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Deutsches und Internationales Schiedsverfahrensrecht WS 2013/2014 Prof. Dr. Joachim Zekoll, LL.M. (Berkeley) Prof. Dr. Rolf Trittmann, LL.M. (Berkeley)

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Presentation on theme: "Deutsches und Internationales Schiedsverfahrensrecht WS 2013/2014 Prof. Dr. Joachim Zekoll, LL.M. (Berkeley) Prof. Dr. Rolf Trittmann, LL.M. (Berkeley)"— Presentation transcript:

1 Deutsches und Internationales Schiedsverfahrensrecht WS 2013/2014 Prof. Dr. Joachim Zekoll, LL.M. (Berkeley) Prof. Dr. Rolf Trittmann, LL.M. (Berkeley)

2 Interaktives Kolloquium in vier Blöcken und in englischer/deutscher Sprache 13.1.2014Grundlagen der Schiedsgerichtsbarkeit/The Basics of Arbitration 20.1.2014Der Ablauf eines nationalen Schiedsverfahrens/ The Course of a Domestic Arbitration Proceeding in Germany 27.1.2014Der Ablauf eines internationalen Schiedsverfahrens/ The Course of an International Arbitration Proceeding 10.2.2014Schiedsspruch und Vollstreckung/The Arbitral Award and Enforcement

3 Grundlagen der Schiedsgerichtsbarkeit/Basics of Arbitration Arbitration as a form of Dispute Resolution Ad hoc and Institutional Arbitration Sources of Law Arbitrability Arbitration Agreement Confidentiality Pros and Cons of Arbitration

4 Arbitration as a form of Dispute Resolution Developments in the 20th century 1923 Foundation of the International Court of Arbitration at the International Chamber of Commerce in Paris – ICC Court of Arbitration Foundation of other arbitration institutions, such as London Court of International Arbitration - LCIA Stockholm Chamber of Commerce – SSC Swiss Arbitration Association - ASA American Arbitration Association - AAA Singapore International Arbitration Centre – SIAC China International Economy and Trade Arbitration Commission - CIETAC German Institution for Arbitration - DIS

5 Arbitration as a form of Dispute Resolution (2) Developments in the 20th Century Various multilateral Treaties 1927 Genfer Abkommen zur Vollstreckung ausländischer Schiedssprüche 1958 New York Convention 1965 Übereinkommen zur Beilegung von Investitionsstreitigkeiten zwischen Staaten und Angehörigen anderer Staaten von 1965 1965 Foundation of the International Centre for Settlement of Investment Disputes – ICSID 1981 Iran – United States Claims Tribunal in Den Haag – 4000 cases 1985 UNCITRAL Model Law

6 Arbitration as a form of Dispute Resolution (3) Recent Developments in Germany 1998Gesetz zur Neuregelung des Schiedsverfahrensrechts - §§1025 ff ZPO based on the UNCITRAL – Model law 1998 DIS-Arbitration Rules published

7 Arbitration as a form of Dispute Resolution (4) State Courts are maintained by the state to provide a means by which disputes between parties can be decided. They are based on the sovereign power of the state and its responsibility of ensuring a system of independent courts with independent judges and proper rules of procedure Parties may agree to (to a large extent) remove their dispute from the jurisdiction of the state courts and have third parties deal with it (Alternative Dispute Resolution, „ADR“) Other Forms of ADR Mediation Conciliation Expert determination

8 Arbitration as form of dispute resolution (5) An alternative to litigation for protecting contractual rights and enforcing contractual obligations Results in a final, binding award – like a court judgment, but with no appeals on the merits Track record of use in disputes under: international contracts transactions with developing countries transactions involving States and governmental entities

9 Arbitration as form of dispute resolution (6) More than 80 % of all international contracts contain an arbitration clause As of 2012, 817 pending cases at the International Court of Arbitration in Paris, value in dispute up to 5 bn EUR As of 2012, 172 pending cases at the German Institution of Arbitration, value in dispute up to 2 bn EUR

10 The Concept of Arbitration Parties agree to not use state courts to resolve their (arbitrable) dispute but conclude an arbitration agreement by which they consent that a particular legal issue will be finally decided by one or more arbitrators. The arbitral tribunal consists of one or three arbitrators which must be impartial and independent from the parties. The arbitrators are selected by the parties or an indenpendent third party The parties choose the seat of the arbitration The arbitration procedure is regulated by mandatory law but also is determined and controlled by the parties The arbitral tribunal renders a final and binding as well as enforceable decision

