International Arbitration 2020 features 47 jurisdictions. The guide provides expert legal commentary on tribunals, preliminary and interim relief, collection and submission of evidence, confidentiality, types of remedies, class actions, the New York Convention, and grounds for appeal and enforcement.
Last Updated: August 18, 2020
The introduction to the annual Chambers and Partners guide has traditionally sought to provide a broad overview and snapshot of trends and developments in international arbitration that the remaining chapters explore in detail by jurisdiction. This year’s introduction is no different, save that it is being written in extraordinary times. While the true scale of the COVID-19 pandemic remains to be seen, it is already apparent that it will fundamentally alter, among other things, economic orders and the way in which international commerce operates. International arbitration has necessarily been affected by that sea change. But that change has been largely positive.
The pace with which the international arbitration community has adapted to the limitations imposed by the COVID-19 pandemic is, by now, well documented. By mid-April 2020, within weeks of national lockdowns being imposed worldwide, leading arbitral institutions issued a joint statement on “Arbitration and COVID-19”, a seminal move that bears testament to the collaborative spirit of the arbitration community. These institutions welcomed open dialogue with parties and tribunals to ensure that pending cases can continue and that parties have their cases heard without undue delay. Some institutions, such as the ICC, have also developed specific guidelines to mitigate the effects of COVID-19 on the resolution of disputes.
A number of new or updated guidelines have also been released in recent months on the use of technology and the conduct of arbitral proceedings in a remote environment, including the Seoul Protocol on Video Conferencing in International Arbitration, the Chartered Institute of Arbitrators Guidelines for Witness Conferencing in International Arbitration and the Transnational Dispute Management Draft Procedural Order to Govern Virtual Arbitration Proceedings, to name a few. These soft law instruments complement pre-existing guidelines on technology, data protection and cybersecurity, such as the ICCA-NYC Bar-CPR Protocol on Cybersecurity in International Arbitration and the draft ICCA-IBA Roadmap to Data Protection in International Arbitration.
Parties and tribunals alike have also embraced the use of technology to facilitate proceedings. The use of technology in international arbitration is, of course, not in itself novel. However, it is the increase in the use of remote hearings beyond case management and procedural conferences that has been remarkable. Although there was some reluctance in the early stages of the pandemic, anecdotal evidence suggests that even complex multibillion-dollar disputes are now being heard on digital platforms.
While COVID-19 has understandably captivated discourse in recent months, there have also been a number of other notable developments in the arbitration sphere.
First, a number of leading arbitral institutions have either commenced, concluded or will be concluding processes to revise their rules. After a multi-year exercise, the LCIA unveiled its updated arbitral rules in August 2020. The 2020 LCIA Rules span a spectrum of issues, including composite requests for arbitration, broader provisions on consolidation, the power of arbitral tribunals to order an early determination of claims or counterclaims that are manifestly without legal merit, the use of tribunal secretaries, and data protection and cybersecurity. The ICC and SIAC have also announced that revisions to their rules are forthcoming.
In the investment arbitration sphere, ICSID is drawing its multi-year rules revision process to a close. In February 2020, the ICSID Secretariat published its fourth and final Working Paper, clarifying proposed amendments to the ICSID Rules on procedural languages, time limits, third-party funding, disqualification of arbitrators, conduct of sessions, deliberations and publication of documents and awards. The ICSID Secretariat also published a Draft Code of Conduct for Adjudicators in Investor-State Dispute Settlement in June 2020, which notably provides for pre-appointment interviews for adjudicators and for disclosure and recusal in cases involving repeat appointments and “double-hatting” (where adjudicators also serve as counsel in other cases).
Second, multiple jurisdictions have updated their arbitral laws, in large part to align with international best practices. In February 2020, Tanzania passed a new Arbitration Act that repeals its dated 1931 Arbitration Act. The Act is not modelled after the UNCITRAL Model Law but nonetheless addresses a number of crucial issues, including the appointment of arbitrators, jurisdiction, the distinction between domestic and international commercial arbitration, and the enforcement of domestic and foreign awards. The Act also creates a new Tanzania Arbitration Centre that will be responsible for the conduct and management of arbitration and the accreditation of arbitrators in Tanzania. While concerns remain over the degree of curial intervention that the statute permits, the 2020 Arbitration Act is broadly considered a welcome development to the arbitral landscape in Tanzania.
After rounds of discussions that date back to 2017, the Swiss Parliament also approved amendments to the Private International Law Act in June 2020, which governs international arbitrations seated in Switzerland. The amendments further strengthen Switzerland’s robust approach to arbitration and its position as a leading arbitral jurisdiction. Among other things, the amendments empower the Swiss courts to appoint the entire tribunal in a multi-party dispute to preserve the equal treatment of parties, simplify the form requirements for arbitration agreements and permit parties to file challenges against arbitral awards before the Swiss courts in English. The amendments are expected to enter into force in early 2021.
Other jurisdictions that have embarked on legislative reform in the past year include India, New Zealand, Hong Kong and Peru.
Third, reflecting the continued growth of international arbitration, leading arbitral institutions also registered a record number of cases in 2019. SIAC registered 479 new cases involving parties from over 59 countries, its highest single-year caseload increase. The aggregate amount in dispute for SIAC-administered cases exceeded USD8 billion, a remarkable 14.6% jump from 2018. The LCIA similarly recorded its highest number of cases in 2019, with over 406 cases being referred to the institution, 346 of which specifically apply the LCIA Rules. The ICC also recorded 869 new cases in 2019, the second-highest number of newly recorded cases in any year by the ICC. The ICC also recorded its highest number of new cases involving states and state-owned entities (20% of new cases, featuring 212 state and state-owned entities).
