A report of the ICC Commission on International Arbitration

This report was adopted by the Commission on International Arbitration at its meeting of 28 October 1997.

Those who participated in the Working Party on arbitration and intellectual property were as follows:

Chairman: ulian D. M. Lew (United Kingdom)J.

Members: Stefan Bernhard (Sweden), Martine Briat (France), James Bridgeman (Ireland), Xavier De Mello (France), Sami Kallel (Tunisia), Klaus-Jürgen Kraatz (Germany), Bryan Niblett (United Kingdom), François Perret (Switzerland), David W. Plant (United States), Inga Pöntynen (Finland), Stefano Sandri (Italy), Mark Shillito (United Kingdom), D.C. Singhania (India), Tom Webster (Canada), Jacques Werner (Switzerland), Lan Yan (China).

Secretariat: Dominique Hascher, Jean-François Bourque.

The opinions, recommendations and conclusions set out in this report do not modify the ICC Rules of Arbitration; they are not binding on the International Court of Arbitration or its Secretariat. [Page38:]

1. GENERAL ISSUES

(a) Introduction

1.1 This Working Party was established to review the problems which arise out of intellectual property disputes that are referred to arbitration.1 Specifically, what are the problems which arise from intellectual property disputes which do not arise at all, or as intensely, in other types of arbitration? How can, and how should, intellectual property disputes be dealt with? Do they need different rules or approaches to ensure their efficient and effective resolution?

1.2 Intellectual property has become of increasing importance to economic prosperity, international trade and commercial profits in the modern world. The types and areas of intellectual property have broadened in recent years, as has the nature of commercial transactions involving intellectual property. In the last 15-20 years computer technology, both hard and software, has developed beyond all recognition, and the growth in telecommunication systems is staggering. This has resulted in increased licensing and franchising arrangements with global implications.

1.3 Intellectual property represents an enormous value to both national economies and the individual owners or users. Economic progress are dependent on the latest state-of-the-art scientific developments, which in turn are usually registered or recorded intellectual property rights. Businesses invest enormous amounts in research and development programmes to find new and expand or vary existing intellectual property. It is for this reason that the registration and protection of intellectual property by its owners is so important. These intellectual property rights permit technical, industrial and other developments to be used and exploited for the benefit of the privately owned business and the wider national interest. The level of ownership of intellectual property and its use is far greater in the developed countries than in the developing countries.

1.4 For the purpose of the present study, intellectual property will be understood as comprising the following:

• creative rights (such as patents, utility models, copyright and audio-visual rights, design rights, integrated circuit topography rights, property rights in software and plant breeders' rights);

• indications of product or service origin, quality or nature (trade marks, trade names and other distinctive indicators); and

• rights in confidential information and know-how.

1.5 The traditional obstacle to using arbitration to resolve intellectual property disputes was a fundamental concern as to arbitrability. This arose from the fact that some intellectual property rights derive from legal protection granted on a national basis by the local sovereign power, which affords the beneficiaries certain exclusive rights to use and exploit the intellectual property in question. The existence, extent, meaning and application of such rights could legally only be definitively investigated, reviewed, explained, expanded, curbed, revoked or confirmed by the authority which issued or granted the right, by another specifically appointed body under that system or, in certain situations where very specific questions of law arose, by the courts of that country. This had the effect that rights and entitlements to intellectual property, and the legal issues which flowed from those rights, could not usefully be referred to or considered by an arbitration tribunal.

1.6 This arbitrability issue manifested itself at different stages. First, at the time the dispute arose the jurisdiction and authority of the arbitrators would be challenged. This would undermine the arbitration and leave a degree of uncertainty throughout the arbitral process. A second possible course of conduct was for the party objecting to the arbitrator's jurisdiction to seek an injunction, stay or similar order from a court, in order to stop the arbitration proceedings. Third, was for the party objecting to the jurisdiction of the arbitrator to reserve its position, whether or not it participated in the arbitration, to apply to court to overturn or set aside the arbitrator's award, or to request a court to refuse to enforce the award, on the basis that the subject-matter of the dispute was not one that could properly be referred to arbitration.[Page39:]

1.7 The law in most of the major arbitration countries has changed in recent years and is today expressly much more supportive of party autonomy than in earlier years. In this paper, we review and summarize:

• the nature of the most common types of intellectual property disputes, and the approach adopted as to their arbitrability by national legal systems and the most relevant arbitral institutions (Section 2 below);

• the remedies available (particularly injunctions and interim measures (Section 3 below); and

• the enforceability of arbitral awards relating to intellectual property disputes (Section 4 below).

(b) Types of intellectual property disputes

(i) Agreements

1.8 Intellectual property disputes frequently involve one or more of the following types of agreement:

• intellectual property licences;

• agreements for the transfer of intellectual property (often in the context of a business or company acquisition);

• agreements in connection with which intellectual property is developed (such as research or employment contracts).

There are also cases where more contentious situations, including issues of illicit copying and counterfeiting, may be submitted to arbitration through a submission agreement.

Intellectual property licences

1.9 Licences are probably the greatest single source of bona fide intellectual property-related disputes. Although intellectual property licences all share the common general aim of authorizing the licensee to exploit the material in question without fear of challenge from the licensor, their precise purposes, subject-matter, form and terms vary hugely: they may form part of a wider commercial venture (such as a franchise, distribution or agency agreement) or simply be a method of settling an earlier dispute or uncertainty; they may be one-off contracts or standard forms; they may be of short or long duration (sometimes as long as the duration of the property right itself); they may have been well and comprehensively drafted after careful consideration, or vague and poorly thought-out. Importantly, they may also be affected by laws of a public policy nature, particularly competition or antitrust laws.

1.10 Although disputes arising from intellectual property licences are also highly variable in nature, they commonly relate to such issues as whether royalties are payable and the amount of such royalties, the precise extent of the licensed rights, whether new product developments are covered by the licence, the circumstances in which a party is entitled to terminate the licence, the compensation which should be granted for breach of the licence, and the relevance of alleged infringements of mandatory legal requirements (such as competition law).

Agreements for the transfer of intellectual property

1.11 In most corporate or business acquisitions, the seller gives warranties about the extent and ownership of the business' intellectual property, the extent and terms of any licences held or granted, and the status of relevant intellectual property applications or registrations. These are often crucial assets in the underlying transaction, and the acquisition agreement will therefore often provide for a revision of the price at a later stage insofar as the warranties prove inaccurate. Such provisions are a common source of dispute after an acquisition has taken place. Where there is an arbitration clause, such disputes will require the arbitrator to determine the existence, ownership and extent of the rights (subject to considerations of arbitrability and finality), and the implications of that determination for the warranties, the other performance obligations and, of course, the financial terms.

Agreements in connection with which intellectual property is developed

1.12 It is common (and advisable) expressly to make provision for the ownership of (and other terms relating to) any intellectual property which [Page40:] results from an employee's or research contractor's work. This is particularly important for organizations heavily dependent upon intellectual property for their success, such as scientific or medical institutions, pharmaceutical companies, telecommunications companies, computer software businesses, film, video and music recording businesses, and fashion houses, but it is also relevant in many other less obvious contexts. While most national laws do have specific presumptions for the ownership of intellectual property, and some laws provide how the employer should recompense the employee for his inventions,2 it is wise to avoid any doubt or potential mistakes by making express provision. In particular, the fact that one party has paid the other to develop such rights will not necessarily be dispositive of the issues. As with intellectual property licences and transfers, the types of dispute arising from such research or employment contracts are very variable, but they commonly derive from failures to make clear provision for the ownership of property rights in specific circumstances.

(ii) Other disputes involving intellectual property

1.13 There are many other situations where parties may seek to employ arbitration to determine their respective rights in relation to intellectual property. However, in the absence of a pre-existing contractual relationship, there will normally be no possibility of referring a matter to arbitration unless the parties voluntarily submit to this after the dispute has arisen, in the interest of (for example) expedition, expense and/or secrecy.

(c) ICC statistics

1.14 The number and types of cases involving a dispute over an intellectual property right or an intellectual property element are difficult to estimate. However, ICC statistics do provide some illustrative information about these matters.

Proportion of arbitrations involving intellectual property

1.15 In the six-year period from 1990 to 1995, 11.7% of arbitration cases filed at the ICC Court contained a significant intellectual property aspect. Parties with 50 different nationalities were involved in these 199 cases, either as claimants or defendants.3

Nationality of parties

1.16 Of the parties in the 199 cases (at least 420 parties), over half came from five countries: USA (77), France (59), Italy (40), Germany (54), and Switzerland (25).4 Almost 90% of all the cases (170) involved one or more parties from the leading export nations. About 78% of cases (155) involved parties all originating from developed market economy countries. There were only 5 cases where both parties were from the developing world. The remainder involved parties from developed and developing countries, with approximately equal numbers of claimants and defendants from each.

Types of dispute

1.17 A breakdown of the types of dispute is as follows (many cases involved more than one of these matters): [Page41:]

Licence and franchise agreements 143

Know-how, technical assistance 86

Trade names and ensigns 19

Patent validity, infringement or other 34

Trade marks validity or other 35

Designs and models 35

Copyright and audio-visual rights 9

Place of arbitration

1.18 In practice, the place of arbitration is agreed by the parties in over 80% of ICC cases. The role of the ICC Court in fixing the place of arbitration is thus relatively modest. The places of arbitration most often chosen are Paris (54), Zurich (28), Geneva (23), London (22) and cities in the United States (24).5

Choice of law

1.19 The choice of law applicable to the merits is expressly provided for by contract in approximately 80% of cases. The most often chosen laws are Swiss (35), American (32), French (23), English (13) and German (13).6

Number and content of awards

1.20 33 awards in intellectual property-related cases were rendered between 1990 and 1995. The awards contain some legal discussion on a variety of issues, including arbitrability, ownership of intellectual property rights, applicable law, confidentiality, the interpretation of contractual provisions, and post-termination rights.

2. ARBITRABILITY

2.1 Arbitrability is a crucial issue in intellectual property disputes. It is particularly relevant to both the jurisdiction of the arbitrator and the enforcement of arbitral awards under the 1958 New York Convention. Quite often, disputes regarding intellectual property rights - which are typically national in character and often dealt with multi-national portfolios - will give rise to questions of recognition and enforcement in more than one jurisdiction.

2.2 Under Article V(2) of the New York Convention, recognition and enforcement of the award may be refused if the competent authority in the country where enforcement is sought finds that:

• the subject matter is not capable of settlement by arbitration under the law of that country; or

• the recognition and enforcement of the award would be contrary to the public policy of that country.

2.3 In view of the factors mentioned in paragraph 1.5 above, coupled with the policy ramifications of intellectual property, many legal systems have in the past been hostile to the submission of intellectual property disputes to arbitration. There is still substantial uncertainty amongst practitioners and the public regarding the arbitrability of intellectual property rights in particular countries. There is wide recognition that the arbitrability of intellectual property disputes is desirable but national laws do not reflect this wider perception.7

2.4 The Working Party examined the national legislation and court decisions of several countries, based on members' reports and on various earlier studies. Four different categories of countries were identified:

• those wholly denying arbitrability to intellectual property disputes;

• those qualifying arbitrability on public policy grounds;

• those granting full arbitrability

• those where the question remained uncertain and had not been addressed either in legislation or by judicial authority.8[Page42:]

For the purpose of this report we distinguish between only the restrictive approaches and those which recognize party autonomy in national laws.

(i) The restrictive approach

Latin America

2.5 Some Latin American countries, partly in consequence of their historical hostility to international arbitration, are not favourable to the arbitrability of intellectual property disputes. In Brazil, until recently, arbitration was not admissible whenever any public authority, such as the Trademark Office or the Registry of Commerce, was involved. However, Brazil has recently enacted a more liberal arbitration law, effective as of 23 November 1996. This development in one of Latin America's most dynamic countries may well have a bearing on the arbitrability of intellectual property disputes in that region of the world.

South Korea

2.6 In the Republic of Korea, intellectual property rights are not always recognized as commercial matters. Therefore, the enforcement of foreign arbitral awards under the 1958 New York Convention may not be available.

South Africa

2.7 In South Africa, section 18(1) of the current Patents Act 1978 provides that 'no tribunal other than the commissioner shall have jurisdiction in the first instance to hear and decide any proceeding ... relating to any matter under this Act'. South Africa has new arbitration legislation in process but that will not affect the arbitrability issue.

Israel

2.8 In Israel, the absence of specific legislation on intellectual property rights, as well as the absence of case law concerning this issue, has led Israeli scholars to conclude that the adjudication of intellectual property rights is not suitable for arbitration. However, disputes relating to the amounts due arising out of the use of intellectual property rights can be determined by arbitrators as this will not involve an examination of the validity of the right itself.9

(ii) Approach more reflective of party autonomy

2.9 The restrictive approach just described now reflects the position in a minority of countries only, which still seemingly prefer litigation over arbitration. Most countries today concede arbitrability, either generally or subject to certain restrictions. The following survey is given for illustrative purposes only.

