Bennett Jones LLP International Arbitration Practice Group Resolving Cross-Border Disputes Using International Arbitration Presented to Presenters SCCC Vasilis F. L. Pappas, Partner EUCCAN Artem N. Barsukov, Associate
Outline �2
Outline What is commercial arbitration? Why choose arbitration? Potential drawbacks of arbitration How to take advantage of arbitration Investor-state arbitration Impact of CETA on international arbitration �3
What is International Arbitration? �4
Commercial arbitration is a type of alternative dispute resolution (ADR) where the two sides agree to submit their disagreement to a private individual for a final and binding decision. �5
Key Features of Commercial Arbitration Substitute for court Consensual Faster, more efficient, and more streamlined than court Parties appoint arbitrator(s) More flexible, informal Final and binding �6
Commercial Arbitration as an ADR Mechanism �7
Why Choose International Arbitration? �8
Why Choose International Commercial Arbitration? Key Benefits 1. Decisions are enforceable worldwide 2. Decisions are final and binding 3. Neutral forum 4. Parties select arbitrator 5. Flexible process 6. Efficient dispute resolution 7. Confidentiality 8. Recovery of Costs �9
1 Worldwide Enforcement �10
Worldwide Enforcement If the losing side refuses to carry out the arbitrator’s decision, the successful side will have to enforce it in a country where the losing side has assets Unlike court judgments, arbitration awards are enforceable virtually worldwide under the New York Convention This is by far the most significant benefit of international arbitration �11
Worldwide Enforcement 159 Contracting States �12
Worldwide Enforcement �13
Worldwide Enforcement The successful party can apply to a local court for a judgment enforcing the arbitral award Also prevents the losing side from trying to re-litigate the dispute in domestic courts Very limited exceptions to resist enforcement Enforcement cannot be resisted on the basis that the case was wrongly decided �14
2 Finality of Decisions �15
Finality of Decisions An arbitral award is final and binding on the parties Appeals are extremely limited and very rarely successful Generally, appeals are only permitted on serious grounds related to a defect in the arbitration itself Courts around the world are increasingly reluctant to interfere with awards Limited grounds of appeal are widely accepted Any doubts tend to be resolved in favour of arbitration �16
3 Neutral Forum �17
Quality of Decisions Avoid going to court in the home jurisdiction of one of the parties Neutral decision-makers and forums many arbitration rules expressly provide that the deciding arbitrator must be of different nationality than the parties arbitrations typically take place in major and trustworthy commercial hubs (London, New York, Stockholm, etc.) �18
4 Parties Appoint Arbitrator(s) �19
Parties Appoint Arbitrator(s) Parties get to select arbitrator Unlike the courts, the two sides can select arbitrator or arbitrators with the specific expertise that the parties desire �20
5 Flexibility �21
Flexibility The two sides are free to select procedural rules that best suit their specific dispute Many institutional rules to choose from OR Can craft their own unique rules Less formal rules of evidence Unlike courts, arbitration tribunals generally tend not to exclude evidence and instead apply a more flexible approach �22
6 Efficient Dispute Resolution �23
Efficient Dispute Resolution Faster, cheaper, more efficient procedure than court process No lengthy oral discoveries or depositions More streamlined document exchange Hearings much shorter than trials �24
7 Confidentiality �25
Confidentiality Unlike typical court proceedings, arbitrations can be: undertaken entirely in private and kept entirely confidential �26
8 Recovery of Costs �27
Recovery of Costs Unlike court process, the successful party in an arbitration typically recovers some or all of its costs, including its legal costs Discourages frivolous claims Encourages the two sides to: behave professionally and civilly settle their dispute �28
Potential Drawbacks of International Arbitration �29
Potential Drawbacks of International Arbitration Potentially high upfront costs Potential early delays Limits on arbitrators’ powers Difficulties associated with multi-party disputes No binding precedent �30
How to Take Advantage of Arbitration �31
How to Take Advantage of Arbitration Two ways to get to arbitration: (1) agree to arbitrate after dispute arises (2) agree in advance in contract Arbitration agreement is key Ensure that agreement to arbitrate includes the following items: number of arbitrators seat of the arbitration rules for the arbitration language of the arbitration confidentiality currency of award costs �32
Investor-State Arbitration �33
What is Investor-State Arbitration? Historically, private investors had little recourse against a state that had harmed their investment Starting in 1990s countries began to enter into Bilateral Investment Treaties ( BITs ) BITs require states to provide certain guaranteed protections to foreign investors Where states fail to provide those protections, BITs allow foreign investors to sue before independent and impartial international arbitration tribunals �34
What is Investor-State Arbitration? Investor protections are found in treaties BITs Free Trade Agreements (NAFTA, CETA) Sector-specific Agreements (Energy Charter Treaty) Binding and enforceable awards States almost always agree by abide by the outcome of these proceedings �35
Proliferation of BITs 3000 2500 2000s 2000 1990s 1980s 1500 1970s 1000 1960s 1950s 500 0 1960 1970 1980 1990 2000 2010 �36
Proliferation of BITs Canada currently has BITs with the following European countries: Croatia Czech Republic Hungary Kosovo (signed by not yet in force) Latvia Poland Romania Russia Slovakia Ukraine �37
Proliferation of Investor-State Cases 350 300 250 200 2000s 1990s 150 1980s 100 50 0 1960 1970 1980 1990 2000 2010 �38
Investor-State Arbitration Process Very similar to international commercial arbitration Tribunals typically made up of 3 members If the state wins, the investor typically does not pay costs for public policy reasons �39
CETA’s Impact �40
Impact of CETA on International Arbitration Does not affect private international arbitrations Contains a new dispute resolution mechanism for investor- state disputes The new mechanism is not in force yet Once CETA is ratified by all states, the new mechanism will replace the mechanisms in Canada’s BITs with EU members However: the dispute resolution mechanism may never come to force due to ongoing legal challenges �41
Vasilis F. L. Pappas Partner, Co-Head of International Arbitration 403.298.3068 PappasV@bennettjones.com Artem N. Barsukov Associate, International Arbitration 780.917.4266 BarsukovA@bennettjones.com Thank you �42
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