Forgot your password?
Please enter your email & we will send your password to you:
My Account:
Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
Hjördís Birna Hjartardóttir Counsel, ICC International Court of Arbitration, Paris With valuable assistance from Alina Martalogu, legal intern at the ICC Court.
In its 5th year, the ICC European conference remained a great opportunity for arbitration professionals wanting to keep in pace with latest developments and key trends in international arbitration across Europe. Its traditional opening session ‘a year in review’, was followed by an interview with Professor Georges Bermann, a panel on business and human rights arbitration, and an entertaining series of Oxford-style debates. ICCÂ also paid tribute to its outgoing president, Alexis Mourre, and welcomed President-Elect, Claudia Salomon. The 6th ICC European Conference will be held on 28 March 2022.
Euro-Vision: A year in review
The chair of the opening panel session, Hjordis Birna Hjartardottir (Counsel, ICC Court, France) shared a summary of the latest key developments in the region, including the record-breaking caseloads of many arbitral institutions, the huge shift towards virtual hearings, the three-year anniversary of the Achmea ruling1 and, last but not least, the UK’s formal departure from the EU. To get the discussion started, the panel ran a poll with the audience on whether the UK’s departure would increase the attractiveness of London-seated arbitrations. The majority of those polled (45%) answered in the negative, 19% in the positive and the remaining 34% answered ‘it can go either way’.
Kicking off the discussion on Brexit, Lorraine de Germiny (Partner, LALIVE, United Kingdom), noted that one needs to make a distinction between investment and commercial arbitration when assessing the impact of Brexit on London-seated arbitrations. In terms of investment arbitration, the key issue related to the EU-UK bilateral investment treaties (‘BITs’), recalling that the UK did not sign the 2020 agreement by which EU Member States committed to terminate intra-EU BITs. Arguably, those BITs have now become extra EU-BITs, which in turn may make the UK an attractive location for EU investors post-Brexit, as they may wish to structure their investments through the UK. In terms of commercial arbitration, one could imagine a boost in commercial arbitration due to the uncertain future of the Lugano Convention2 and the UK’s accession thereto (in its own name) post-Brexit.
In the view of Sebastiano Nessi (Partner, Schellenberg Wittmer, Switzerland), Brexit will not change much for the landscape of international arbitration, as the advantages of London-seated arbitrations do not derive from EU law or from the UK’s membership to the EU. As for the restructuring of investments, he opined that following Achmea and the 2020 termination agreement, one could expect a number of companies to restructure their investments not only via London, but also via Switzerland. While agreeing that little will change in terms of the enforcement of arbitral awards under the New York Convention, he noted that ancillary proceedings may well be impacted, such as the enforcement of English worldwide freezing orders.
Olga Hamama (Co-founder, V29 Legal, Germany), talked about the role of German courts and investors in the Achmea saga. In December 2019, the Netherlands adopted a new law prohibiting the use of coal for the production of electricity as of 1 January 2030. The law required some companies to close their coal fired power plants immediately while others were granted a transition period of five to ten years. In this context, two German energy producers initiated ICSID proceedings against the Netherlands based on the ECT, seeking compensation for damages resulting from the coal-phase out law.3 These cases bring into the spotlight several complex issues, including a state’s right to regulate to achieve climate change goals. It is also anticipated that the jurisdiction of the ICSID tribunals will be heavily contested based on the alleged incompatibility of the ECT with EU law in view of the Achmea ruling.4
The panel proceeded to discuss how courts have tackled the scope of public policy.
Silvia Martinez Sastre (Counsel, Hogan Lovells, Spain) spoke about recent developments in Spain where superior courts have rendered several decisions prompting criticism for their broad interpretation of public policy. Specifically, two concerning trends have emerged: (1) decisions where courts have declined parties’ requests to withdraw an action to annul an award on the basis that they have a duty to control public policy; and (2) decisions where awards had been set aside for lack of sufficient reasoning. Luckily, as Ms Martinez Sastre explained, the Spanish Constitutional Court has provided a useful handrail for this slippery slope through four judgments handed down in 2020 and 2021, reaffirming that (i)Â arbitration is based on the will of the parties and it is thus also up to the will of the parties to decide how to proceed with any potential enforcement or annulment action, and (ii)Â an annulment proceeding should not be a form of judicial appeal.5
Lorraine de Germiny considered the starkly different approaches adopted by the English High Court and the Paris Court of Appeal towards allegations of corruption in the so-called Alstom case. In May 2019, the Paris Court of Appeal refused to enforce an arbitral award on the ground that it was tainted by corruption and that its enforcement was therefore contrary to international public policy. In doing so, the Court confirmed its hands-on approach and applied its test of ‘serious, precise, consistent’ indicia of corruption. By contrast, in June 2020, the English High Court granted the application to enforce that very same award, notwithstanding the allegations of corruption. The English High Court emphasized the public policy in favor of the finality of arbitral awards and relied on the ‘could and should have’ test, i.e. that Alstom could and should have put forward a full-fledged illegality defense in the underlying arbitration but had not done so.