11 Ad hoc and Institutional Arbitration Institutional arbitration means that an arbitration is administered by an arbitral institution Where parties have not selected an arbitration institution, the arbitration will be ad hoc, i.e. governed by the mandatory law, the lex arbitri Advantages/Disadvantages of the two forms of arbitration

12 Sources of Law The Applicable Procedural Law Procedural law inlcudes those aspects of a legal system which determines the technical aspects of a (court) procedure Substantive Law contains those elements of a legal system that creates, defines and regulates the duties, liabilities and rights of legal entitities The rules applicable to the procedure primarily result from the arbitration agreement between the parties. Mandatory procedural law in Germany relating to arbitration Sec 1025 – 1066 ZPO (10th Book)

13 Sources of Law (2) The Applicable Procedural Law primarily depends on the mandatory provisions at the place of arbitration (lex loci arbitri) The parties have a free choice of the applicable procedural law as long as it is in compliance with the lex loci arbitri In absence of parties´agreement the arbitral tribunal may decide at its discretion or refer the applicable rules of procedure at the place of arbitration Ranking order according to Sec 1042 ZPO: Mandatory Rules at the place of arbitration (Sub 1) Determination of the parties (Sub 2) Procedural Orders by the Tribunal (Sub 3)

14 Sources of Law (3) Limitations to Applicable Procedural Law Sec 1042 ZPO (Minimum standards) Fair Trial Equality of the parties Possibility of presenting its case Counsel may not be excluded from acting as representative

15 Sources of Law (4) The Applicable Substantive Law The law applicable to the merit of the dispute results usually from the underlying agreement between the parties Mandatory regulation on Substantive Law in Germany relating to arbitration : Sec 1051 ZPO Parties may choose a legal system of a given jurisdiction as a whole or only certain elements Limitations of the applicable substantive law An arbitral award can be set aside if it is in conflict with mandatory law (ordre public), Sec 1059 II Nr 2b

16 Sources of Law (5) The UNCITRAL Model Law (1985/2006) Standard basis for the arbitration law in many jurisdictions Basis for 10 th Book of the ZPO Provides for the basic rules for all stages of an arbitration proceeding Aims at harmonizing and unifying national arbitration laws

17 Sources of Law (6) UNCITRAL Arbitration Rules (2010) Ad hoc framework of rules which is widely accepted Regulates all stages of an ad hoc proceeding No administrative support Regulations include Scope of application and model arbitration clause Composition fo the arbitral tribunal Arbitral proceedings (place, language et al) The award (form, effect, applicable law, costs et al)

18 Sources of Law (7) Institutional Arbitration Rules DIS ICC UNCITRAL LCIA SCC CIETAC Swiss Rules Vienna Rules CAS ICSID HKIAC

19 Sources of Law (8) „Soft law“/ „best practice“ IBA (International Bar Association) Guidelines for Drafting International Arbitration Clauses IBA Rules on the Taking of Evidence in International Commercial Arbitration IBA Guidelines on Conflicts of Interest Consistent and published case law of arbitral tribunals Articles by experienced practitioners

20 Case study Compare the Rules of DIS and ICC-Regeln. What are the prerequisites for filing a request for arbitration, are there differences with respect to mandatory content of the request for arbitration / statement of claim?

21 Case study A company from Brazil, (S) sells 50 t coffee – beans to a highly reputed family company (B) in Hamburg for EUR 100 000. Upon receipt, B discovers that roundabout 20% of the coffee- beans are damaged. He wants partial repayment of the purchase price, i.e. EUR 20.000,00. S denies responsibility and refuses payment. B decides to sue.

22 Case study § 10 of the Contract reads: "All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with said rules. The place of Arbitration shall be Hamburg, Germany. The language of the proceedings shall be English. The present contract shall be governed by German Law."

23 Case study Applicable Law Statutory Rules of §§ 1025 et seq of the German Civil Procedural Code ICC Rules of Arbitration Agreement of the parties Discretion of the arbitral tribunal

24 Case study Conflict of Law Rules Question 1: Which conflict of law rules are applicable? Question 2: To which substantive law lead the conflict of law rules? Question 3: What is the content of the applicable substantive law?

