Recent Developments in International Arbitration

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Recent Developments in International Arbitration
Catina Haynes Kinan Romman November 17, 2008
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I. Fifth Annual Fulbright Litigation Trends Survey
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Fifth Annual Fulbright Litigation Trends Survey
Background

• Fifth consecutive year Fulbright has commissioned
  an independent survey of senior corporate counsel
  on litigation trends.
• Largest survey of its kind.
• 358 respondents participated in the survey,
  including 251 in the U.S. and 100 in the U.K.

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Fifth Annual Fulbright Litigation Trends Survey
Costs

• With the downturn of economy, the volume of
  litigation is expected to increase.
• One of every ten companies spends 10 million or
  more on litigation annually (excluding
  settlements and judgments).
• On average, U.K. companies spend 2.8 million on
  litigation.

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Fifth Annual Fulbright Litigation Trends Survey
Case Types

• Investigations, Regulatory, and FCPA Actions
• 7 of all respondents and 11 of those with
  international facilities have engaged outside
  counsel in the past year regarding corruption or
  bribery investigations such as alleged FCPA
  violations.
• U.K. businesses are seeing more regulatory
  activity from overseas regulators, such as the
  SEC, DOJ, and EU Commission, rather than OFT or
  FSA.
• 13 of companies, including one-quarter of the
  energy industry, admit they still allow small
  direct payments to foreign governments in certain
  specific situations.

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Fifth Annual Fulbright Litigation Trends Survey
Case Types

• Subprime-Related Matters
• 4 of public companies have already engaged
  outside counsel for subprime-related matters and
  7 foresee involvement in subprime matters in the
  next 12 months.
• 22 of financial services and 15 of insurer
  respondents anticipate more subprime suits or
  investigations.
• Labor/Employment and Contracts are the most
  active areas of litigation in the U.S.
• Contracts and Labor/Employment are the most
  active areas of litigation in the U.K.

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II. Recent Developments in the United Arab
Emirates
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The Dubai International Financial Centre
(DIFC) Amended its Arbitration Law

• DIFC became an autonomous jurisdiction within the
  UAE in 2004.
• UAE acceded to N.Y. Convention on the Recognition
  and Enforcement of Arbitral Awards on June 13,
  2006.
• DIFC-LCIA Arbitration Centre was established
  February 17, 2008 as a joint venture with the
  LCIA court.
• Similar to the Dubai International Arbitration
  Centre (DIAC) arbitration rules, based on the
  UNCITRAL, ICC, LCIA, WIPO, and AAA arbitration
  rules, the DIFC Arbitration Law follows the
  UNCITRAL Model Law on International Commercial
  Arbitration and a slightly modified version of
  LCIAs arbitration rules.

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Selected Provisions from the DIFC Arbitration Law

• The DIFC amended its Arbitration Law on September
  1, 2008 to allow all parties, irrespective of any
  connection with the DIFC, to choose the DIFC as
  their seat of arbitration.
• Article 10 states In matters governed by this
  Law, no DIFC Court shall intervene except to the
  extent so provided in this Law.
• Unless the parties agree otherwise, the default
  number of arbitrators is one. (Article 16).
• Under Article 14, Unless otherwise agreed by the
  parties, all information relating to the arbitral
  proceedings shall be kept confidential, except
  where disclosure is required by an order of the
  DIFC Court.

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Selected Provisions from the DIFC Arbitration Law

• Article 15 confirms that it is not inconsistent
  with an arbitration agreement for parties to
  apply to the DIFC courts for interim measures of
  protection before or during arbitration
  proceedings.
• Article 24(1)(a) mirrors Article 25.1 of the LCIA
  Arbitration Rules, which gives the tribunal the
  power to order a party to provide security for
  the interim measure.