Belgium

2.10 The Belgian Patent Act of 28 March 1984 resolved the controversy which existed under the former legislation regarding the arbitrability of disputes involving patents. Under Article 73.6 of that Act, disputes concerning the ownership, validity and infringement of patents and/or patent licensing agreements (other than compulsory licensing agreements) can be validly submitted to arbitration. Disputes concerning trade marks, drawings and models are also arbitrable under Belgian law. Although the Uniform Benelux Act on Trademarks and the Uniform Benelux Act on Drawings and Models refer in their relevant provisions only to courts, legal commentators agree that these provisions do not affect the arbitrability of any such disputes, since the Acts only aim to prevent administrative agencies from involving themselves in this area.10

England

2.11 In England neither the Arbitration Acts of 1950 and 1979, nor the Arbitration Act 1996, make special provision for intellectual property disputes.11 In particular, there is no statutory provision corresponding to the US Patents Act 1983 (35 USC 294). The UK Patents Act 1977 provides for arbitration in certain circumstances. First, where an application for a compulsory patent [Page43:] licence under sections 48 to 51 of the Act is opposed, the Comptroller General of Patents may order the proceedings, or any question or issue of fact arising in them, to be referred to an arbitrator under section 52(3) of the Act. Moreover, the right of appeal to the Patents Court may be excluded by agreement of the parties. Secondly, when a dispute arises under section 58 of the Act (Crown use), the court may refer a part or the whole of the issue to arbitration.

2.12 There is no reason of principle in English law why an intellectual property dispute should not be referred to arbitration. For example, an English Court stayed court proceedings in favour of arbitration in a dispute arising out of a patent licence agreement.12 However, the arbitrators can only bind the parties before them.

2.13 Nonetheless, questions of title to, and infringement of, intellectual property may raise special considerations because an arbitration award is a decision in personam, only binding the parties actually involved in the arbitration, whereas intellectual property rights can bind the whole world. However, given that it is well settled in England that disputes relating to title to real property may be arbitrated, and that awards in such cases bind not only the parties but (by section 16 of the Arbitration Act 1950 and section 58(1) of the Arbitration Act 1996) those 'claiming under' a party to the arbitration (but not third parties), it seems likely that intellectual property arbitration awards would be accorded the same effect.

2.14 There is no reason to suppose that a foreign award dealing with intellectual property would not be recognized or enforced in England under the New York Convention of 1958. Since the subject matter is capable of settlement by arbitration under English law, it is unlikely that recognition or enforcement of such an award would be contrary to the public policy of the UK.

France

2.15 In France, Article 35 of the Trade Marks Act states that trade mark agreements can be the subject matter of arbitration in accordance with Articles 2059 and 2060 of the Civil Code. As for the subsequent Intellectual Property Code (in force as of 1 July 1992), it provides that its jurisdictional rules are no obstacle to the settlement of intellectual property disputes by arbitration.13

2.16 Thus, the general principle is that intellectual property disputes may be settled through arbitration, subject to the qualification that the validity of a patent cannot be submitted to arbitration. In the 1989 SDP v. DPF case,14 the Paris Court of Appeal ruled that 'the contractual and private nature of arbitration prevents the arbitral jurisdiction [from being available] in matters governed by mandatory provisions with a public policy dimension, this being a prerogative of the State Courts'.

Germany

2.17 According to the new Article 1030 German Code of Civil Procedure ('ZPO') any right to which a commercial or financial value is attached (vermögensrechtlicher Anspruch) may be submitted to arbitration. This includes of course any intellectual property right. However, a patent is a right which does not flow from party autonomy but which is issued by a state authority. Once a patent is issued, it is valid against everybody. If the validity of a patent is disputed between the patent holder and a third party in arbitration, the arbitral tribunal may not itself annul the patent. However, it may decide that the patent holder has no right under the patent and has to consent to have the patent declared null and void by the competent patent authority. In enforcement proceedings the competent patent authority then has to declare the patent null and void, the arbitral award serving as the application of the patent holder.

Ireland

2.18 In Ireland, disputes which are within the competence of the parties are prima facie arbitrable. This would include disputes relating to the respective rights and obligations of parties under contracts and licences and would include claims in tort (delict). Although the issue has not come before the courts in Ireland, it is generally accepted that certain subjects are not within the [Page44:] competence of an arbitral tribunal. This would include the validity of patents, the validity of trade mark and service mark registrations and the validity of design registrations. There are a number of reasons for this view. These grants and registrations are acts of a third party, namely the government, which would not be a party to the reference. Secondly, these grants and registrations are not within the competence of the parties to resolve themselves without involving third parties including the public. Thirdly, it would most probably be contrary to public policy to have a private tribunal interfere with a decision of the sovereign power, particularly where this involved the entitlement to a monopoly right.

Italy

2.19 Article 806 of the Italian Civil Procedure Code states that all 'disputes which may not be the subject of a settlement' (i.e. 'transazione') cannot be submitted to arbitration. In 1977, the Italian Supreme Court ruled that it followed from this principle of law that a controversy about the validity of an internationally registered trademark with effect in Italy had to be retained by the Italian courts, and could not be subject to arbitration.15 There is a consensus, however, that arbitration of patent and/or trademark validity or forfeiture is admissible, provided the relevant decision is taken incider tantum.

2.20 Accordingly, disputes relating to termination and breach of a licence or assignment of a trademark or patent can be submitted to arbitration so long as it is not directly connected to the validity in rem of intellectual property rights. All other disputes involving intellectual property can be referred to and settled by arbitration.16

Japan

2.21 Under Japanese law, any dispute which can be disposed of by compromise between private parties can be referred to arbitration. Article 78 of the Japanese Code of Civil Procedure (Law No. 29 of 1890) provides that 'an agreement for submission of a controversy to one or more arbitrators shall be valid insofar as the parties are entitled to effect a compromise regarding the subject matter in dispute'. According to the AIPPI report, disputes concerning intellectual property rights are, however, rarely referred to arbitration.17

2.22 Disputes regarding the cancellation or alteration of a right dependent upon grant or registration by a public authority cannot be validly submitted to arbitration. Thus, an arbitrator's decision as to the validity of patents, utility models, design rights and trade marks cannot be enforced.

Spain

2.23 In Spain, Article 1 of the Arbitration Act 1988 states that the parties may enter into an arbitration agreement, provided that the subject matter of the arbitration may lawfully be compromised by the parties. The Arbitration Act does not make explicit provision for intellectual property disputes, but arbitration does in principle appear to be available, subject to two qualifications:

• the validity of registry entries is within the exclusive jurisdiction of the courts. Thus, the validity of the patents, trade marks and the like (but not copyright) may not be the subject of arbitration; and

• the jurisdiction of the Culture Ministry's Arbitration Commission (established under the Intellectual Property Act 1987) in certain copyright cases may not be excluded.

Switzerland

In particular, according to Troller, 'the federal trademark and patent registrar will strike out a patent or trademark pursuant to an arbitration award'.18 Thus, in 1976 the Federal Office for Industrial Property ruled that, 'since arbitral tribunals had the power to decide whether an industrial property right was validly registered, the Federal Office was going to execute their decision, upon the condition, however, that the arbitral award had been declared enforceable by the competent cantonal authority.'19 Article 195 of the Swiss Private International Law Act lays down rules for determining enforceability.

United States

2.25 Under 35 USC, Congress has expressly provided for the voluntary, binding arbitration of patent validity, enforceability and infringement issues. Accordingly, virtually all issues concerning United States patents are properly subject to binding arbitration. However, while an arbitration clause may permit resolution of patent issues by way of binding arbitration in lieu of litigation in a United States Court, under some circumstances it may not do so in place of proceedings before a United States administrative agency.

2.26 Regarding copyright issues, the U.S. Congress has not expressly authorized arbitration. Nevertheless, the courts have confirmed that copyright licence agreements may properly provide for binding arbitration.

2.27 Trademark issues are also arbitrable in principle. Their arbitrability in particular cases depends upon how generously the courts choose to interpret the arbitration agreement and related statutes.

2.28 There is no specific statutory provision relating to trade secrets. Formerly, the courts held that binding arbitration of trade secret disputes was precluded by antitrust concerns. However, recent United States Supreme Court decisions endorsing the arbitrability of antitrust disputes have reversed this trend, and in Aerojet-General Corp. v. Machine Tool Works 20 the United States Court of Appeals for the Federal Circuit upheld the arbitrability of trade secrets disputes.

2.29 More generally, recent decisions concerning the arbitrability of issues under Federal antitrust and securities laws (such as Mitsubishi Motors v. Soles Chrysler-Plymouth 21 and Shearson/American Express Inc. v. McMahon 22) are evidence of a trend in favour of the arbitrability of intellectual property issues.

2.30 In view of this case law, it would appear unlikely that in the United States, decisions regarding intellectual property will hold public policy as sufficient justification to preclude arbitration of such disputes.

Summary

2.31 In light of this study, it can be asserted that in most countries the arbitrability question is no longer a grave issue. However, the degree to which different countries have moved down this road varies, especially as regards the arbitrability of the validity of intellectual property rights.

2.32 The position in several countries remains uncertain (for example, Ireland lacks both legislation and judicial pronouncements on the matter of the arbitrability of the validity of grants and registrations of intellectual property, though otherwise there seems to be no problem with arbitrating intellectual property disputes in Ireland).

3. INTERIM MEASURES

(a) The issues

3.1 In the context of intellectual property disputes, it is often critical for one party to stop, as swiftly as possible, the manufacture and sale of [Page46:] illicit products, the use or publication of trade secrets or some other infringement of his intellectual property rights. In comparison with national court proceedings, arbitrations can often be conducted with great expedition. Where both parties are anxious to resolve an intellectual property dispute quickly, it will invariably be possible to find an arbitrator willing to deal with the matter with expedition.

3.2 However, arbitration is often not considered a practical option where swift, effective action against infringement is required, particularly where the claimant rights holder and the alleged infringer are not parties to a contractual arbitration clause. Even if the parties agree to arbitrate, the reality is that in intellectual property disputes of this kind, one party (usually the alleged infringer) is frequently not willing to move as quickly as the other. Since arbitration is essentially a voluntary process between parties, in which the arbitrators offer and provide a service to the parties, any delay of this nature by one party, whether intentional or not, may necessitate recourse to the national court system. Furthermore, a court will generally have broader and more effective powers than an arbitrator. When infringement is detected, the rights holder often feels that he has to seek interim relief through the courts (such as an injunction or a seizure of infringing material), followed by full civil and/or criminal proceedings as necessary.

3.3 This same need for a rapid and effective response means that there are many instances where arbitrators are requested to give injunctive or other relief, both during the course of the arbitration, to preserve the status quo, and as a final remedy. It is important that any order made by the tribunal be effective and enforceable. Since arbitrators have no coercive powers of their own, their orders must, if they are to be effective, have the backing of the applicable local law and the national courts.

3.4 In procedural terms, where arbitrators are asked to grant injunctive relief or other interim measures of protection during the course of the proceedings (which is normally an aspect of their power to order provisional measures) two principal issues must be determined.

• Do the applicable rules of procedure, be they rules of a national system or those of an arbitral institution, contemplate and allow the arbitrators the powers which they are being asked to exercise?

• Even where such powers exist, do they conflict with the mandatory rules of the place of arbitration (the lex arbitri) or the place where the requested measure is to be enforced?

3.5 What are the typical kinds of issues which an arbitrator in the field of intellectual property will face? Where an arbitration concerns a licence agreement, the arbitrator may be asked to make an order that, pending the outcome of the arbitration, a licensee should not:

• use the trade mark or patent or other confidential know-how or secret information of the licensor;

• sell products manufactured under the licence;

• hold out itself or one of its subsidiaries as an authorized licensee for the products;

• grant sub-licences to third parties; or

• take any other action that could possibly affect the validity and/or value of the intellectual property rights.

In other cases, an order may be sought to preclude a party from making statements concerning ownership of the intellectual property or disparaging the claims and competing products of the other in the market place or to customers. This may be particularly significant where both parties are attending trade fairs and other industry meetings. These are all highly significant issues in practice.

3.6 An arbitrator faced with these sorts of requests may have to make a swift decision whether to protect the intellectual property rights of one party pending the full arbitration hearing. This raises the fundamental question of whether an arbitrator can make an interim award giving interim relief to one of the parties, or preserving the status quo (and, if he can do so in principle, in what circumstances exactly can he do so?). Further, if interim relief is denied, can national courts intervene in the dispute (and, if so, in what circumstances)?

3.7 One problem of particular significance in the context of intellectual property disputes is that, while international arbitrators are generally [Page47:] permitted to make interim orders enforceable as between the parties themselves (inter se), it is fundamentally more difficult, and generally ineffective, for arbitrators to make orders which purport to have an effect on third parties. In particular, an arbitrator cannot ordinarily make an order that will affect the obligations owed to a third party, such as the blockage of funds in a bank account.