25 Case study Conflict of Law Rules Conflict of Law Rule of German Statutory Law (§1051 ZPO) Conflict of Law Rules of the ICC-Rules (Artikel 17 ICC-SchO) Conflict of Law Rules of German International Private Law (EGBGB bzw. Rom-I und Rom-II-Conventions?)

26 Case study Objective determination § 1051 (2) ZPO Where the parties to the dispute failed to determine which statutory provisions are to be applied, the arbitral tribunal is to apply the laws of hat state to which the subject matter of the proceedings has the closest ties. Artikel 21 S. 2 ICC-SchO In case the Parties have not agreed on the law applicable, the Arbitral Tribunal shall apply the rules of law which it determines to be appropriate.

27 Arbitrability Party capacity („subjektive Schiedsfähigkeit“) To conclude an arbitration agreement the legal capacity of the contracting person is required. The legal capacity and capacity to contract of a person are governed by the law of the country of which the person is a national or where a legal entity is registered. Limitations of party capacity are governed by the respective national law. Under German Law, doubts with respect to party capacity exist in cases where one party is consumer or employee, or where a party is insolvent.

28 Arbitrability (2) Eligibility for arbitration („objektive Schiedsfähigkeit“), § 1030 ZPO (1)Any claim concerning an economic interest (2)Private disputes in competition law matters may also be referred to an arbitral tribunal including, for example, disputes arising out of an agreement regarding restrictive trade practices. (3)The German Federal Supreme Court (BGH) ruled in 2009 that applications to set aside shareholders’ resolutions adopted at a general meeting of a limited liability company, (Gesellschaft mit beschränkter Haftung), may be subject to arbitration if certain formal and procedural requirements are observed

29 Arbitrability (3) Sec 1030 CCP (ZPO) (1)An arbitration agreement regarding non-pecuniary claims has legal effect insofar as the parties to the dispute are entitled to conclude a settlement regarding the subject matter of the dispute. (2)An arbitration agreement regarding legal disputes arising in the context of a tenancy relationship for residential space in Germany is invalid. Arbitration is not possible if statutory law provides that disputes may not be subjected to arbitration proceedings.

30 Arbitration Agreement The Arbitration Agreement is the basic element of every arbitration proceeding Sec 1029 Sub 1 CCP (ZPO) „Schiedsvereinbarung“ ist eine Vereinbarung der Parteien, alle oder einzelne Streitigkeiten, die zwischen ihnen in Bezug auf ein bestimmtes Rechtsverhältnis vertraglicher oder nichtvertraglicher Art entstanden sind oder künftig entstehen, der Entscheidung durch ein Schiedsgericht zu unterwerfen“ Two alternatives „separate arbitration agreement“ (Schiedvereinbarung) „arbitration clause“ (Schiedsklausel)

31 Arbitration Agreement (2) Example of an institutional arbitration clause : DIS arbitration clause „All disputes arising in connection with the contract (description of the contract) or its validity shall be finally settled in accordance with the Arbitration Rules of the German Institution of Arbitration e.V. (DIS) without recourse to the ordinary courts of law.“ It is recommended to add the following provisions: „The place of arbitration is....“ „The tribunal consist of (number of) arbitrators“ „The language of the arbitration is.....“ „The substantive law of.....is applicable to the dispute.“

32 Arbitration Agreement (3) Legal qualification depends on applicable law: German law qualifies arbitration agreement as „Procedural Agreement“ Effect of arbitration agreement Binding on contracting parties No binding effect on third parties such as guarantors (exceptions 328 BGB, 398 BGB) Conclusion by offer and acceptance Necessary: well-defined description of controversies to be resolved by arbitration Written form required (Sec 1031 ZPO) Trend to a liberal approach as to written form

33 Arbitration Agreement (4) What is compliant with the „written form requirement“ ? Exchange of letters, telefaxes, telegrams, or other means of arbitration which provide a record of the agreement Contained in a document transmitted from one party to the other or by a third party to both parties, as well as when such document is considered to be part of the contract in accordance with common usage („kaufmännsiches Bestätigungsschreiben“) A reference in a contract to a document containing an arbitration clause is sufficient if the clause form part of the agreement („AGB“) Arbitration Agreements to which a consumer is a party must be contained in a separate agreement which has been personally signed by the parties Any non-compliance is cured by entering into discussions on the merits

34 Question What is the relevance of the „written form requirement“ ? Should it be handled liberally or rather not ?

35 Arbitration Agreement (5) Pathological clauses Example 1: Each dispute, disagreement or each claim which results out of this agreement or which releates to this agreement, its infringement or ist annulment is to be decided upon by arbitration proceedings according to the UNCITRAL Rules of arbitration in their current version.

