New York, 28 September 2018

Spotlight North America: Developments affecting the hemisphere

Members of the panel: Ina C. Popova (Partner, Debevoise & Plimpton, New York), Tina Cicchetti (Independent Arbitrator, Vancouver), Arif Ali (Partner, Dechert LLP, Washington, D.C.) and Kabir Duggal (Associate, Arnold & Porter, New York).

The first panel was an overview of the changing legal landscape in North America, including recent legislative changes and noteworthy case law.

Different arbitration seats in North America were discussed:

  • In California, a new law allows foreign-qualified attorneys to appear in an international arbitration as long as any of a list of conditions are satisfied, such as: (i) services are undertaken in association with a Californian attorney who actively participates or, (ii) services arise out of or are reasonably related to the attorney's practice in a jurisdiction in which the attorney is admitted to practice.
  • In British Columbia, the International Commercial Arbitration Act was updated to incorporate the UNCITRAL Model Law. The key changes include a new immunity provision to protect arbitrators and clarified standards for arbitral challenges.

The panellists also gave an overview of recent American case law on the topic of enforcement of annulled awards:

  • In Getma International v. Republic of Guinea,1 the Court of Appeals for the D.C. Circuit affirmed the district court's refusal to enforce an award that had been annulled by the Common Court of Justice and Arbitration (‘CCJA’) of the Organization for the Harmonization of Business Law in Africa (‘OHADA’), holding that the CCJA’s decision did not violate ‘basic notions of morality and justice'. Here, the speakers highlighted a recurring trend in American courts: the focus on whether annulled judgments are entitled to comity instead of whether the underlying award should be enforced under the New York Convention.
  • In Hardy Exploration & Production (India), Inc. v. Government of India, Ministry of Petroleum & Natural Gas,2 the United States District Court for the District of Columbia denied a petition to confirm an arbitral award on the ground that its order of specific performance interfered with a sovereign state in violation of US public policy and was unenforceable under Article V(2)(b) of the New York Convention. The District Court also denied the portion of the award granting interest, since it considered it to be inseparable from the specific performance portion of the award, and denied a motion to stay proceedings pending resolution of an appeal in India.3
  • In Mobil Cerro Negro Ltd. v. Bolivarian Republic of Venezuela,4 concerning an ICSID award rendered in favour of ExxonMobil subsidiaries (‘Mobil’) against Venezuela, the Second Circuit rejected ex parte enforcement of ICSID awards against foreign states and decided that the Federal Sovereign Immunities Act (‘FSIA’) provides the sole basis for subject-matter jurisdiction in ICSID enforcement actions against foreign states and that ICSID award-creditors must comply with the FSIA’s procedural and venue requirements.

The panel also addressed ISDS developments in the region:

  • In Canada, the investment protection and ISDS provisions contained in Chapter 8 of the Comprehensive Economic Trade Agreement (‘CETA’) reflect a new model of replacing ISDS with a court structure. CETA creates both a Tribunal of First Instance composed of 15 judges (five from the EU, five from Canada, and five from ‘third countries’)5 and an Appeal Tribunal.
  • In the US, the Trump administration does not have a clear and articulated position on ISDS. From Trump's description of NAFTA as ‘the worst trade deal the US ever signed’ during his election campaign, to recent indications in the past year that Trump is reconsidering joining the Trans-Pacific Partnership (‘TPP’), it is unclear what future ISDS has in the US.

Efficiency is money: Techniques to improve international arbitration

Members of the panel: Dana C. MacGrath (Counsel, Sidley Austin LLP, New York), Eduardo Siqueiros (Partner, Hogan Lovells, Mexico City), Cecilia Carrara (Partner, Legance Avvocati Associati, Italy), Greig Taylor (Managing Director, AlixPartners, New York), Marine Assadollahi (General Counsel for North America, Fives Group, Canada).

One of the techniques discussed by the speakers was bifurcation. The panel noted that in complex arbitrations, bifurcation allows the tribunal to focus first on issues of jurisdiction and applicable law, when these issues can be decided without fact-finding. However, there may be cases with factual and/or legal overlaps between different issues where bifurcation is not appropriate and can result in added time and costs for the parties. Importantly, the panel emphasized that the arbitral tribunal should assess whether a party may be supporting bifurcation to delay and obstruct arbitration, rather than to make the proceedings more efficient.

In Glamis Gold, Ltd. v. United States,6 the arbitral tribunal identified several considerations that should be taken into account when deciding whether bifurcation can result in greater efficiency. These include:

  • whether the jurisdictional objection is non-frivolous;
  • whether subsequent proceedings would be considerably narrowed by granting the request for bifurcation;
  • whether jurisdictional and merits issues are intertwined to the extent that bifurcation would be impractical and savings in time or costs unlikely.

Moreover, the panel discussed how to improve efficiency on evidentiary and procedural issues. Factors like a proper identification by the parties of the disputed and non-disputed issues in the arbitration at the earliest convenience, limiting the number of briefs as well as the number of pages (if appropriate), clear cut-off dates for filing of documents and anticipating sanctions for frivolous and dilatory challenges are a few of the examples debated by the speakers. The panellists also argued that a limitation in the number of witnesses is not improper, provided due process is respected.

