PART I – PART II
By Samiron Borkataky (I. G. & Associates, New Delhi)
Generally speaking, in India the word “Fraud” has long been a source of anxiety to both Arbitration Practitioners and Arbitral Tribunals. The frequent commencement of civil suits seeking to divest the Arbitral Tribunal of jurisdiction on the grounds of alleged fraud have raised concerns for parties invoking arbitration agreements. The fact that this apprehension is not unfounded is also obvious from the 246th Report of the Law Commission of India, recommending that issues of fraud be made arbitrable. However, such recommendations are yet to be enacted. In a situation such as the above, is the purpose of having an agreement to resolve a dispute by arbitration, at all attainable or can the parties’ intent be rendered otiose by a mere allegation of fraud? The Delhi High Court recently found itself in such a position when hearing an application for an interim stay of an ICC Arbitration, in a suit, seeking a declaration regarding the validity of a document; and a permanent injunction.
Continue reading FRAUD: The Demon of Arbitration in India – Part I of a II Part Series
by Ms. Harshitha Ram (Managing Partner, Lex Apotheke, India)
Some people consider the Indian judiciary eerie, due to its complex court procedures and inordinate delays. The optimistic news reports promote the idea of developing arbitration in India but, in reality, there needs to be an acceptable and appropriate degree of thorough improvement with the basic structuring of the Indian legal system. The Law Commission of India has prepared a report on proposed amendments to the Indian Arbitration and Conciliation Act, 1996 (“Act”). This ordinance of the 246th report by the Law Commission of India has been pending approval by the Indian Parliament since last December after the winter session of the Parliament. According to latest news reports, the Cabinet is focusing on the correction of two key provisions of Section 10A and Section 29A of the proposed amendments. Section 10A deals with arbitrator’s fees and Section 29A concerns the time limit of nine months for rendering an arbitral award and debarring the arbitrators for three years if found to have delayed adjudication.
This post discusses some pertinent points that deserve a closer look to perceive the significance of the proposed amendments in consonance with the international arbitration scenario with which India is expected to compete.
Continue reading Arbitration in India – A connecting Comet!
by Jack Wright Nelson (Chinese University of Hong Kong)
Enforceability has long been arbitration’s trump card. When debating litigation vis-à-vis arbitration, proponents of the latter could simply cite the New York Convention – and its list of 154 contracting states – as proof that, for international business, arbitration was “the only game in town.” By the end of this year, however, litigators will have their own convention: the Hague Convention on Choice of Court Agreements.
The Hague Convention seeks to replicate the New York Convention by ensuring both the effectiveness of choice-of-court agreements, and the enforceability of judgments resulting from such agreements. It achieves this through three basic rules. Courts in contracting states must first, assume jurisdiction if named in a choice-of-court agreement; second, refuse jurisdiction if not named in a choice-of-court agreement; and third, recognise and enforce any judgment issued by a court in a contracting state that assumed jurisdiction under a choice-of court-agreement. The court assuming jurisdiction under the first rule is referred to as the chosen court. The jurisdiction in which enforcement is sought pursuant to the third rule is called the requested State.
Continue reading The Hague Convention on Choice of Court Agreements: Return of the Litigators?
By Mostafa A. Hagras (Advocate, Egypt)
- Summary And Update
- This post updates my previous post on anti-arbitration injunctions entitled “The Egyptian Arbitration Law and Anti-Arbitration Injunctions Due to Expiry the Time Limit for the Final Award – Case Study”, posted on 3 February 2015. The post introduced the position of the Egyptian arbitration law and of some Arab Middle Eastern laws, whereby state courts are conferred the authority to terminate an ongoing arbitration if the time limit for rendering the final award has expired.
- The post, inter alia, remarked this position as an anti-arbitration injunction, which is one of the pervasive problems of international arbitration in some Arab Middle Eastern countries. The post also presented a study for the ICC Case No. 14695/EC/ND. This case was terminated by an injunction granted by the chief judge of the Cairo Court of Appeal on 7 July 2008 on the ground that the time limit for the final award had expired without the statement of claim having been filed.
- The injunction (injunction no. 19/125) was granted under article 45 (2) of the Egyptian Arbitration Act, which provides that if the contractual or statutory time limit expires without the final award having being rendered, each party to the arbitration may request the chief judge of the competent court[] to fix a new time limit or terminate the arbitration.
- The claimants appealed the injunction, but their appeal was dismissed and the injunction was confirmed by injunction no. 23/125 dated 24 March 2009.
