the possibility for expedited appointment of arbitrators. Nevertheless, I’mpleased that the newRules contain additional provisions on emergency arbitration. I expect that users, in particular those used to being able to obtain injunctions fromcourts, welcome the opportunity to obtain effective relief from the tribunal itself. A second feature is the Annex containing guidelines on the conduct of party representation. The Rules allow the tribunal to impose sanctions for breach of norms contained in these guidelines. The guidelines are not novel (for example, the IBA has also published Guidelines) and do not contain provisions that would or should be deemed objectionable by the parties. What is unique is that the LCIA is the first institution to include such guidelines in its Rules. Other changes are intended tomake the proceedingsmore effective and efficient. Potential arbitrators are required to declare that they have sufficient time to dedicate to a new matter. There will also be a requirement to set a procedural timetable. One of the specific provisions that I find useful, is the requirement that the tribunal inform the parties of the time set aside for deliberation. Inmy view, transparency is one of the most important tools inmaking an arbitrationmore effective. These provisions assist to create transparency, allowing the parties and the institution tomonitor and, if necessary, to control the tribunal.
INTERNATIONAL ARBITRATION 1/3LY
DE V IK A Howdid you develop an interest/become involved in international arbitration? Is it true that (like all good lawyers!), you have a background in shipping law? JACK IE I beganmy career in arbitration by accident, effectively. As a law student, I went to see Professor Piet Sanders who was a family friend and one of the few lawyersmy parents, both doctors, knew. I needed a topic for a paper and he suggested arbitration. I needed to look up the word in the dictionary but followed his advice anyhow! After I finishedmy PhD andwork for an international tribunal, I set out to become a lawyer in Rotterdam. My first firm, like all large firms in those days, had a significant maritime practice. This is where youwould typically get your basic training, being on your feet and getting plenty of experience in court. As a young associate, that mainlymeant arresting ships and doing witness hearings in court. It certainly taught me the wisdomof first ensuring that there are assets before you begin arbitration or litigation! DE V IK A Who do you consider to be your rolemodel(s) in international arbitration?
JACK IE There are a number of people I greatly admire in our field. Some people I admire for a specific component of what they do, such as legal expertise, or advocacy skills; others I admiremore generally. If I could name one, I think I would like to mention Sally Harpole. She has done an amazing job in bridging two cultures, as an Americanwoman, becoming a respected arbitrator in China as well as elsewhere. DE V IK A With your background on the ICSID panel for the Netherlands and in investment treaty arbitration, are you keen to develop the name of the LCIA for such disputes given the continued boom in claims by investors, also increasingly within Europe? JACK IE Treaty arbitration is booming and appears to continue to boom. It is certainly an area that I will monitor closely to see to what extent the LCIA can play a role. While we are not traditionally as big in this field as certain other institutions, we do have our share of interstate and treaty related cases. Whether expanding our role in this field is going to be a short termpriority is something I will need to reflect on and discuss with the various stakeholders. What you can be sure of, is that shipping will remain an area close tomy heart and verymuch onmymind!
WE MUS T LOOK AT THE SERV I CES OFFERED BY OTHERS , INCLUDING IN SOME C A SES THE INCRE A SED WILL INGNESS OF THE COURT S TO PROV IDE MORE TA ILORED SERV I CES .
IN CONVERSATION WITH JACOMIJN VAN HAERSOLTE-VAN HOF 19
W I T H T H A NK S T O T HE C ON T R I BU T OR S OF T HI S E XCH A NGE . . .
JACOMIJN VAN HAERSOLTE-VAN HOF, LONDON COURT OF INTERNATIONAL ARBITRATION As of 1 July 2014, Jackie van Haersolte-van Hof has become Director General of the LCIA. Previously, she practised as a counsel and arbitrator in The Hague, at her GAR 100 boutique HaersolteHof. She continues to follow through on cases where she is sitting as arbitrator until their conclusion. She set up HaersolteHof in 2008 after three years as of counsel in the international arbitration group at Freshfields Bruckhaus Deringer in Amsterdam. She was previouslywith Amsterdam firmDe BrauwBlackstoneWestbroke from2000 to 2004, and before that Loeff Claeys Verbeke in Rotterdam, which she joined on her qualification in 1992. She has sat as arbitrator in cases under the ICC, LCIA and UNCITRAL rules, as well as those of the Netherlands Arbitration Institute (NAI), onwhose supervisory board she sits. She has also arbitrated cases at the Royal Dutch Grain and Feed Trade Association and the Institute of Transport andMaritime Arbitration, both based in the Netherlands. She is on the ICSID roster of arbitrators. She was also involved in setting up the arbitral process for the Claims Resolution Tribunal in Zurich, which analysed claims fromHolocaust survivors over dormant accounts in Swiss banks. In addition to her arbitration practice, she is a lecturer in international arbitration at VU University Amsterdamand a member of GAR’s editorial board. Her 1992 PhD thesis on the application of the UNCITRAL rules by Iran-US Claims Tribunal was one of the first books to be published on the subject.
DE VIK A KHANNA , CLYDE & CO
Devika is a partner in Clyde&Co’s international arbitration team, based in London. Her arbitration experience includes cases for both private and state parties under the auspices of a variety of rules (AAA, ICC, ICSID, LCIA and UNCITRAL). Devika has experience in the energy, construction, telecoms and pharmaceutical sectors, advisingmulti-national companies on the resolution of complex cross-border disputes. She has particular experience of representing clients in gas price reviewarbitrations, in relation to production sharing agreement disputes and on bilateral investment treaty planning. Devika is an English-qualified solicitor-advocate (Higher Rights) and has been named as a “Rising Star” in International Lawby Super Lawyers 2013 (Thomson Reuters). Before joining the firm, she spent five years as part of Freshfields Bruckhaus Deringer’s international arbitration group and before that, five years in Slaughter andMay’s dispute resolution group. Devika is a regular contributor to legal journals and speaker at conferences. She speaks English French, Italian and Greek.