36 Arbitration Agreement (6) Pathological clauses Example 2: Zur Durchführung von Streitigkeiten wählt die Firma G eine neutrale Person aus der Wirtschaft oder dem Recht als Schiedsrichter. Der Schiedsrichter entscheidet dann den Streitfall definitiv für beide Seiten. Die Entscheidung ist ohne Widerspruch sofort vollstreckbar. Findet das Verfahren vor einem ordentlichen Gericht statt, sind Rechtsanwälte als Parteivertreter zu bestellen.

37 Arbitration Agreement (7) Pathological clauses Example 3: "The Parties shall attempt to settle amicably any dispute or difference of opinion that may arise in connection with the Contract. Disputes or disagreements that cannot be solved through negotiations shall be brought before the International Court in Switzerland. This court will proceed in accordance with international law. The award of this court shall be considered final and binding upon the Parties."

38 Arbitration Agreement (8) Pathological clauses Example 4: "Arbitration: […] Any dispute not settled amicably […] shall be finally settled by arbitration. […] For contracts with foreign contractors, international arbitration with proceedings administered by the international arbitration institution appointed in the Contract Data, conducted in accordance with the rules of arbitration of the appointed institution, if any, or in accordance with UNCITRAL arbitration rules, at the choice of the appointed institution. The place of arbitration shall be the city where the headquarters of the appointed arbitration institution is located. The arbitration shall be conducted in the language for communications defined in Sub-Clause 1.4 of the Contract Data."

39 Arbitration Agreement (9) What went wrong ? Keep it simple Don‘t over-engineer Stick with Standard clauses of the leading arbitral institutions if you want to avoid problems when starting your arbitration.

40 Standard slide Template tip To start using numbers or bullets, use the INCREASE INDENT button Choose the Law Choose the Venue Choose the Rules Choose the Number of Arbitrators If there’s time, add “Bells & Whistles” Arbitration Agreement

41 Case study Draft an institutional arbitration clause relating to a supply agreement between a German manufacturer and a Chinese distributor. Draft an ad hoc arbitration agreement for a German and a Spanish party relating to the purchase of a solar-energy system to be supplied to the Spanish customer in Malaga

42 Confidentiality More private than state court litigation. Oral hearings not open to the public. The private nature of arbitration is usually considered as one of the key advantages of arbitral proceedings compared to proceedings in state courts. Reluctance to publish awards; publications, if any, in a sanitized version The public is not informed of the conduct and content of the proceedings.

43 Confidentiality (2) BUT: Confidentiality of such proceedings is not as clear as parties assume. German arbitration law does not expressly stipulate a confidentiality obligation on the parties. Regarding any consultation during the decision-making process, the arbitrators are bound by the confidentiality of judicial deliberations.

44 Case study During an arbitration the arbitrators become aware that the parties are in dispute about claims arising out of a (prohibited) cartel the European and national cartel offices are not aware of. Are the arbitrators under an obligation to report the prohibited behaviour to the authorities ? The arbitrators become aware that they are „used“ by the parties to conduct a sham arbitration with the aim to illegally transfer monies out of Russia. What should they do ? The arbitrators believe that they have written a faboulous award which the world should be aware of. They want to publish the award. Are they allowed to ?

45 Pros and Cons of arbitration (1) Advantages of arbitration – perception and reality Enforceability – New York Convention awards are enforceable in more than 149 signatory states – but do your do diligence Neutrality – “level playing field”´, away from local courts and national administrative bodies Confidentiality of arbitral proceedings – but do not take it for granted Procedural flexibility Expert arbitrators chosen by the parties more or less carefully Finality – a double edged sword? Speed and cost?

46 Pros and Cons of arbitration (2) Disadvantages of Arbitration – inherent and other limitations Limited scope of arbitral jurisdiction – defined by contract Limited powers of arbitrators, e.g. to order injunctions with effective sanctions/impact on third parties and (in practice) to give summary judgments Flexibility may lead to unpredictable procedure The problem of multi-party disputes/lack of consolidation powers Awards are not precedents, nor binding on third parties – problem of contradicting awards Speed and cost?