Sebastiano Nessi then talked about the decision of the Swiss Supreme Court in the Caster Semenya case, which rejected an athlete’s challenge against an award of the Court of Arbitration for Sport (‘CAS’) and upheld the legality of the ‘testosterone regulations’ of World Athletics. Based on these rules, the athlete was banned from competition in the women category because her naturally produced testosterone levels exceeded the threshold defined by World Athletics. The CAS decided by majority that these rules, while being discriminatory, were necessary and reasonable. The athlete challenged the decision for violating, inter alia, human dignity and personality rights. The Swiss Supreme Court dismissed the setting aside application, stating that the regulations do not breach substantive public policy, and are a proportionate means to ensure a level playing field among all female athletes.6
Olga Hamama mentioned the recent decision of the Higher Regional Court of Frankfurt, where the Court, in an obiter dictum, commented that there are good reasons to suggest that the disclosure of dissenting opinions violates the principle of secrecy of deliberations which forms part of the internal German public policy. Ms Hamama stressed that this only applies to German-seated arbitrations and that the Court ultimately left the question unanswered.
Sebastiano Nessi spoke about the recent Russian law providing state courts with exclusive jurisdiction over disputes involving Russian individuals and entities, as well as foreign entities controlled by them, which are subject to restrictive measures (sanctions) introduced by foreign public authorities.7 According to this law, the sanctioned Russian entity is entitled to apply to the Russian courts for an anti-suit injunction preventing the commencement or continuation of foreign court or international arbitral proceedings. In case of non-compliance, the Russian courts may order the disobeying party to pay to the sanctioned entity damages up to the total amount in dispute plus legal costs. Mr Nessi cited the first-ever anti-suit injunction case under this law. The Russian court dismissed the application on the basis, inter alia, that the Russian party who requested the anti-suit injunction had actively participated in the SCC arbitration for more than two years.8
Olga Hamama, touched upon a series of controversial decisions by the Ukrainian Supreme Court in cases involving the sale of military goods by a Ukrainian state-company to a Russian military industry company.9 The Russian company was included on the Ukrainian sanctions list and the delivery of the goods never happened. The Ukrainian party raised a defense that the sanctions precluded enforcement of the arbitral award. In a first decision, the Ukrainian Supreme Court stated that the mere fact that claimant was a Russian company, with Russia recognized by Ukraine as an ‘aggressor-state’, was not a proper ground for the failure to perform obligations and that suspension of the performance of obligations may not serve as grounds to reject enforcement. However, the Supreme Court subsequently shifted its approach and went on to recognize that the sanctions regime must be recognized as part of public policy, highlighting that the subject matter was the sale of military goods. The Court noted that, after the sanctions have been lifted, the Russian party may try to enforce the award again.
Finally, the panel briefly discussed arbitrators’ duty to disclose. Silvia Martinez Sastre noted that the Spanish Arbitration Club has put together a Code of Good Practices,10 which includes a detailed list of 31Â illustrative questions that arbitrators should ask themselves to decide whether to make a disclosure and promotes a higher degree of transparency. Lorraine de Germiny discussed the UK Supreme Court judgment in Halliburton v. Chubb which clarified English law on arbitrator bias.11 The issue before the Supreme Court was whether and to what extent an arbitrator can accept multiple appointments in cases involving the same or overlapping subject matter and where there is only one common party. The Supreme Court concluded that this might reasonably cause an objective observer to conclude that there is a real possibility of bias and where there is such a real possibility of bias, the arbitrator has a legal duty to disclose that appointment. The Court concluded that the arbitrator had breached this duty of disclosure, but also essentially concluded ‘no harm, no foul’.12
Welcome addresses
Alexis Mourre (outgoing President of the ICC International Court of Arbitration), reflected on the key developments during his six-year tenure as president. He noted that the ICC Court has become a truly global institution with the opening of offices in Singapore, São Paulo, and Abu Dhabi and with Court members originating from more than 110 jurisdictions. He also talked about the meaningful steps taken by the Court towards greater diversity and greater transparency while acknowledging that more work lies ahead. Mr Mourre wished Claudia Salomon, the incoming president of the Court, the best of luck for her tenure, adding that she has all the qualities to fulfil her role in a magnificent way in the coming years.