INTERNATIONAL ARBITRATION 1/3LY
KE Y CHANGES IN THE LCI A’ S NEW ARBI TRAT ION RULES
The London Court of International Arbitration (LCIA) has recently adopted a new set of arbitration rules, whichwill come into effect on 1 October 2014. The new rules aim to ensure an effective, efficient and fair process. The LCIA reports that its newDirector General, Dr Jacomijn van Haersolte-van Hof, thanked those who contributed to a “meticulous and thoughtful drafting process, which has led to a balanced set of Rules.” This piece discusses some of themain changes introduced by the new rules. EMERGENCY ARBITRATOR The new rules provide that in case of emergency, a party can apply for the appointment of a temporary sole arbitrator in advance of the formation of the tribunal. Specific grounds for requiring the emergency appointment must be set out, and, if the party’s application is successful, the LCIA Court will appoint the emergency arbitrator within three days from receipt of the application. The emergency arbitrator will then decide the claimas soon as possible, but no later than 14 days after his appointment. He is not required to hold a hearing and can decide the claimon the basis of the documents available if he deems this appropriate. The new rules have reinforced the procedures for the expedited formation of the tribunal and a replacement arbitrator. Emergency arbitrator provisions bring the LCIA into line withmany other arbitral institutions which have introduced similar provisions in recent years. LCIA users no longer need to resort to local courts for emergency relief before the formation of the tribunal. COUNSEL AND PART Y CONDUCT An explicit provision has been added to the new rules that from the tribunal’s formation onwards, no party shall initiate contact relating to the arbitration or the parties’ dispute with anymember of the tribunal or the LCIA Court (excluding the Registrar), unless this has been disclosed inwriting to all other parties, all members of the tribunal and, where appropriate, the Registrar. Under the new rules, where a partywishes to change or add to its counsel after formation of the tribunal, the approval of the tribunal is required. This approval may be withheldwhere the change or addition could compromise the composition of the tribunal, or the finality of any award. Factors such as the stage the arbitration has reached, and the likelywasted costs or loss of time resulting from the change will be considered. General guidelines for the parties’ legal representatives have been added to the new rules as an annex. Counsel must complywith the guidelines as a condition of appearing by name before the tribunal. If a legal representative is found to have breached the guidelines, the tribunal can issue awritten reprimand; awritten caution as to future conduct in the arbitration; or take any other measure necessary tomaintain the general duties of the tribunal. Given the often international scope of LCIA arbitrations, these guidelines will serve as a common denominator in circumstances where the parties originate fromcountries that do not have similar obligations in an applicable professional code. The International Bar Association’s Guidelines on Party Representationwere published inMay 2013 but the LCIA is the first arbitral institution to propose a set of guidelines for party representatives. A comparison of both sets of guidelines shows how this aspect of international arbitration is developing.
BY KHALED MOYEED AND CL ARE MONTGOMERY, A SSOCIATES AT CLYDE & CO
MARKET COMMENTARY 21
POWERS OF THE TRIBUNAL Whereas previously parties were permitted to agree on the conduct of their arbitral proceedings, wider powers have nowbeen granted to the tribunal, and the parties can now only agree on ‘joint proposals’ for consideration by the tribunal. In other areas, the tribunal’s power has been reinforced. The new rules provide that the parties can agree the seat of the arbitration inwriting at any point prior to the formation of the tribunal, however after this point, the prior written consent of the tribunal is needed. COSTS The tribunal has the power to decide that all or part of the legal or other expenses incurred by a party be paid by another party. The parties can no longer agree otherwise, unless they agree before the dispute arises that one or more parties shall pay the whole or any part of the costs, in which case the agreement must be confirmed inwriting by the parties after the commencement date (i.e. the date when the tribunal received the Request for Arbitration). The tribunal will base its costs decision on the parties’ relative success and failure in the arbitration – the parties can no longer agree otherwise – andmay also take into account the parties’ conduct. The latter provisionwas implicit in the old rules; however, bymaking the conduct consideration explicit, the LCIAmay improve the efficient conduct of its arbitrations as parties will seek to avoid being penalised on costs. PROCEDURAL RULES Several procedural changeshavebeenmade tomodernise the rules, for example, allowing the Request andResponse tobe submitted to theRegistrar inelectronic form, and toensure that arbitrations aredealtwith inamore timeand cost efficientmanner. The LCIACourt cannowproceed with thearbitrationnotwithstanding that theRequest is incompleteor theResponse ismissing, and theparties and the tribunal areencouraged tomake contact as soonas practicablebut no later than 21days fromreceipt of theRegistrar’swrittennotificationof the formationof the tribunal. Many timeperiodshavebeenshortened, for instance from30 to28days, however theparties retain the flexibilityof agreeing inwritingalternativedeadlines for thewrittenstageof thearbitrationand its procedural timetable. Further improvingefficiency, arbitrations canbe consolidated intoa singlearbitrationunder thenew rules, and inactivearbitrations canbediscontinued if theyhavebeenabandonedby theparties or whereall claimshavebeenwithdrawn, provided that nopartyobjectswithinagivenperiodof time. CONCLUSION The new rules seek to improve efficiency in the conduct of the arbitration, to be achieved both through newprovisions such as the appointment of an emergency arbitrator, and through other changes to the rules such as the tightening of time limits or allowing documents to be served electronically. While a number of arbitral institutions have revised their rules in recent years, the LCIA is the first to includemandatory provisions on party representation and conduct – perhaps setting a trendwhich others will follow in years to come.
A version of this article was first published in Kluwer Arbitration Blog, August 2014.
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