47 Pros and Cons of arbitration (3) Bottom line: ultimately, perhaps the only realistic option – or the least worst alternative to home field advantage

48 Pros and Cons of institutional/ad hoc arbitration (1) Choosing the rules – tailor made or ready to wear? Pure ad hoc arbitration: tailor made to the (likely) dispute but heavy administrative/financial burden on parties and risk of delay (or worse) through non-cooperation (e.g. expensive applications to court to appoint arbitrators). Drafting of arbitration clause is crucial! Ad hoc arbitration with UNCITRAL Rules: preferable to pure ad hoc arbitration; must specify appointing authority and expressly exclude appeals Institutional arbitration: may seem slower and more expensive, but generally recommended; always adopt model institutional arbitration clause Choice of institution: choose a major international institution absent a particular reason not to (e.g. ICC, LCIA, SCC); check track record/durability of regional alternatives

49 Pros and Cons of ad hoc/institutional arbitration (2) Advantages of Institutional Arbitration Existence of an automatically incorporated set of arbitration rules Higher degree of forseeability and predictability Assistance through trained staff No issues with service of process Quality assurance (some institutions) Different types of rules for different situations Disadvantages of Institutional Arbitration Higher costs through administrative fees Potentially slower proceeding Not all institutions are of same quality

50 Choice of the arbitral institution Often chosen by default or because institute is well known in a particular region or trade area Differences Default regulation on number of arbitrators Nomination of arbitrators Calculation of costs Ability of the institution to consolidate proceedings or join parties Rules on multi-party proceedings Ability of the institution to control the proceeding Scrutiny of the draft award Level of administrative support Experience of staff

51 Domestic Arbitration in Germany The initiation of the arbitration proceeding (ad hoc/DIS) The selection of the arbitral tribunal (ad hoc/DIS) The stages of an arbitration The role of the ordinary courts Interim relief (ad hoc/DIS) Expedited Proceeding (DIS) Rules for arbitrating corporate issues (DIS)

52 The initiation of the arbitration proceeding (ad hoc/DIS) Initiation of proceeding Sec 1044/1046 CCP/Sec 6 DIS-Rules What are the prerequisites for initiating a domestic arbitration ? Which elements are mandatory ? What applies as to language ? When is an arbitration proceeding „pending“ (Sec 204 Sub 1 no 11 Civil Code) ? Practical issue: full reasoning or notice pleading ? Cost of initiating an arbitration proceeding Sec 7 DIS-Rules http://www.dis-arb.de/en/22/costcalculator/overview- id0http://www.dis-arb.de/en/22/costcalculator/overview- id0 Sec 6 Sub 1 and 12 GKG Consequence of non-payment ?

53 Initiation of proceeding (2) Service of process (Sec 8 DIS-Rules/Sec 1047 Sub 3 CCP) Reply (Sec 9 DIS-Rules/Sec 1046 Sub 1; 1040 Sub 2 CCP) No formal requirements as to contents Sec 1049 Sub 2 CCP requires Respondent to invoke lack of jurisdiction of the arbitral tribunal in its reply, DIS-Rules ? Sec 1032 Sub 2 CCP allows until constitution of the tribunal the initiation of court proceeding to request a declaration that an arbitration proceeding is permissible/impermissible Counterclaim (Sec 10/11 DIS-Rules/Sec 1046 Sub CCP) Tribunal decides on permissibility (Sec 10 Aub 2 DIS-Rules) Is the Tribunal competent ? Is there a congruent arbitration agreement ? Set-off ?

54 The constitution of the arbitral tribunal (ad hoc/DIS) Key element in every arbitration Sole arbitrator, three or more arbitrators ? What is preferable in which situation ? Default provision in Sec 1034 CCP/DIS ? Who is the „ideal“ arbitrator ? Qualifications What are the relevant condiderations ? Rules on the appointment of arbitrators, Sec 1035 Sub 3 CCP/Sec 12 DIS-Rules Nationality requirements ? Judges ? Lawyer ? Special situation Multi-party proceedings (Sec 13 Sub 3 DIS-Rules)

55 The constitution of the arbitral tribunal (2) What happens if the Respondent does not nominate an arbitrator ? Sec 12 Sub 1 DIS-Rules (The „DIS-Appointing Committee“) Sec 1035 Sub 3 CCP (Appointment by the ordinary courts, cost issues) Nomination of the Chairman By the two co-arbitrators within 30 days (Sec 12 Sub 2 DIS- Rules/Sec 1035 Sub 3 CCP) Default nomination Sec 12 Sub 2 DIS-Rules, on request by one of the parties after expiration of 3o days period

