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Duties Of Directors Under Cyprus Companies Law

Cyprus Companies Law (Cap. 113) provides that every private company shall have at least one director and every public company shall have at least two directors (s.170). Furthermore, every company must have a secretary and a sole director shall not be also secretary. However, in the case of a single-member private liability company the sole director can be also the company secretary (s.171).

According to section 174 of Cap.113, the acts of a director or manager are valid notwithstanding any defect which may afterwards be discovered in his/her appointment or qualification. Since directors have powers to take important decisions several duties are imposed on them so that to guarantee that the companies’ interests are well-protected.

Duties of Directors:
a.Fiduciary Duty
b.Duty to exercise skill and care
c.Statutory Duties

It should be clarified that there is no difference in principle between executive, non-executive or nominee directors. Have in mind that the duties owed by the Directors are owed to the company and not to individual shareholders.

Fiduciary Duty:
According to the Law, a Director owes a duty to the company to act in good faith in the best interests of the company. This duty is known as the ‘fiduciary duty’. In other words, the director is obliged to promote the profitability of the company and protect company’s interest.

The principal duty of the director is to act in the best interests of the company as a whole, and that is usually taken to denote the interest of shareholders both present and future.

In practice, the fiduciary duty can be explained as follows:
1.Directors shall act in good faith in what they consider to be the interests of the company.
2.Directors must act in accordance with company’s constitution, i.e. the memorandum of articles and association, and shall exercise their powers only for the purposes allowed by law.
3.Directors must not use company property, information or opportunity for their own or anyone else’s interest, unless allowed to by the company’s constitution or in particular cases where such use has been disclosed to the company in general meeting and the company has approved it.
4.Directors shall not agree to restrict their powers to exercise an independent judgement. Nevertheless, if they consider in good faith that this it is in the interests of the company for a transaction to be entered into, they may restrict their powers to exercise an independent judgement by agreeing to act in a precise way to attain this.
5.In case there is a conflict between directors’ interests or duties and the interests of the company, then directors are obliged to account to the company for any benefit they receive from the transaction. Nonetheless, directors are not obliged to account for the benefit if they are allowed to have that interest by company’s constitution, or the interest has been disclosed and approved by the company in general meeting.
6.Directors must act fairly as between the members of the company.
7.In the course of a winding up of a company it appears that directors continue to allow a company to incur credit even though they knew or ought to have known that the company had no reasonable prospect of paying, then following the sections 307 and 312 of Cap.113, they may become personally liable for that credit unless they can prove that they have taken every step, in order to minimise and/or eliminate the possible loss.

Duty to exercise skill and care:

The modern approach to the duty of care is defined in Re D’ Jan of London Limited [1993] B.C.C. 646, a leading English company law case related to directors’ duty of care. ‘The conduct of: a reasonably diligent person means a person having both (a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as carried out by that director in relation to the company, and (b) the general knowledge, skill and experience that that director has’.

However, the absence of clear authority makes it difficult to define exactly what the above definition entails. The first part of the definition indicates an ‘objective’ or a ‘benchmark’ test of what ‘the reasonable person’ might expect of a director in specific circumstances. The second part of the test requires that in case that particular director has a particular skill or level of experience, then he/she is obliged to exercise that particular skill in addition to the benchmark test.

Statutory Duties:
Directors have several statutory duties imposed by the Companies Law and other legislation, i.e. the Income Tax, VAT, Customs& Excise Legislation, Health and Safety, and Environmental legislation.

The statutory liabilities imposed under the Companies Law to directors regarding the company, its shareholder or to the public are:
•Register of Directors and Secretary (s. 192);
•Register of Directors interests (s. 187);
•Disclosure of payment for loss of office made in connection with transfer of shares in company (s.185);
•Disclosure of interests in contracts (s.191);
•Loans to directors (s. 188-189);
•Prospectus offers (s.31-.39);
•Pre-emption rights /Transfer of shares (s.71 – 82);
•Fraudulent trading (s.311);
•Profit and loss account and balance sheet (s.142);
•Falsification of books or destroying company documents (s.308);
•Duties antecedent to or in course of winding up (s.207, s. 213);
•Directors report and annual return (s.151);
•Financial Statement available for review and investigation (s 141);

Have in mind that:
Pursuant to Companies Law, breach of director’s duties is a criminal offence with penalties ranging from a default fine to two years imprisonment. Moreover, the directors are liable to personally compensate the company in respect of any loss caused by the breach of their duties. Regarding tax-related offences, directors may be liable for prosecution by the Inland Revenue or Customs& Excise Department.

Milennials: Why You Need To Consider Estate Planning

Estate planning for millennials? Surely that’s the last thing that generation is thinking about. Jokes and memes about millennials abound online. When a meme about the three biggest millennial fears is all about being connected here and now, it’s no wonder that estate planning is not a high priority for people in their 20’s and 30’s. This is a generation that (for the most part) have not yet accumulated a significant asset pool like the generations proceeding them. They’ve got plenty of time. They’re taking their time getting married and having kids and therefore they’re taking their time thinking about estate planning, according to a Bloomberg report.

USA Today recently reported that Millennials — those born roughly between 1980-2000 — would rather enjoy the present than prepare for the future. Millennials are enjoying connecting with the here and now, not worrying about who will make decisions for them if they become incapacitated. An enduring power of attorney seems like a very distant form to complete. 31 year-old Usman Ahmad echoes the sentiments of many a Millennial when explaining his decision to not buy life insurance: “I’m not planning on dying anytime soon,” he says. “So it’s a waste of money.”

But we don’t get to choose when we die. The millennial generation are no different to the generations that have come before and the ones that will follow after. Death comes to us all, and tragically young for some people.

While many of us will get to live long lives, there are some who will die tomorrow (including millennials) that will upset the natural order of death. The unnatural order of death is when children die before their parents or when nieces and nephews die before their aunts and uncles. It just doesn’t seem right and yet it is inescapable in a world that contains sickness and tragedy.

Not everything is rosy for millennials. Their generation face serious health threats, including high rates of suicide, homicide, motor vehicle accidents, and substance abuse. Between 1999 and 2004, nearly nine percent of 20- to 29-year-olds reported having experienced major depression, generalized anxiety disorder or panic disorder in the past year. In particular, young women are nearly twice as likely (11 percent) to report these symptoms than are young men (6 percent). Motor vehicle accidents remain the leading cause of death for young adults ages 15-29, followed by homicide and suicide. In fact, seven out of 10 deaths for those aged 10-24 in 2005 were the result of these three killers.

Just over 1 in 4 of today’s 20 year-olds will become disabled before they retire. According to CDA’s 2013 Long-Term Disability Claims Review, the leading causes of long-term disability include musculoskeletal/connective tissue disorders, disorders of the nervous system and cardiovascular disorders. Approximately 90% of disabilities are caused by illnesses rather than accidents.

Why Should Millennials do Estate Planning?
You are worth something. Not just assets and life insurance if you have them, but your life is meaningful. Estate planning is not just about writing a will to pass on your stuff. Estate planning is like a love letter to those who are important to you. Estate planning does mean something now – it is not just for later on. A good estate lawyer will encourage you to discuss and share your estate plans with your loved ones. While your sister may not be massively excited that you are going to leave her your old, beat-up VW beetle, she will understand that you have included her in your will and therefore your head and heart.

But remember – many young Australians have a life insurance policy within their superannuation. This could be tens of thousands or hundreds of thousands of dollars in your estate! Who will receive it? Your parents or your partner? A binding death nomination is one of the only ways in which you get to decide who should receive this asset.

Good estate planning also includes an advance health directive. Millennials understand that we are living in a time where our chances of having a longer life have been increased because of advances in medical technology and understanding of the body. An advance health directive helps to give us control over what happens to us medically when we are incapacitated in any way. It is a formal way of outlining what you wish for your future health care. It only comes into effect if you lose the capacity to make decisions. Although you cannot account for every medical scenario in this document, you can outline generally what treatment you wish to or don’t wish to receive should you become unable to speak for yourself.

Doing Your Estate Planning Does Not Speed Up the Download of Your Life
Kate Muller is a wills and estates lawyer at Mitchells Solicitors. She says she finds practicing this area of law rewarding. “Sometimes people – especially young people – are reluctant to deal with these issues. It’s probably that they just don’t see the need to do it because they don’t think they’re going to die soon,” she says. “Yet it’s universal that when you sign your will and your estate planning is done, you feel great.”

Writing your will does not make your death imminent, but it does ensure that your assets do go to the people you want to benefit from them. This is particularly important if you have minor children. In a will you can nominate a guardian for your minor children for if both you and the other parent die before they turn 18 years of age, otherwise the court will decide for you. Estate planning allows you to plan for the unexpected as well as the expected. We hope that our children will never need a guardian but burying our heads in the sand will not make it so.

How Financial Planners Can Fight Elder Abuse

As our population continues to age, so we must continue to fight elder abuse. The most common kind of elder abuse is financial abuse, and the good news is that professionals like financial planners can help to identify and fight elder abuse.

Why are the elderly targeted? Their loneliness and isolation make them easy targets. They are vulnerable, in need of a helping hand or someone who will pay them some attention. They’re easy prey for undue influence, trusting of their perpetrators. Maybe dementia is setting in.

How Elder Financial Abuse Occurs
In 2016, Mary Evans was indicted for allegedly stealing more than $400,000 from three elderly men in New York City.

Ms. Evans, 44, approached her targets in neighborhood restaurants, supermarkets or coffee shops, engaging them in a conversation by pretending to recognize them from prior encounters, according to Manhattan District Attorney Cyrus Vance. According to the charges, Ms. Evans stole more than $130,000 in cash and goods, including a Mercedes convertible, from a 77-year-old retired transit employee. Her second victim was an 81-year-old, retired church musical director from whom she stole $53,000. She obtained a marriage certificate for herself and her third victim, a 73-year-old retired college professor who suffered from dementia, and withdrew $225,000 from his retirement account.
A study issued last year by True Link Financial, a financial services firm that helps older adults and their families protect themselves from fraud, put the figure at $36.5 billion. Even at that, most experts believe the problem is significantly underreported. Cases often don’t come to light because victims are embarrassed about having allowed themselves to be swindled, or reluctant to point the finger at the perpetrators — often people who are close to them.

How Financial Planners Can Help Fight Elder Abuse
Financial planners are on the front lines of elder financial abuse and are often among the first to spot red flags. Yet they’re not always sure how to respond and they worry about the consequences of taking action.

An InvestmentNews survey of 591 advisers found that 62% have seen or suspected financial abuse of an elderly client at least once. But more than half of those who suspected abuse — 56% — said they didn’t report it.

The trouble for advisers is while they often see hints of exploitation, the hints are often “very fuzzy,” and it’s not within their expertise to figure out if the person sitting in front of them is being victimized, according to Dr. Blum, who provides expert evaluation in cases of undue influence and manipulation tactics. Indeed, 61% of advisers in the InvestmentNews survey said they didn’t report suspected financial abuse of their elderly clients because they “did not have enough evidence.”

In the InvestmentNews survey, 65% of advisers identified a family member as a suspected perpetrator, while 30% pointed to a friend or acquaintance and 30% said it was a caregiver.

Bank of America Merrill Lynch surveyed its advisers last year to identify the most common perpetrators of elder financial abuse and found that 71% cited children of the victim, with 32% flagging other family members and 18% identifying anonymous fraudsters.

