Waleed Al-Qarqani, et al v. Chevron Corporation and Chevron U.S.A. Inc.

United States District Court Northern District of California Oakland Division, Case No. 4:18-cv-03297-JSW, Judge Hon. Jeffrey S. White

Between: Waleed Al-Qarqani, et. al. (Petitioner) - and - Chevron Corporation and Chevron USA Inc. (Respondent)

https://dockets.justia.com/docket/california/candce/3:2018cv03297/327379

Attorneys for Amicus Curiae the ICC International Court of Arbitration: Ina C. Popova, Berglind Halldorsdottir Birkland, Guilherme Recena Costa, Matthew D. Forbes, Meryl Holt Silverman*, Emily Rebecca Hush (Debevoise & Plimpton LLP)

* No longer with Debevoise & Plimpton

Brief of Amicus Curiae the International Court of Arbitration of the ICC (Petition filed: 1 June 2018)

Interest of Amicus Curiae¹

The International Chamber of Commerce (‘the ICC’) is the largest business organization in the world, representing more than 45 million companies, including many of the world’s largest companies, along with numerous small and medium enterprises, business associations, and local chambers of commerce in over 100 countries. It works to promote and facilitate international trade and investment as a force for economic growth. The ICC is an advocate for international business on issues connected with international trade and investment in key intergovernmental fora, including the United Nations, the World Trade Organization, and the G-20 group of countries, and it represents the interests of international business to national policy-makers and regulators.

The ICC also develops internationally agreed rules and standards which business organizations adopt voluntarily and incorporate into their international commercial agreements. These include the ICC Rules of Arbitration (‘the ICC Rules’), which are used in arbitrations administered by the International Court of Arbitration® (‘the ICC Court’).

The ICC Court is the leading arbitral institution globally. Since its creation in 1923, it has administered more than 24,000 cases from around the world. In the most recent arbitration market study, it ranked as the most preferred arbitral institution in the world, with a 77% acknowledgment rate.² The ICC Court’s principal role is to supervise arbitration proceedings under the ICC Rules. In doing so, the ICC Court performs various functions, including ascertaining prima facie jurisdiction; deciding on consolidation of proceedings; fixing the place of arbitration; constituting arbitral tribunals; monitoring the financial aspects of each case; deciding on challenges made against arbitrators, tested against the twin requirements of independence and impartiality; and scrutinizing all draft arbitral awards to reinforce quality and enforceability.

In addition to contributing to best practices for arbitral institutions, the ICC has been deeply involved in the development of the legal framework for arbitration around the world. The ICC played a crucial role in the development of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 1958 (‘the New York Convention’ or ‘the Convention’), on which Petitioners here rely. In the early 1950s, the ICC’s Committee on International Commercial Arbitration observed that ‘[t]he development of international trade depend[ed] on’ a framework to ensure that international arbitration awards could be enforced in all countries in the same way.³ The ICC then proposed a draft of what later became the Convention and initiated the drafting process.⁴ The final version of the Convention is materially similar to the ICC’s 1953 draft.

Today, as the world’s preeminent international arbitration institution, the ICC Court continues to safeguard the proper application of the Convention. The ICC publishes practice guides, engages in thought leadership, and provides training to judges, users, and practitioners on arbitration law and practice. On a day-to-day basis, the ICC Court and Secretariat also consider the enforceability of proposed awards under the New York Convention in the course of their scrutiny of arbitral awards under the ICC Rules.⁵

As a leading global arbitration institution, the ICC Court has an abiding interest in the integrity of arbitral proceedings and of the arbitral system as a whole, including the independence and impartiality of the administering institutions and tribunals, respect for the parties’ consent to arbitrate, and the protection of the due process rights of arbitral parties. In particular, the ICC Court has an interest in ensuring that the New York Convention is not abused to achieve results contrary to its provisions and purpose, and that arbitration is not used as a means to perpetrate fraud.

Statement of Facts

On 1 June 2018, Petitioners filed a Petition for an Order to Confirm a Foreign Arbitration Award and For Entry of Judgment in Conformity with the Arbitral Award before this Court (‘the Petition’).⁶ The Petition requests that this Court confirm a purported arbitral award that was issued on 3 June 2015 in favor of more than 60 individual heirs to two deceased Saudi nationals (‘the Arbitration Claimants’) against ‘Chevron Entities (Chevron Company of USA, Chevron Saudi Arabia and Aramco)’ (‘the Arbitration Respondents’) for approximately US$18 billion (‘the Award’).⁷ The award was issued under the auspices of an institution called the International Arbitration Center (‘the IAC’) located in Cairo, Egypt. In support of their Petition, the Petitioners argue that ‘the New York Convention and its implementing legislation "have a pro-enforcement bias" ’, that ‘[d]efenses to enforcement under the New York Convention are construed narrowly’, and that ‘[t]his Court should therefore confirm and enforce the Award unless Respondents can carry its [sic] burden of showing the applicability of one of the enumerated grounds set forth in Article V(1) or (2) of the New York Convention’.⁸

