international commercial law...–state of ukraine v norsk hydro asa, svea hovrätt, 17 december...
TRANSCRIPT
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International Commercial Law
Arbitration
University of Oslo
Giuditta Cordero-Moss, Ph.D., Dr.Juris
Professor, Oslo University
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Is an arbitration clause really sufficient to exclude relevance of national law?
• Fine as long as you are within the closed circuit (voluntary compliance)
• But what if you need assistance to enforce the award?
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Arbitration as autonomous system?
• 1958 New York Convention (ratified by 150
states):
– Art. II: Courts shall recognise an arbitration
agreement and refer the parties to arbitration
– Art. V: Courts shall recognise and enforce foreign
arbitral awards
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Judicial control on arbitral awards UNCITRAL Model Law art. 34/36, New York Convention art V
• Challenge of validity before the courts of place of arbitration
• Enforcement proceedings before the courts of the place of enforcement
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Grounds for invalidity/unenforceability of an award
UNCITRAL Model Law art. 34/36, New York Convention art V
• Invalidity of arbitration agreement
• Lack of legal capacity
• Lack of arbitrability
• Contrast with ordre public
• Excess of power
• Procedural Irregularity
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Invalidity of arbitration agreement, Legal capacity
•Decided under the lex arbitri/the law of each of the parties
•Not under the law chosen by the parties
– State of Ukraine v Norsk Hydro ASA, Svea Hovrätt, 17 December 2007, T 3108-06
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Arbitrability
Recognition of the arbitration agreement:
• Decided under the lex fori
• Not under the law chosen by the parties
• From second look doctrine • Mitsubishi Motors Corp v Soler Chrisler-Plymouth, Inc., 473 U.S. 614
(1985) and Scherk v. Alberto-Culver Co., 417 U.S. 506, to
• To ensuring application of mandatory rules • Belgium, Cass., 16.11.06, Germany, OLG München, 17.5.06, U.S.,
Thomas v Carnival Corp, England, High Court 30.10.09
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Arbitrability Jurisdiction clauses in investment treaties
• Decided under the governing law
• Not under an autonomous system
• RosInvestCo UK Ltd. v. The Russian Federation, SCC • Accepted jurisdiction in spite of narrow jurisdiction clause (”disputes
on the amount or method of payment” – not on whether compensation is due)
• Extended jurisdiction on the basis of the MFN clause
• 9.11.2011, Stockholm District Court: Arbitral tribunal did not have jurisdiction
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Public policy
• Decided under the lex fori
• Not under the law chosen by the parties
• No review of the merits
• No verification of tribunal’s application of law
• Prevent to give effect to an award if the result would violate fundamental principles of the forum
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Typical examples where ordre public clause is applicable - I
• Measures essential to the accomplishment of the tasks entrusted to the European Community:
– Competition law (Eco Swiss, C-126/97)
– Protection of the agent (Ingmar, C-381/98 (?))
– Consumer protection (Claro, C-168/05)
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Typical examples where ordre public clause is applicable - II
• Company Law
– OAO Telecominvest, Sonera Holding B.V., Telia International AB, Avenue Ltd, Santel Ltd, Janao Properties Ltd, and IPOC International Growth Fund Ltd, Federal Commercial Court of West Siberia, 31 December 2006
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Typical examples where ordre public clause is applicable - III
• Insolvency (French Supreme Court, 6.5.2009 09-10.281, Salen Dry Cargo AB v. Victrix Streamship Co, C.A., 2nd Circ., August 5, 1987)
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http://www.jus.uio.no/ifp/english/research/projects/choice-of-law/index.html
F 09 S 10 F 10 S 11 F 11 S 12 F 12 S 13 F13 S14
Company law Cathrine Bjoland
Competition Law Nicolai Nielsen
Property and Insolvency Siri Hafeld
Administrative Regulations Tone Wetteland
Arbitrability Ulrik Tetzschner
Intellectual Property Hedda Bjøralt Roald
Contract Law: Indemnity clauses Tommy Thomsen
Contract Law: Early termination Nanette Arnesen
Labour law Øivind Foss
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An arbitration clause excludes relevance of national law to the extent that:
– The applicable private international law permits to choose a different law, and
– The award meets the criteria of the New York Convention art V and of the lex arbitri
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Arbitration as preferred dispute resolution method
• Courts ”trapped” in national laws
– Mandatory rules
– Ancillary obligations
– General rules on interpretation of contracts
• International arbitration believed to be more apt in understaning parties’ interests
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What does it mean?
• Relying more on the language of the contract?
• Relying more on considerations of good faith, economic interests, trade usages?
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International contracts
• Exhaustive and precise regulation – Standardised irrespective of the governing law
• Boilerplate clauses on interpretation and general operation of contracts – No waiver – Entire Agreement – Subject to contract – …
• Any external element excluded – No room for interpreter’s discretion – Rules and principles of the governing law are meant to be made
redundant
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Boilerplate clauses
• If interpreted literally, may permit speculative conduct
• Not if interpreted in light of good faith, loyalty, ancillary obligations
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If the contract is interpreted by a court
• The wording does not have an absolute meaning detached from the governing law
• Clauses with the same wording may have different effects under different laws
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What is more faithful to parties’ intention?
• Literal interpretation permitting speculative conduct
• Regard to underlying principles overriding contract’s language
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Why do contracts have clauses that have not been evaluated or
negotiated?
• Not thoughtlessness
• Not refusal of national laws
• Calculated risk
– Costs of adapting models
– Likelihood that risk materialises
– Consequences of risk materialisation
• Internal organisation
– Risk management requires standardisation
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Faithful interpretation 1
• Understanding uneven approach to contract drafting
– Important clauses are negotiated carefully
– Less important clauses are not evaluated or negotiated
• E.g.: Entire Agreement should not be interpreted literally
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Faithful interpretation 2
• Need for objectivity and predictability
– Contracts may circulate: assignment, security, basis for insurance premium,…
• Therefore: Entire Agreement should be interpreted literally
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Arbitration: a uniform formula to square the circle?
• 1958 New York Convention
• 1985/2006 UNCITRAL Model Law:
– Arbitral tribunal shall follow the parties’ instructions
– [National law on arbitrability, public policy, validity of arbitration agreement, validity of award, …]
• Award enforceable even if:
– Wrong interpretation of contract
– Wrong application of law
– Application of wrong law
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Arbitration as largely autonomous system
• But is there an autonomous doctrine of interpretation?
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A transnational doctrine of interpretation?
• UNIDROIT, PECL, DCFR, CESL
• How faithful is it?
– Largely based on civilian good faith
– Overrides contract language
• How autonomous is it?
– No uniform standard of good faith
– Unilex on Entire Agreement
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Being faithful to the parties’ intentions Arbitration and the not unlimited party autonomy
The impact of the applicable law on the interpretation of contracts
Nov 21, 2011 http://www.jus.uio.no/ifp/english/research/projects/choice-of-law/events/2011/2011-arbitration-and-the-not-unlimited-party-autonomy.html
APA-prosjektet (”Arbitration and Party Autonomy)
http://www.jus.uio.no/ifp/english/research/projects/choice-of-law/index.html
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Multiple approaches
• Accurate application of governing law • Application also of overriding mandatory rules from other
systems • Flexible application of governing law • Application of transnational principles (with extensive good
faith general clauses that override the terms of the contract)
• Application only of the terms of the contract • Integration of the contract with parties’ interests and trade
usages • Guts feeling of what is right • Splitting the baby.
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Conclusion
• Arbitration is not a unitary system
• Selection of arbitrators is crucial