Alexander Fessas (Secretary General of the ICC International Court of Arbitration) recognized that the global community is emerging from the pandemic stronger, more connected, and unified. He talked about the mission of the ICC Court to lead in the future of dispute resolution and to develop the ICC’s network by being more open, transparent, inclusive and innovative. Mr Fessas also paid tribute to Alexis Mourre as a leader and supporter of the excellent work produced by the Court in partnership with the Secretariat:
Alexis, in the beginning of your first term, you spoke to all of us and asked us to think outside of the box, to press forward, to work together and to strive to excel in everything that we do. You showed us the way by expanding the Court’s footprint, first Eastward and then Westward. You insisted on need for business development. You moved past the rhetoric on diversity and took action to bridge the real gap in diversity. Importantly, you trusted the younger talent of the Secretariat and created the right conditions for the next generation of practitioners to thrive, both within the walls of the Secretariat and outside them across the full arbitration community.
Fire-side chat
In this fire-side chat, Claudia Salomon (Incoming President of the ICC International Court of Arbitration) interviewed world-renowned Professor George Bermann (Professor of Law at Columbia Law School; Director of the Center for International Commercial and Investment Arbitration) on his career.
Professor Bermann said that the most significant change he has experienced in teaching international arbitration is the enormous increase in interest in the field of international arbitration compared to when he started teaching 40 years ago, not only in terms of the number of students but also their enthusiasm, energy, and commitment.
Professor Bermann said that the most significant development in international arbitration, if one leaves technology aside, is the urge and challenge of taking on political issues, such as climate change, diversity, and corruption. The biggest challenge, in his view, is coping with these challenges that are not quite within our natural grasp.
One of the worst developments in international arbitration, according to Professor Bermann, is the demise of direct examination of witnesses and increased use of written witness statements. While he understands the rationale for written witness statements, he is not convinced that a cost-benefit analysis would suggest that the benefits outweigh the loss. He also mentioned that, as arbitrator, he sometimes wishes that counsel appearing before him were a little less adversarial and that he very much appreciates when counsel enhances its credibility by taking a reasonable position.
When asked what changes he would like to see in the future, and specifically how ICC might be able to contribute, Professor Bermann said that the ICC is unrivaled in its performance and a solid institution, suggesting that Ms Salomon can focus her attention on what will end up being incremental changes. He stressed, however, that the ICC Court should not relax the scrutiny process, despite the gripes that one might hear about it, recalling circumstances where it has really strengthened the draft award.
Finally, when asked about the future co-existence of EU law and international arbitration, Professor Bermann emphasized that the EU is going to have to carefully consider the extent to which it can rightfully maintain the attitude of autonomy when it is, in fact, one among many international organizations.
Business and human rights arbitration
Marney L. Cheek (Co-chair, International Arbitration Practice, Covington & Burling, USA) started the discussing by recalling that, since the UN Guiding Principles on Business and Human Rights13 were published 10 years ago, we have seen an increased interest in resolving business and human rights disputes through arbitration or other means of dispute resolution. The UN Guiding Principles speak to corporate social responsibility, but they also include a third pillar and that is access to remedies for those whose rights have been violated. The principles set out effectiveness criteria for dispute settlement mechanism and remedies, stipulating that any business and human rights arbitration or other means of dispute resolution should be legitimate, accessible, predictable, equitable, transparent, rights-compatible and a source of continues learning.
Ursula Kriebaum (Professor of Public International Law, University of Vienna, Austria) made some opening remarks about the use of the Hague Rules on Business and Human Rights Arbitration (2019).14 She recalled that their goal is to benefit victims of human rights abuses and the businesses involved in such abuses, stressing that they are not intended to be a substitute for judicial remedies but rather an alternative mechanism for dispute resolution to fill the judicial remedies gap in the UN Guiding Principles. Their aim is to provide non-state-based, non-judicial remedies for victims ex poste under pillar 3 of the UN Guiding Principles, while at the same time offering businesses possibility to fulfill their obligations under Pillar 2 to ex ante offer a remedy for human rights abuses committed by them or through their supply chain. The rules therefore have a dual function: on the one hand, they are about providing for reparation and remedies for victims of human rights abuses and, other hand, about managing the risks of businesses.