Organisations Who Have Introduced Measures To Fight Elder Abuse
In 2010, Wells Fargo started tracking instances of financial exploitation of senior and elderly clients. The number of reported cases rose from about 30 a month in 2010 to 90 to 100 cases in 2014. The increase was in part due to the firm’s focus on training financial planners to spot it. And more than two years ago, Wells Fargo formed a unit within in its compliance department to process reports of suspected fraud from financial planners themselves. The unit has fielded about 2,000 incidents of abuse and frequently brings in adult protective services agencies or financial regulators into the cases.

Merrill Lynch, meanwhile, educates its financial planners on preventing elder abuse and encourages them to acquaint themselves with their elderly clients’ family or close friends so they can turn to someone with any doubts. The company also gives its financial planners an authorization form to get a trusted contact person planners can consult about suspicious activity.

Morgan Stanley has built a website on senior client-specific concerns for its financial planners. It also trains its reps on identifying exploitation and has a protocol for taking up issues affecting senior clients to its legal unit. Meanwhile, smaller wealth management firms are taking similar steps, according to the publication.

Fight Elder Abuse By Watching Out For Scams
Older people are also targeting by scammers they don’t know, and here are the most common common scams and frauds.

• Getting a call or email from the ATO demanding immediate payment to avoid jail or requesting identifying information

• Receiving a phone call from a “computer technician” informing the client of a computer virus that is rapidly spreading and stealing person information. The caller is then able to access the computer and its data.

• Notification that the client has won a huge lottery in a foreign country, but in order to receive the millions they must pay fees, transport or other processing costs upfront.

• Receiving an email or phone call that a grandchild or other relative is stranded in a foreign country without money and passport, or is in a hospital, or was jailed unjustly, along with a plea to send money right away.

• An email from a bank or financial institution that looks legitimate but that comes from an address the client does not recognize, or that has no subject line, especially if it contains a link to click on.

• A “friend” develops a relationship online, offering understanding and love to a lonely client. Before long, the friend begins to request money to help resolve legal or medical issues, or to fund a trip to come meet in person, or any number of other scenarios. Once money is sent the first time, the requests continue endlessly.

Expert lawyers in succession law (wills and estates) are also trained to recognise elder financial abuse, including undue influence. The key is to seek advice as soon as you become aware of the problem so that you can minimise the loss to the older person. Bryan Mitchell is an Accredited Specialist in Succession Law (wills and estates) and takes a keen interest in safeguarding older people.

For your free, 10-minute phone consultation, please contact us today.

Do I Have a Case? Three Points to Help You Know

For personal injury attorneys, one of the most frequent questions is whether or not a client has a case. For example, a client will call or be in one of our free consultations and will say, “I recently got in an accident, these are the details, do I have a case?” This inquiry should include a personal injury attorney. Determining whether or not you have a case is largely dependent on some of the unique factors in the case. Thus, this article is not meant to take the place of a consultation with an attorney, but in general, there are three things that will help you know:

1. WAS IT YOUR FAULT? Essentially, did someone wrong you? Were you the victim of the accident because someone was reckless? In legal cases, the term lawyers use to determine fault is called “negligence.” When someone is negligent, it means they are not reasonably prudent. For example, blowing through a red light, driving at excessive speeds, or running onto the sidewalk are all examples of negligence. In these situations, someone is careless. Negligence is the first thing you will want to look for if you have been in an accident. It is an important distinction to determine if you have a case. If you are negligent, you are legally liable for the ensuing harm and damage that you may cause another person.

2. YOU HAVE TO BE INJURED. If someone almost hit you, that is not an injury, and you don’t have a case. You have to suffer some damage whether it a physical injury to your person or property damage to your vehicle. When calculating damages in a personal injury case, one has to consider the losses suffered by the injured person. When injured, this leads to medical expenses, property damage, as well as things like lost wages, caused from missing work due to the injury.

3. THE ACCIDENT HAS TO CAUSE THE INJURY. Unfortunately, this is usually the most complicated part of a case. At the Advocates Law, this is where we fight a lot of our battles. For example, if someone has an issue with his/her neck that is slowly improving, but he/she is involved in a car accident, and the neck problem gets worse, how much of this was pre-existing and how much is the result of the accident? One must be able to prove that it was the accident that caused the injury. Frequently, we battle over whether the accident was sufficient to cause such injuries. At the Advocates, we have seen accident victims with little bumps that cause acute pain. An illustration was a woman who was bumped; you could hardly see her injury. It turned out that she had fractured her neck and had to have emergency surgery the next day. Such injuries can be deceptive.

There are likely hundreds of online formulas to determine if you have a case. For us at the Advocates Law, this is probably the most basic and useful three steps for discovering if you have a case. Unfortunately, sometimes these formulas do not account for key fine points in your case. Each case is different; therefore, the best advice is to meet with a personal injury attorney in a consultation. At the Advocates, for example, our attorneys have handled hundreds of cases and will know pretty well if you have a case or not. Many personal injury firms, like ours, offer free consultations, so there is no risk for you. In your meeting, your attorney will be able to assess your case and help determine what you should do next.

How to ensure non-NHS health care organisations are prepared for CQC registration

Registering with the Care Quality Commission (CQC) is compulsory for all providers of health and social care in England, not just those as part of the NHS, and it is against the law not to do so. The provider can be an individual, a partnership or an organisation and knowing which of these legal entities applies is important. The CQC’s aims are to set standards, ensuring that they are met and, where possible, improved upon. With a growing number of non-health care organisations, these standards exist in order to protect users and improve their experiences of health and social care.

Providers should be prepared to register by understanding what is involved in the application process, what information should be given and how much it costs. Here are a few pointers to give providers an idea of how to get ready for registration.

Getting the right checks
Applying for a CQC-countersigned DBS check is the first absolute must when it comes to preparing. This covers individuals who carry on or manage a care service, all partners, and registered managers. To avoid common mistakes that will hinder registration, visit the CQC website.

Stating the purpose
Providers should be in a position to describe what they do, where they do it and who they do it for so that they can write this in their statement of purpose. This statement also includes some of the details listed below.

Understanding ‘regulated activities’
Organisations need to be aware of the 14 health care services that are regulated by the CQC and then consider which of these ‘regulated activities’ they will continue with.

Having a registered manager
Alongside this, at least one registered manager must be in place to manage the regulated activities. This person must work routinely in the activities and have some legal responsibility in relation to their position. The new registered manager should apply at the same time as the new provider.

Who can be contacted
It is important that the organisation has a nominated individual who can be contacted about the regulated activities and has some supervision responsibilities for these. It is advised that this person is not the registered manager if it can be avoided.

Where the activities take place
A regulated activity might be carried out as one service but at many locations. In this case, the locations must be clearly stated as this is a declaration about compliance with the relevant activity standards at each location.

Supporting the application
Providers need to know how to get hold of policies that can support their application, such as those on Management, Safeguarding and Governance. There will also need to be some evidence of the registered manager’s position.

Providing references
Individual providers need to supply details of employment history and medical fitness, whilst
partnerships need to supply the same information for all partners. However, organisations do not need to supply this information for their nominated individual.

Covering the fees
Applicants need to be aware of the fees involved as this will need to be paid on the same date each year. The fee amount depends on the type of provider and how many people benefit from the service.

Applications for registration are made online via the CQC website, where there are also a number of guidance documents to help with registration.

Registering with the CQC may seem like a lengthy and cumbersome procedure. However, it is worth bearing in mind that they are looking for ‘fitness’ and compliance with the relevant regulations, and if applicants are found to be non-compliant they will have their application refused. There are many conditions that the CQC needs to consider so it is worth taking the time to prepare and get registration right first time.

Publication of international adjudication decisions and arbitral awards: confidentiality v transparency

 

  1. Introduction

In his entertaining and erudite address to celebrate the 150th anniversary of The Incorporated Council of Law Reporting for England and Wales[1], Lord Neuberger drew particular attention to the following wartime words of Lord Atkin in his famous (if not infamous) speech in Liversidge v Sir John Anderson[2], described in the Foreword to the 150th Anniversary Edition of the Law Reports as a dissent of “power, eloquence and passion”.

The Lord Chief Justice went on to point out in his Foreword[3]:

First, the case demonstrates the importance of a dissenting judgment, for, less than 40 years later, Lord Diplock was to accept in R v Inland Revenue Comrs, Ex p Rossminster Limited that Lord Atkin was right:

‘For my part I think the time has come to acknowledge openly that the majority of this House in Liversidge v Anderson were expediently and, at that time, perhaps, excusably, wrong and the dissenting speech of Lord Atkin was right.’

Second, it demonstrates the courage necessary to take an unpopular decision and to withstand all pressures.  The then Lord Chancellor attempted to persuade Lord Atkin to omit his reference to Alice in Wonderland; and Viscount Maugham subsequently wrote to The Times to deplore Lord Atkin’s characterisation of the Crown’s arguments as those which might have been used at the time of Charles I.  The case thus illustrates why Lord Atkin must be regarded as one of our greatest judges”.

(emphasis added)

This quotation of antique authority serves the sole purpose of emphasising the immense importance under Common Law systems of having accurate and comprehensive law reporting, where such systems inherently depend upon reference to precedent cases.

Such a system is inevitably eroded when important cases (and issues) are decided by private “judges”, as has happened, by way of example, in the United Kingdom, following the coming into force of the Housing Grants, Construction and Regeneration Act 1996 (the HGCRA) (as amended by the Local Democracy, Economic Development and Construction Act 2009 (the LDEDCA)) and, on the international stage, by ad hoc, or institutionally administered, arbitration.

This article sets out to weigh in the scales of balance the question of confidentiality, which is so vital to private adjudicatory proceedings (such as domestic UK adjudication proceedings, dispute adjudication boards (DABs) under FIDIC and other standard from contracts and international commercial arbitration), with the perceived need for greater transparency and a “level playing field”, in which all participants (not just the MAFIA[4]!) are able to source any relevant precedent.

The availability of such precedent is seriously eroded when adjudicators, DABs and arbitral tribunals make decisions (for example, upon the proper interpretation of commonly-used standard forms), which never see the light-of-day in the public domain, unless the decision in question happen to become the subject-matter of enforcement proceedings (usually (in England and Wales) in the Technology and Construction Court), or on appeal (usually (in the same jurisdiction) in the Commercial Court).

Confidentiality

As Avv Mauro Rubino-Sammartano accurately observes at section 19.17 of his International Arbitration Law[5] (under the heading “Confidentiality of the award”):

The award, contrary to court decisions, is not in the public domain until it is published, with the consent of a party, or it is attacked before a court or its recognition is applied for.

The problem of classifying a possible breach of confidentiality by the arbitrators, or by participants to the proceedings, has been raised. It has been argued that such conduct would amount to a breach of confidence. The publication of awards is in a border-live region between the duty to preserve confidentiality on the one hand, and the great advantage which their publica­tions provides in the study and progress of the law of arbitration on the other. The formula of publishing long passages of awards, from which the names of the parties has been eliminated, tries to satisfy both requirements.

The publication of awards[6] is expressly allowed by the Russian arbitration rules[7]:

‘With the permission of the President of the Arbitration Court the awards of the Court may be published in periodicals or in special collections of awards. The interests of the parties shall be taken into account and in particular information containing identification of the parties, enterprises commodities and prices shall not be published’

and in the Polish arbitration rules[8]:

‘The President of the Court of Arbitration may order the award to be published in juridical and commercial periodicals, but without designation of the parties’.

