Presentation on theme: "1 Enhancing Business Opportunities in Africa: The Role, Reality, and Future of Africa–Related Arbitration November 2-4, 2014 George Anthony Smith."— Presentation transcript:
1 Enhancing Business Opportunities in Africa: The Role, Reality, and Future of Africa–Related Arbitration November 2-4, 2014 George Anthony Smith
2 The Arbitration Clause A.Drafting Arbitration Clauses B.Functions of an Arbitration Clause and Use of Model Clauses C.Key Elements to Include and Sample Multi- Purpose Clause D.Pathological Clauses
3 Four Essential Functions: An arbitration clause must produce mandatory consequences for the parties. It must empower the arbitrator to settle the disputes likely to arise between the parties. It must allow for an efficient and rapid procedure leading to an award that is judicially enforceable. It must exclude the intervention of state courts in the settlement of the conflict, at least before an award is issued.
4 The Arbitration Clause Four Basic Questions to be Answered: What is to be arbitrated? By whom is it to be arbitrated? Where is it to be arbitrated? How is it to be arbitrated?
5 The Arbitration Clause “Any dispute or claim arising out of or in connection with this contract, including any question regarding its existence, validity, or termination, shall be referred to and finally resolved by arbitration [under LCIA Rules] [OR] [administered by the International Centre for Dispute Resolution in accordance with its International Arbitration Rules] [OR] [ under the Rules of arbitration of the International Chamber of Commerce], which Rules are deemed to be incorporated by reference into this clause.”
6 The Arbitration Clause “The number of arbitrators shall be [one/three]” “The seat, or legal place, of arbitration shall be [City and/or Country]” (usually a center like London or New York). “The language to be used in the arbitral proceedings shall be [English].” “The governing law of the contract shall be the substantive law of [(usually) where the centre is – in this example England or New York].”
9 Pathological Arbitration Clauses Pathological Arbitration Clauses Can be Defined as Clauses Drafted in Such a Way That They May: Lead to disputes over the interpretation of the arbitration agreement; Result in the failure of the arbitral clause; or Result in the unenforceability of an award.
10 Examples of Pathological Arbitration Clauses Internally Inconsistent: “The arbitration shall be conducted in Dar es Salaam, Tanzania and, unless otherwise agreed by the Parties, the number of arbitrators shall be three, with such arbitrator to be nominated by agreement of the Parties within 30 days from the date when the claimant’s request for arbitration has been communicated to the other party, or failing such agreement, appointed in accordance with the ICC Rules”
11 Examples of Pathological Arbitration Clauses Equivocation as to Whether Binding Arbitration is Intended: “In the case of a dispute, the parties undertake to submit to arbitration, but in case of litigation, the Tribunal de la Siene shall have exclusive jurisdiction.” “In the event of any unresolved dispute, the matter will be referred to the International Chamber of Commerce.”
12 Examples of Pathological Arbitration Clauses Ambiguity as to the Parties’ Intent: “Arbitration, if any, to be held in Paris, France.”
13 Examples of Pathological Arbitration Clauses Mis-Identifying the Arbitral Institution by Name or by Country: “The parties shall proceed to litigation before the Arbitration Court of the International Chamber of Commerce with the seat in Zurich.” The “ICC Court of Arbitration in Madrid, Spain.” The “Official Chamber of Commerce in Paris, France.”
14 Examples of Pathological Arbitration Clauses Providing Too Much Specificity With Respect to the Arbitrator’s Qualifications: “The Arbitrator shall be an English-speaking Italian, with a French law degree and a familiarity with Mid- East construction contracts.” “All disputes shall be finally settled by three arbitrators who are fluent in Spanish and Japanese, but are neither of Spanish nor Japanese citizenship.”
15 Examples of Pathological Arbitration Clauses Providing for Conflicting or Unclear Procedures : “Disputes hereunder shall be referred to arbitration, to be carried out by arbitrators named by the International Chamber of Commerce in Geneva in accordance with the arbitration procedure set forth in the Civil Code of Venezuela and in the Civil Code of France, with due regard for the law of the place of arbitration.” “All disputes hereunder shall be referred to arbitration before the ICC in Switzerland in accordance with the arbitration procedures set forth in the French Civil Code and the Civil Code of Argentina, insomuch as those procedures are not in conflict with the law of the place of arbitration.”
16 Examples of Pathological Arbitration Clauses Use of “May” vs. “Shall”: “Any dispute of whatever nature arising out of or in any way relating to the Agreement or to its construction or fulfillment may be referred to arbitration under the Rules of the ICDR.”
17 Examples of Pathological Arbitration Clauses Using Vague or Unclear Terminology: “Any disputes arising from the interpretation of the present contract will be settled by an arbitral tribunal sitting in a country other than that of each of the parties.”
18 Examples of Pathological Arbitration Clauses Combining Non-Institutional Arbitration with Institutional Arbitration: “In case such a dispute is not settled amicably by senior management within 30 days of escalation to senior management, such dispute shall be resolved and determined by an ICC arbitration board acting in accordance with the UNCITRAL Rules of Arbitration whose decision shall be final and binding upon the parties.”
19 Examples of Pathological Arbitration Clauses Where Two Institutions Have Been Combined: “ICC Arbitration to be administered by the AAA.”
20 Examples of Pathological Arbitration Clauses Too Narrowly Defining the Scope of the Arbitration Clause: “Disputes and controversies arising hereunder AND relating to the interpretation of the contract AND matters of performance.” Compare to “arising out of or in connection with this contract...”
21 Examples of Pathological Arbitration Clauses No Clear Divisions Between Dispute Resolution Methods: “In the event of disputes arising hereunder, the parties will initially attempt to resolve said disputes by mediation before a mediator to be mutually agreed by the parties. If both parties subsequently agree that the mediation has failed to resolve the dispute, then either party may refer the dispute to arbitration...”
22 Examples of Pathological Arbitration Clauses Naming a Person by Title to Appoint the Arbitrators: President of the International Court of Justice President of the Swiss Federal Tribunal
23 Examples of Pathological Arbitration Clauses “Other”: Naming as arbitrator a specific person – who is now deceased, incapacitated, or who refuses to act. Failing to name the seat of the arbitration. Adopting the rules of an institution without a clear understanding of those rules. Neglecting to specify applicable law.
24 Enhancing Business Opportunities in Africa: The Role, Reality, and Future of Africa-Related Arbitration November 2-4, 2014 For more information: George Anthony Smith Weinberg, Wheeler, Hudgins, Gunn & Dial, LLC Attorneys at Law 3344 Peachtree Road NE Suite 2400 ATLANTA, GEORGIA 30326 telephone (404) 876-2700 facsimile (404) 875-9433
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