56 The constitution of the arbitral tribunal (3) Basic elements: Independence and impartiality Sec 1036 CCP/Sec 15 ff DIS-Rules Arbitrators shall disclose possible conflicts before and during an arbitration proceeding The IBA Guidelines on Conflict of Interest/Sec 41 CCP What are the crucial elements ? Independence: personal economic interests, professional relationship with one of the parties, previous actvities Red/Orange/Green list Impartiality: Bias Formal acceptance by an arbitrator Sec 16 DIS-Rules/Sec 1035 CCP Formal nomination Sec 17 DIS-Rules

57 The constitution of the arbitral tribunal (4) How to find the „right tribunal“ ? What are the relevant criteria ? What is the right process ?

58 Competence-Competence Sec 1040 CCP The Tribunal has competence to rule on its jurisdiction Separability of the arbitration agreement (sub 1) By objection of one party the tribunal it should make a preliminary ruling on its jurisdiction (sub 2) This ruling then can be challenged before the ordinary courts (sub 3) During the review by the courts the tribunal may continue the arbitration proceedings

59 The further stages of an arbitration (ad hoc/DIS) How to structure an arbitration CCP and DIS-Rules give broad discretion (Sec 1042 CCP/Sec 24 DIS-Rules) Procedural Order No 1 (PO 1) „German court proceeding in a hotel“, „Hybrid approach“ or „international best practice in Germany“ Rules on factfinding process are very limited and leave many options CCP contain in Sec 1042 only provides a procedural framework DIS-Rules contain more specific but still broad rules in Sec 24, 25, 26, 27. Difference to CCP procedure in Book 1 – 9 since arbitrators in Sec 27 have possibility to independently from evidence provided by the parties may investigate the facts

60 The further stages of an arbitration (2) Generally, a domestic arbitration includes the following stages Presentation of facts by the parties including submission of the relevant (e-)documents, possibly written witness statements, expert reports Normally two rounds of submissions Evaluation of the relevant facts for the decision of the requests by the arbitral tribunal Possibly bifurcation of proceeding Taking of evidence, controlled by the tribunal, some times verbatim protocol Post-hearing briefs Drafting to the award

61 The further stages of an arbitration (3) No or only limited involvement of the DIS in the course of an arbitration, no „scrutiny“ of the arbitration agreement, the arbitration process or the award. In practice the DIS nevertheless gives guidance and follows the arbitration In ad hoc proceedings there is no institution which follows the proceedings No Terms of Reference, no time management requirements Best practice guides (?)

62 The role of the state courts The intervention of state courts is very limited and an exception (only to the extent permitted by Sec 1026 CCP) Primary situations where an intervention might take place: Declaration of admissibility or inadmissibility of arbitration Interim relief Assistance in constituting the arbitral tribunal Assistance in connection with the taking of evidence Recognition and enforcement of the award

63 The role of the state courts (2) Recognition of the arbitration agreement Enforcing the agreement (Sec 1032 CCP), pursuant to Sub 1 an action before a state court is inadmissible Anti-suit injunctions ? („West Tankers“ : Inadmissible where Brussels I regulation applies) Declaration of (in)admissibility of an arbitration (Sec 1032 Sub 2 CCP) Application to OLG, only permissible until tribunal has been constituted, thereafter exclusively to be dealt with by tribunal Interim Measures (see separate slides) Support and control during constitution process Appointment of sole arbitrator or chairman (Sec 1035 Sub 3 CCP) Replacement of arbitrator, challenge of arbitrators, if tribunal dismissed the challenge (Sec 1037 Sub 3, Sec 1038 Sub 1 CCP)

64 The role of the state courts (3) Support in connection with the taking of evidence and other measures (Sec 1050 CCP) To compensate lack of sovereign power of the tribunal Upon application of one party or the tribunal Summons and interrogation of witnesses Excursus: US 28 U.S.C. § 1782a

65 Interim relief Alternative 1 Request for interim relief to state court Alternative 2 Request to arbitral tribunal Which issues exist ? What seems preferable ? Alternative 1 State courts are competent to render interim measures (Sec 1033 CCP, also with regards to arbitrations with seat outside of Germany; Sec 1025 Sub 2 CCP)