3.8 These questions are examined further below (and in the more detailed Appendices) in the contexts of the rules of arbitral institutions, the laws of 12 of the countries where arbitration plays a significant role in dispute resolution, and the UNCITRAL Model Law.23

(b) Institutional and other arbitration rules

3.9 The specific provisions of the relevant rules of the ICC, AAA, WIPO, UNCITRAL, LCIA, CIETAC and the Moscow International Commercial Arbitration Court, concerning interim measures are set out in Appendix A.

3.10 These rules generally empower the tribunal to take whatever interim measures it deems necessary in respect of the subject matter of the dispute.

3.11 The difficulty with the conventional provisions relating to interim relief in arbitration rules is seen to be the 'lacuna' that exists before the constitution of the tribunal, which may often be precisely the time at which a party wishes to seek interim relief. For this reason, arbitration rules usually allow a party to seek an interim remedy from a national court, without that action being considered to be incompatible with the arbitration agreement.

3.12 Perhaps the most interesting recent development in this area has been WIPO's proposal of a new procedure for parties seeking to obtain emergency interim arbitral relief. The proposed Supplementary Emergency Interim Relief Rules are set out in more detail in Appendix A. In short, they would take the form of an addition to the existing WIPO Arbitration Rules, to be adopted on an optional basis by parties who have agreed beforehand to arbitration under the WIPO Rules.

3.13 The proposed WIPO emergency interim relief procedure would involve constituting a 'stand-by' panel of arbitrators to ensure that an emergency arbitrator could be appointed at 24 hours' notice. It is not conceived that there would be a recourse to the procedure other than by means of a pre-existing contractual clause.

3.14 WIPO believes that the procedure could be useful in jurisdictions where interim relief is available from a judicial authority only after a lapse of a considerable period of time. The procedure would also offer a means of obtaining, by means of a single procedure, interim relief across several jurisdictions in appropriate cases, provided that the relevant jurisdictions recognize and will give effect to the power of arbitral tribunals to grant interim relief (some, such as Greece and Italy, currently do not).24 It is generally thought that the New York Convention does not apply to interim relief decisions even in the form of an award.

(c) UNCITRAL Model Law on International Commercial Arbitration 25

3.15 The Model Law confers wide powers on arbitrators to order interim measures. Article 17 states that: [Page48:]

'Unless otherwise agreed by the parties, the Arbitral Tribunal may, at the request of a party, order any party to take such interim measure of protection as the Arbitral Tribunal may consider necessary in respect of the subject-matter of the dispute. The Arbitral Tribunal may require any party to provide adequate security in connection with such measure.' (Emphasis added)

3.16 In addition, Article 9 states that it is not incompatible with an arbitration agreement for a party to request from a court, before or during arbitral proceedings, an interim measure of protection and for a court to grant such measure.

4. ENFORCEABILITY OF AWARDS

(a) Introduction

4.1 Much of the practical impact of the arbitration procedure is ultimately focused on the enforceability of the arbitration award. This is particularly the case in the context of international arbitration, where the arbitration may very well not take place in the country where the final award is sought to be enforced. A party who succeeds in an international commercial arbitration expects the award to be performed without delay. This is as much the case in the context of intellectual property disputes as it is with general commercial arbitrations. The purpose of arbitration, unlike conciliation and most other methods of alternative dispute resolution, is to arrive at a binding decision on the dispute between the parties. In essence, therefore, it is an implied term of every arbitration agreement that the parties will carry out the award.

4.2 While express provision to facilitate the enforceability of an arbitration award is technically unnecessary, it is often found in both arbitration clauses and submission agreements, as well as in institutional rules of arbitration. For example, Article 32.2 of the UNCITRAL Rules states that 'the parties undertake to carry out the award without delay'.

4.3 It is by no means certain that interim awards would be enforced in many jurisdictions. Many national laws grant enforceability only to final or partial awards, but not to interim awards. It is questionable whether recognition and enforcement of interim awards could successfully be sought under the New York Convention, since the Convention does not define the term 'arbitral award' as such. Thus, while Article III of the New York Convention states that 'each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the Rules of procedure of the Territory where the award is relied upon', contracting states may choose to interpret this as applying only to final awards.

4.4 The various institutional arbitration rules which we have reviewed all provide that the parties undertake to carry out the arbitral award. Ultimately, however, enforcing the performance of an award against a losing and resistant party will require recourse to national courts. The specific provisions of the institutional rules on this topic are set out in Appendix C.

4.5 According to the consultation document prepared by the International Bureau in respect of the proposed WIPO Supplementary Emergency Interim Relief Rules, 'there is great doubt about the enforceability of interim awards under the New York Convention'.26 In jurisdictions which do not recognize or enforce interim awards, such awards by an Emergency Arbitrator would have effect as a contractual obligation, requiring enforcement on that basis through a court of law.

4.6 Article X(b)(vi) of the proposed WIPO Rules makes it clear that the Emergency Arbitrator may, in the interim award, fix an amount of damages to be paid by a party for breach of that award. It is hoped that this would encourage 'spontaneous' enforcement of the award. However, if the party in breach did not pay such damages, then enforcement would still need to be carried out through the courts.

4.7 This Working Party has been considering the facilitation of the enforceability of arbitration awards through additional provisions to the arbitration clause, which would expressly recognize the private and commercial character of the contractual arrangement.27 Provisions of this nature would stress, inter alia, that the award would deal with the issues inter partes, and would be final, [Page49:] binding and enforceable between them, but that there would be no attempt to make any decisions concerning the validity and enforceability of intellectual property rights which might affect third parties. This is a similar difficulty to that faced by arbitrators with respect to interim measures, and may be a useful precedent.

4.8 When a losing party fails to carry out an award, the winning party will need to take steps to enforce the performance of it. This is as relevant in intellectual property disputes as it is in international commercial arbitration generally. One of the means of enforcement, and the ultimate sanction in this regard, is to invoke the powers of the state, exercised through its courts, to seize the losing party's assets in satisfaction of the award of the Arbitral Tribunal.

4.9 International enforcement may conveniently be divided into four separate national groupings:28

• Countries where the award may be deposited or registered with a court or other authority, following which it may be enforced as if it were a judgement of that court, e.g., Switzerland, USA and India;

• Countries where the law pertaining to arbitration provides that the award of an arbitral tribunal may be enforced directly, without the need for deposit or registration, e.g., England and China;

• Countries where it is necessary to apply to the court for some form of exequatur (leave for enforcement) as a preliminary step to enforcement, e.g., France, Sweden, Hong Kong, Germany and Finland;

• Situations where it is necessary to sue on the award as evidence of an obligation to do or not to do something by virtue of the general law of contract, on the basis that the arbitration agreement constitutes a contractual obligation to perform the award. The laws of most countries permit this approach, but it is cumbersome, inconvenient and an extra expense, and should be avoided if any of the other methods are available.

(b) Public policy and the enforcement of foreign arbitral awards

4.10 The arena of international enforcement with regard to arbitration is governed by the New York Convention of 1958, which is perhaps the most important international treaty relating to international commercial arbitration. In its opening statement, the Convention provides:

'This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.'

4.11 While the New York Convention has been extremely influential, it has not been without practical difficulties. This is primarily because of the lack of a uniform approach by the courts of the various contracting states to the grounds on which enforcement may properly be refused under the Convention. For example, recognition and enforcement may be refused if the court finds that 'the recognition or enforcement of the award would be contrary to the public policy of that country' (New York Convention, Article V2(b)). Public policy is notoriously difficult to define and is interpreted by different countries in different ways, but it is clear that the arbitrability of intellectual property disputes is a 'public policy' question. The different approaches to that question (and, therefore, to the question of the enforceability of arbitral awards made in the context of intellectual property disputes) in the ten countries which we have considered, are set out earlier in this report under 'arbitrability'. The relevant national law provisions on enforceability generally are set out in detail in Appendix D.

(c) Summary

4.12 In summary, the different national approaches to this important public policy question fall into the following categories:

• Those countries in which the arbitration of intellectual property disputes is not thought to [Page50:] conflict with public policy, so that arbitral awards will be enforced both inter partes and against third parties, claiming under parties to the arbitration.

• Those countries in which the arbitration of intellectual property disputes between the parties is not thought to conflict with public policy so that arbitral awards will be enforced inter partes but not against third parties.

• Those countries in which the arbitration of intellectual property disputes is thought to be contrary to public policy with the result that arbitral awards will not be enforced.

4.13 The more specific questions which are addressed in more detail in Appendix D (in the context of both domestic and international arbitral awards) with regard to each of the eleven countries which we have considered are as follows:

• Does the award need leave for enforcement (exequatur) or is it directly enforceable through the laws of the relevant country?

• If leave is required, what authority decides on the granting or refusal of that leave?

• On what grounds may the arbitral award be set aside and enforcement refused? Is refusal limited to violation of rules of public policy, or may enforcement be refused on other grounds as well?

5. CONCLUSIONS AND RECOMMENDATIONS

5.1 Arbitration is a most desirable method for settling disputes arising out of intellectual property transactions. There are no substantive differences in arbitrations arising from intellectual property disputes as in other areas. There are, however, special characteristics of intellectual property which necessitate arbitral institutions, parties, arbitrators and lawyers giving special consideration to the arbitrators appointed, the procedure to be followed and the general arbitration jurisdiction. It is a fact that increasingly disputes submitted to arbitration involve at least an element of intellectual property.

5.2 Clarifying questions concerning arbitrability is considered of great importance. As laws relating to arbitration increasingly liberalize, this is an area that should be clarified. The reduction in the number of countries applying a strict or even restrictive approach to arbitrability is to be welcomed and encouraged. Support from international institutions including UNCITRAL, ICC, WIPO, and WTO will greatly facilitate the final resolution of this problem.

5.3 To facilitate enforcement, it may be useful to add a clause whereby the parties agree to enforcement in the terms suggested in Appendix E. This should help to obviate the problems created by arbitrability.

5.4 A key in every arbitration is the selection of arbitrators. In intellectual property disputes, arbitrators may need additional understanding and qualification. Where parties consider this to be essential, they should make such provision in the arbitration agreement.

5.5 There are situations where interim relief should properly be sought from the arbitral tribunal. It is always preferable for the arbitrators to make these orders rather than the courts, although the support of the courts will be necessary in extreme cases, or where parties are unwilling to recognize the authority of arbitrators. Interim relief is frequently required where intellectual property is involved to protect its integrity and to prevent abuse.

5.6 Confidentiality is of great importance in intellectual property cases. National laws are not uniform and there is no certainty of complete confidentiality of papers in arbitration. Where the underlying substantive contract contains secrecy provisions these should hold good for the arbitration procedure, subject always to matters which may be referred to the court. Both parties and arbitrators need to make provision for secrecy as appropriate in particular intellectual property disputes. This may be in the form of additional contract clauses or a procedural order by the tribunal or in the terms of reference. [Page51:]

APPENDIX A

INSTITUTIONAL AND AD HOC ARBITRATION RULES - INTERIM MEASURES

A1. ICC Rules

A1.1. Article 23 of the 1998 ICC Rules of Arbitration provides as follows:

'1. Unless the parties have otherwise agreed, as soon as the file has been transmitted to it, the Arbitral Tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate. The Arbitral Tribunal may make the granting of any such measure subject to appropriate security being furnished by the requesting party. Any such measure shall take the form of an order, giving reasons, or of an Award, as the Arbitral Tribunal considers appropriate

2. Before the file is transmitted to the Arbitral Tribunal, and in appropriate circumstances even thereafter, the parties may apply to any competent judicial authority for interim or conservatory measures. The application of a party to a judicial authority for such measures or for the implementation of any such measures ordered by an Arbitral Tribunal shall not be deemed to be an infringement or a waiver of the arbitration agreement and shall not affect the relevant powers reserved to the Arbitral Tribunal. Any such application and any measures taken by the judicial authority must be notified without delay to the Secretariat. The Secretariat shall inform the Arbitral Tribunal thereof.'

A1.2. The ICC Pre-Arbitral Referee Procedure, in force since January 1990, provides for the immediate appointment of a 'referee' prior to the setting up of the arbitral tribunal, with power to order: any conservatory measure or measures of restoration; any payment which ought to be made; a party to take any step which ought to be taken according to the relevant contract; and any measures to preserve or establish evidence.

A2. LCIA Rules

Article 25 of the 1998 LCIA Rules provides as follows:

'25.1 The Arbitral Tribunal shall have the power, unless otherwise agreed by the parties in writing, on the application of any party:

(a) to order any respondent party to a claim or counterclaim to provide security for all or part of the amount in dispute, by way of deposit or bank guarantee or in any other manner and upon such terms as the Arbitral Tribunal considers appropriate. Such terms may include the provision by the claiming or counterclaiming party of a cross-indemnity, itself secured in such manner as the Arbitral Tribunal considers appropriate, for any costs or losses incurred by such respondent in providing security. The amount of any costs and losses payable under such cross-indemnity may be determined by the Arbitral Tribunal in one or more awards;

(b) to order the preservation, storage, sale or other disposal of any property or thing under the control of any party and relating to the subject matter of the arbitration; and

(c) to order on a provisional basis, subject to final determination in an award, any relief which the Arbitral Tribunal would have power to grant in an award, including a provisional order for the payment of money or the disposition of property as between any parties.