 However, the duty of secrecy is expressly specified for the arbitrator by the Polish Court of Arbitration[9]:,

 ‘He shall be bound to observe secrecy’.“

(emphasis added)

In a similar vein, sections 2-818 and 2-819 of Volume 1 of the lilac-hued (and somewhat “long in the tooth”) fourth edition of Bernstein’s Handbook of Arbitration and Dispute Resolution Practice[10] read as follows (under the heading “Confidentiality of the Award”):

“2-818    An arbitration award is confidential. As the cases make clear, it may be disclosed to a third party if it is reasonably necessary for the establishment or protection of an arbitrating party’s legal rights in relation to that third party.[11] It is important to note that this test does not apply to an application for disclosure of the award by a party who was not a party to the original arbitration proceedings. In this situation, the two tests .to be applied are, first, one of relevance, arid secondly, whether disclosure is necessary for a .fair disposal of the action, so as to out­weigh the duty of confidentiality.[12]

In addition, a party to the arbitration may of course disclose the award to the court for the purpose of invoking the court’s supervisory jurisdiction, or en­forcing the award.[13]  Equally, there may be disclosure under compulsion of law, with the leave of the court, or by consent with the other party to the arbitration.

(…)

2-819     The English courts have not yet had to decide a case where it is argued that the public interest requires disclosure, as was the case in Esso Australia. In international arbitration, the confidentiality of arbitration awards may be being slowly eroded due to the public law aspect of many proceedings. The reporting of ICSID, NCAA and Nafta awards and the decisions of the Iran-US Claims Tribunal illustrate cases where it has been recognised that the interest in the arbitration lies in the public, rather than the private, sphere.[14]  Accordingly, it seems likely that as both domestically and internationally, arbitration becomes recognised increasingly as a matter of public law, the public interest exception will be further developed. In so doing it is necessary to draw a proper balance between the protection of the public interest in the transparency and accountabil­ity of public administration, and the legitimate interest of commercial concerns to protect commercial confidence and the privacy of their commercial dealings.

Transparency

At section 3.6 of Rubino-Sammartano, the author seeks to distinguish between arbitral and court precedents, as follows (under the heading “(a) Arbitral precedents”):

 “Awards are generally not published unless they are attacked, or their recognition or enforcement is sought. An exception to this rule is made for the ICC awards published in Clunet (Journal du Droit International) and the decisions of the Iran-US Claims Tribunal. Individual awards are also occasionally presented to law journals and published; they are regularly published by the Yearbook of Commercial Arbitration. Among the other reports one must men­tion, besides Clunet, the Journal of International Arbitration (Geneva), the Revue de l’Arbitrage (Paris), the Rassegna dell’ Arbitrato (Rome), Arbitration International (London), Arbitration Journal (London), the Japan Arbitration Journal, the AAA’s Arbitration Journal, the Collection of Information Ma­terials (USSR), the News from ICSID, the Journal of Commercial Arbitration (Korea) and The Arbitrator (Australia).

Amongst the bulletins which summarise information are the ICA Indian Arbitration Quarterly, the American Arbitration Association Quarterly and the Mediterranean and Middle East Quarterly Report (Cyprus).

Arbitral precedents have no binding nature, as the Arbitral Tribunal (Cremades, Chairman, Pereira and Redfern) stated in Liberian Easterfi Timber[15]:

‘although the Arbitral Tribunal is not bound by the precedents of another ICSID arbitration tribunal’,

but they are carefully examined by the arbitrators, who state:

it is not without interest to note their construction…’

and who, after having quoted several precedents, state that they constitute:

a useful guide to the Arbitral Tribunal for the assessment of the damages’.

One could say that arbitral precedents have a persuasive value, if this is construed as a simple possibility for persuading the arbitrator, instead of an indirectly compulsory directive.

Arbitral precedents are referred to frequently by arbitrators as witnessed in the important oil arbitrations and in express reference to them in several ICC awards[16].  In the award rendered in 1986 in ICC proceedings No. 43811[17] the arbitrators openly refer to arbitral precedents stating:

‘whereas it has been recognised by arbitral precedents…’

Even Derains in his comments on this award[18] states:

The reasons given by the arbitrators in this matter are fundamen­tally based on arbitral precedents, summaries of which have already been published’.

The awards made in 1977 in ICC proceedings Nos. 2745 and 2762 go even further[19]:

It would be paradoxical to hold that an arbitrator sitting in an ICC arbitration would not be bound by a previous award rendered between the same parties and on the same matters by another arbitrator also sitting in an ICC arbitration’.

A further comment by Derains[20] that the publication of arbitral awards contributes to the creation of unity in arbitral precedents, also seems well- founded.

New York Bar survey

In February 2014, the New York City Bar published a Report by its Committee on International Commercial Disputes, entitled Publication of International Arbitration Awards and Decisions, surveying ten major international institutions and identifying (on pages 1 to 3 inclusive thereof) and summarised the following “issues posed by publication” of such awards and decisions:

“A. Confidentiality

International arbitration has traditionally been private though not necessarily confidential. Publication of unredacted decisions certainly lessens that. Even when decisions are just summarised, or are published in heavily redacted form, to eliminate party and arbitrator names and specific facts, that may not hide enough to maintain as much privacy as the parties desire. Parties who are against publication stress the importance of party autonomy in arbitration and note that they bear the costs of every element of the process.  Parties who feel strongly about confidentiality may therefore want to consider drafting arbitration clauses with strong confidentiality provisions and selecting an administering institution that does not publish anything.

B. Opening the Club/Leveling the Playing Field

 International arbitration has been criticized for excessive clubbiness, both as to arbitrators and advocates.  Publication of awards and decisions can exacerbate or alleviate that widely perceived characteristic.  Specifically:

    1. There is a (perceived or actual) tendency of advocates and parties to return to a small group of the ‘usual suspects’ when choosing arbitrators. To the extent that the names of arbitrators are disclosed in published decisions, that tendency could increase if publication bore out the perception that a small group of arbitrators dominate the field, decrease if disclosure shows a great diversity of active, widely used arbitrators, or simply alter the choices to the extent that the parties perceive variations in expertise or biases among specific arbitrators.
    2. Greater access to the content of awards and the arbitrators rendering them confers advantages in the process, and that access can be very uneven. Lawyers or firms with large international arbitration practices develop files and institutional knowledge about the arbitrators, institutions, and procedural customs that may not be available to those at smaller films or firms less immersed in international arbitration. The less information that is publicly available about arbitrators and their decisions, the greater is the advantage of a relatively small group of firms and lawyers. Increased publication of arbitral decisions may tend to level the playing field and open the practice of international arbitration to more lawyers. The extent of levelling may, however, depend on the cost of access to publications and the degree to which published decisions are redacted. Smaller practices may not be able to afford the often high subscription rates of the publications of arbitration institutions, which would tend to counter­balance the greater openness that publication would otherwise bring. Also, publication of only limited numbers of redacted awards may make little difference in this imbalance.

 C. Shift to a Precedent-Driven System

Arbitral awards and decisions have had no formal precedential value, either as to procedural decisions or interpretations of law, but increased publication may alter that as a matter of practice even if not as a formal matter, at least to the extent the decisions involve procedural matters or recurring, general substantive issues, and do not merely turn on idiosyncratic contractual language or factual issues.  The extent to which practitioners and arbitrators are citing and using prior decisions as precedent and whether that will accelerate with greater publication is a topic for further investigation.

 D. Changes in the Content and Style of Awards and Decisions

An arbitrator who knows that his or her decision is likely to be published may write it differently than one whose sole intent is to inform the parties. While some believe that the knowledge that their awards will be published will impose a desirable discipline on arbitrators to articulate coherent legal and factual bases for them findings, others are concerned that publication will undesirably impact the form, substance, and length of awards. Arbitrators writing for a broader public audience than just the parties before them may tend to write awards that are longer and that are driven by considerations beyond those necessary to resolve the particular dispute before them.

This may be more likely if the arbitrator’s name is disclosed, which has so far been the practice of a minority of institutions that publish decisions. The sense that publication may change how decisions are written (whether for better or worse) remains, however, even if the names of the arbitrators are not disclosed.

E. The Cost of Selection and Editing

Selecting and editing awards for publication incur significant costs, and this fact appears to have had an influence on institutions’ decisions. The editing process also carries certain risks – eg, whether the redactions are indeed sufficient to prevent identification of the parties.

F. Publication of Awards vs Challenges

The London Court of International Arbitration (‘LCIA’) has decided that it is more important and useful to the arbitration community, and less threatening to confidentiality, to publish the reasoning of decisions on challenges to arbitrators. The Stockholm Chamber of Commerce (‘Stockholm Chamber’) also publishes summaries of some decisions on challenges along with other more noteworthy awards or decisions.  Decisions on challenges are more specific to arbitration and more difficult to research as compared to arbitrators’ reasoning on substantive law, for which judicial decisions are available and more authoritative.

The publication of institutional decisions on challenges to arbitrators may, depending on the trends they evince, encourage, discourage, or simply sharpen the arguments of such challenges. Some believe that greater disclosure of the low rates of success in such challenges will discourage frivolous challenges.

 G. Impact on Challenges to Arbitrators

To the extent that arbitrators’ names are published, the publication of awards may lead to more challenges to arbitrators on the basis of partiality. While publication of awards may provide useful information about an arbitrator’s or potential arbitrator’s views on particular issues likely to arise in an arbitration, some have expressed concern that it may also lead to more challenges to arbitrators on “issue conflicts” grounds – ie, challenges to an arbitrator on the grounds that he or she is biased as to issues likely to arise in the arbitration by virtue of prior published views on those issues. Such challenges are increasingly seen in investment treaty arbitrations and might, with increased publication of awards with arbitrators’ names, also increase in private commercial arbitration.

 H. The Difference Between Commercial and Investor-State Arbitrations

The policy arguments for publication of awards in sovereign arbitration are quite different from the arguments for publication in the context of private commercial arbitration. Claims by investors against a sovereign state have far greater political and public interest implications, so arguments for greater transparency in that type of international arbitration may not necessarily apply or may be of lesser significance to commercial disputes.

 I. Potential for Publication Beyond Institutional Control

All institutions’ rules on party confidentiality have exceptions for court filings to enforce or vacate awards.  At least in the United States, court filings are public, unless a court permits a party to file the document under seal for reasons of particular confidentiality, which is relatively rare. Court files may therefore be a fertile ground for finding full, unredacted arbitral decisions, and the Committee is aware that some legal publishers have contemplated mining those files to publish the decisions. This may provide more detailed information on the arbitrations and arbitrators, and may also be a reason for a party to hesitate in seeking to confirm or vacate an award.

For better or worse, the criteria for determining disclosure differ between institutional publication and court filings. Institutional selection reflects institutional considerations such as perceived quality and broad applicability of the reasoning.  The selection for court filings is simply the decision of a party to seek judicial relief to vacate or confirm an award, which could reflect the perceived quality of the award or just party strategy[21].”

Further researches

In a similar vein, the author of this article has carried out a simple comparative survey of many major international arbitral institutions, the results of which are set out in tabular form in the appendix hereto. This appendix examines the extent to which the various sets of international rules do (or do not) encourage the publication of redacted awards.