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Amendments to Provisions Dealing with Arbitration
Agreements

• An arbitration agreement may be in an arbitration
  clause or a separate contract, and the
  requirement for an arbitration agreement to be in
  writing can be met by an electronic
  communication. (Article 12)
• However, arbitration agreements in employment
  contracts will not be enforceable except where
  the employee gives written consent after the
  dispute arises or submits to arbitration
  proceedings under the arbitration agreement.
  (Article 12)

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III. Proposed U.S. Arbitration Legislation
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Recent Consumer Bills Intl Arbitration

• Unintended Consequences for International/
  Business-to-Business Arbitrations?
• Bills Intended to Address Due Process Concerns
• Consumer/Employment Disputes Contracts of
  Adhesion
• Would Materially Amend the FAA.
• Several Bills Pending in the House and Senate
• Three Were Approved by a Subcommittee of the
  House Judiciary Committee on July 15, 2008.

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The Bills

• Arbitration Fairness Act of 2007
• The Fair Arbitration Act of 2007
• The Fairness in Nursing Home Arbitration Act
• Automobile Arbitration Fairness Act of 2008

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Arbitration Fairness Act of 2007

• Amends 2 of Chapter 1 of the FAA Validity
  and Enforcement.
• Adds subsections (b) and (c) to 2
• (b) No pre-dispute arbitration agreement would be
  valid or enforceable if it requires arbitration
  of
• Employment, Consumer, or Franchise Disputes.
• Disputes Arising Under Statutes Regulating
  Contracts Between Parties of Unequal Bargaining
  Power/Civil Rights Statutes.
• (c) Validity/Enforcement questions must be
  determined by a court, not the arbitrator, for
  all arbitrations.

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The Fair Arbitration Act of 2007

• Adds 17 to Chapter 1 of the FAA Would Make
  The Following Applicable to all Arbitrations
• Consumer Protection Text Required in Arbitration
  Clauses.
• Arbitrator Must be a Member of the State Bar
  Where Seat Located.
• Arbitrations Must Be Administered by an
  Institution.
• Choice of law Principles State of the
  Non-Drafter.
• Respondent Must Answer within 30 Days - Hearing
  90 days later.
• Depositions shall be available to each party.
• And others (U.S. Ethics Rules, Party-Appointed
  Arbitrators only).

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Why?

• Overbroad Drafting.
• Lack of Awareness in the Consumer Advocacy
  Community.

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IV. Anti-Suit Injunctions in the EU
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Regulation 44/2001 and West Tankers

• ECJ Advocate General Disagreed with the House of
  Lords West Tankers Decision in a September 2008
  Opinion.
• Advocate General Found that Anti-Suit Injunctions
  in Support of an Arbitration Agreement Are
  Inconsistent with Council Regulation (EC) No.
  44/2001.

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Regulation 44/2001 and West Tankers

• Council Regulation (EC) No. 44/2001 on
  Jurisdiction and the Recognition and Enforcement
  of Judgments in Civil and Commercial Matters
  (Brussels I Regulation)
• Lis pendens - Jurisdiction Between Courts of EU
  Member States Decided on first seised Basis
  (Article 27).
• Regulation Not Applicable to Arbitration (Article
  1(2)(d)).
• Allianz SpA v. West Tankers (2007)
• Involved ship collision in Italian waters.
• Arbitration governed by English Law London
  Seat.
• Claimant pursued related tort claims in Italy.
• English High Court Issued an Anti-Suit
  Injunction.
• House of Lords Affirmed - Ruled that Injunction
  was Consistent with Council Regulation (EC) No.
  44/2001.

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Regulation 44/2001 and West Tankers

• AG Says that Article 1(2)(d) Was Not Applicable
  to West Tankers.
• Subject matter of arbitration anti-suit
  injunctions relates to the underlying
  substantive dispute between the parties and not
  the arbitration agreement (i.e., the claims
  brought in Italy).
• Questions of arbitration agreement validity are
  also not exclusively related to arbitration
  according to AG a foreign court first seized,
  not the tribunal or a court at the seat, would
  rule.
• Threatens Kompetenz- Kompetenz Doctrine in
  Europe?
• ECJ Likely to Adopt the AG Opinion.

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