Claire Bright (Associate Research Fellow, British Institute of International and Comparative Law; Assistant Professor in Private Law, Nova School of Law, Portugal) provided some insights on legislative proposals on mandatory human rights and environmental due diligence at the EU level. She referred to the expectation that is becoming more of a legal requirement for companies to have processes in place to identity, prevent and account for the adverse human rights impact that they may contribute to. This global norm of expected conduct has been incorporated into various international standards, all of which are soft law instruments. Ms Bright noted that we are seeing an evolution in the legislative landscape towards more stringent legal requirements and identified two types of laws that are currently being developed:Â (i)Â reporting legislations that aim to encourage companies to exercise due diligence through reporting requirements, and (ii) mandatory due diligence laws that require companies to exercise substantive due diligence.
Alexander Marcopoulos (Counsel, Shearman & Sterling, France) talked about human rights in the context of the law of the sea. He reflected on why we continue to see human rights abuses occurring at sea, such as modern slavery and human trafficking, when there seems to be at least some improvement on land. Mr Marcopoulos argued that the problem is not one of lack of substantive protection, but rather one of lack of enforcement, stemming in part from the fact that it is difficult to determine who is responsible on the high seas for protecting human rights. The project that Alexander is working on - the development of human rights at sea arbitration - aims to have a victim centered system that circumvents this problem by giving the victim a direct right of claim to bring arbitration against the party responsible. One of the key aspects of this approach is to make for a more effective system in two ways, first, by incentivizing state involvement in facilitating the system by taking some heat of the states and, second, by getting victims access to an effective remedy and combating impunity by going after the party most directly responsible.
The panel discussed a number of issues arising in the context of business and human rights arbitration, including challenges to obtaining the parties’ consent to arbitrate and barriers to access the remedies. When looking to the future, all panellists said that they are cautiously optimistic, agreeing that while there is still a lot of work to be done, there is clearly a trend taking place by which the world is requesting more accountability from corporations which in turn will likely lead to a further update of arbitration.
Debate: ‘This House believes that …’
The panellists debated for and against three different topics and tried to persuade the audience to accept their point of view. The audience was invited to vote against or in favor of each topic, both at the outset and a second time having heard the arguments. The chair of the panel, Sophie Lamb QC (Co-Chair, International Arbitration Practice, Latham & Watkins, United Kingdom), made the disclaimer that the positions taken do not necessarily reflect the professional or personal views of the speakers and invited the audience to treat this debate in the spirit of which it was intended (for entertainment!).
Artificial intelligence and big data will substantially affect the work of arbitration counsel and arbitrators in the next ten year.
At the outset, 75% of the audience voted in favor of this statement and 25% against it. Charles Kaplan (Partner, Orrick, France) started by arguing in favor of this statement, reasoning that AI and big data already affected the work of counsel and most certainly will affect the work of arbitrators within the next 10 years. Malgorzata Surdek (Partner, CMS, Poland) then argued against this statement, insisting that machines cannot replace humans as they lack qualities like flexibility, empathy and moral judgment. In the second poll 65.7% supported the statement and 34.3% voted against it.
Mediation works and it is time to make it compulsory.
At the outset, 30% voted in favor of this statement and 70% against it. Hanna Tümpel (Interim Executive Lead, UWC International, Germany) started by arguing in favor of the statement, reasoning that mediation is the seatbelt of dispute resolution, quick to fasten and effective, and should therefore be made mandatory. Kai-Uwe Kar (Senior Counsel, GE Renewable Energy, United Kingdom) in turn argued that by making mediation mandatory across the board, we risk making more harm than good. The second poll revealed a considerable shift in opinion, with 42% voting in favor and 57% voting against the statement.
Summary dispositions allow arbitral tribunals to render decisions on discrete issues, saving the parties time and costs.
At the outset, 70% of the audience voted in favor and 30% against this statement. Elena Gutierrez Garcia de Cortazar (Independent Arbitrator and Professor of Law, France) started by arguing in favor of summary dispositions arguing that they save time and money and encourage settlements. Michael Polkinghorne (Partner, White & Case, France) then argued against, reasoning that summary dispositions are a risky and dangerous tool. In the second poll 66% voted in support of the statement and 34% against it.