On 5 August 2018, Respondents filed a Motion to Dismiss and Opposition to the Petition to Confirm a Foreign Arbitration Award (‘the Motion to Dismiss’). The Motion to Dismiss alleges, among other things, that the Award was the product of sham proceedings engineered to produce an award in the Arbitration Claimants’ favor, that there was never an agreement to arbitrate between the Arbitration Claimants and the Arbitration Respondents, that the proceedings violated the plain terms of even the arbitration agreement on which the tribunal purported to rely, that the Arbitration Claimants’ claims in the arbitration fell outside the scope of the purported arbitral agreement in any event, and that the arbitral proceedings were marred by gross irregularities and criminal misconduct.⁹

In particular, Respondents allege that the IAC engineered the selection of the presiding arbitrator, who had a casting vote;¹⁰ that the original party-appointed arbitrators – both respected members of the Egyptian arbitration community – resigned in protest due to their lack of confidence in the IAC’s ability to administer the arbitration and the misrepresentations that the IAC had made to them in the appointment process;¹¹ that the presiding arbitrator issued an award determining that the tribunal had no jurisdiction over the dispute;¹² that on the very same day that this ‘No Jurisdiction’ Award was issued, the IAC appointed a new arbitrator on the Arbitration Respondents’ behalf who, together with the Arbitration Claimants’ arbitrator, ousted the presiding arbitrator and replaced him with a new arbitrator;¹³ that the newly constituted tribunal issued the Award that Petitioners here seek to enforce, just sixteen days after the issuance of the ‘No Jurisdiction’ Award;¹⁴ that the Award was then seemingly authenticated with stamps that purportedly belonged to the United States Department of State and the Egyptian Ministry of Foreign Affairs, but that were both later confirmed to be forgeries;¹⁵ and that Egyptian Public Funds Police investigators determined that the General Manager of the IAC had falsely represented that the IAC’s bylaws had been approved by the Egyptian Ministry of Justice.¹⁶

Respondents further state that Egyptian prosecutors are continuing to investigate the IAC, the purported Award, and the forgery.¹⁷ On 8 August 2018, the Egyptian General Prosecutor referred to a criminal trial five individuals involved in the alleged arbitral proceedings, namely, the Deputy Chairman of the IAC, members of the arbitral tribunal, and the secretary of the tribunal.¹⁸ The Prosecutor’s report states, among other things, that ‘the [IAC] claimed its jurisdiction and falsely adjudicated such Case and further delivered an Arbitration Award based upon fraud and deceit’, that the arbitration was ‘fabricated’ and that ‘forged papers’ were used to ‘initiate the Case in pursuit for obtaining the mentioned award against such Companies’,¹⁹ and that ‘the Director of the International Arbitration Center, jointly with [an] unknown person, forged the seal of the [Tanta] Foreign Certifying Office’ and affixed the seal to the Award ‘with intention of deceiving the Respondent Companies’ and ‘in order to make the Two Respondent Companies believed [sic] that those Awards were official’.²⁰

On 13 November 2018, the Petitioners filed an Opposition and Response to Respondents’ Motion to Dismiss (‘the Opposition’), arguing, among other things, that the Respondents’ allegations of misconduct are ‘scandalous’ and ‘libelous’ and that the Respondents should be precluded from asserting various substantive arguments because they failed to challenge the award in Egyptian courts.²¹ Respondents are due to file a Reply to the Petitioners’ Opposition by 21 December 2018.

Summary of Argument

Over the course of the ICC Court’s nearly century-long existence, international commercial arbitration has arguably become the dispute resolution system of choice for the international business community. This growth is due in great part to the New York Convention, and the contribution of national courts and the international arbitration community in upholding its values. For over 60 years, the New York Convention has offered a simplified regime for enforcing arbitration awards to which most countries in the world have now subscribed.

That near-universal compact, however, is premised on the legitimacy of the underlying proceedings. The integrity of the norms and practices of the international arbitration community is a critical factor in the success of arbitration. The ICC Court and other established arbitration institutions around the world are guardians of this integrity, not only because of their practical role in the resolution of each individual dispute, but also because of their active contribution to the credibility of the system as a whole.