25.2 The Arbitral Tribunal shall have the power, upon the application of a party, to order any claiming or counterclaiming party to provide security for the legal or other costs of any other party by way of deposit or bank guarantee or in any other manner and upon such terms as [Page52:] the Arbitral Tribunal considers appropriate. Such terms may include the provision by that other party of a cross-indemnity, itself secured in such manner as the Arbitral Tribunal considers appropriate, for any costs and losses incurred by such claimant or counterclaimant in providing security. The amount of any costs and losses payable under such cross-indemnity may be determined by the Arbitral Tribunal in one or more awards. In the event that a claiming or counterclaiming party does not comply with any order to provide security, the Arbitral Tribunal may stay that party's claims or counterclaims or dismiss them in an award.

25.3 The power of the Arbitral Tribunal under Article 25.1 shall not prejudice howsoever any party's right to apply to any state court or other judicial authority for interim or conservatory measures before the formation of the Arbitral Tribunal and, in exceptional cases, thereafter. Any application and any order for such measures after the formation of the Arbitral Tribunal shall be promptly communicated by the applicant to the Arbitral Tribunal and all other parties. However, by agreeing to arbitration under these Rules, the parties shall be taken to have agreed not to apply to any state court or other judicial authority for any order for security for its legal or other costs available from the Arbitral Tribunal under Article 25.2'

A3. AAA Rules

A3.1. Under Article 21 of the American Arbitration Association's Rules the tribunal may, at the request of any party, take 'whatever interim measures it deems necessary'. This includes measures for the conservation of goods which are the subject-matter in dispute, such as ordering their deposit with a third person, and also includes orders for the sale of perishable goods. Such interim measures may be taken in the form of an interim award, and the tribunal may require security for the costs of such measures.

A3.2. In addition, Article 21(3) provides that a request for interim measures addressed by a party to a judicial authority will not be deemed incompatible with the agreement to arbitrate, nor will it constitute a waiver of the right to arbitrate. Article 27(7) again refers to the tribunal's power to make 'interim, interlocutory or partial orders and awards' in addition to making a final award.

A4. UNCITRAL Arbitration Rules

A4.1. Article 32.1 states that 'in addition to making a final award, the Arbitral Tribunal shall be entitled to make interim, interlocutory or partial awards'.

A4.2. Article 26 contains provisions dealing with interim measures of protection. At the request of either party, the arbitral tribunal may 'take any interim measures it deems necessary in respect of the subject-matter of the dispute'. Such measures include orders for the conservation of goods, such as ordering their deposit with a third party, and also includes orders for the sale of perishable goods.

A4.3. The Rules state that such interim measures may be established in the form of an interim award and the arbitral tribunal is entitled to require security for the costs of such measures.

A4.4. As with the AAA Rules, a request for interim measures 'addressed by any party to a judicial authority shall not be deemed incompatible with the agreement to arbitrate, or a waiver of that agreement'.

A5. WIPO Arbitration Rules

A5.1. Under Article 46(a), a tribunal may issue 'any provisional orders or take other interim measures it deems necessary, including injunctions and measures for the conservation of goods which form part of the subject-matter in dispute'.

A5.2. The tribunal may make the granting of such measures subject to appropriate security being furnished by the requesting party.

A5.3. Under Article 46(c), 'measures and orders contemplated under this Article may take the form of an interim award'. Further, Article 62 states that the tribunal may make 'preliminary, interim, interlocutory, partial or final awards'.

A5.4. Under Article 46(d) a request to a judicial authority for interim measures or for the implementation of any measures or orders granted by the Tribunal will not be deemed incompatible with the arbitration agreement or deemed to be a waiver of that agreement. [Page53:]

A6. WIPO Proposed Supplementary Emergency Interim Relief Rules

A6.1. In order to integrate the proposed Emergency Interim Relief Rules with the existing WIPO Arbitration Rules, a new paragraph would be added to Article 46 of the existing Rules, as a new Article 46(a):

i) 'Where the Arbitration Agreement provides for the WIPO Supplementary Emergency Interim Relief Rules to apply in conjunction with the WIPO Arbitration Rules, the provisions contained in the Annex to the Rules shall also be deemed to form part of that Arbitration Agreement'.

A6.2. In addition, a standard recommended arbitration clause would allow the parties the option of adopting the WIPO Arbitration Rules either with or without the Emergency Interim Relief Rules.

A6.3. Article II of the draft Emergency Interim Relief Rules seeks to ensure that the mandate of the Emergency Arbitrator is not nullified by one party commencing judicial or other arbitral proceedings after the Emergency Arbitrator has been appointed, except where this is a consequence ordered by a competent court of law. The Rules seek to avoid duplication of proceedings by limiting the use that a party may make of the proposed procedure to circumstances in which that party has not previously sought the same relief from a judicial authority or through arbitral proceedings.

A6.4. Failing agreement by the parties as to which Emergency Arbitrator to appoint, Article VI(b) provides for the Emergency Arbitrator to be appointed by the WIPO Mediation and Arbitration Centre from amongst members of a stand-by panel, within 24 hours of receipt of the Request for Relief.

A6.5. The Emergency Arbitrator is given power under Article IX to convene a hearing on the shortest possible notice, as well to convene ex parte hearings and to make ex parte awards, so long as he is satisfied that the other party has been given notice of the time, date and place of hearing adequate to enable it to be present, or in the case of ex parte measures, that such a hearing and award are necessary in order to avoid irreparable harm being done to the rights of the parties pending a final determination of those rights in subsequent judicial or arbitral proceedings.

A6.6. In addition, the Emergency Arbitrator can convene a further hearing, after delivery of an ex parte award, to receive submissions from an absent party. An ex parte award could therefore be reviewed at an inter partes hearing and, as a result, be confirmed, modified or terminated.

A6.7. As to the scope of an Emergency Arbitrator's award, Article X of the proposed Rules states that the Emergency Arbitrator may make 'any award the Emergency Arbitrator considers urgently necessary to preserve the rights of the parties pending a final determination of those rights in a subsequent judicial or arbitral proceeding'. In particular, the Emergency Arbitrator may issue an interim injunction or restraining order, order the performance of a legal obligation by a party, order the payment of an amount by one party to the other, or to another person, order any measure necessary to establish or preserve evidence, order any measure necessary for the conservation of any property and fix an amount of damages to be paid by a party for breach of the award. In addition, the Emergency Arbitrator can require the party in whose favour the award is made to provide adequate security, or require that a party commence arbitration proceedings on the merits of the dispute within a designated period of time.

A7. CIETAC Arbitration Rules

Article 57 provides that the arbitral tribunal

'... may, if it deems it necessary or the parties so request and the arbitration tribunal agrees, make an interlocutory award or partial award on any issue of the case at any time in the course of arbitration before the final award is made.'

A8. International Commercial Arbitration Court at the Chamber of Commerce and

Industry of the Russian Federation Rules

Article 30.1 states that:

'.. at the request of any party the Arbitral Tribunal may order that either party shall take such measures of protection in respect [Page54:] of the subject-matter of the dispute, as it may consider necessary. It may also require either party to provide appropriate security in connection with such measures.'

Article 30.2 adds:

'The Arbitral Tribunal may order to take such measures of protection in the form of an interim award.'

A9 Italian Arbitration Association Rules on International Arbitration

Article 19 - Urgent measures

A9.1 Unless the parties have agreed otherwise, the arbitrator may, at the request of the interested party and within the limits imposed by law, adopt urgent measures on matters within the parties' power and eventually impose a guarantee upon the petitioning party and determine a penalty for failure to comply.

The measure is taken by an order which can be modified or revoked in the course of the proceedings and shall remain in force until the award is decided, unless a shorter time-limit is indicated therein.

A9.2 At the time of the making of the award, the arbitrator, taking into account the behaviour of the parties in relation to the urgent measures, shall decide in relation to the guarantee and the penalty.

A9.3 If the arbitral tribunal has not yet been set up, the above measures can be taken by the Permanent Committee (set up under Article 2 of the Rules) and can at any time be modified or revoked by the said Committee and, after the constitution of the arbitral tribunal, by the latter. [Page55:]

APPENDIX B

NATIONAL LAWS - INTERIM MEASURES²

B1. England

B1.1. The English legal system confers on the arbitrator the power to rule on interim measures. Under section 39(1) of the English Arbitration Act 1996, the parties can agree that 'the Tribunal shall have power to order on a provisional basis any relief which it would have power to grant in a final award'. This includes the making of a provisional order for the payment of money or the disposition of property between the parties and an order to make an interim payment on account of the costs of the arbitration. Section 39(4) makes it clear that unless the parties agree to confer such power on the Tribunal it has no such power.

B1.2. Section 38 contains general powers exercisable by the Tribunal. The parties are free to agree on the powers exercisable by the arbitral tribunal for the purposes of, and in relation to, the proceedings. Under section 38(4), the Tribunal may give directions in relation to 'any property which is the subject of the proceedings or as to which any question arises in the proceedings, and which is owned by or is in possession of a party to the proceedings'. Such directions may include those for the inspection, preservation, custody or detention of the property by the Tribunal, an expert or a party.

B1.3. Where a party fails to comply with an order or direction of the Tribunal, the Tribunal may make a 'peremptory order to the same effect, prescribing such time for compliance with it as the tribunal considers appropriate' (section 41(5)).

B1.4. Unless otherwise agreed by the parties, the court has, for the purposes of and in relation to arbitral proceedings, the same power of making orders as it has for the purposes of and in relation to legal proceedings (section 44). Such orders may relate to property which is the subject of the proceedings, for the purpose of its preservation, custody or detention; they may also relate to the preservation of evidence, the sale of any goods the subject of the proceedings and the granting of an interim injunction.

B1.5. If the case is one of urgency, then the court, on the application of a party or proposed party to the arbitral proceedings, may make such orders as it thinks necessary for the purpose of preserving evidence or assets. If the case is not one of urgency 'the court shall act only on the application of a party to the arbitral proceedings, upon notice to the other parties and to the Tribunal, made with the permission of the Tribunal or the agreement in writing of the parties'. In any event, the court is to act only if, or to the extent that, the arbitral tribunal has no power or is unable to act effectively.

B1.6. Section 9 of the Arbitration Act 1996 provides that a party to an arbitration agreement against whom legal proceedings are brought in respect of a matter which is to be referred to arbitration may apply to the court to stay the proceedings. Under sections 9 and 86 of the 1996 Act, the court will now be bound to grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, incapable of being performed, or that there are other sufficient grounds for not requiring the parties to abide by their arbitration agreement. We have yet to see a case brought seeking a stay under these new provisions. However, it is interesting to note the position under the preceding UK Arbitration Act 1950. This may best be seen from the House of Lords decision in the Channel Tunnel case referred to below.

B1.7. In the English case of Channel Tunnel Group v. Balfour Beatty Construction,29 the Channel Tunnel Group sought an injunction in the English courts to restrain a contractor from suspending work. The relevant contract provided that the agreed place of arbitration was Brussels.

B1.8. The House of Lords upheld the Court of Appeal's decision and found:

B1.8.1. that it had inherent power to stay proceedings brought before it in breach of an agreement to decide disputes by an alternative method, and that whether or not the procedure for resolving disputes agreed [Page56:] between the parties amounted to an arbitration agreement falling within the Arbitration Act 1950, the court had jurisdiction to stay the action, a jurisdiction which ought in the circumstances to be exercised;

B1.8.2. that, on the true construction of section 12(6)(h) of the Arbitration Act 1950, there was no power to grant an interim injunction in respect of a foreign injunction;

B1.8.3. that a claim to an interlocutory injunction under the Supreme Court Act 1981 was incidental to and dependent on the enforcement of a substantive right and could not exist in isolation. Although the substantive right usually took the form of a cause of action it was not a necessary condition of the grant of such an injunction that it should be ancillary to a claim for relief to be granted by an English court;

B1.8.4. that there was no reason in principle why an order for a mandatory stay of an action would not be combined with an injunction to secure interim relief. Accordingly, there was power under section 37(1) of the Supreme Court Act to grant the injunction, but such a grant would largely pre-empt any decision ultimately to be made by the arbitrators, and it was not appropriate in the circumstances to grant relief.

B2. Switzerland

International Arbitration

B2.1. In 1987, the Swiss Parliament enacted a Private International Law Act (the 'Swiss Act') which in Chapter 12 (Articles 176-194) governs 'International Arbitration'. According to Article 176(1) of the Swiss Act, the provisions of Chapter 12 apply to all arbitrations where the seat of the arbitral tribunal is in Switzerland, provided that at least one party has neither its domicile nor its habitual residence in Switzerland at the time of the conclusion of the arbitration agreement.

B2.2. With regard to interim measures, Article 183 of the Swiss Act states as follows:

'(1) Unless the parties have agreed otherwise, the Arbitral Tribunal may, at the request of the party, order provisional or protective measures.