Further reporting encouraged

One particular field can serve by way of an example of when and where such reporting is both eminently desirable and necessary, namely in the interpretation of standard form contracts, such as the FIDIC “rainbow” suite of contracts.

Taking, by way of straightforward example, the enforceability (or otherwise) of FIDIC dispute adjudication board decisions (analogous to those of UK adjudicators under the HGCRA (as amended)) searches of BAILII and similar electronic search engines, throw up the three Persero decisions[22] in the Singapore courts, together with the two further (Swiss and English) Illustrations set out under paragraph 17 below.

One particular issue which arises (particularly under the FIDIC contracts, which use a multi-tiered dispute resolution process) is what the parties should do where a DAB has not been constituted. This question is particularly pertinent in circumstances where one of the parties attempts to delay and disrupt the constitution of an ad hoc DAB, which has to be put in place in order to resolve a specific dispute (as opposed to a standing DAB appointed at the outset of a project). Absent a DAB, how can any dispute be referred to it? Can such a dispute be referred directly to arbitration (or litigation) instead?

The standard FIDIC terms do not themselves provide a clear answer to these questions. However, it has been suggested by some commentators that an answer could be found in sub-clause 20.8. Although entitled “Expiry of Dispute Board’s Appointment” (which could be interpreted as applying solely where a DAB is already implemented), the clause states that the provisions relating to the DAB do not apply and a dispute may be referred directly to arbitration in circumstances where “there is no [DAB] in place, whether by reason of the expiry of the [DAB’s] appointment or otherwise” (emphasis added). The phrase “or otherwise” may, perhaps, offer a possible answer to the question, although it is by no means a clear-cut one.

One effect of this uncertain situation is that a party on the receiving end of a notice of arbitration will often challenge the arbitral tribunal’s jurisdiction, if only as a tactical point to be taken in settlement discussions, or to buy more time in which to prepare their defence in the arbitration.

Two decisions in South Africa in 2013 and four decisions in 2014 from the Swiss Supreme Court and the London and Leeds Technology and Construction Courts (as well as Persero in Singapore) have provided some guidance about the precise manner in which this clause ought properly to be interpreted.

ILLUSTRATIONS

Facts:  In a case regarding a contract under the standard FIDIC Conditions of Contract and the effect of sub-clause 20.4 and 20.6 thereof, it was held: by Plessis AJ, that: “The effect of these provisions is that the [DAB] decision shall be binding unless and until it has been revised as provided. There can be no doubt that the binding effect of the decision endures, at least, until it has been so revised….” “… The notice of dissatisfaction does not in any way detract from the obligation of the parties to give prompt effect to the decision until such time, if at all it is revised in arbitration. The notice of dissatisfaction does for these reasons, not suspend the obligation to give effect to the decision. The party must give prompt effect to the decision once it is given”:  Tubular Holding (Pty) Limited v DBT Technologies (Pty) Limited[23].

Facts: In a further case, Wepener J referred to the unreported decision in Esor Africa (Pty) Limited v Bombela Civils JV (Pty) Limited (SGHC case no. 12/7442), which concerned a DAB decision given under sub clause 20.4 of the FIDIC Conditions of Contract.  Held: that, “whilst the DAB decision is not final, the obligation to make payment or otherwise perform under it is …” and further that “… The DAB process ensures that the quid pro quo for continued performance of the contractor’s obligations even if dissatisfied with the DAB decision which it is required to give effect to is the employer’s obligation to made payment in terms of the DAB decision and that there will be a final reconciliation should either party be dissatisfied with the DAB decision…” The court therefore held that the respondent was not entitled to withhold payment of the amount determined by the adjudicator: Stefanutti Stocks (Pty) Limited and S8 Property (Pty) Limited[24]. Held: that (at least for international arbitrators sitting in Switzerland) the DAB procedures under the FIDIC contract must be treated as mandatory.  An arbitration may not be initiated without going first to the DAB, if the contract provides for this.  However, in the particular circumstances of this case, where an ad hoc DAB had not been constituted 18 months after it was requested, R was ultimately found to be unable to continue to rely upon the mandatory nature of the DAB procedure so as to prevent the resolution of the dispute by arbitration.  The decision contains helpful analysis of the relevant FIDIC provisions, which could be applied equally in other jurisdictions.  As part of this analysis, the Swiss Supreme Court considered the wording of sub-clause 20.8, the words “or otherwise” being described as a “very vague expression”, although it stated:

interpreting it literally and extensively would short-cut the multi-tiered alternative dispute resolution system imagined by FIDIC when it came to a DAB ad hoc procedure because, by definition, a dispute always arises before the ad hoc DAB has been set up, in other words, at a time when ‘there is no DAB in place’, however such interpretation would clearly be contrary to the goal the drafters of the system had in mind”: Case 4A_124/2014 (Swiss Federal Tribunal)”.

Facts:  C commenced court proceedings in the Technology and Construction Court, arguing that it was effectively entitled to opt-out of the requirement in sub-clause 20.2 of the FIDIC Silver Book, when it did not wish to have a dispute resolved by the DAB, and to refer the dispute directly to court (which had been chosen by the parties as the final determination procedure, rather than arbitration). C again relied upon sub-clause 20.8 and, in particular, the “or otherwise” wording.  C’s position was that the parties could not be under a mandatory obligation to achieve the appointment of a DAB and that the phrase “or otherwise” was wide enough to include a state of affairs where a DAB was not in place because a Dispute Adjudication Agreement had not been concluded as between the parties and the DAB. Held: by Edwards-Stuart J in the TCC that the clause should be interpreted so that the words “or otherwise” should be viewed narrowly, with the effect that sub-clause 20.8 did not give either party:

a unilateral right to opt out of the [DAB] process save in a case where at the outset the parties have agreed to appoint a standing DAB and that, by the time when the dispute arose, that DAB had ceased to be in place, for whatever reason”.

The court proceedings commenced by C were therefore stayed to enable the parties to “resolve their dispute in accordance with the contractual machinery”, ie by the DAB.

Edwards-Stuart J further rejected the proposition that sub-clauses 20.4-20.7 of the FIDC dispute resolution procedure were unenforceable for lack of certainty.  A number of commentators have commented on a potential “gap” in these provisions, summarised by the judge as follows (at [24]):

[   ] what has been described as ‘the gap’ in those sub-clauses […] arises when the DAB has made a decision and one party has given a notice of dissatisfaction – with the result that the DAB’s decision, whilst binding is not final.  The problem then is that if the unsuccessful party refuses to comply with the decision of the DAB as it is required to do by sub-clause 20.4.4, the only remedy (it is said) available to the other party is to refer the dispute occasioned by the refusal to comply to yet another adjudication. This can have the effect, Ms Sinclair submitted, that the party in default can embark on a course of persistent non-compliance with DAB decisions and thereby deprive the other of any effective remedy”.

Edwards-Stuart J neatly side-stepped this issue, because the contract before him provided for court proceedings, rather than arbitration. He noted that, whilst the point “may be arguable in the context of the standard FIDIC Books which include an arbitration clause”, an English court was not subject to the same jurisdictional limitations as an arbitrator. It could, for example, simply order specific performance of the DAB’s decision, pending final determination of the court proceedings: Peterborough City Council v Enterprise Managed Services Limited (2014)[25].

Facts: This case concerned a dispute to arbitration under a FIDIC contract pursuant to which, obtaining an engineer’s decision a condition precedent to a reference of any dispute to arbitration. The engineer made it clear that it was no longer the engineer under the contract and would not be determining the dispute. Subsequently, MAN Enterprise Sal (D) referred the dispute to arbitration. Al Waddan Hotel (C) claimed that this ignored the condition precedent. Held: by His Honour Judge Raeside QC, that C was not entitled to benefit from its own wrong, ie its failure to appoint an engineer, who could make the necessary decision: All Waddan Hotel Limited v Man Enterprise Sal (Offshore) (2014)[26].

Facts: A contractor (C) obtained a DAB decision for the payment of $17 million against an employer (E). E gave a “notice of dissatisfaction” and C commenced an arbitration to enforce the DAB’s decision. The arbitral tribunal gave a final award, enforcing the DAB’s decision, and declined E’s request to consider the underlying merits of C’s claim. The tribunal ruled that the proper course for E was to seek such a review by a separate arbitration. This final award was struck down by the Singapore Court of Appeal as being without jurisdiction and in breach of the rules of natural justice. The arbitral tribunal was required to determine the full dispute between the parties and had been wrong to decline E’s request to consider the underlying merits of the claim.  The Court noted that a better approach for C would have been to have sought an interim, or partial, award, pending the making of a final award. C took account of the Court’s comments and commenced a further arbitration this time seeking an interim award to enforce the amount of the DAB’s decision. The interim award was granted and E then brought proceedings before a Singapore court to challenge its validity. E contended that the applicable arbitration rules prevented any provisional award being made which might be varied in the tribunal’s final award and also offended against a provision in the rules which prevented the tribunal from varying, amending, or revoking, an award.        Held: that E’s challenge should be rejected. The tribunal’s award (whilst expressed as being “interim”) was final and binding in relation to its subject- matter, namely E’s compliance (or otherwise) with DAB decision. If the DAB decision was reversed in the final award, that would not be an amendment, or revocation, of the interim award, as such, but merely an accounting exercise, given effect to by the final award. It is expected that this issue will be expressly resolved in the revised suite of FIDIC contracts (beginning with the Yellow Book). For the moment, however, though, this case provides welcome confirmation that DAB decisions will be capable of enforcement by some means, despite perceived drafting infelicities): PT Perusakaan Gas Negara (Persero) TBK v CRW Joint Operation (2014)[27].

The ICC has most helpfully also published issue 1 for 2015 of the Dispute Resolution Bulletin, containing 16 ICC interim, partial and final awards and procedural orders in redacted form, thereby assisting legal practitioners to gauge precisely how arbitral tribunals are likely to construe clause 20 and similar provisions.

ILLUSTRATIONS

Facts:  A contractor (C) sought to recover unpaid monies due under a contract for maritime clearance work undertaken for the employer (E), which contract incorporated the 1999 FIDIC Conditions of Contract for Construction (the Red Book) and provided for a permanent dispute adjudication board (DAB). E raised a number of objections, including an allegation that the claims were not admissible, because they had not been submitted to adjudication prior to arbitration (as required by the dispute resolution provisions in the Red Book).  Held, by the arbitral tribunal, in an interim award, that the adjudication procedure was mandatory, that the formal requirements for submitting a dispute to the DAB had not been met and that there were no exceptional circumstances justifying any departure from such requirements. The tribunal ordered that the arbitration should be suspended whilst the parties proceeded with adjudication, but observed that (given the likelihood that at least one of the parties would probably be dissatisfied with the DAB’s decision) they might wish to waive the necessity to adjudicate and to proceed directly to arbitration.  Unusually, in this case, the Engineer under the contract also acted as the DAB: ICC Case 14431 (2008)[28].

Facts: C terminated a Red Book contract for alleged breaches by E. The parties failed to agree on the establishment of the DAB within the time limits provided in the Red Book. An ad hoc DAB was established, upon R’s initiative, rendering two decisions on the issues in dispute. C argued that these decisions were invalid and referred the dispute to arbitration. E challenged the arbitral tribunal’s jurisdiction and requested a partial award to enforce the DAB’s decision. Held, by the arbitral tribunal, that it had jurisdiction over disputes which were sufficiently closely connected to the matters that had been decided by the DAB and thus could be brought directly to arbitration; that the DAB decisions were valid and binding and that C’s request for an interim measure to suspend the execution of the DAB’s decisions should be rejected:  ICC Case 15956 (2010)[29].