The 5th ICC European Conference on International Arbitration was kindly sponsored by Fenwick Elliott, Diales, Cleary Gottlieb Steen & Hamilton LLP, Kroll, Linklaters, 36 Stone, Covington & Burling, DAC Consulting Services, DemirGökyayla, Gatehouse Chambers, GESSEL, J.S. Held. For sponsorship opportunities, please contact sponsorship@iccwbo.org.
1 Slovak Republic v. Achmea B.V., CJEU (Case C-284/16).
2 'Convention on jurisdiction and the enforcement of judgments in civil and commercial matters', done at Lugano on 16 September 1988.
3 RWE AG and RWE Eemshaven Holding II BV v. Kingdom of the Netherlands (ICSID Case No. ARB/21/4) and Uniper SE, Uniper Benelux Holding B.V. and Uniper Benelux N.V. v. Kingdom of the Netherlands (ICSID Case No. ARB/21/22).
4 A few weeks prior, Advocate General Maciej Szpunar had issued a non-binding opinion concluding that the ISDS mechanism in the ECT was incompatible with EU law. Following the conference, on 2 September 2021, the Court of Justice of the EU predictably decided that intra-EU arbitration under the ECT was incompatible with EU law (Case C‑741/19, Republic of Moldova v Komstroy).
5 The Constitutional Court clarified that a court cannot set aside an arbitral award on the basis that it does not refer to each piece of evidence, or because the arbitrator has not expressly dealt with all arguments put forward. The court only needs to satisfy itself that the award contains reasons that link the facts with the evidence and the conclusions. See Elena Gutierrez García de Cortázar, ‘The Constitutional Court Narrows Judicial Scrutiny of Arbitral Awards’, ICC Dispute Resolution Bulletin, issue 2021-2 (https://library.iccwbo.org/).
6 Tribunal Federal, 4A_248/2019, 4A_398/2019, 25 Aug. 2020. Caster Semenya has filed an application with the European Court of Human Rights (‘ECHR’) on 18 Feb. 2021.
7 Federal Law No. 171-FZ dated 8 June 2020, introducing the new sanctions-related amendments to the Russian Commercial (Arbitrazh) Procedure Code.
8 PESA v. UralTransMash, Russian Supreme Court, 28 May 2021; E. Rubibina, 'All Bark and No Bite? The Russian Supreme Court’s Refusal to Grant an Anti-Arbitration Injunction to a Sanctioned Company' (Kluwer Arbitration Blog, 30 July 2021).
9 Avia FED Service v. SJSHC Artem, Resolution of the Supreme Court, 9 Jan. 2020, case No. 761/46285/16-ц; Avia FED Service v. SJSHC Artem, Resolution of the Supreme Court, 13 Feb. 2020, case No. 824/100/19. See Olga Kokoz, 'Is There Room for Sanctions in Public Policy? Opposite Approaches in The Recent Case Law of the Ukrainian Supreme Court' (Kluwer Arbitration Blog, 17 Apr. 2020)
10 Code of Best Practices in Arbitration (2019), available at https://www.clubarbitraje.com/en/.
11 The dispute arose out of insurance claims relating to the oil spill in the Gulf of Mexico. The parties were unable to agree on the selection of the president of the arbitral tribunal which was appointed by the English High Court. Chubb then went on to nominate that same individual as its own party-appointed arbitrator in a second arbitration involving the same oil spill.
12 Halliburton Company v. Chubb Bermuda Insurance Ltd [2020] UKSC 48. Five arbitral institutions intervened before the Supreme Court, including ICC which raised concerns that the Court of Appeal’s decision was out of step with internationally accepted standards and practices. See the ‘Written Submission in Support of Intervention by the ICC International Court of Arbitration, 12 November 2019’, published in ICC Dispute Resolution Bulletin, issue 2020-1 and S.J. Rowe, G. Petrova, ‘Halliburton Company v. Chubb Bermuda Insurance Ltd: Failure to Disclose but No Bias’, ICC Dispute Resolution Bulletin, issue 2021-1 (https://library.iccwbo.org/).
13 https://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf
14 The Hague Rules are based on the UNCITRAL Arbitration Rules, ‘with modifications needed to address certain issues likely to arise in the context of business and human rights disputes’, see The Hague Rules on Business and Human Rights Arbitration, Introduction, https://www.cilc.nl/cms/wp-content/uploads/2019/12/The-Hague-Rules-on-Business-and-Human-Rights-Arbitration_CILC-digital-version.pdf