66 Interim relief (2) Alternative 2: An arbitral tribunal is competent to render interim relief pursuant to Sec. 1041 (1) CCP, which must be declared enforceable, Sec 1041 Sub 2 CCP

67 Expedited proceedings (DIS) Rationale: Arbitrations must be less time-consuming, i.e. consume less efforts and money; arbitrations must be simpler to organize without endangering the principles laid down in the existing practice CCP does not provide expedited proceedings „Supplementary Rules for Expedited Proceedings“ Issued by DIS in 2008, must be agreed on expressly Maximum Duration of proceeding: 6/9 months(Sec 1) but in full compliance with Sec 24 DIS-Rules Sole arbitrator as default (Sec 3), shorter periods Shorter periods for submissions (Sec 4) Time schedule, two rounds of submissions, guidance by the tribunal (Sec 5)

68 Expedited Proceedings (2) Time limits may be modified If parties and arbitrators cannot comply with the time-limits the jurisdiction remains unaffected (Sec 6) The tribunal may in abstain from stating the facts in the award (Sec 7) Limited practical success More success of (mandatory) expedited proceeding pursuant to the Swiss Rules

69 Arbitrating corporate disputes (DIS) Rationale: Corporate disputes for a long time have been considered non-arbitrable due to its impact on other shareholders The Federal Supreme Court in its decisions „Schiedsfähigkeit I“ and „Schiedsfähigkeit II“ (BGH NJW 2009, 1962) finally permitted to arbitrate corporate shareholder disputes, provided certain prerequisites are fulfilled Implemented in „Supplementary Rules for Corporate Law Disputes“ (in force since 2009)

70 The course of an international arbitration proceeding The ICC rules and its features What differentiates an international arbitration from a domestic arbitration ? Some elements of the common law approach to arbitration The IBA Rules on the Taking of Evidence in International Arbitration Other elements of „best practice“

71 The ICC Rules and its features Revised in 2012 The ICC Court of Arbitration and the ICC Secretariat Contain many quality assurance elements Art 6 Rejection of obviously impermissible requests by the Court Art 12.5.Selection of arbitrators by the Court or NCs Art 23 Terms of reference Art 24 Case management conference Art 33 Scrutiny Annex IVManagement Techniques The ICC Commission on Techniques for Controlling Time and Costs in international arbitration

72 What differentiates an international arbitration from a domestic arbitration ? Different legal regimes (lex fori) lead to unexpected standards the participants to an arbitration have to comply with Example: Settlement discussions „Best practice“, lex fori and applicable substantive law may lead to discrepancies which have to be bridged Different legal cultures lead to different expectations On part of the parties to the arbitration On part of the arbitrators Lack of certainty as to the procedure followed may lead to unpredictability

73 Some elements of the common law approach to arbitration Civil law approach The „relative truth“ Common law approach The search for „real truth“ (US) or the „truth“ (UK) Documents vs oral testimony Concept of materiality and relevance Electronically Stored Information (ESI) Procedure driven by Counsel rather than by the judges Witness statements; cross-examination; re-cross Battle of the experts

74 The IBA Rules on the Taking of Evidence in International Arbitration Revised in 2010 Try to bridge different approaches in civil law and common law Scope „Guidelines for international arbitration“ Fairness and good faith as implied guideline Preparation by the tribunal Document production (Art 3) E-document production Witness and expert deposition Privileges

75 Other elements of „best practice“ Case Management (E-)Document production Witness testimony Use of Experts Assistance to the tribunal Deliberations „Relationstechnik“ ? Drafting of the award Dissenting opinions More „Softlaw“ or is there enough already ?

76 The true „best practice“ No „one size fits all“ Expectation Management Tailormade arbitration Lex fori What do the parties expect ? In case of discrepancies: Accommodate the needs of the parties Discussion, Agreement or Order ?