It is therefore of particular concern to the ICC Court that the New York Convention not be misused to recognize irregular awards that are given a false veneer of legitimacy by association with a purported arbitral institution. The ICC Court does not express a view as to the veracity of the facts alleged by the parties here, which are for this court to determine. However, invoking the New York Convention to recognize awards that are tainted by a failure to respect the will of the parties, gross procedural irregularities, collusion, a lack of due process, and other misconduct would undermine the goals of the New York Convention and destroy the confidence in the arbitral process that leading arbitral institutions like the ICC Court, arbitration users, and national courts have for decades sought to achieve.

Discussion

A. Consent to arbitrate and legitimacy of the arbitral process are critical premises of the New York Convention

The New York Convention forms the backbone of the international arbitration system. The Convention eliminates the unnecessary hurdles that previously stood in the way of enforcement of foreign arbitral awards, and codifies the principle that arbitration agreements and awards should be enforced in a simplified manner. One hundred and fifty-nine countries are currently signatories to the Convention.²²

The Convention’s simplified enforcement regime presupposes, however, that the award being enforced is legitimate and that it comports with the parties’ agreement. As the ICC’s 1953 Report noted, the intent behind the draft Convention was to ‘greatly increase the efficiency of international commercial arbitration, by ensuring a rapid enforcement of arbitral awards rendered in accordance with the will of the parties’.²³ The Report continued: ‘Since arbitration is always voluntary, it must be based on an agreement between the parties, evidence of which must be given so that the enforcement of the award can be granted’.²⁴

At the recognition and enforcement stage, national courts have a paramount role in ensuring that the arbitral process was faithful to the will of the parties. Specifically, Article IV of the New York Convention requires that the party seeking recognition produce to the enforcing court a ‘duly authenticated original award or a duly certified copy thereof’, and ‘[t]he original agreement [under which the parties undertook to submit their dispute to arbitration] or a duly certified copy thereof’.²⁵ Article V(1), in turn, allows courts to refuse recognition or enforcement of an award, among other things, where the resisting party did not have proper notice of the proceedings or was not given an opportunity to be heard (Article V(1)(b)); where the award goes beyond the scope of the agreement to arbitrate (Article V(1)(c)); and where the tribunal was not constituted in accordance with the parties’ agreement (Article V(1)(d)).²⁶ Article V(2) likewise preserves the enforcing court’s discretion to refuse to recognize awards when ‘[t]he recognition or enforcement of the award would be contrary to the public policy of [the country where recognition and enforcement is sought]’.²⁷ Recognition and enforcement should be refused where the parties did not agree to arbitrate, the tribunal was constituted in a manner inconsistent with the agreement, the arbitrators exceeded the powers conferred on them by the parties’ agreement, or a party was denied a fair opportunity to be heard. Article V of the Convention, on its plain terms, does not require a party to have first attempted to challenge the award in the national courts at the place of the award before resisting enforcement; indeed, a significant feature of the New York Convention is that it eliminated the requirement of double exequatur.

Because the New York Convention’s regime is necessarily premised on the express or implied consent of the parties to arbitrate and the legitimacy of the proceedings, so, too, is any "pro-enforcement bias" that national courts may apply on the basis of the Convention. Any pro-enforcement policy should not relieve the reviewing court of its duty, under the New York Convention and the Federal Arbitration Act to satisfy itself of the existence of the underlying arbitration agreement and the fundamental legitimacy of the arbitral process and resulting award.

B. Legitimate arbitral institutions bear the hallmarks of independence, transparency, and respect for the parties’ consent

In reviewing the legitimacy of the award and compliance with the parties’ consent, national courts look to the manner in which the proceedings were conducted by the tribunal and, in the case of institutional arbitration, by the administering institution. As noted above, the ICC Court was established in 1923 and is one of the oldest and most popular institutions worldwide. Many other legitimate arbitral institutions have since been created, including regional centers, to respond to the evolving needs of international business. There is, however, no supranational body regulating arbitral institutions.

As arbitral institutions proliferate, legitimate institutions distinguish their credibility through certain common characteristics. First, legitimate arbitral institutions operate in a transparent and even-handed manner, independent of the parties in any given dispute and of other outside interests. For example, under the ICC Rules, if the President, Vice-Presidents, or members of the ICC Court are ‘involved in any capacity whatsoever in proceedings pending before the Court’, they receive no material information relating to such proceedings and do not participate in the discussions or decisions of the Court in that regard.²⁸