(2) If the party so ordered does not comply voluntarily, the Arbitral Tribunal may request the assistance of the court. Such court shall apply its own law.

(3) The Arbitral Tribunal or the court may make the granting of provisional or protective measures subject to the provision of appropriate security.'

B2.3. Under the Swiss Act, such provisional protective measures are given in an order or ruling which is not appealable and which normally does not constitute any interlocutory award as such.

Domestic Arbitration

B2.4. It is interesting to compare the Swiss domestic arbitration law with that of the international regime. Switzerland is a Confederation of 26 cantons. According to Article 64(3) of the Federal Constitution of 1874, questions of judicial organization, procedure and administration of justice remain within the competence of the cantons. The Federal Supreme Court held in a decision of 28 May 1915 30 that an arbitration agreement was not governed by the federal (unified) private law but by the cantonal law on procedure.

B2.5. In 1969, various cantons entered into the Intercantonal Arbitration Convention (the 'Concordat'), an agreement unifying their laws on arbitration. Article 26 of the Concordat provides that only the State judicial authorities have jurisdiction to make provisional orders upon request of one of the parties in a domestic arbitration. However, the parties may voluntarily submit to the provisional order proposed by the arbitral tribunal. If the parties do not voluntarily submit, then they must ask the competent judicial authorities to make the provisional order. The competent authority is the court of common not necessarily the one at the seat of the arbitral tribunal. [Page57:]

B3. France

B3.1. In France, arbitrators may grant the same interim measures as judges. They may render one of several interim awards, provided that the object of those measures is closely linked with the matter in dispute.

B3.2. The arbitrators are allowed to rule that their award will be provisionally enforced with a view to avoiding the filing of a recourse against the award, which would be an obstacle to its immediate effect. In such a case, the judge may confirm the enforcement of the award, in spite of a request for appeal or annulment of the award.31

B3.3. However, it should be noted that in France the arbitration agreement does not prevent the judges of the national courts (juges des référés) taking conservatory or provisional measures. The parties often prefer this course of proceeding in practice since the effect is more immediate than that of an interim arbitral award, the provisional enforcement of which has, in any case, to be confirmed by the court.

B4. United States of America

B4.1. In the US, under the Federal Arbitration Act 1925 ('FAA'), arbitrators have the power to issue injunctive relief.

B4.2. Such is the support for the arbitration process that judicial opinion has left very little room to urge that equitable relief may not be awarded by an arbitrator in the US. Indeed, American courts are often not willing to grant injunctive relief where parties have even referred the matter to arbitration, and where the power is perceived to have been effectively passed on to arbitrators.

B4.3. In Pacific Reinsurance Management Corp. v. Ohio Reinsurance Corp.,32 the court held that 'temporary equitable orders calculated to preserve assets or performance needed to make a potential award meaningful ... are final orders that can be reviewed for confirmation and enforcement by district courts under the FAA.' The court also stated that 'if temporary equitable relief is to have any meaning, the relief must be enforceable at the time it is granted, not after the arbitrator's decision on the merits.'

B4.4. It is, therefore, clear that if a party should elect to defy an arbitrator's order granting interim relief, a record will have been established which would serve as a basis from which a party could seek judicial release. Consequently, as a practical policy matter it is unlikely that a party would defy a provisional order of an arbitrator pending the outcome of the case on the merits.

B4.5. The American courts are very reluctant to intervene where interim measures have been granted by arbitrators, the concern being that where a court grants a remedy prior to an award being made this could influence the arbitrator to determine the issue in the direction that the court has indicated.

B5. Sweden

B5.1. A new Swedish Arbitration Act, to replace the Arbitration Act of 1929, is expected to come into force in the near future. A final Report was published by the Committee which was given the task of drafting the Act. The Act applies equally to domestic and international arbitrations and it was decided that the UNCITRAL Model Law would not be used as a blueprint for drafting the Act.

B5.2. Section 4 of the new Act provides that while a dispute is pending before arbitrators, or before such time, a Swedish court may issue such decisions on interim measures of protection as the court by law has jurisdiction to make, irrespective of the arbitration agreement. This provision applies equally to arbitrations which take place outside Sweden.

B5.3. Section 30 states that 'unless the parties have agreed otherwise, the arbitrators may at the request of a party decide that the opposite party shall take a specified action in the course of the proceedings for the purpose of securing the claim which shall be tried by the arbitrators'. In addition, the arbitrators may require the party requesting the action to provide security for any damage that may be inflicted on the opposite party. However, decisions by arbitrators under this section will not be enforceable, according to the Report of the Committee. [Page58:]

B6. Hong Kong

B6.1. Since April 1990, two separate arbitral regimes have been in force for arbitration in Hong Kong. The regime applicable to domestic arbitrations is modelled on the English Arbitration Acts 1950-1979. The regime applicable to international arbitrations follows the UNCITRAL Model Law (the 'Model Law'). There is essentially complete interchangeability between the two regimes at the parties' option.

International Arbitration

B6.2. The High Court has the same powers to grant interim measures of relief in respect of international arbitrations as it has in domestic arbitrations (see below). Seeking interim relief in the Hong Kong High court is not incompatible with the arbitration agreement. The parties may, however, agree that such provisions should not apply.

Domestic Arbitration

B6.3. The Hong Kong Arbitration Ordinance 33 provides that the parties in a domestic arbitration must do all that the arbitrator requires (section 14(1)). Pursuant to this general provision, the arbitrator may issue any order necessary for the disposal of the dispute. But, following Kursell v. Timber Operators & Contractors Limited,34 it appears that this power does not extend to orders ancillary to the reference (for example, security for costs), or to orders against third parties.

B6.4. The parties may agree to vest wider powers in the arbitrator. In circumstances where the court has the same or similar power, the court's jurisdiction will not be ousted. Where concurrent powers exist, the court should generally not exercise its discretion until the arbitrator has decided whether to exercise his power, and thereafter should give due weight to the arbitrator's decision. An exception to this general rule is where the court's powers of enforcement are more effective than those of the arbitrator. Actual enforcement of injunctions is a key area where the court's power is indeed more effective.

B6.5. The court does have the power to order the detention, preservation, interim custody or sale of any goods which are the subject matter of the reference (section 14(6)). Such powers are restricted to goods in the possession of one of the parties to the proceedings. The Arbitration Ordinance also empowers the courts to grant an interim injunction (section 14(6)(h)), a power which extends to preventing a party disposing of its assets where there is a reasonable fear that it intends to remove its assets from the jurisdiction to evade an award. Furthermore, a court may grant a civil search and seizure order to preserve property in evidence, but it should be noted that the Hong Kong court exercises this jurisdiction sparingly. The court may also require a party to provide security for costs or to secure the amount in issue in an arbitration (section 14(6)).

B6.6. It is interesting to note the case of Katran Shipping Co Ltd v. Kenven Transport Ltd.35 The case was a domestic arbitration in the sense that both parties were Hong Kong companies which had their places of business in Hong Kong. The charter party agreement between the parties had provided for any dispute to be settled before Hong Kong arbitrators. The court considered Article 1(3)(b)(ii) of the UNCITRAL Model Law, which provides that an arbitration is international if 'any place where a substantial part of the obligations of the commercial relationship is to be performed' was situated outside Hong Kong (in this case in China and Bangladesh).

B6.7. Nevertheless, the court held that it had jurisdiction to grant a Mareva injunction in support of a 'domestic' arbitration being carried out in Hong Kong and duly did so, concluding that the 'interim measure of protection' referred to in Article 9 of the Model Law 'is clearly intended to be of wider application than a mere order preserving the subject matter of the dispute' and on the basis of the clear language used, was 'wide enough to cover a Mareva injunction'. The issue of whether the court could grant an injunction in support of an arbitration whose seat was outside Hong Kong, was, in the court's opinion 'not raised by the instant case'. [Page59:]

B7. India

B7.1. The Arbitration and Conciliation Ordinance Act 1996, which was effective from 25 January 1996, replaced the Arbitration Act 1940 and is largely based on the provisions of the UNCITRAL Model Law.

B7.2. Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take 'any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute' (section 17). The Tribunal may require a party to provide security in connection with such measures.

B7.3. In relation to arbitration proceedings, the court has the same power to make orders as it does in relation to any proceedings before it (section 9). This covers areas such as the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement; securing the amount in dispute; detention, preservation or inspection of any property or things which are the subject of the dispute; interim injunctions or the appointment of a receiver and 'such other interim measures of protection as may appear to the court to be just and convenient.' Courts are empowered to authorize samples to be taken, any observation to be made or experiments to be carried out which may be necessary in order to give arbitrators adequate evidence, in the context of an intellectual property dispute or otherwise.

B7.4. A party may apply to the court for such measures before or during arbitral proceedings, or at any time after the making of an award but before it becomes a decree of the court.

B8. China

B8.1. The Chinese arbitration laws have been influenced by the Civil Code system and there is a proliferation of laws and regulations concerning international and domestic commercial arbitration.

B8.2. The laws and regulations confirm that where interim measures of protection are requested by one of the parties, the Arbitration Commission may, according to Article 258 of the Law of the People's Republic of China on Civil Procedure, obtain an order to obtain such a measure from the intermediate People's Court in the place where the person against whom such action is directed is residing.

B8.3. At the request of one party the Chinese court will take such conservatory measures of protection in the process of arbitration as the court considers necessary.

B8.4. Articles 28 and 46 of the Arbitration Law of the People's Republic of China, which came into effect on 1 September 1995, provide for the Arbitration Commission to submit a party's request for interim measures to a People's Court.

B9. Germany

Article 1041(1) ZPO expressly authorizes the arbitral tribunal to issue interim awards, which it may consider necessary in respect of the subject matter of the dispute. Article 1041(2) ZPO grants enforceability of an interim award if a party applies to a state court for enforcement procedure.

B10. Finland

B10.1. The Finnish Arbitration Act came into force on 1 December 1992. An arbitral tribunal has no power to order interim measures of protection and may only make a provisional award (for example awarding a sum of money at an early stage in the proceedings) with the agreement of the parties. Even if the parties do agree, it is doubtful whether such a decision would be enforceable as an arbitral award according to the International Handbook on Commercial Arbitration.

B10.2. Such measures can, however, be sought from the courts of law, which have exclusive jurisdiction on such orders. It is stated in the Act that a 'court or another authority may, however, before or during the arbitral proceedings, despite the arbitration agreement, grant such interim, including protective, measures which the authority has the power to grant.' (Section 5(2)). Such measures can include a conservatory attachment by a creditor of assets of a debtor. [Page60:]

B11. Ireland

B11.1. The Irish Arbitration Acts 1954-1980, provide inter alia that subject to the contrary expressed intention in the arbitration agreement, the parties shall do all such things which during the proceedings on the reference the tribunal may require. This includes directions for discovery of documents, delivery of interrogatories, inspection of property. Where a dispute arises about the arbitrators' powers the matter may be referred to the Court for directions.

B11.2. There are express provisions in the Arbitration Acts 1954-1980 granting the court jurisdiction to make orders for security for costs, discovery and inspection of documents and interrogatories, giving evidence on affidavit, examination before the court, on oath, of witnesses in the reference, the issue of a commission or request for the examination of a witness out of the jurisdiction, the preservation, interim custody or sale of any goods which are the subject of the reference, securing the amount in dispute in the reference, the detention, preservation or inspection of property and the appointment of a receiver where appropriate.

B11.3. These powers are exercised in a manner which is sensitive to the confidential nature of arbitration. The Irish Courts have continuously expressed themselves to be very supportive of arbitration 36 and that subject to recognized exceptions, it is desirable as a matter of policy, that the courts should respect the finality of arbitration awards.

B12. Italy

B12.1. The Italian Code of Procedure, § 818, provides that 'arbitrators are not allowed to grant seizures or other ad interim measures'. Case law is well established in keeping the stand that interim measures are reserved to the jurisdictional power.

B12.2 This judicial attitude was lately reinforced by specific provisions on interim measures introduced by the Amending Law of the Code of Procedure 37 and its further amendments which clearly grant the courts the exclusive power to issue such measures. [Page61:]

APPENDIX C

INSTITUTIONAL AND AD HOC ARBITRATION rules -

ENFORCEABILITY OF AWARDS

C1. 1998 ICC Rules

Article 28 (6) states that an arbitral award shall be binding and that

'by submitting the dispute to arbitration under these Rules, the parties undertake to carry out any Award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made'.

C2. AAA Rules

Article 27 states that awards

'... shall be final and binding on the parties. The parties undertake to carry out any such award without delay'.

C3. LCIA Rules

Under Article 26.9, by agreeing to arbitration under the LCIA, the parties

'undertake to carry out any award immediately and without any delay subject only to Article 27; and the parties also waive irrevocably their right to any form of appeal, review or recourse to any state court or other judicial authority, insofar as such waiver may be validly made'.

C4. UNCITRAL Arbitration Rules

In wording similar to the provisions contained within the other Arbitration Rules, Article 32.2 provides that an award is to be final and binding on the parties and that the parties undertake to carry out the award without delay.