77 The Making of the Award Decision making (Sec 1052 CCP) Deliberations and voting (Sub 1) Refusal of an arbitrator to participate (Sub 2) Formalities (Sec 1054 CCP) In writing Signed by the arbitral tribunal (majority) Specify the place and date of arbitration Shall state the reasons on which the award is based

78 The making of the award (2) Contents of the award Recitals Procedural history Facts of the case Reasons Dispositive sections Place and date Signature of the arbitrators Dissenting Opinion Delivery of the award

79 Effect of the award Same effect between the parties as a final and binding court judgment (Sec 1055 CCP) Possibility to make certain corrections and interpret the awards pursuant to Sec 1058 CCP Res iudicata (limited to dispositive section and to the parties) No agreement to appeal permissible under German law Exceptions from the binding effect If the award is set aside (Sec 1059 CCP) Foreign awards are binding only to the extent they have become final under the lex arbitri

80 Types of awards Final awards Partial awards Interim/interlocutory awards Decision on jurisdiction Award on claim in principle

81 Settlement No need for tribunal to promote settlement discussions Settlement by means of a consent award (Sec 1053 Sub 2 CCP) Alternative Termination of proceeding pursuant to Sec 1053 Sub 1 CCP

82 Decision on costs Tribunal has to mandatorily decide on costs (Sec 1057 CCP) Except if parties have agreed otherwise The decision has to state the exact amounts It is possible to decide costs in a separate cost award Costs include administrative costs of institute (if applicable), the fees and expenses of the tribunal and the costs of the parties In case of a separate cost award the decision can be contested separately too

83 Recourse against the award Application for setting aside (Sec 1059 CCP) Constitutionally required control of the arbitration process In line with effect of Sec 1055 CCP Largely in the disposition of the parties to the arbitration Limiting function: only by an application for setting aside in accordance with Sub 2 and 3, i.e. no review on the merits No waiver permissible in advance but after award has been rendered Object of setting aside proceeding Only awards Only domestic awards (i.e. with seat of arbitration in Germany) To be treated separately from proceeding to declare domestic award enforceable (Sec 1060 CCP)

84 Recourse against the award (2) Setting aside proceedings have to brought within three months (Sec 1059 Sub 3 CCP) To appeals court (Sec 1063 CCP) hearing mandatory, Grounds for setting aside: (Sec 1059 Sub 2 CCP) Literally taken from Model Law and Art V of New York Convention Sub 1: grounds to be pleaded by parties Sub 2: grounds to be taken into account ex officio Sub 1: Lack of valid arbitration agreement Violations of the right to be heard Excess of authority Flaws in the composition of the tribunal or the procedure

85 Recourse against the award (3) Sub 2 (ex officio) Non-arbitrability Conflict with public policy (ordre public) “if the award led to a result that obviously violates basic principles of German law, especially if it is inconsistent with constitutional rights” Form of decision Order, appealable to Federal Supreme Court Consequence of a setting aside Arbitration agreement becomes operable again (Sec 1059 Sub 3) Consequence of a rejection to set aside Determination with res iudicata that alleged defects do not exist (Sec 1060 Sub 2 CCP)

86 Recognition and enforcement of arbitral awards in Germany (Domestic Award) German approach different from Model Law and NYC 1958 since it differentiates between domestic and foreign awards Domestic awards (Sec 1060 CCP) are considered final and binding per se (Sec 1055 CCP) unless it is set aside pursuant to Sec 1059 CCP (application only permissible within three months period) Pursuant to Sec 1060 CCP the award is not per se enforceable but has to be declared enforceable Declaration will be granted in the absence of a reason to set aside in Sec 1059 Sub 2 CCP Application required Procedure regulated in Sec 1063, 1064 CCP Appealable to Fed Supreme Court

87 Recognition and enforcement of arbitral awards in Germany (Foreign award) For the recognition and enforcement of foreign arbitral awards Sec 1061 CCP directly refers to the New York Convention of 1958 Recognition occurs automatically provided that no grounds to resist enforcement exist Request to Appeals Court where debtor or assets are located (Sec 1062, 1063 CCP) Foreign award is defined pursuant to NYC 1958 Grounds to refuse Enforcement Lack of a valid arbitration agreement (Art V (1)(a) NYC 1958 Violations of the right to be heard (Art V (1)(b) NYC 1958 Excess of Authority (Art V (1)(c) NYC 1958 Irregularities in the Constitution of the Tribunal (Art V (1)(d)

88 Recognition and Enforcement of arbitral awards in Germany (Foreign awards 2) Lack of a final and binding award (Art V (1)(e) Ground that have to be considered “ex officio” Lack of objective arbitrability (Art V (2)(a) Violation of public policy (Art V (2) (b) Annulment of the award in its country of origin constitutes a ground to refuse the declaration of enforceability (Art V (1) (e)


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