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( Source of the document: ICC Digital Library )
On 7 March 2017, ICC hosted the 32nd edition of the joint conference co-organized each year with Queen Mary University London. This year's topic-'Abuse of Process in International Arbitration'-led to lively debate across four panels under the overall direction of Yves Derains and Julian D.M. Lew QC, respectively Chairman and Council Member of the Institute. Ileana M. Smeureanu, associate at Jones Day in Paris, reports.
Institute Chairman Yves Derains opened the symposium by emphasising that the arbitral tribunal's mission to ensure due process while keeping costs and time under control must be upheld when navigating around potential abuses of process.
With this in mind, the first panel sought to define abuse of process in arbitration. Noting that the concept is largely unexplored, Stavros Brekoulakis advocated establishing a doctrine of 'prohibition of abuse of process'. In his view, such a doctrine would rely on general principles allowing flexibility when addressing particular abuses. Tribunals would have inherent power, to apply these principles to establish whether the exercise of rights is reasonable or not.
Robin Oldenstam explained that in civil law jurisdictions abuse of process comes within the larger concepts of abuse of rights and good faith, having emerged as a jurisprudential construction to deal with gaps in the law. As it has no fixed definition or scope, it is examined using a 'sniff test' based on the circumstances. Criteria used to determine abuse of process include (i) intention to harm, (ii) lack of a legitimate interest, (iii) disproportionality, and (iv) exercising a right contrary to its intended function.
Laurence Shore noted that US and UK courts strictly define abuse of process as a cause of action and are unwilling to find abuse after a claim has been stated. According to this view, misbehaviour does not necessarily amount to abuse of process. Rather, courts have found an abuse of process in cases where the legal process was used for an improper purpose or to re-litigate concluded arbitrations in court by way of a collateral challenge against the award. Arbitrators should be wary of invoking extreme or broad categories of conduct when there are other ways of addressing apparent abuses in a case.
The second panel examined the circumstances in which abuse of process has been invoked in international arbitration. As examples of potential abuses in commercial cases, Anne Véronique Schlaepfer referred to conducting parallel proceedings in state courts in disregard of a pending arbitration and claiming the court-related costs as arbitration damages, or initiating parallel arbitrations between identical parties based on different legal grounds.
Marc-Olivier Langlois added more examples, including abusive arbitrator challenges; sporadic participation in or absence from conferences, meetings or hearings; changing or adding counsel in the midst of proceedings; refusing to make clients available as witnesses or experts; abuses related to document disclosure; and last-minute surprises like the disclosure of new documents before the hearings, or the late withdrawal or substantial modification of claims.
Concerning abuses of process in investment arbitration, Emmanuel Gaillard flagged instances ranging from acquiring a particular nationality or engaging in corporate restructuring for the sole purpose of securing jurisdiction under a particular bilateral investment treaty, to creating multiple companies and initiating proceedings at different levels of the corporate chain and across various fora to enhance chances of success. He also noted that treaty protection may be used as a shield against criminal investigations in the host state.
Noah Rubins explained that an abuse of process in investment arbitration arises when a party has an undisputed right to initiate process under an international instrument but should be prevented from exercising it because it would be for an improper purpose. On the basis of this premise, he disagreed that Emmanuel Gaillard's first two examples would constitute abuse of process. On the other hand, abuse would be caused by counsel's persistent disregard of common rules of decency of conduct and ethics, which they would never breach before their national courts but would readily abandon in arbitration.
The third panel then examined whether abuse of process is a growing phenomenon and what tools are available to eradicate it. John Beechey stressed the tribunal's procedural discretion to deal with abuse under arbitral rules, coupled with the institution's obligation to act in the interests of the process and in support of the arbitrators in the event of a complaint or challenge of an arbitral decision.
Stefano Azzali of the Milan Chamber of Arbitration noted the growing sophistication of abuses in the appointment of arbitrators, such as repeat appointments, deadlock and multi-party problems, insisting on the role of institutions in actively taking a stand to balance the parties' rights. Andrea Carlevaris of the ICC International Court of Arbitration remarked on the increasing use of tactical challenges, including belated, repeat and post-award challenges, and flagged the recent reform allowing reasoned challenge decisions to be made available to the parties. Finally, Jacomijn van Haersolte-van Hof of the London Court of International Arbitration dealt with the issue of legal representatives and ethics, addressing in particular the appointment of new conflicting counsel, putting the tribunal in the dilemma of having to either accept them or step down. The panel concluded by agreeing that arbitral rules afford sound mechanisms to alleviate these types of abuses.
Finally, the fourth panel looked into the need to introduce new tools to deal with abuse of process. Maxi Scherer opined that in the vast majority of situations the arbitral tribunal already possesses what is its most important tool-its broad discretion to conduct the proceedings in the most efficient way. In a similar vein, Jacob Grierson called for a new level of arbitrator protection that would encourage tribunals to use the instruments they already have. As new tools, Stefan Wilske mentioned transparency and publicity, and proposed listing sanctioned counsel on institutions' websites, excluding counsel from the proceedings, or even imposing monetary sanctions for improper counsel conduct.
Concluding, Julian Lew noted that arbitration is market-linked and exists because parties prefer it to national courts. He remained optimistic that the market, helped by practitioners and supported by institutions, would find ways to address abuses of process.