Fourth, the past year has witnessed a number of landmark decisions from various apex national courts. Affirming the application of non-signatory theories in domestic law under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), the US Supreme Court in GE Energy Power Conversion France SAS, Corp. v Outokumpu Stainless USA, LLC, et al. held that state law principles of equitable estoppel could apply to bind non-signatories to arbitration agreements without running afoul of the Convention. The Court reversed the decision of the Eleventh Circuit that, in order to be bound by an arbitration agreement under the New York Convention, a party must have signed the agreement. In a unanimous ruling that reflects a robust approach to enforcing arbitration agreements, the Court held that the “text of the New York Convention does not conflict with the enforcement of arbitration agreements by non-signatories under domestic-law equitable estoppel doctrines” and that the Convention “contemplate[s] the use of domestic doctrines to fill gaps in the Convention.”
In a decision that finally settles the test for the law governing arbitration agreements, the Singapore Court of Appeal in BNA v BNB endorsed the three-step Sulamerica framework that, absent an indication to the contrary, favours the application of the express choice of law in the underlying contract containing the arbitration agreement. The question of the law governing the arbitration agreement has similarly percolated up to the UK Supreme Court, which recently allowed an appeal on the issue in Enka İnşaat ve Sanayi AŞ v OOO Insurance Company Chubb.
The UK Supreme Court also heard oral arguments in Halliburton Company v Chubb Bermuda Insurance Ltd on the effect of repeat appointments on the independence and impartiality of arbitrators in November 2019. In a closely watched case, the Supreme Court permitted the intervention of multiple arbitral institutions, including the LCIA, the ICC, the LMAA and CIArb. While the Court’s decision remains pending, it is widely expected to have important ramifications on arbitrator appointments.
Fifth, the Commonwealth Secretariat concluded its study on the challenges and solutions to accessing international commercial arbitration across the Commonwealth. The study, which was commissioned in 2018 by Ministers of Law and senior officials of the 53 Commonwealth member states, includes over 600 pages of country reports that canvas the arbitral landscape in individual member states. While the study identifies specific challenges to the widespread use of international arbitration across the Commonwealth, including underdeveloped legal frameworks, judicial attitudes to arbitration, costs and a lack of familiarity with arbitration, particularly amongst small and medium-sized business, it also identifies avenues to overcome those challenges through, among other things, legislative reform and capacity building. Although focused on the Commonwealth, the study provides a useful roadmap to analyse similar issues in other jurisdictions.
Sixth, the investment arbitration landscape is still recalibrating in light of the March 2018 decision of the Court of Justice of the European Union in Slovak Republic v Achmea B.V. An increasing number of tribunals have rejected Achmea-based jurisdictional objections, including on the grounds that it does not apply to arbitrations under the Energy Charter Treaty (ECT) or other multilateral instruments involving non-EU member states, such as the Convention On The Settlement Of Investment Disputes Between States And Nationals Of Other States International Centre For Settlement Of Investment Disputes (“ICSID Convention”).
National courts have also entered the fray in the past year, shedding light on the questions Achmea may raise at the enforcement stage. In September 2019, the United States District Court for the District of Columbia enforced an ICSID award in the long-running Micula v Romania dispute. The Court was careful to emphasise that, in rejecting the Achmea-based objections, it was persuaded by the fact that the impugned measures pre-dated Romania’s accession to the EU. It remains to be seen how the US courts will approach enforcement in the absence of such temporal nuances. There are, at present, a suite of awards against Spain under intra-EU treaties and the ECT that are pending enforcement before the US courts.
In December 2019, the Swedish Supreme Court agreed to refer a question to the European Court of Justice on whether Poland could implicitly consent to arbitration by failing to raise a jurisdictional objection on the basis of Achmea before the arbitrators. The decision arises in the context of set-aside proceedings in PL Holdings v Poland under the Belgium/Luxembourg-Poland bilateral investment treaty.
The decisions above are unique to the circumstances of each case. But the differing legal and factual matrixes reaffirm that the ripple effects of Achmea will continue to be felt for some time to come.
Seventh, while tribunals and national courts continue to grapple with Achmea, the broader march of the European Union (EU) and Commission away from investor-state arbitration continues unabated. In October 2019, the European Commission presented additional proposals on the investment court system under the EU-Canada Comprehensive Economic and Trade Agreement while reiterating its support for a multilateral investment court in UNCITRAL Working Group III on Investor-State Dispute Settlement Reform.
In May 2020, 23 member states of the European Union signed the plurilateral Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union, effectively implementing a broad reading of the Achmea ruling on the incompatibility of investor-state arbitration in intra-EU treaties with EU law. In parallel, the European Commission also announced proposals to reform the ECT, most notably to align the ECT’s dispute resolution provisions with its proposal for a multilateral investment court in UNCITRAL Working Group III.
Ironically, as the European Commission seeks to dismantle investor-state arbitration, the European Union has found itself on the receiving end of its first investment treaty claim. In Nord Stream 2 AG v The European Union, Nord Stream 2 AG, a subsidiary of Gazprom, the Russian state-owned gas company, is seeking injunctive relief or damages from the EU in excess of EUR8 billion as a result of changes to the 2009 EU gas directive.
It remains to be seen how widely the proposal for a multilateral investment court is adopted to replace investor-state arbitration. As noted in this chapter last year, large multilateral and bilateral treaties continue to retain mechanisms for investor-state arbitration in some form, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the China-Singapore Free Trade Agreement and the United States-Mexico-Canada Agreement.