C5. WIPO Arbitration Rules

Under Article 64(a), by agreeing to arbitration under the WIPO Rules, the parties undertake to carry out the award without delay, and waive their right to any form of appeal or recourse to a court of law or other judicial authority, insofar as such waiver may validly be made under the applicable law.

C6. Cairo Regional Centre for International Commercial Arbitration Rules

Article 18.1 provides that the Centre:

'shall, at the request of any party, render advice and assistance in the enforcement of an arbitral award.'

C7. CIETAC Arbitration Rules

Article 60 states:

'The arbitral award is final and binding upon both disputing parties. Neither party may bring a suit before a law court or make a request to any other organization for revising the arbitral award.'

C8. International Commercial Arbitration Court at the Chamber of Commerce and

Industry of the Russian Federation Rules

Paragraph 5 of the Statute on the International Commercial Arbitration Court provides that:

'... an award of the International Commercial Arbitration Court shall be executed by the parties voluntarily within the period specified by the Court. If no period is indicated in the award, the latter shall be carried out immediately. Awards not carried out voluntarily within the specified period shall be enforced according to the law and international agreements.' [Page62:]

APPENDIX D

NATIONAL LAWS - ENFORCEABILITY OF AWARDS

D1. UNCITRAL Model Law

D1.1. Article 35.1 states that:

'An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing ... to the competent court, shall be enforced subject to the provisions of this article and of Article 36.'

D1.2. Article 36 contains the grounds upon which a state may recognize or enforce an award. The general rule is that an arbitral award is to be recognized or enforced, irrespective of the country in which it was made. Such recognition or enforcement may be refused only if:

(i) the party against whom it is invoked proves to the competent court, on the motion of that party, that:

• a party to the arbitration agreement was under some incapacity, or the agreement was not valid under the law to which it was subject, or under the law of the country in which the award was made;

• the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present his case;

• the award deals with a dispute not contemplated by, or not falling within, the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;

• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, or failing such agreement, in accordance with the law of the country where the arbitration took place; or

• the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was; or

(ii) the court finds (whether on the motion of a party or of its own motion) that:

• the subject matter of the dispute is not capable of settlement by arbitration under the law of the state; or

• the recognition or enforcement of the award would be contrary to the public policy of the state.

D2. England

Interim awards

D2.1. Section 45(5) of the Arbitration Act 1996 provides that if a party without sufficient cause fails to comply with any order or directions of the Tribunal (which would include directions under section 38), the Tribunal 'may make a peremptory order to the same effect'. Under section 42, unless otherwise agreed by the parties, the court may make an order requiring a party to comply with a peremptory order made by the Tribunal. The court should not act unless it is satisfied that the applicant has exhausted any available arbitral process in respect of failure to comply with the Tribunal's order.

Effect of award

D2.2. Under section 58, unless otherwise agreed by the parties, an award made by the Tribunal pursuant to an arbitration agreement is final and binding on the parties, although the Act provides that this does not affect the right of a person to challenge the award by any available arbitral process of appeal or review.

Enforcement of the award - section 66

D2.3. An award made by a Tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgement or order of the court to the same effect. Where leave [Page63:] is given, judgement may be entered in terms of the award. An award can be challenged under sections 67 and 68, on application to the court, on the grounds that there was a serious irregularity affecting the Tribunal, the proceedings or the award, or that the Tribunal lacked substantive jurisdiction to make the award. However, this may only occur if the arbitral process of appeal or review has been exhausted.

Recognition and enforcement of foreign awards

D2.4. Section 101 of the Act provides that a 'New York Convention Award' is to be recognized as binding on the persons on whom it was made, and may by leave of the court be enforced in the same manner as a judgement or order of the court. Under section 103, recognition or enforcement of a Convention Award shall not be refused, unless the person against whom it is invoked proves that:

• a party to the arbitration agreement was under some incapacity;

• the arbitration agreement was not valid under the law to which the parties subjected it, or under the law of the country where the award was made;

• he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present his case;

• the award deals with a difference not contemplated by or not fully within the terms of the submission to arbitration;

• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or with the law of the country in which the arbitration took place;

• the award has not yet become binding on the parties or has been set aside or suspended.

D2.5. This section clearly follows the New York Convention itself. There is a further provision that recognition or enforcement may also be refused if the award is in respect of a matter which is not capable of settlement by arbitration or if it would be contrary to public policy to recognize or enforce the award.

D2.6. The English courts have developed a narrow view of public policy. In Deutsche Schachtbau-und Tiefbohrgesellschaft mbH v. Ras Al Khaimah National Oil Company,38 Sir John Donaldson MR stated:

'Considerations of public policy can never be exhaustively defined, but they should be approached with extreme caution ... It has to be shown that there is some element of illegality or that enforcement of the award would be clearly injurious to the public good or, possibly, that enforcement would be wholly offensive to the ordinary reasonable and fully informed member of the public on whose behalf the powers of the State are exercised.'

D3. Switzerland

D3.1. According to Article 190(1) of the Swiss Act, the award is final from its communication (notification).

D3.2. Although it is not an essential pre-requisite for enforcement, in order to facilitate the enforcement of the award, a certificate of enforceability made by the state judge can be obtained (Article 193(2)). This certificate is merely an attestation by the judge at the place of the seat of the arbitral tribunal that the award has become final and binding with regard to the proceedings within that canton as far as the competent judicial authorities are concerned.

D3.3. Article 193(3) of the Swiss Act furthermore provides that the arbitral tribunal shall certify, upon the request of one party, that the award has been rendered 'in conformity with the provisions of' the Swiss Act. The certificate is refused only on a very limited number of grounds. Certification of enforceability must be carefully distinguished from the actual enforcement of the award by the judge.

D3.4. The enforcement of the award is either subject to federal law (if it involves a sum of money) or to cantonal law (in all other cases): [Page64:]

(i) Cantonal law - in this enforcement procedure, the party against which enforcement is sought is allowed to make a certain number of objections. This possibility means that besides the ordinary action for setting aside the award (see below with regard to the provisions of the Concordat), it can also be attacked indirectly at the time of enforcement in Switzerland;

(ii) Federal law - the Federal Law on Debtors and Bankruptcy of 1889 will be applicable if the award involves a sum of money. The party who seeks enforcement of an award must have sent to the debtor an order to pay. The debtor can then either pay or raise opposition. The award will not be enforced if a debtor can furnish proof that the award violates Swiss public policy or that the constitution of the arbitral tribunal did not give the necessary guarantee for impartiality.

D3.5. Awards of arbitral tribunals rendered in Switzerland and declared enforceable are, by virtue of Article 61 of the Federal Constitution, enforced throughout Switzerland in the same way as judgements of Swiss state courts.

Setting aside the award

D3.6. The Swiss Act designates the Federal Supreme Court as the only competent authority to hear the action for setting aside, although the parties can agree to regard the cantonal court as the only competent authority if they so choose (Article 191(2)). It should be noted that Article 192(1) of the Swiss Act provides that where none of the parties has its domicile, its habitual residence or a business establishment in Switzerland they may, by an express statement in the arbitration agreement or by a subsequent agreement in writing, exclude all the setting-aside provisions.

D3.7. The Swiss Act and the Concordat list the following exclusive grounds for setting aside an arbitral award:

• the sole arbitrator was not properly appointed or the arbitral tribunal was not properly constituted (Article 190(2)(a) of the Swiss Act; Article 36a of the Concordat);

• the arbitral tribunal wrongly accepted or declined jurisdiction (Article 190(2)(b) of the Swiss Act; Article 36b of the Concordat);

• the arbitral tribunal's decision went beyond the claims submitted to it (Article 190(2)(c) of the Swiss Act; Article 36c of the Concordat);

• the principle of equality of the parties or the rights of the parties to be heard was violated (Article 190(2)(d) of the Swiss Act; Article 36d of the Concordat);

• the award is contrary to public policy (Article 190(2)(e) of the Swiss Act; no Concordat provision). Unlike the general notion of 'arbitrariness' contained in Article 36f of the Concordat, public policy under the Swiss Act is narrowly defined. Only violations of very fundamental principles are regarded as constituting violations of public policy, a concept which has been very restrictively interpreted by the Federal Supreme Court. Consequently (and contrary to the Concordat), the absence of factual, legal and, as the case may be, equitable reasons for the decision, does not in itself constitute a violation of public policy under Article 190(2)(e) of the Swiss Act.

Public policy and the enforcement of foreign arbitration awards

D3.8. Article 194 of the Swiss Act confirms that Switzerland is governed by the New York Convention.

D3.9. The Convention notion of public policy (as opposed to the concept of public policy under international arbitrations governed by the Swiss Act) is utilized by the Swiss courts as a ground for refusal of enforcement of the award when enforcement of a foreign arbitral award is applied for in Switzerland. The courts are, however, inclined to apply a more lenient interpretation of international public policy than is the case under the Concordat or the Swiss Act. Consequently, what might be held to be contrary to Swiss public policy under the Concordat need not necessarily frustrate the enforcement of a foreign arbitral award validly rendered in the country where it was made (BGE 100 Ia section 26).

D4. France

D4.1. In France, the arbitral award has the authority of res judicata as soon as it has been issued by the arbitrators (Article 1476 of the Code [Page65:] of Civil Procedure, the 'CCP'). However, an arbitral award only acquires executory force through an exequatur (leave for enforcement) of the Tribunal de Grande Instance of the place of arbitration. By virtue of Articles 1498 to 1500 of the CCP, this requirement for leave applies to both the enforcement of foreign awards and the enforcement of awards issued in international arbitrations taking place in France, together with all domestic arbitrations.

D4.2. In order to obtain leave, one original copy of the award, together with a copy of the arbitration agreement, must be deposited with the Tribunal either by one of the arbitrators or by one of the parties (Article 1477 CPP). The exequatur is ordered by the judge in charge of enforcement within the Tribunal. The procedure is unilateral, without the participation of the party against whom enforcement is sought. If the arbitrators have granted provisional enforcement, the exequatur may be ordered notwithstanding the filing of an appeal or a request for annulment against the award. The exequatur order is mentioned on the award itself. In the case of refusal of the exequatur, reasons must be given by the judge.

Setting aside the award

D4.3. If the request for the exequatur is denied, the petitioner may appeal to the Cour d'Appel within a time-limit of one month after notification of the denial. This applies to both domestic and international arbitrations in France. The following factors will be relevant if an appeal to set aside the award (in international arbitrations it is technically an action for annulment) is made:

• there was no arbitration agreement, the arbitration agreement was invalid or had expired;

• the award was made by an arbitral tribunal irregularly constituted, or by a sole arbitrator irregularly appointed;

• the arbitrator(s) did not act in conformity with the Terms of Reference defined for him by the parties or exceeded the authority conferred upon him or them;

• due process has not been respected;

• there has been a violation of public policy (domestic) or the recognition or the enforcement of the award would be contrary to international public policy (see below).

Public policy and the enforcement of foreign arbitral awards

D4.4. France became a signatory of the New York Convention in 1958. Awards which are not 'considered as domestic' (Article 1 of the New York Convention) are subject to the Convention regime, unless the party requesting the recognition or enforcement has preferred not to make use of a convention which otherwise would have been applicable. International public policy has a narrower scope than domestic public policy in the context of arbitration.

D5. United States of America

D5.1. The Federal Arbitration Act (the 'FAA') provides that, at any time within one year after an award is made, any party may apply to a federal court for an order confirming the award. This procedure results in transforming the award into a judgement of the court and is commonly called 'entering judgement on the award'. Interim, interlocutory and partial awards may also be confirmed. The FAA provides in section 9 that the court must grant an order confirming the award, unless the award has been set aside, modified or corrected (see below).

D5.2. The procedure for securing a court order confirming an award is regarded as straightforward. It requires, in addition to filing an application, the filing with the clerk of the court of copies of the agreement, the award and a copy of any court order modifying or correcting an award. Appeals to a higher court can be made against an order confirming an award.

D5.3. When an order confirming an award is issued, it has the same executory force and effect as a court judgement (FAA section 13).

Setting aside the award

D5.4. An arbitral award is final and binding upon the parties, and the courts may set aside an award only on very limited grounds. The grounds are set out in the FAA and also in the Uniform [Page66:] Arbitration Act (first adopted in 1955). The statute law provides that a court has power to set aside an award only:

• where it was procured by corruption or fraud;

• where there was evident partiality by an arbitrator;

• where the arbitrators refused to hear evidence; or

• where the arbitrators exceeded their powers or did not exercise them in accordance with their remit.

D5.5. The court will not inquire whether the arbitrator made errors either of fact or law, because such errors are not grounds for setting aside an award.

Public policy and the enforcement of foreign arbitral awards

D5.6. The FAA implements the 1958 New York Convention. The provisions in Article V(2) of the Convention are particularly relevant to arbitration awards in intellectual property disputes. Under Article V(2)(a), recognition and enforcement if sought may be refused by US courts if they find that the subject matter in dispute is not arbitrable in the US. Under Article V(2)(b), US courts may refuse recognition and enforcement if that would be contrary to the public policy of the US.