Facts:  The parties entered into a contract for the consideration of a power plant. A dispute arose over the validity of the termination by E of the contract in the arbitration commenced by C to obtain compensation for expenses which it had incurred and payments made to a sub-contractor. E contested the arbitral tribunal’s jurisdiction over claims which had not first been submitted to amicable dispute resolution and an ad hoc DAB, in compliance with the contract. Although closely based upon the FIDIC Conditions of Contract for EPC turnkey projects, the contract contained contradictory provisions relating to dispute resolution, one providing for amicable settlement and arbitration and the other adjudication, amicable settlement and arbitration. Held, characterising the issue as one of admissibility rather than jurisdiction and basing its decision upon a good faith interpretation of the parties’ intentions the arbitral tribunal found that the two-step procedure (comprising amicable settlement and arbitration), which was a special condition, ought properly to prevail over the three-step procedure (comprising adjudication, amicable settlement and arbitration), which was part of the general contractual conditions. Moreover E’s insistence that C should have submitted its claims to the DAB was inconsistent with E’s own submission of counterclaims directly to arbitration without first referring these to the DAB.  Given that attempts had been made to settle the dispute amicably, the two-step procedure had been complied with and C’s claims were therefore admissible: ICC Case 16083 (2010)[30].

Facts: Under a Red Book contract a permanent three-member DAB was established. After many referrals to the DAB and notices of dissatisfaction from both parties, E suggested that the parties should agree upon an addendum to the contract, in order to allow disputes to be submitted directly to arbitration, thereby bypassing the DAB. C rejected this suggestion, claiming that the DAB decisions were binding and had to be executed. Held, by the arbitral tribunal, that although the nature of DAB decisions was binding, since in this case the DAB decisions were subject to notices of dissatisfaction (NoDs), C’s claim for a partial award ordering payment of the sums decided by the DAB could not be accepted: ICC Case 16119 (2010)[31].

Facts: C raised concerns with the Engineer regarding E’s ability to make payments during the performance of a Red Book contract and soon gave notification of termination of the contract on the same grounds. E also sought to terminate the contract, alleging contractual breaches by C. The case was submitted to arbitration, with E contending that C’s claim was inadmissible, since the multi-tier dispute resolution mechanism provided under the contract had not been followed. The arbitral tribunal first found that C’s referral of the claim to the Engineer was not invalidated by their failure to substantiate the claim with supporting information and documentation. Held, by the arbitral tribunal, that, as the referral to the DAB had been impossible by reason of E’s refusal to co-operate regarding their appointment, C was entitled to resort directly to arbitration. The dissenting arbitrator argued, however, that this was not a justifiable reason for avoiding adjudication: ICC Case 16155 (2010)[32].

Facts: C referred a dispute to arbitration, E arguing that the arbitral tribunal had no jurisdiction, since the claims had not been previously submitted to a DAB, in accordance with the dispute resolution provisions. The parties’ contract incorporated the 1999 FIDIC Conditions of Contract for Plant and Design-Build (Yellow Book). The parties disagreed about whether the contract provided for an ad hoc, or a standing, DAB. Held, by the arbitral tribunal, that the contract did not depart from the Yellow Book’s provisions requiring an ad hoc DAB and confirmed the validity of the adjudicator’s appointment and that it was not contingent upon the conclusion of a dispute adjudication agreement: thus C’s objection that there had been insufficient consultation prior to the adjudicator’s appointment was dismissed; that, since the DAB had been validly established, it was required to decide upon the clams prior to arbitration and, given that this condition precedent had not been respected, the arbitral tribunal declined jurisdiction:  ICC Case 16262 (2010)[33].

Facts: C referred its claim to arbitration after an adjudicator’s decision that it was not entitled to all the additional costs claimed. E challenged the arbitral tribunal’s jurisdiction on the grounds that C had failed to comply with the agreed dispute resolution procedure to refer the dispute to arbitration within 28 days of the adjudicator’s decision and that as a consequence, the adjudication had become final and binding and could no longer be submitted to arbitration. Held, by the arbitral tribunal, that the 28-day time-limit was triggered, irrespective of the existence of an identifiable dispute, and that a formal referral to arbitration was necessary within such time limit; since there had been no such formal referral, the adjudicator’s decision had become final and binding, and as a consequence, the arbitral tribunal had no jurisdiction to revisit the decision: ICC Case 16435 (2013)[34].

Facts: The parties incorporated the Yellow Book into their contract. C objected to E’s notice of termination for delay in the performance of the contract and established at DAB, which issued two decisions. E issued NoDs against both decisions in the arbitration. C requested an order, enforcing the DAB’s decisions, and E objected on the grounds that C’s claim was time-barred and counterclaimed. Held, by the arbitral tribunal, that E’s counterclaims were time-barred, but C’s claims were not. However, the DAB’s decisions could not be enforced, because it was an ad hoc DAB, whereas the parties’ mutual intention was to have a permanent one and, thus, its decisions could not be binding: ICC Case 16570 (2012)[35].

Facts: Under a Yellow Book contract C submitted a claim to the DAB for an extension of time (EoT), when the Engineer did not respond. The DAB issued two decisions, with E giving a NoD for the second one, whilst C also gave a NoD for matters left undecided in such decision. C initiated arbitration to recover losses and E accused C of breach of contract and counterclaimed for delay damages. Held, by the arbitral tribunal, that the counterclaim was inadmissible, since E had not submitted its claim to the Engineer, or to the DAB, in accordance with the mandatory multi -tier dispute resolution process; that, C’s claim for EoT was time-barred, because it was made outside the 28-day period under sub-clause 20.1: ICC Case 16765 (2013)[36].

Facts:  Under a Red Book contract, C sought, by arbitration, enforcement of a decision (No 4) issued by the DAB, which ordered payment of amounts awarded to it in earlier decision of the DAB. E objected to the arbitral tribunal’s jurisdiction over this decision. Held, by the arbitral tribunal, that decision No 4 was a separate decision from the earlier decisions and concerned a breach of the obligation to comply with the DAB’s decisions under sub-clause 20.4, and as a consequence, C was entitled to damages: ICC Case 16948 (2011)[37].

Facts:  C’s construction of a pipeline contract was terminated by E for failure to complete it within the deadline, leading to C’s expulsion from the site. C referred the matter to the dispute resolution board (DRB), which held that, although E was not entitled to terminate the contract for breach, it was entitled to do so for convenience. E gave a NoD and challenged the jurisdiction of the ICC arbitral tribunal in the ensuing arbitration, on the grounds that the contact did not provide for referral to ICC. C argued that the parties intended that the ICC should have jurisdiction over disputes if no other institution were designated. Held, by the arbitral tribunal, that under applicable principles of contract interpretation, the parties’ intention was to submit disputes to ICC arbitration: ICC Case 17146 (2013)[38].

Facts: Under a Red Book contract, C and R1 entered into a dispute adjudication agreement (DAA) with R2, sole member of the DAB. The DAB issued an initial decision, awarding a sum of money to R1. When C failed to pay, R1 sought a second decision from the DAB, claiming that C was in breach of contract and should pay immediately also initiating arbitration proceedings, C also initiated arbitration requesting the arbitration tribunal to find that the DAB had no jurisdiction to issue a second decision, since it was an ad hoc DAB, whose mandate expired when the first decision was issued.  Held, by the arbitral tribunal, that the DAA could be terminated only with the consent of both parties and, since that consent was lacking, the DAB had the power to render its second decision. However, R1’s initiation of an arbitration in relation to the first DAB’s first decision, following a NoD, put an end to the DAB’s jurisdiction over the dispute:  ICC Case 18096 (2012)[39].

Facts: The parties submitted various claims to a DAB under a Yellow Book contract. E issued a NoD against the DAB’s decision and C and a company to which it had assigned part of its claim sought arbitration in order to enforce the DAB’s decision. E argued that the arbitral tribunal lack of power to enforce a DAB’s decision, against which a NoD had been issued. C challenged the validity of the NoD. Held, by the arbitral tribunal, that the NoD was validly given and that, since C’s request was limited to enforcement of the DAB’s decision, it would not issue a final award ordering specific performance of a DAB decision which had been contested before it:  ICC Case 18320 (2013)[40].

Facts: E terminated C’s contract due to delays in performance and changes in the joint venture, both parties having signed a Yellow Book contract. C requested the arbitral tribunal to declare that the contract had been unlawfully terminated and to order E to pay the moneys allegedly due. E asked for the proceedings to be bifurcated and for the arbitral tribunal to issue a partial award, rejecting jurisdiction over the dispute for non-compliance with the multi-tier dispute resolution clause. Held, by the arbitral tribunal, that a dispute could be brought directly to arbitration where no DAB was in place and that there was no obligation first to submit the dispute to the Engineer: ICC Case 18505 (2013)[41].

Facts:  C referred a claim to the Engineer, alleging E’s failure to provide within the applicable deadline certain design documents. The parties had signed a Yellow Book contract. E objected to the Engineer’s determination and referred the dispute to the DAB. Both parties issued NoDs against the DAB’s decision.  C initiated arbitration, seeking delay damaged in reliance upon the Engineers determination and claiming that E’s NoD had been given late and that, as a consequence, that part of the DAB decision to which it related had become final and binding and could not therefore be submitted to arbitration.  E argued that the DAB decision was not binding upon the parties. Held, by the arbitral tribunal, that the scope of its jurisdiction was determined by the dispute as originally submitted to the DAB and it could therefore examine all the issues covered by that decision:  ICC Case 19346 (2014)[42].

Facts: The parties signed a Red Book contract, appointing a sole member of a standing DAB. E referred to the Engineer and then the DAB certain disputes over payments, with C objecting to the DAB’s decision and initiating arbitration directly. E thought that C first needed to refer the dispute to the Engineer, or the DAB. Held, by the arbitral tribunal, that C was correct in referring the dispute directly to arbitration, since the DAB must be considered non-existent, given that its sole member lacked the required independence and impartially and that, in these circumstances, there was no obligation to seek an amicable settlement, nor had the dispute first to be referred to the Engineer:  ICC Case 19581 (2014)[43].

The ICC is to be warmly commended upon this initiative and it would surely not be too much to expect other bodies such as the Chartered Institute of Arbitrators (CIArb) and Glasgow Caledonian University (which publishes annual adjudication updates), to name but two, to take measures also to follow the ICC’s helpful suit.

This theme is reflected in a recent article[44] by Elina Zlatanska, who wrote as follows (on page 36 thereof):

“… the arbitral institutions need to amend their rules to include express provisions as to the publication of awards with reasons and also provide model clauses dealing with confidentiality before and after the award is rendered[45]. Institutions that have some publishing experience should publish guidelines for the publication of awards that others can follow. The efforts of the Milan Chamber of Commerce to that effect are commendable and serve as a useful example[46].

Last but not least, it would also be desirable for the international arbitral community to reach a consensus on the value of the duty of confidentiality and whether it presents a genuine obstacle to systematic publication of awards[47]. It is advisable that uniform standards for the application of the duty of confidentiality be developed. This can be done by way of guidelines. The most appropriate venue appears to be CIArb[48].