- The sole arbitrator, notwithstanding, refused to comply with the injunction and declared that the arbitral proceedings must resume, irrespective the injunction.
- The respondent filed a court action against the sole arbitrator claiming damages, which were allegedly caused by the sole arbitrator’s decision to continue the proceedings irrespective of the injunction.
- The sole arbitrator, consequently, resigned and suspended the proceedings until receiving the decision of the ICC Court in this respect. On 13 August 2009, the ICC Court appointed a new sole arbitrator pursuant to Article 12 (4) of the ICC Rules.
- Although the respondent added the new sole arbitrator as an additional respondent in the court action for damages, the new sole arbitrator rendered an award on jurisdiction on 17 November 2009. In the award, the sole arbitrator declared his refusal to recognize the injunction. He considered that Egypt is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). As a result, Egypt is bound by Article II of the New York Convention to recognize the agreement to arbitrate and enforce it by referring the parties to arbitration, unless it finds that the arbitration agreement is null and void, inoperative, or incapable of being performed. The Egyptian Arbitration Act provides for the same in Article 13. It further provides for the ‘Competence-Competence’ principle in Article 22.
- The new sole arbitrator concluded that neither the New York Convention nor the Egyptian Arbitration Act confer the power on state courts to terminate the arbitration. The court’s act therefore runs contrary to the obligation under the New York Convention. The new sole arbitrator proceeded to hear the merits of the case and rendered the final award on 26 January 2011.
- On 2 May 2011, the respondent initiated a court action before the Cairo Court of Appeal to set aside the award. The respondent asserted that, due to the injunction, the new sole arbitrator lacked jurisdiction to render an award.
- On 7 April 2013, the Cairo Court of Appeal dismissed the respondent’s case on the ground that the parties had agreed to refer their dispute to arbitration under the 1998 ICC Arbitration Rules. Therefore, these rules shall apply and the Egyptian Arbitration Act shall cease to apply. Hence, the rules governing the arbitral process including the time limit for the final award and a termination of the arbitration fall within the exclusive jurisdiction of the ICC Court. The Egyptian courts have no jurisdiction to terminate the ICC proceedings. The injunction is, therefore, frustrated and has no sanctity or power under the Egyptian law. []
- The respondent challenged the judgment of the Cairo Court of Appeal before the Cassation Court of Egypt on the ground that the Cairo Court of Appeal is precluded from reviewing the injunction because it was final and had res judicata value. The Cassation Court, on 10 March 2015 upheld the decision of the Cairo Court of Appeal and declined to recognize the injunction.
- The Cassation Court concluded that, under the joint-venture agreement dated 10 August 2001, the parties agreed to arbitrate their disputes under the ICC Arbitration Rules. Therefore, the arbitration shall be governed by the procedural rules of the ICC and the provisions of the Egyptian Arbitration Act shall cease to apply, except those provisions relating to public order. Specifically, Article 24 of the ICC Rules applies, whereby the ICC Court may extend the time limit to render the final award at the request of the arbitral tribunal or on its own initiative if it finds it necessary. Thus, the injunction terminating the ICC arbitration violated the parties’ agreement.
- Furthermore, the Cassation Court found that the injunction granted under Article 45 (2) of the Egyptian Arbitration Act, in general, is an interim inunction in nature. Thus, its binding effect expires when the subject matter of the dispute is finally decided. Therefore, the Cairo Court of Appeal was correct when it refused to recognize the injunction.
- The Cassation Court confirmed that the time periods and extensions as provided under the ICC Rules should have been applied instead of the time periods provided for in the Egyptian Arbitration Act. Therefore, the Cassation Court upheld the decision of Cairo Court of Appeal and declined to recognize the injunction. []
Continue reading Update: Cassation Court of Egypt Declined to Recognize Anti-Arbitration Injunction against Ongoing ICC Arbitration
by Aracelly López
When Costa Rica requested El Salvador to honor the customs benefits -tariff reduction program- agreed under the CAFTA-DR Treaty for goods originated in Costa Rica, including those produced under special exportation regimes (such as corporations operating under a Free Trade Zone Regime), El Salvador argued that these benefits applied only to the United States of America since, for Central American countries, the General Treaty on Central American Economic Integration (The Guatemala Protocol) applied, and refused Costa Rica’s request.
Continue reading Costa Rica v. El Salvador: Outcome of the First Treaty Arbitration under CAFTA-DR