D5.7. Because virtually all US intellectual property rights are the proper subject of binding arbitration, Article V(2)(a) should not prohibit enforcement in the US of a foreign award regarding US intellectual property rights. Notwithstanding that a given issue would be resolved differently in a domestic context, the majority of the US Supreme Court in Mitsubishi Motors Corp v. Soler Chrysler-Plymouth, Inc. 39 declared that 'concerns of international comity, respect for the capacity of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for predictability in the resolution of disputes require that we enforce the parties' agreement...'. The court continued: 'the expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our laws and in our courts'.

D5.8. To the same effect, judicial opinions construing Article V(2)(b) of the Convention have made it clear that the public policy ground should be applied narrowly. In Fotochrome Inc. v. Copal Corp.,40 the Court of Appeals for the Second Circuit noted the 'pro-enforcement bias' of the Convention and stated that the defence should be applied 'only where enforcement would violate the forum state's most basic notions of morality and justice.'

D5.9. In the light of the more recent Supreme Court opinions expanding the scope of arbitrable issues under Federal antitrust and securities laws, such as Mitsubishi Motors and Shearson/American Express Inc. v. McMahon,41 it is unlikely that agreements to arbitrate intellectual property issues would violate the public policy concerns mentioned in Fotochrome.

D5.10. Two caveats may be appropriate:

(i) In Diapulse Corporation of America v. Carba Limited,42 a court vacated an award because the injunction, unlimited in duration and geographic scope, violated the public policy against unreasonable restraints on trade; and

(ii) In Garrity v. Lyle Stuart, Inc.,43 the New York Court of Appeals applied New York law in a copyright royalty dispute, as required by a choice of law provision and found that an arbitrator lacked the power to award punitive damages, even if agreed to by the parties, because punitive damage awards violate public policy in that state. Although Mastrobuono v. Shearson Lehman Hutton Inc.,44 and is progeny have severely restricted the application of Garrity, it is important for the intellectual property practitioner to understand whether increased damages are indeed 'punitive'.

D5.11. Thus, although a US court would not normally re-examine the merits of a controversy in considering a motion to vacate, when the form of relief runs counter to US public policy the court may make its own, independent evaluation. [Page67:]

D6. Sweden

D6.1. According to the Report of the Committee set up to draft the new Act, amendments of the existing law are made in the rules pertaining to the enforcement of Swedish arbitral awards in Sweden. These rules are not included in the Act but in other statutes, and are not dealt with in the Report, which does, however, state that the proposed new enforcement rules are considerably simplified compared to the present ones.

D6.2. Under the previous Arbitration Act of 1929, an award was enforceable without a court order or other exequatur. If the parties did not carry out the award voluntarily, the award could be brought to the relevant Bailiwick (a 'tier' down from the Swedish District Court) which would make a summary check of the matter and proceed to enforce the award if satisfied that the arbitration agreement did not contain any provision giving a party the right to appeal to the courts on substantive grounds.

Invalidity

D6.3. Section 33 of the Swedish Act contains similar provisions to those concerning the enforcement and recognition of foreign arbitral awards, in that an award is invalid if it comprises a decision of a matter which under Swedish law is not arbitrable, or if it is patently incompatible with the basic principles of the Swedish legal system. In addition, the award must fulfil certain requirements with regard to its written form and signing.

D6.4. According to the Report, the concept of public policy is, in accordance with Swedish legal tradition, intended to have a very narrow scope. The absence of a valid arbitration agreement does not of itself render the award invalid. Such a defect would require a party to challenge the award under the provisions for setting aside an award contained within section 34.

Setting aside

D6.5. At the request of a party, an award can be wholly or partially set aside if:

• it falls outside the scope of a valid arbitration agreement between the parties;

• the arbitrators have given their award after the expiration of a period of time stipulated by the parties or have otherwise gone beyond the matters submitted to them;

• an arbitrator has been appointed in a manner contrary to the agreement between the parties or to the provisions of the Act;

• the arbitration proceedings should not have been conducted in Sweden; or

• any irregularity of procedure has occurred, through no fault of the party, which is likely to have influenced the outcome of the case.

D6.6. Such an action should be brought within three months of the date on which the award was made, after which time a party may not challenge the award on any new ground in support of such an action.

Remission

D6.7. Under the present law, a successful action to challenge the award which results in a court judgement by which an award is set aside in whole or in part, must be resolved in fresh arbitration proceedings. The Act introduces a remedy of remission.

D6.8. The rules are contained in section 36, which provides that a court may stay an action concerning the invalidity or setting aside of an award for a certain period of time in order to provide the arbitrators with an opportunity to resume the arbitration proceedings, or to take some other action which in the opinion of the arbitrators will eliminate the ground for the invalidity or setting aside. If the arbitrators render a new award, a party may, within the period of time stipulated by the court and without filing a new complaint, challenge the award insofar as the action is based on the resumed arbitration proceedings.

Recognition and enforcement of foreign arbitral awards

D6.9. The Act incorporates in sections 54 to 60 provisions which are presently contained in a separate Act implementing the New York Convention. [Page68:]

D6.10. A foreign award which is based on an arbitration agreement will be recognized and enforced in Sweden, unless it falls within one of the exceptions to this general principle. A foreign arbitration award will not be recognized and enforced where one party is able to prove that:

• the party did not have authority to enter into the arbitration agreement, was not properly represented, or that the agreement was invalid under the law to which the parties have subjected it;

• the party was unable to present its case, for example by not being given proper notice of the arbitration proceedings;

• the award deals with a difference not contemplated by the terms of the submission to arbitration, or it contained decisions on matters beyond the scope of the arbitration agreement;

• the arbitral procedure or composition of the arbitral tribunal was not in accordance with the agreement of the parties, or failing such agreement was not in accordance with the law of the country where the arbitration took place; or

• the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made.

D6.11. In addition, a foreign award will not be recognized if it includes the resolution of a matter which is not arbitrable under Swedish law or if such recognition or enforcement would be 'patently incompatible with the basic principles of the Swedish legal system'. An application for the enforcement of a foreign award must be submitted to the Svea Court of Appeal. If the court grants the application, the arbitral award will be enforceable in the same manner as a judgement of a Swedish court.

D6.12. In terms of the public policy of enforcing foreign awards, the willingness of the Swedish courts to recognize and enforce a foreign arbitral award was demonstrated by Götaverken Arendal AB v. General National Maritime Transport Company.45 In that case, it was held in regard to a French award that the filing of an opposition à l'ordonnance d'exequatur did not prevent the award from being 'enforceable or otherwise binding', nor did it mean that the award had been 'set aside or suspended by a competent authority'. A postponement of enforcement in Sweden was also refused.

D7. Hong Kong

D7.1. The High court will grant leave to enforce awards made in both domestic and international arbitrations. Under section 2H of the Arbitration Ordinance,46 the court has wide discretion to permit enforcement of domestic and international awards, provided they are not governed by the New York Convention.

D7.2. As under English law, every award is final and binding between the parties. However, the successful party may make an application to the High court for leave to enforce the award, and may thereafter enforce the award in the same manner as a judgement. The initial application is made ex parte and at that stage, the court will be concerned that the formal requirements of the arbitral regime have been met. An affidavit producing the necessary evidence is required.

D7.3. Where leave to enforce is given, it is normally conditional upon the respondents being served with a copy of the order and having an opportunity (usually 14 days) to apply to the court to set it aside. Where leave is given and not subsequently set aside, judgement may be entered in the terms of the award. An appeal may be made to the Court of Appeal against the granting, or refusal, of leave to enforce an award. The circumstances in which the court will refuse to enforce an award are limited, reflecting those situations where the court would give leave to appeal against an award or set aside an award.

Setting aside the award

D7.4. The grounds for setting aside the award in Hong Kong are as follows: [Page69:]

D7.4.1. International arbitrations:

• a party to the arbitration agreement was under some incapacity, or the agreement was not valid for some other reason;

• a party was not given proper notice of the appointment of the arbitrator or of the proceedings or was otherwise unable to present his case;

• the award deals with matters beyond the scope of the arbitration agreement or reference;

• the arbitral tribunal did not comply with the terms of the arbitration agreement or reference;

• the award conflicts with public policy.

D7.4.2. Domestic arbitrations:

• misconduct of the arbitrator;

• unqualified arbitrator;

• lack of jurisdiction (i.e. award not within the powers conferred on the arbitrator);

• violation of public policy;

Public policy and the enforcement of foreign arbitration awards

D7.5. Part IV of the Arbitration Ordinance gives effect to the New York Convention in sections 41 to 46. Section 44(3) of the Arbitration Ordinance empowers the court to refuse enforcement if it is contrary to public policy to enforce the award.

D7.6. In Werner Bock v. The N's Company Limited,47 the Court of Appeal held that, even if the wrong law had been applied, it would not necessarily be contrary to the public policy to enforce the award stating that:

'public policy should not be extended to include every conceivable kind of error'.

D7.7. The Hong Kong courts follow the English and American approach by taking a narrow view of public policy. In the case of Zhejiang Province Garment Import & Export Company v. Siemssen,48 the court rejected a public policy defence where it was alleged that the Chinese tribunal had ordered the Hong Kong defendant to reimburse customs tax. It had been argued that the effect of the award had been to enforce China's customs tax provisions extra territorially. The court held that this was not so, because all the tribunal had done was to make an award for damages in the amount of the wasted customs tax paid by the Chinese party.

D8. India

D8.1. Section 35 states that arbitral awards are 'final and binding on the parties and persons claiming under them'.

Setting aside the award

D8.2. An arbitral award in a domestic arbitration can only be set aside by the court if less than three months have elapsed from receipt of the award and one or more of the grounds set out in section 34 of the Arbitration and Conciliation Ordinance Act 1996 are relevant, namely:

(i) The party making the application proves that:

• he was under some incapacity;

• the arbitration agreement was not valid under the law to which the parties have subjected it;

• he was not given proper notice of the appointment of an arbitrator, or of the arbitral proceedings, or was otherwise unable to present his case;

• the arbitral award deals with a dispute not contemplated by it, or not falling within the terms of the submission to arbitration; or

• the composition of the tribunal, or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of the ordinance; or

(ii) The court finds that: [Page70:]

• the subject matter of the dispute is not capable of settlement by arbitration; or

• the arbitral award is in conflict with the public policy of India.

D8.3. The Ordinance states that generally an award is in conflict with the public policy of India 'if the making of the award was induced or affected by fraud or corruption', or was in violation of sections 75 or 81 (breach of confidentiality or disclosure of pre-arbitration negotiations in respect of conciliation proceedings).

D8.4. Where the time for making an application to set aside an award has expired, or such application has been refused, an award will be enforced under the Code of Civil Procedure 1908, in the same manner as if it were a decree of the court. An award no longer has to be filed in court before it can be enforced, as it did under the previous Arbitration Act of 1940.

Enforcement of foreign awards

D8.5. Enforcement of a foreign award may be refused only if the party against whom it is to be enforced proves that:

• the parties were, under the law applicable to them, under some incapacity, or the agreement is not valid under the law to which it has been subjected;

• he was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case;

• the award deals with a difference not contemplated by or not falling within the terms of submission to arbitration;

• the composition of the arbitral tribunal or the arbitral proceedings was not in accordance with the agreement of the parties; or

• the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country under the laws of which the award was made.

D8.6. Enforcement may also be refused if the court finds that:

• the subject-matter of the dispute is not capable of settlement by arbitration under the law of India; or

• enforcement would be contrary to the public policy of India.

D8.7. As with domestic awards, where the court is satisfied that a foreign award is enforceable, the award is deemed to be a decree of that court.

D9. China

D9.1. An arbitration award may, by an order of the court, be enforced in the same manner as a judgement of the court.

Setting aside the award

D9.2. Article 260 of the Civil Procedure in force as of April 1991 specifies the grounds for setting aside an award or refusal of enforcement of a foreign arbitration award. These grounds include:

• the lack of a valid arbitration agreement;

• lack of due process;

• improper constitution of the arbitral tribunal;

• arbitral procedure not in conformity with the applicable rules; and

• the award exceeds the scope of the arbitration agreement or the jurisdiction of the arbitral tribunal.

Public policy and the enforcement of foreign arbitration awards

D9.3. Public policy is subject to strict interpretation in China. The concept of international public policy has not been developed in the Chinese court decisions. There is no control by the Chinese courts on the merits of arbitration awards, not even as to errors of law.

D10. Germany

D10.1. An award is described as being equivalent to a final court decision in Article 1040 of the German Code of Civil Procedure. The possibilities [Page71:] of challenging the arbitration award and enforcing it are further set out in Articles 1041 to 1044. An arbitration award, whether domestic or international, needs an execution clause from a court as a formal requirement for its enforcement. In such an execution procedure, the award has to pass screening under Article 1041 (domestic) or 1044 (international) by which the losing party can challenge its validity.