Second, legitimate arbitral institutions typically ensure that tribunal members are independent and impartial (unless the parties have agreed otherwise). Respecting the parties’ agreement as to the appointment of arbitrators is critical to the award’s enforceability under Article V of the New York Convention. When it is called upon to make default arbitrator appointments, the ICC Court considers (among other things) an arbitrator’s independence, impartiality, and availability.²⁹ Although the ICC Court has the ability to replace an arbitrator on its own motion, that power is very rarely exercised and only in exceptional circumstances. The ICC Court may only replace an arbitrator if he or she ‘is prevented de jure or de facto from fulfilling the arbitrator’s functions, or [if] the arbitrator is not fulfilling those functions in accordance with the Rules or within the prescribed time limits’.³⁰ The ICC Court can only exercise this power ‘the arbitrator concerned, the parties and any other members of the arbitral tribunal have had an opportunity to comment in writing’, and those comments must be shared with the parties and the arbitrators.³¹

Third, in the administration of their cases, legitimate arbitral institutions typically ensure that the tribunal respects due process and equality between the parties in the conduct of the proceedings, that the proceedings are adapted to the stakes at issue in each case, and that the draft award is likely to be enforced. The ICC Court and Secretariat, for example, supervise all stages of arbitrations conducted under the ICC Rules. The ICC Rules provide that ‘[i]n all cases, the arbitral tribunal shall act fairly and impartially and ensure that each party has a reasonable opportunity to present its case’.³² Tribunals must communicate their procedural timetable, and any modifications thereto, to the ICC Court and the parties.³³ The structure of the proceedings themselves is generally commensurate with the complexity of the dispute and the amount at stake. While arbitrations can sometimes be resolved on an expedited basis in a matter of months, multi-billion dollar arbitrations are typically more complex: they can take years to resolve and often involve extensive legal briefing, weeks of hearings, witness and expert testimony, and a substantial documentary record. Once a draft award has been prepared, the ICC Court scrutinizes the award to reinforce its quality and ensure its enforceability. The ICC Court may draw the tribunal’s attention to points of substance in the award, but it does so ‘without affecting the arbitral tribunal’s liberty of decision’.³⁴ Once the award has been approved by the Court and signed by the tribunal, the ICC Secretariat notifies the final award to the parties for purposes of enforcement and retains an original of each signed award.³⁵

Finally, legitimate arbitral institutions are committed to developing rules, procedures, and best practices for international arbitration more generally. Transparency and thought leadership are a key part of most major institutions’ missions. Arbitral institutions contribute practical guidance, provide education and training, publish practice guides, and may provide excerpts of arbitral decisions and awards. The ICC Secretariat, for example, publishes model forms for terms of reference and procedural timetables as well as practice notes for parties and tribunals on the conduct of arbitrations.³⁶ The ICC Court also publishes an Award Checklist for arbitrators to help ensure the quality, comprehensiveness, and enforceability of awards issued under the ICC Rules.³⁷ The ICC Commission on Arbitration and ADR, which is one of the ICC’s think tanks, produces practical reports and guidelines on legal, procedural, and practical aspects of dispute resolution.³⁸ The ICC also published a comprehensive, over 400-page Guide to National Procedures for Recognition and Enforcement of Awards under the New York Convention.³⁹ Since the first publication of a summary of an arbitral award by the President of the Court in 1925, the ICC has been publishing summaries and excerpts of awards and procedural orders in leading publications such as the Journal du Droit International (Clunet), a French leading academic publication. The ICC also publishes the quarterly ICC Dispute Resolution Bulletin, which follows global developments in arbitration law and practice, provides commentary on topics of interest, publishes the reports of the ICC Commission, and reports on case decisions as well as the ICC’s activities, practices, and procedures.⁴⁰ The ICC’s Dispute Resolution Digital Library, which is continuously updated, currently makes available 687 articles, 635 awards, yearly statistical reports, extracts from procedural orders in ICC arbitrations, and other resources.⁴¹ In addition, the ICC organizes dozens of conferences and events every year, offering training and thought leadership on the cutting edge issues in arbitration, and the ICC Institute of World Business Law organizes entry-level and advanced trainings on ICC arbitration, masterclasses for arbitrators, trainings on case management, advocacy, settlement, award drafting and administrative secretaries and trainings on the drafting of international contracts in multiple regions around the world.⁴²

Although each arbitral institution has its own rules and practices, all genuine institutions typically share a commitment to independence, due process, transparency, and community outreach. Those hallmarks of legitimacy distinguish them as guardians of the integrity of the arbitral process and create confidence in awards rendered under their auspices, subject to the requirements of the New York Convention.

Conclusion

The ICC Court takes no position on the facts alleged by the parties in this proceeding, which are for this Court to determine. Recognition of an illegitimate arbitration award, however, would undermine arbitration altogether and be highly detrimental to the global interests that the ICC represents. The facts Respondents have alleged here, if proven, would bear little resemblance to a typical arbitration process and would fall woefully short of the safeguards that legitimate institutions typically uphold. Recognition of the resulting award in such circumstances would undermine public confidence in arbitral institutions, in the New York Convention, and in arbitration more generally.

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