Arbitrator appointment: Freedom of choice vs. assurance of expertise

Members of the panel: Christian Leathley (Partner, Herbert Smith Freehills LLP, New York), Nancy M. Thevenin (General Counsel, United States Council for International Business, New York), Susan D. Frank (Professor of Law, American University Washington College of Law, Washington D.C.), John Fellas (Partner, Hughes Hubbard, New York), Claudia Benavides Galvis (Partner, Baker McKenzie, Bogota).

The third panel was a lively and interactive debate on whether arbitrators are required to undergo formal training to acquire certain qualifications and the role of arbitral institutions in promoting diversity in international arbitration. The panellists were divided into two groups.

  • In favour of regulation, one side argued that arbitrators should have an awareness of what standard arbitration is, i.e. the margins in which they can act. On one hand, arbitration has been unregulated for the past decades of existence and the main criticisms toward it do not seem to refer to a lack of regulation. On the other hand, it is very hard to remove an arbitrator based on quality and this can seriously jeopardize a whole case.
  • Against regulation, the central argument made was that having a formal accreditation will undermine the flexibility of arbitration – one of the most important principles underlying the field. Practitioners become arbitrators in an organic way and the requirement of accreditation will solidify a dispute resolution process that was created to avoid rigidity and be adaptable to the specific needs of the parties. The requirement of formal training and the rigidity that it would bring to arbitration could result in frequent and unreasonable challenges, and consequently further increase in arbitrators a ‘due process paranoia’.

When asked to decide who ‘won’ the debate, the majority of the audience voted against regulation.

The debate on gender diversity also raised important considerations. One side argued that arbitral institutions are the best platforms to promote diversity. They have, for example, the power to influence arbitrator appointments and the structural organization to implement change and promote gender parity. The side arguing against arbitral institutions being tasked with promoting diversity stated that international arbitration is grounded mainly on party autonomy and this may be affected when gender diversity is imposed by institutions.

A tale of two perspectives: In-house counsel – external counsel dialogue

Members of the panel: Yasmine Lahlou (Partner, Chaffetz Lindsey LLP, New York), Janet Oh (Senior Vice President Legal Affairs, Clean Power Sector, SNC-Lavalin, Montreal), Richard J. Paul (Vice President and General Counsel, Lockheed Martin International, Arlington), Benjamin S. Longlet (Senior Counsel, Litigation, Chevron Upstream, San Ramon), Ari D. MacKinnon (Partner, Cleary Gottlieb Steen & Hamilton LLP, New York).

The last panel was a dialogue on the relationship between in-house and external counsel. One of the questions raised was on the choice of external counsel by in-house counsel and what are the criteria they value the most. The speakers explained that corporations commonly have a panel of outside counsel in place, from which they choose when needs arise, and that subject matter expertise is the first criteria in choosing external counsel. Understanding the corporate culture and the strengths and weaknesses of the client is crucial. Furthermore, cost and efficiency is also key in their consideration. A law firm’s promotion and support of diversity is also an important criterion for in-house counsel when choosing law firms.

As general counsel, finding external counsel is more challenging than it seems. Big companies are generally risk averse and tend to follow the default of choosing law firms they have previously worked with, which may not always have the best expertise to deal with a specific case. The balance between managing corporate expectations and respecting a company's priorities and objectives is crucial when choosing external counsel.

The panellists also discussed the expectations of external counsel when working with in-house teams. A relationship of trust is key – when there is a true alliance between in-house and external counsel the quality of the work increases greatly. The panellists agreed that engaging external counsel as soon as possible is also critical to guarantee transparency and a meticulous knowledge of the case.

John W.H. Denton AO, ICC Secretary General, gave the closing speech. He emphasized the organization’s vital role in helping businesses adapt to new global challenges, stating that it is more important than ever for businesses to participate in global policymaking. Mr Denton, who was elected in March 2018, also stressed the importance of ICC’s dispute resolution services and its constant strive to adapt to the new realities of the business world and to follow international best practices.

Getma Int'l v. Republic of Guinea, No. 16-7087, 2017 WL 2883755 (D.C. Cir. July 7, 2017).

Hardy Exploration & Production (India), Inc. v. Government of India, Ministry of Petroleum & Natural Gas, United States District Court, District of Columbia, Civil Action No. 16–140 (RC), 07 June 2018

Natascha Born, Line Chataud, et al., 'Hardy Exploration & Production (India), Inc. v. Government of India, Ministry of Petroleum & Natural Gas, United States District Court, District of Columbia, Civil Action No. 16–140 (RC), 07 June 2018', A Contribution by the ITA Board of Reporters, Kluwer Law International.

Mobil Cerro Negro Ltd. v. Bolivarian Republic of Venezuela, No. 15-707, 2017 WL 2945603 (2d Cir. July 11, 2017).

CETA, Article 8.27.

Glamis Gold, Ltd. V. United States of America, UNCITRAL award issued on June 8, 2009. The decision on bifurcation was issued in Procedural Order no. 2, dated May 31, 2005.