Setting aside the award

D10.2. The challenge of an award issued under German law is slightly different from that of an international award. The grounds of challenge under the respective regimes are as follows:

(i) International arbitrations

In international arbitration a foreign award may be challenged before German courts only for reasons permitted under the New York Convention.

If the Defendant invokes the concept of public policy, enforcement will only be refused if the content of the award violates international public policy, the international public policy being defined as a violation of the most basic notions of fundamental justice. A non compliance with 'simple' procedural or substantive German law does not constitute a violation of international public policy - unless it is a consumer affair and a law concerning consumer protection is violated.

(ii) Domestic arbitrations

• if there was no valid arbitration clause or the arbitration process was inadmissible;

• if the recognition of the award would be contrary to good morals or public order;

• if the party was not legally represented and did not consent to the proceedings;

• if the right to be heard was violated;

• if the award was not supported by reasons; or

• if there are reasons under which a state court judgement could be challenged (for example, restitution may in some cases be ordered under Article 580 CCP if newly discovered evidence emerges).

Public policy and the enforcement of foreign arbitration awards

D10.3. Insofar as public policy is relevant, as is the case for foreign judgements, the violation of principles of public policy constitutes a bar to the recognition and enforcement of a foreign arbitral award. However, the German courts have repeatedly held that it is not every violation of the principles of public policy which will be fatal. The Bundesgerichtshof (Federal Supreme Court) has said that, 'only in extreme cases'49 will the enforcement be refused. An arbitration agreement is regarded as invalid under this head if, for example, it was entered into after the exercise of certain kinds of economic or other pressure by one of the parties.

D11. Finland

Enforcement of domestic arbitration awards

D11.1. A final or partial award may be enforced upon leave granted by the court of first instance.50

D11.2. Before an application for leave for enforcement is granted, the party against whom enforcement is sought is given the opportunity to be heard. That party is invited, within a period of time specified by the court, to state in writing any objections he may have.

D11.3. The court may refuse the application for leave to enforce only if it finds that the award is null and void under section 40, the grounds being:

• the arbitral tribunal has decided an issue not capable of settlement under Finnish law;

• recognition of the award would be contrary to public policy;

• the award is so obscure or incomplete that it does not appear from it how the dispute has been decided;

• the arbitral award has not been made in writing or has not been signed by the arbitrators. [Page72:]

D11.4. If leave is refused, an appeal may be made to the Court of Appeal, and thereafter, with leave, to the Supreme Court.

Setting aside an award

D11.5. An award may be set aside by the court upon the request of a party, within three months of receipt, on any of the following grounds (section 41(1)):

• the arbitral tribunal has exceeded its authority;

• an arbitrator was not appointed in due order;

• a party was given insufficient opportunity to present his case;

• a party has become aware of a ground for disqualification of an arbitrator, or a valid challenge to an arbitrator was made but was not accepted before the award was made.

D11.6. An award cannot be set aside on the basis of an error in law or in fact, although violation of rules of public policy does constitute a ground for declaring the award null and void.

Enforcement of foreign arbitration awards

D11.7. Finland has ratified and enacted the 1958 New York Convention by a separate Act. Foreign awards may also be enforced under the general national legislation so long as they meet the criteria of the Finnish Arbitration Act. This allows enforcement without the need for an exequatur: nor is this conditional upon reciprocity.

D11.8. Sections 51 to 55 of the Act, which apply to arbitral awards given abroad, contain provisions which correspond to those of the New York Convention concerning the recognition and enforcement of foreign arbitral awards.

D11.9. There are the usual provisions concerning non-recognition where an award is contrary to the public policy of Finland. Section 53 contains grounds upon which a foreign award will not be recognized against a party who proves that:

• he did not have the capacity to enter into the arbitration agreement, or was not properly represented when the agreement was entered into, or that the agreement is not valid under the law to which the parties had subjected it;

• he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present his case;

• the arbitral tribunal has exceeded its competence or powers;

• the composition of the tribunal or the arbitral proceedings substantially deviated from the agreement of the parties or from the law of the state where the arbitration took place; or

• the award has not yet become binding on the parties, or it has been declared void or set aside or suspended in the state in which it was made.

D11.10. Section 54 states that:

'An arbitral award which has been made in a foreign state and which under this Act shall be recognized in Finland shall be enforced here upon request. An application for enforcement shall be submitted to a court of first instance.' [Page73:]

APPENDIX E

EXAMPLES OF ADDITIONAL PROVISIONS TO ARBITRATION AGREEMENTS 51

E1. [Arbitration clause: standard ICC clause or other]

E2. This dispute is a private commercial dispute between the parties and affects international commerce. [Any dispute arising hereunder is likely to be a private commercial dispute between the parties and to affect international commerce.]

E3. The parties agree that such dispute and all aspects thereof shall be resolved by binding arbitration as to the rights of the parties with respect to one another.

E4. In the event that determination of this dispute necessitates consideration by the Tribunal of any issue relevant to the validity, enforceability or infringement of any [intellectual property right] of any party with respect to another party, the Tribunal shall have the authority to consider all such issues and to express a view with respect to all such issues. It is expressly agreed that the Tribunal shall not have authority to declare any such [intellectual property right] valid or not valid, enforceable or not enforceable or infringed or not infringed, provided, however, that the Tribunal may render an opinion to the parties as to whether in the Tribunal's view a court or other government agency of competent jurisdiction would uphold the validity, enforceability or infringement of any such [intellectual property right]. The Tribunal shall specify [may state] the Tribunal's reasons underlying any such opinion. However, neither the opinion nor the statement of reasons by the Tribunal shall be regarded by any party as a declaration of validity or invalidity, enforceability or unenforceability, or infringement or non-infringement of any such [intellectual property right].

E5. The Tribunal's Award:

(a) shall state what acts, if any, each party may or may not undertake with respect to any other party;

(b) shall be final, binding and effective only between or among the parties;

(c) shall not be appealable by any party; and

(d) shall not be regarded or asserted by any party as having any effect on any person or entity not a party.

E6. The parties expressly agree that judgement based on the Tribunal's award may be entered in favour of, or against, any party in any jurisdiction which the Tribunal determines is appropriate under the circumstances, and each party against whom any such judgement may be entered hereby agrees to and shall make itself subject to the jurisdiction of any court in which any such judgement is entered.

E7. The parties agree to incorporate the terms of the award into [an underlying or related technology transfer, licence, etc. agreement] as a binding amendment to the agreement and enforceable as such, effective as of the date of the award.

1
It is noteworthy that the working party was established at a time when several major arbitration institutions were revising their Rules, and the World Intellectual Property Organization ('WIPO') was establishing its arbitration and ADR system.

2
For example, the Italian Patent Law, § 27 R.D. No 1127, provides as follows: 1. 'When the industrial invention is made in the course of the performance or fulfilling of a contract or a work/employment relationship, where the inventive activity is established as object of the contract or of the relationship and it is paid for, the rights originating from the invention itself belong to the employer, without prejudice to the right of the inventor to be acknowledged as the author. 2. If no compensation is provided and established for the invention activity and the invention has been developed in the course of the performance or fulfilment of an employment contract or relationship, the rights deriving from the invention belong to the employer, but the inventor shall in addition to his right to be acknowledged as the author, be entitled to fair compensation, the amount of which shall be referred to as the value of the invention.'

3
Figures released after the completion of the base-study (1990-1995) seem to indicate a trend upwards. The percentages of cases introduced in 1996 and 1997 which contained a significant intellectual property aspect were, respectively, 14.5% and 17.3%.

4
These proportions were roughly maintained in 1996 and 1997, except that more parties came from the United Kingdom than from Switzerland.

5
This holds true for 1996 and 1997, except that London was chosen more often than Zurich or Geneva.

6
The order for 1996 and 1997 was as follows: American, French, English, German and Swiss.

7
The liberalization of national laws on arbitrability, which has been greatly helped by the UNCITRAL Model law, could be further advanced by a positive approach from both WIPO and WTO.

8
The information given below illustrates the wide spectrum of possible national attitudes vis-à-vis the arbitrability issue. The legal situation in several countries has changed during the period when this Working Party has been deliberating. For example, the French Code of Intellectual Property, Articles L.615-17 and L.716-4, now provides that the rules of competence no longer prevent recourse to arbitration.

9
See Professor S. Ottolenghi, Arbitration Law and Procedure, 3rd enlarged edition, Tel Aviv, 1991.

10
See M. Storme and B. Demeulenare, International Commercial Arbitration in Belgium, Kluwer, 1993, p. 26.

11
This is equally the case in Scotland under the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 which gave effect to the UNCITRAL Model Law in Scotland.

12
Roussel-Uclaf v. Searle & Co., [1978] 1 Lloyds Rep. 225.

13
Art. L.714-4 Trade Marks, L.615-17 Patents.

14
20 June 1989, Rev. Arb. 1989, p. 280, with note by L. Idot. See also Société Deko v. Dingler and Meva, 24 March 1994, Rev. Arb. 1994, p. 525, with note by C. Jarrosson.

15
Sherk Enterprises AG v. Société des grandes marques SA, 15 September 1977, No 3989 SU, Giurisprudenza Annotata di Diritto Industriale 1977, p. 70.

16
The traditional judicial attitude has changed in favour of acceptance of the arbitrability of disputes relating to the validity of some intellectual property rights, following:- EEC Regulation No 2348 of 1984, which allows for the insertion of arbitration clauses into patent licences without violating Articles 85 and 86 of the Treaty;- A decision by the Court of Appeal of Milan (IPIR v. Wright & Sons Ltd, 3 March 1980) to the effect that the validity of a patent may be subjected to settlement between the parties and therefore decided upon by an arbitrator (res judicata being limited in such cases to the parties).

17
Association internationale pour la protection de la propriété industrielle, Annuaire 1992/I, XXXVe Congrès, Tokyo, 1992.

18
See Troller, 'Specific Aspects of Intellectual Property Disputes - The Swiss Perspective', in Objective Arbitrability - Intellectual Property Disputes, ASA Special Series No 6 (1994), p. 155, at 159.

19
Patent, Trademark, Model and Design Reporter, 1976, p. 10.

20
895 F 2d 736 (1990).

21
473 U.S. 614 (1985).

22
107 S. Ct 2332 (1987).

23
The institutions have been selected subjectively as the most appropriate for dealing with intellectual property disputes. The national laws chosen reflect the laws of members of the Working Party or on which the Working Party was able to obtain a report on the legal effects and implications of the matters covered.

24
The form of the decision granting interim relief also presents an issue: should it be an order or an award? In a decision of the Supreme Court of Queensland, an award providing for interim relief was refused enforcement: Resort Condominiums International Inc. v. Ray Bolwell and Others, 29 October 1993, in Yearbook Commercial Arbitration, Vol. XX-1995, p. 628.

25
At the date of this Report, legislation based on the UNCITRAL Model Law has been adopted in 32 legal systems: Australia, Bahrain, Bermuda, Bulgaria, Canada, Cyprus, Egypt, Germany, Guatemala, Hong Kong (now Hong Kong Special Administrative Region), Hungary, India, Iran (Islamic Republic of), Kenya, Lithuania, Malta, Mexico, New Zealand, Nigeria, Oman, Peru, Russian Federation, Scotland, Singapore, Sri Lanka, Tunisia, Ukraine, within the United States of America: California, Connecticut, Oregon and Texas; and Zimbabwe.

26
Proposed WIPO Supplementary Emergency Relief Rules, April 1996, p. 6.

27
Examples of the types of provisions that may be relevant are included in Appendix E.

28
See Redfern and Hunter, International Commercial Arbitration, 2d ed., London, Sweet & Maxwell, 1991, pp. 47071.

29
[1993] 2 WLR 262.

30
Entscheidungen des Schweizerischen Bundesgerichts ('BGE') 41 II 534.

31
Article 1479 of the Code of Civil Procedure - Book IV -Arbitration.

32
935 F.2d 1019, 9th Cir. (1991).

33
Chapter 341, revised October 1990.

34
[1923] 2 KB 202.

35
(1992) HK Digest 69.

36
See Doyle v. Kildare County Council [1995] 2 LR 424.

37
No 353, 26 November 1990.

38
987] 2 All ER 769, at page 779 e-f.

39
473 US 614, 629 (1985).

40
517 F.2d 512, 515, 2nd Cir. (1975).

41
482 US 220 (1987).

42
626 F.2d 1108 (2d Cir. 1980).

43
40 N.Y. 2d 354 (1976).

44
514 US 52 (1995).

45
NJA 1979, page 527; Yearbook of Commercial Arbitration, Vol. VI (1981) page 237.

46
Chapter 341, revised October 1990.

47
[1978] HKLR 281.

48
[1992] HK Digest F8.

49
BGHZ 98, p. 70.

50
Finnish Arbitration Act, section 43.

51
This is an example of the type of provisions which could be included in a contract with a view to persuading a court to give effect to the parties' agreement to submit their differences to arbitration even though they involve an intellectual property issue. The effectiveness of such provisions should be reviewed carefully with regard to the rules of law applicable to the arbitration and the courts of the jurisdiction where enforcement may be sought.