International commercial arbitration is a dynamic and constantly evolving process. The protection of confidentiality is without a doubt essential for the smooth functioning of arbitration proceedings. However, confidentiality, whilst considered to be one of the cornerstones of arbitration, is not reliable[49]… Balancing the parties’ private interests with the publication of reasoned awards is not an easy task. But if we want to promote international commercial arbitration as an efficient and reliable method for settling business disputes, information needs to be made available to everyone who has an interest in it, or as Fouchard once put it:

“If the international community of merchants aspire to give itself an autonomous system of law, this law has to be made known to all those who have an interest in it: the arbitrators should not resemble the ancient pontiflex of antique Rome, who jealously kept the knowledge of law for themselves and with it the religious and political power[50].

The same theme is further developed in another recent article by Nicholas Towers, who wrote[51] as follows:

“… a possible draft… amendment [to the Arbitration Act 1996] is as follows:

Confidentiality of the award

Unless otherwise agreed by the parties –

(1) ny award may be published 30 days after the award becomes available to the parties and no earlier, and any such publication shall be in a redacted format as may be prescribed, and shall preserve the anonymity of the parties and their representatives and identify only the members of the tribunal.

(2) Notwithstanding (1), if any party, at any time before the expiry of 30 days after the award becomes available to the parties, makes a request in writing to the tribunal asking that the award not be published, the award shall not be published unless otherwise provided for by law.

The hundreds of arbitrations in England each year could provide an important source of arbitral jurisprudence; the LCIA alone reported that it administered 290 disputes in 2013[52], but the procedural legal and practical knowledge contained in those awards is currently largely unavailable[53]. The London Maritime Arbitrators Association (LMAA) Arbitration Terms (2012) cl.26 encourages tribunals to release meritorious awards within that narrow field for publication, but this approach is rare.

 What is proposed in this article is a relatively small change but one which could provide substantial practical benefits for English arbitration. In effect, the reform maintains the confidentiality of awards because the parties are not identified, but allows the generation of an accessible body of arbitration knowledge originating in England. This will improve the conduct of proceedings and the quality of awards, as well as increasing competition and choice within the industry and assist legislative developments – all highly positive outcomes. The suggested reform represents a pragmatic compromise between maximising the utility of awards and allowing a slightly higher level of confidentiality where required by certain users. A portion of awards would necessarily be sacrificed in order to avoid diminishing England’s role as a leading arbitral seat but the remainder will go on to contribute to an invaluable set of resources for participants in arbitration around the world.”

Having began this article with a decision which cited Humpty Dumpty in a House of Lords’ dissenting speech, the author cannot resist reverting to Through the Looking Glass[54], hoping that this does not turn out to be his epigraph:

                        “The little fishes of the sea,

They sent an answer back to me.

The little fishes’ answer was

‘We cannot do it, Sir, because ……….”!

 

Andrew Burr

3 March 2017

www.arbdb.com

[1]              Delivered in the Great Hall of Lincoln’s Inn on 6 October 2015.
[2]              [1942] AC 206 at pages 244 – 5.
[3]              By Lord Thomas of Cwmgiedd, the Lord Chief Justice.
[4]              Most Appropriate For International Arbitration!
[5]              (1990, Deventer, Boston, Kluwer Law and Taxation Publishing).
[6]              Honduras v Nicaragua, awarded by the King of Spain, 23 November 1960, ICJ Reports 1960,  at 192.
[7]              Paragraph 42, Rules of the Arbitration Court of the USSR Chambers of Commerce and Industry.
[8]              Paragraph 33, Rules of the Court of Arbitration at the Polish Chamber of Foreign Trade in Warsaw.
[9]              Paragraph 16, Rules of the Court of Arbitration at the Polish Chamber of Foreign Trade in Warsaw, cit.
[10]             Edited by John Tackaberry QC and the late, great, Arthur Marriott QC (2003, London, Sweet and Maxwell, in conjunction with The Chartered Institute of Arbitrators).
[11]             Hassneh at 247.
[12]             Dolling-Baker v Merrett and Another [1990] 1 WLR 1205.
[13]             Hassneh at 249.
[14]             And see the decision of the UNCC to post recommendations of its commissioners on its website: the process is quasi arbitral and potentially concerns sensitive matters since the claimants were in many cases carrying out work in Iraq, see also appendix.5.
[15]             Liberian Eastern Timber Corporation (LETCO) v. Government of the Republic of Liberia, award 31 March 1986, Clunet 1988, 166 et seq.
[16]             The decision in ICC proceedings No 3344 of 1981, Clunet, 1982, 986
[17]             See, for example, the award rendered in ICC proceedings No 4381, 1986 Clunet, 1986,1106.
[18]             In Derains-Jarvin, Chronique des sentences arbitrales, Clunet, 1986, 1107.
[19]             Y Derains, Chronique des sentences arbitrales, Clunet, 1978, 992.
[20]             Derains, Chronique des sentences arbitrales, Clunet, 1976.
[21]             Professor Catherine Rogers has begun an interesting attempt to counteract the bias inherent in publication of decisions determined by institutional selection, or court filings, and to increase publicly available knowledge about arbitrators. Her plan is to encourage parties to disclose decisions that will be available and searchable on a website with minimal editing to protect especially sensitive information and trade secrets.
[22]             See Christopher Seppälä, “An Excellent Decision From Singapore Which Should Enhance the Enforceability of Dispute Adjudication Boards – The Second Persero Case Before the Court of Appeal” (2015) 31 Const LJ 367.
[23]              SGHC case no. 06757/2013
[24]              SGHC case no 20088/2013
[25]            [2014] EWHC 3193 (TCC) [2014] 2 All ER (Comm) 423; [2014] BLR 735.
[26]                  [2014] EWHC 4796 (TCC).
[27]             [2014] SGHC 146 [2015] BLR 119, [2015] 155 Con LR 169.
[28]             Place of arbitration:  Zurich Switzerland. Origin of parties: America and Europe. Applicable substantive law: Law of E’s country in Eastern Europe
[29]             Place of arbitration: A city in East Europe. Origin of parties: Europe.  Applicable substantive law:  Law of E’s country in Eastern Europe.
[30]             Place of arbitration: Paris, France. Origin of parties: Middle East and Sub-Saharan Africa. Applicable substantive law:  Law of E’s country in Sub-Saharan Africa.
[31]             Place of arbitration:  Capital city of an Eastern European country. Origin of Parties: Europe. Applicable substantive law:  Law of E’s country in Eastern Europe.
[32]             Place of arbitration: Paris, France. Origin of Parties: Africa, Asia Applicable substantive law:  Law of E’s country in Sub-Saharan Africa.
[33]             Place of arbitration: London, United Kingdom. Origin of Parties: Europe. Applicable substantive law: Law of E’s country in Eastern Europe.
[34]             Place of arbitration: Port-Louis, Mauritius.  Origin of Parties: Sub-Saharan Africa Applicable substantive law: Law of E’s country in Sub-Saharan Africa.
[35]             Place of arbitration: capital city of an East European country. Origin of Parties: Europe Applicable substantive law:  Law of E’s country in East Europe.
[36]              Place of arbitration: capital city of an Eastern European country. Origin of Parties: Europe Applicable substantive law:  Law of E’s country in Eastern Europe.
[37]             Place of arbitration: capital city of an Eastern European country. Origin of Parties: Europe Applicable substantive law:  Law of E’s country in Eastern Europe.
[38]             Place of arbitration:  Paris, France.  Origin of Parties:  Europe Applicable substantive law: Law of E’s country in Eastern Europe.
[39]             Place of arbitration:  capital city of an Eastern European country. Origin of Parties: Europe Applicable substantive law:  Law of E’s country in Eastern Europe.
[40]             Place of arbitration:  capital city of an Eastern European country. Origin of Parties: Europe Applicable substantive law:  Law of E’s country in Eastern Europe.
[41]             Place of arbitration:  capital city of an Eastern European country. Origin of Parties: Europe Applicable substantive law:  Law of E’s country in Eastern Europe.
[42]             Place of arbitration:  capital city of an Eastern European country. Origin of Parties: Europe Applicable substantive law:  Law of E’s country in Eastern Europe.
[43]             Place of arbitration:  capital city of an Eastern European country. Origin of Parties: Europe Applicable substantive law:  Law of E’s country in Eastern Europe.
[44]             E Zlatanska, “To Publish or Not To Publish, Arbitral Awards: That is the Question” (2015) 81 Arbitration 25.
[45]             Hwang and Chung, “Defining the Indefinable” (2009) Journal of International Arbitration 642, 644.
[46]             See, eg Milan Chamber of Commerce, Guidelines for Anonymous Publication of Arbitral Awards (Milan: Milan Chamber of Commerce and Università Carlo Catteneo, n.d.), http://www.camera-arbitrale.it/Documents/guidelines_anonym-aw-pdf [Accessed 9 December 2014].
[47]              Kyriaki Noussia, Confidentiality in International Arbitration:  A Comparative Analysis of the Position under English, US, German and French Law (Heidelberg: Springer 2010), p.181
[48]             A full list of CIArb Guildelines, Protocols and Rules is available at http://www.ciarb.org/resources [Accessed December 9, 2014].
[49]             Paulsson and Rawding, “The Trouble with Confidentiality” (1994) ICC Bulletin 48.
[50]             Klaus Peter Burger, The Creeping Codification of Lex Mercatoria, citing Philippe Fouchard, L’arbitrage commercial international (Alphen aan den Rijn: Kluwer Law International, 2010), p.85.
[51]             N Towers, “Expanding Horizons in Commercial Arbitration: The Case for the Default Publication of Awards” (2015) 81 Arbitration 131.
[52]              LCIA Registrar’s Report 2013, available online at http://www.lcia.org/LCIA/reports.aspx [Accessed February 27 2015].
[53]             LCIA Rules Art.30 makes arbitration awards confidential.
[54]             (1872) chapter 6.

 

What really is the ‘law firm of the future’?

It’s a struggle to think of an industry that hasn’t been disrupted by advances in technology – marketing, finance and retail, to name a few.

The legal industry, however, has typically been seen as late to the party. But as we know from our latest report, firms in the sector are now taking tech adoption seriously in a bid to become the “law firm of the future.” In fact, the industry is taking technologies such as artificial intelligence (AI) and machine learning more seriously than other industries, with 55% of IT staff in the legal sector currently using predictive coding and 48% using machine-learning technologies. That’s compared to only about a third of CIOs in non-legal sectors (30% and 38%, respectively).

Steeped in tradition, there is no denying that some firms are more hesitant when it comes to technology – those that are “set in their ways” regarding the structure of the business. However, they need to realise that it’s sink or swim if they choose not to adapt to the digital age.

Competition from start-ups

The new kids on the block are causing senior executives at law firms to think seriously about the way they do business. Now experiencing what legacy banks have been struggling with for almost seven years, law firms are facing fresh competition from start-ups that have a vast knowledge of technology and a huge set of IT skills, enabling them to operate new business models.

Working with four of the five Magic Circle firms, we know that by operationalising IT systems, law firms have the opportunity to work more efficiently and increase their billable hours. If every episode of The Good Wife, Suits or Law & Order were to show the true amount of time spent shuffling paper, they wouldn’t make it to air!
However, a law firm’s ability to increase billable hours is limited when they fail to adopt an IT system that allows them to benefit from new technology in a safe way.

With the help of new technologies, less time will be spent on tedious administrative tasks and employees will no longer need to refer to the “files cupboard” when researching past cases, as so many still do. Luminance is an example of beneficial technology for the sector. Its AI software understands language at speeds no human could, providing an immediate and global overview of any company and picking out warning signs without needing any instruction. Firms using analytics tool Brainspace, for example, are able to better understand unstructured data faster than ever before.

Due to security fears, it’s understandable that firms have been slow to utilise cloud technologies, despite the fact that moving to a cloud platform could make them easily accessible from many different offices across the world. However, what firms need to understand is that with the right platform and security offering they could increase billable hours and grant global access. After all, every hour spent searching through the files cupboard or scanning documents is an hour that can’t be billed to a client.

In order to keep up with the competition, we will no doubt see many of the “traditional” firms take on the characteristics of legal start-ups that not only enable firms to increase billable hours but also aid and improve client interaction. For example, AI chatbots, like DoNotPay’s, could offer standard legal advice via a mobile phone or tablet, giving the enquirer an answer immediately, or direct them to the best solution/department. The result would be a seamless and quality customer experience, while freeing up time for lawyers to work on more bespoke cases.
Competitive salaries aren’t everything

As a way to enhance their services, many industries, like financial services, are recognising the importance of attracting top tech talent. Those who have been slow to provide roles focused on innovation have fallen victim to global tech corporations, like Facebook and Google, which are a larger cultural draw for millennials.

Top law firms with tough entry requirements but competitive salaries have previously been an attractive option for law students. However, those entering the industry want more from a job than just a chunky wage packet at the end of the month – they want to be sold a lifestyle.

According to PwC (2011), millennials crave a better work/life balance ahead of wanting more money, and would like technology to be better incorporated into their job. Many industries have answered these desires – plenty of financial corporations have opened innovation labs as a response, whilst other industries offer employees the option of working remotely or on the move, supplying them with smartphones or tablets to access databases. But law firms have a long way to go in attracting top tech talent who will be the key to bringing fresh and innovative ideas to challenge the archaic business model. Law firms also need change at the top of the partnership to allow tech experts in the firm to drive the changes needed.

In-house isn’t necessarily best

Previously, law firms have been confident in deciding which IT network their firm requires. Understandably, as guardians of highly sensitive documents, firms tended to keep everything in- house. However, as the competitive threat from start-ups increases and more and more firms look to adopt technology to keep up, organisations are recognising that they simply don’t have the resources to consult on the best possible IT strategy for their needs. In addition to this, General Data Protection Regulation (GDPR), which comes into force in May 2018, will put pressure on firms from a data control/processing standpoint. Ahead of this date, to get their “data house in order,” firms must partner with reputable third parties who are focused on meeting compliance regulations.

In response to industry challenges, we will undoubtedly see an increased number of mergers and consolidations, as firms look to expand globally. That being said, the lack of IT knowledge within firms will only become more problematic. Without a scalable and robust network, these transitions will be next to impossible, take far longer than needed and will be a risk to a firm’s security.

There needs to be a cultural shift in educating firms around the need for digital transformation. It’s understandable that the industry is cautious of “handing over” its data – news stories like the Panama Papers scandal and the increasing threat of cyber-attacks being reported daily in the media have made law firms wary of outsourcing solutions and services. However, if data protection regulations aren’t met, a firm’s clients are at risk, and its own finances and reputation could also suffer. Outsourcing this responsibility to an organisation that is dedicated to ensuring data is stored securely, and that complies with regulation, means one less worry for the corporate team.

Legal firms are at a crossroads – they either digitally transform and adapt to the needs of their employees and customers, or face the consequences. However, it’s not just about adopting tech for the sake of it. Consideration as to how workloads can be eased, billable hours increased and how the quality of client interaction can be improved will put such firms in a good position to survive, and thrive, in the digital age.

A STRATEGIC APPROACH TO EFFECTIVE WORKPLACE INVESTIGATIONS.

 

Employers often question how they can avoid the impact and expenses associated with defending against claims raised by employees for misconduct in the workplace.  The employer wants to take employment action against an employee but hesitates to do so because of the risk of costly litigation for a claim of wrongful termination.  When a complaint about employee misconduct is received, or the employer becomes aware of employee misconduct through an anonymous source or a demand letter, the employer may inquire whether it can go on with “business as usual” or be required to take steps to address the alleged conduct.  In such cases, as well as those in which any claim of harassment, discrimination, breach of confidentiality, security, or any other form of employee misconduct comes to the attention of the employer, the employer’s investigative response can potentially increase or decrease the employer’s risk of liability.

Employers are tasked with the duty of ensuring its workplace complies with federal and state laws which prohibit a hostile, discriminatory or retaliatory work environment, and which are intended to protect employee safety.  This duty requires the employer to promptly determine whether there is any merit to a claim of employee misconduct, and effectively act to address such misconduct to prevent any further recurrence.  In addressing allegations of improper workplace conduct, the manner in which the employer responds is of critical importance to its ability to assert defenses. A faulty investigation can result in the employer’s failure to prevent repeated misconduct, failure to remedy conduct which violates state and federal law, failure to comply with its own employment policies against harassment, discrimination, retaliation, and safety regulations in the workplace, and can also result in claims of defamation and intentional infliction of emotional distress by employees who participated in the investigation process.  By implementing an effective and responsive workplace investigation plan, employers can establish a defense to such claims and increase the likelihood of being successful if faced with litigation.

  1. EMPLOYER’S AFFIRMATIVE DEFENSE

 The United States Supreme Court has determined that investigations of workplace harassment[1] are a key component of an employer’s response to allegations of employee misconduct, providing employers with an affirmative defense to vicarious liability for a supervisor’s hostile work environment where the employer’s action does not result in a tangible employment action, provided that: (1) The employer exercised reasonable care to prevent and correct promptly harassment; and (2) the employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer to avoid harm otherwise.  Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 765 (1998); Faragher v. City of Boca Raton, 524 U.S. 775, 807 (1998).

Employer liability may be premised on negligence based on failure to have effective policies and procedures for addressing employee complaints.  See Lehmann v. Toys ‘R’ Us, 132 N.J. 587, 621 (1993) (finding that “a plaintiff may show that an employer was negligent by its failure to have in place well-publicized and enforced anti-harassment policies, effective formal and informal complaint structures, training and monitoring mechanisms).   An employer may avoid liability if its procedures for investigating and remediating alleged discrimination are sufficiently effective.  See e.g., Bouton v. BMW of North America, Inc., 29 F.3d 103, 106 (3rd Cir. 1994).  Through an effective investigation, an employer reaffirms commitment to, and enforcement of, policies against employee misconduct.  See Ilda Aguas v. State of New Jersey, 220 N.J. 494 (2015).  The goal of deterring employee misconduct is promoted by an employer’s “responsible efforts to detect, address and punish it” to prevent violations.  Aguas, supra, at 519, citing Burlington, supra, 524 U.S. at 764; Faragher, supra, 524 U.S. at 805-06) (Employer may have an affirmative defense if it exercised reasonable care to prevent and correct misconduct).  An affirmative defense cannot be asserted by employers who fail to implement effective anti-harassment policies, and “employers whose policies exist in name only.”  Aguas, supra, at 523; see also Gaines v. Bellino, 173 N.J. 301, 314 (2002) (finding that employer’s due care is demonstrated through effective complaint, sensing and monitoring mechanisms, and through showing of commitment to workplace policies through consistent practice).

An employer’s remedial action is adequate if it is “reasonably calculated to prevent further harassment.  Knabe v. Boury Corp., 114 F.3d 407, 412, n.8 (3rd Cir. 1997).  “The prospect of an affirmative defense in litigation is a powerful incentive for an employer to unequivocally warn its workforce that [harassment] will not be tolerated, to provide consistent training, and to strictly enforce its policy… [A]n employer that implements an ineffective anti-harassment policy, or fails to enforce its policy, may not assert the affirmative defense.”  Aguas, supra, at 523.  Effective remedial measures include the process by which the employer arrives at the sanction that it imposes on the alleged harasser.  If the effective measures are those reasonably calculated to end the harassment, then neither a court nor a jury can evaluate the effectiveness without considering the entire remedial process…. [t]he effectiveness is gauged by the process of investigation – including timeliness, thoroughness, attitude toward the allegedly harassed employee, and the like.”  Lehmann, supra, at 623; Payton v. New Jersey Turnpike Authority, 148 N.J. 524, 537 (1997).

  1. ENFORCEMENT THROUGH AN EFFECTIVE WORKPLACE INVESTIGATION

             An investigation is not only worth doing, it is worth doing well.  An employer’s policy against harassment, discrimination and retaliation, and policies for the protection of its employees, are only as effective as the measures utilized to implement and enforce such policies.  A poorly conducted investigation can compound an employee’s complaints about wrongful conduct in the workplace, and provide evidence that the employer knew of unlawful conduct and failed to take appropriate action to remedy it.  A properly conducted workplace investigation sends a message to employees that the employer is committed to enforcing its policies on workplace conduct and employee protection.

  1. Employer’s Pit-falls in Investigating Employee Complaints.

 An employer may be defeated in asserting an investigation as an affirmative defense if it engages in action or inaction that is reflective of a “sham” investigation rather than an effective investigation.  Examples of such conduct include:  delaying the commencement of an investigation or taking too long to complete an investigation; conducting the investigation with pre-determined intention to shield the employer from liability or protect the accused, rather than address the employee’s legitimate concerns; failure to select an unbiased investigator; making an employment decision before the investigation even commences, or reaching conclusions based on one-sided information; showing disrespect for the individual interviewed, or not affording a full opportunity to respond (e.g., rolling eyes, raising voice, aggressive questioning); making pre-judgment statements during the interview (e.g., “I don’t believe this, that does not sound like something he/she would do”); failing to take down names of additional witnesses; refusing to interview key witnesses; interviewing key witnesses in the presence of company management showing lack of independence; taking a dismissive approach to the investigation, particularly if the complaining employee has a history of making complaints; failing to conduct an investigation when the employee says that he or she wants to make the employer aware of a concern, but does not want anything done or said about it at this time; promising the complaining employee that the employer will keep the complaint completely confidential, [2] (complaint and investigation should be kept on a need-to-know basis); failing to conduct a sufficiently thorough investigation, including interviews of all parties, or not talking to all relevant witnesses; failing to properly and appropriately document the investigation; failing to monitor the workforce, address and remedy potential situations or interactions which violate employer policies.

  1. Employer’s Investigation Plan.

The primary goal of an investigation is to provide the employer with the appropriate findings and facts to make a decision regarding the matter.  For an employer to legitimately rely on the results of an investigation, the investigation must commence promptly upon receipt of complaint or notice of misconduct; be conducted thoroughly through review of all allegations, interviews with all relevant witnesses, review of all relevant documentation and applicable employment policies; be conducted by the investigator in an objective, fair and neutral manner; and the investigation’s findings must create a proper foundation for carrying out effective remedial measures, and provide the company with the grounds upon which to initiate appropriate steps for resolution of the matter.

The company should be prepared to promptly identify employees who may have information pertinent to the investigation, and gather all relevant documents to be reviewed as part of the investigation.  These include:  written allegations of complaints by complainant (or by anonymous note or other employee writing); written policies and procedures; personnel files; electronic files; e-mails; texts; voice mail messages; prior complaints and investigation files; organizational charts; and information from social media websites to the extent permitted by state law.

  1. Selection of Investigator

An employer should give careful consideration to the selection of an investigator to conduct the workplace investigation.  The investigator selected must be impartial, objective, fair, and unbiased; be knowledgeable about relevant laws and applicable workplace policies; have effective communication and interviewing skills; be sensitive to the situation and persons involved; and be able to conduct a thorough investigation and prepare an accurate report.

Investigations may be conducted internally by in-house counsel or a member of the employer’s human resources department or senior management team, or by outside counsel for the employer, or by an independent third party investigator.  There are certain pros and cons depending upon whether the employer elects to have the investigation conducted internally or through an outside third party, particularly outside counsel.  Some benefits to having an investigation conducted by in-house counsel or a member of the Human Resources department or management, is that the investigator will have a pre-existing knowledge of the corporation, its structure, its policies and procedures, its record-keeping practices, its culture, and possibly even the personalities and politics involved in the underlying claims, and be in a position to start the investigation almost immediately.

In contrast, an “internal” investigator may not be viewed as independent enough to conduct a thorough and impartial inquiry; may become a witness in litigation resulting from the matter being investigated; and if the in-house investigator is also legal advisor to the company, may face issues relating to the confidentiality and privilege of information obtained during the course of the internal investigation.

In circumstances where the attorney conducts the investigation and becomes a witness to the content of information and documentation obtained during an investigation, it must be understood that the attorney may later be disqualified from representing the company as its legal counsel in litigation ensuing from the allegations of workplace misconduct and/or accompanying investigation.  Similarly, an attorney who appears at an investigation interview with his/her client, the complainant, and thus becomes an investigation witness, may be disqualified from representing the complainant in subsequent litigation.

Regardless of how time and cost efficient an internal investigation could be, if it fails to thoroughly and fairly address the allegations or workplace misconduct, or is seen as partial or otherwise lacking in credibility, it could ultimately cause the employer more expense and risk of liability in the event the matter proceeds to litigation.

  1. Application of Privileges in an Investigation

The role of in-house or outside counsel in an investigation presents the risk that communications with the lawyer during the investigation may not be protected by the attorney-client privilege or the work-product privilege.  When an employer intends to rely on the investigation as a defense that it took reasonable and justified responsive and remedial action, documents related to the employer’s internal investigation are subject to discovery since it demonstrates the employer’s response to an employee’s complaint, inclusive of facts obtained, the timing of the investigation, the employer’s evaluation of the facts, and any action taken by the employer in response to the findings of the investigation.  See Payton, supra.

What may remain privileged from disclosure, however, is the attorney’s legal advice and recommendations.  Privilege only applies to confidential communications made to a client “by an attorney acting as such.”  Upjohn v. United States, 449 U.S. 383, 394-95 (1981) (holding that… “where communications at issue were made by corporate employees to counsel for corporation acting as such, at direction of corporate superiors in order to secure legal advice from counsel, and employees were aware that they were being questioned so that corporation could obtain advice, such communications were protected.”  See also, Waugh v. Pathmark Stores, Inc., 141 F.R.D. 427 (D.N.J. 2000) (finding that attorney-client privilege was not waived where employer’s in-house counsel attended meeting with employer’s decision-makers after internal investigation into employee’s discrimination complaints, and reviewed related documents in his capacity as attorney for employer, to provide legal advice on remediation efforts; counsel did not conduct investigation himself or act as decision-maker in employer’s remediation efforts); Harding v. Dana Transport, Inc., 914 F.Supp. 1084 (D.N.J. 1996) (finding that any communications between company and counsel involving legal opinions and legal advice was subject to attorney-client privilege).

It should be noted, however, that the attorney-client privilege may be waived if an attorney will be presenting evidence at a trial which was developed during the course of the investigation.  The attorney cannot assert the attorney-client privilege for the purpose of restricting disclosure of matters related to the investigation, and subsequently seek to introduce the information, or even selected portions of the information, as evidence on behalf of the employer at trial.  See Harding, supra, 914 F.Supp. at 1096) (attorney-client privilege waived as to investigatory files of counsel who conducted investigation of harassment allegations, when employer raised reasonableness of investigation as an affirmative defense; “by asking [the attorney] to serve multiple duties, the defendants have fused the roles of internal investigator and legal advisor.  Consequently, [the employer] cannot now argue that its own processes are shielded from discovery.”)  The waiver of the attorney-client privilege and work product privilege in this context also extends to documents which relate to the investigation, although the documents may be redacted to exclude attorney communications which reflect legal advice or legal opinion.  Id.; see also Payton, 148 N.J. at 551-52.

Where the attorney is acting in a business role, i.e., fact-finder, rather than in a legal role for purposes of offering legal advice or preparing for pending or threatened litigation, privileges may not apply.  In addition, the privileges will not protect the underlying facts from disclosure, even if those facts were contained in a communication to the attorney.  Upjohn, 449 U.S. at 395-96; see also XYZ Corp. v. United States, 509 U.S. 905 (1993) (communications between attorney and client regarding an internal investigation were privileged, but factual information contained in written communications, including the results of investigation, were not shielded from discovery).

For these reasons, both the attorney and employer should recognize that even where the employer has retained the attorney for purposes of investigating an internal complaint, only the attorney’s legal analysis and advice is privileged from disclosure, and the facts uncovered during the investigation are discoverable.

  • CONCLUSION

While no two investigations are exactly the same and there are no mandatory procedural rules or court imposed deadlines for conducting an investigation, an employer is well guided to ensure that any workplace investigation is conducted in a prompt and thorough manner by an unbiased and experienced investigator, resulting in effective remedial action in response to complaints of employee misconduct.

[1] These guidelines are not limited to charges of sexual harassment but also apply to all forms of workplace harassment that violate Title VII of the Civil Rights Act of 1964.  EEOC Enforcement Guidelines (1999). 

[2] Employers may not tell employees who make a complaint not to discuss the matter with co-workers while an investigation is ongoing, since such a request violates employees’ rights to discuss the terms and conditions of their employment as protected under Section 7 of the National Labor Relations Act.  See Banner Health Systems d/b/a Banner Estrella Medical Center, 358 NLRB No. 93 (July 30, 2012) (holding that employers could not apply a general rule prohibiting employees from discussing ongoing investigations of employee misconduct and that instead, it must first determine whether in any investigation there are grounds to justify a requirement of confidentiality, e.g., for protection of investigation witnesses, to protect evidence that is in danger of being destroyed, where testimony is in danger of being fabricated, or where there is a need to prevent a cover up).

 

Current Hot Topics in UK Employment Law

Current hot topics in UK employment law

What a difference the Brexit vote has already made. This time last year we were anticipating, with some certainty, various employment-related proposals from an established government. Now, what lies ahead is much less predictable, given a different prime minister, the prospect of Brexit and renewed calls for increased delegation of powers amongst the devolved governments, if not independence. In addition, the drain on government resources caused by Brexit preparations is already resulting in delays to legislation and consultations.

Brexit

The outcome of last year’s EU referendum did not result in any immediate changes to UK employment law and is unlikely to do so for some two years. The prime minister has committed that “as we translate the body of European law into our domestic regulations, we will ensure that workers’ rights are fully protected and maintained”. However, whilst no employment law changes are envisaged in the short-term, of immediate concern to many employers is the impact Brexit may have on the movement of workers. It is currently unclear how immigration will be managed post-Brexit, although the indications are that new controls on European immigration will seek to accommodate an ongoing need for skilled and seasonal workers.

Gender pay reporting

Addressing a reducing but persistent gender pay gap has been on the government agenda for some time. Regulations taking effect in April 2017 require larger employers in the private sector to report on their gender pay gap. There are similar regulations covering public sector employers operating in England.

The regulations require employers to publish the difference between the median and mean average hourly rate of pay paid to male and female employees; the difference between the median and mean average bonus paid to male and female employees; the proportions of male and of female employees who receive bonuses; and the relative proportions of male and female employees in each quartile pay band of the workforce.

In the private sector, employers’ first gender pay reports will have to be published no later than 4 April 2018, based on hourly pay rates as at 5 April 2017 and bonuses paid between 6 April 2016 and 5 April 2017. The public sector regulations will require the first pay reports to be published no later than 30 March 2018, based on hourly pay rates as at 31 March 2017 and bonuses paid between 1 April 2016 and 31 March 2017.

For private sector employers, there is no specific penalty for non-compliance. A key incentive is the risk of adverse publicity and reputational damage. However, compliance is also not risk-free, depending upon the data collated and how it is presented. Employers concerned that publication could prompt negative perception may therefore choose to volunteer additional information, explaining the context of any pay gap and how they are responding.

Labour law developments

Changes affecting the way trade unions organise industrial action came into force on 1 March 2017. These Trade Union Act provisions are aimed at stopping unrepresentative strike action, such as where disruption occurs despite a low turnout for the strike ballot. A new 50% threshold for voter-turnout during strike ballots now applies. An additional 40% support threshold applies for industrial action in important public services (including some health, education, fire, transport and border security services) where the majority of those entitled to vote are normally engaged in the provision of such services. Accompanying these changes are steps to tighten the supervision of picketing, longer advance notice of strikes, changes to the ballot paper and the re-balloting of ongoing disputes.

The balloting changes are anticipated to result in more focused, and possibly fewer, ballots, as trade unions seek to ensure the new thresholds are met. It is conceivable, however, that alternative forms of protest may also manifest where a minority of workers harbour strong grievances which are not supported more widely by colleagues. In addition, unions may challenge some of the changes on human rights grounds and the Welsh government is also disputing the application of some to Welsh devolved services.

The way in which trade unions operate has also come under recent government scrutiny. The result is a series of measures which will introduce new public sector check-off arrangements (where the employer deducts union subscriptions from pay), reporting on public sector facility time and an extension of the role of the Certification Officer (a form of regulator for trade unions). A phased implementation of these changes will take place over this year and next.

Hot topic litigation

The calculation of holiday pay has been a significant and high-profile employment law issue before the courts over recent years. The critical question under review was whether UK legislation could be read to conform with EU requirements in terms of what elements of pay fall due during periods of statutory holiday.

In February 2017 the UK Supreme Court refused permission to appeal and we now know that representative results-based commission and non-guaranteed overtime (overtime which workers are contractually required to perform) must be included in the calculation of holiday pay for the first four weeks of holiday under the Working Time Regulations. However, the position with respect to truly voluntary overtime (overtime which workers are not contractually required to perform) remains unclear. Although there are a number of first instance tribunal decisions which do suggest that truly voluntary overtime should be included, there is no binding UK authority on the point.

The other emerging hot topic relates to the employment status of workers, typically in the gig economy. A tribunal has ruled that two Uber drivers who brought test cases against the company were ‘workers’, not independent contractors, and were therefore entitled to holiday pay and to be paid at least the national minimum wage while working.

In UK law, having ‘worker’ status is a passport to a range of employment rights such as the national minimum wage, holiday pay and access to a pension scheme, although the full array of employment rights, including statutory sick pay and protection against unfair dismissal, is reserved for the narrower category of workers commonly referred to as ‘employees’.  Uber is appealing this decision.

Two further cases, one at first instance involving a cycle courier and the other in the Court of Appeal involving a self-employed plumber, were also successful in claiming ‘worker’ status.

At the same time, the government and MPs are conducting separate reviews into new forms of work, including the gig economy and worker status issues. There are also concerns that the growth in self-employment is reducing national tax revenue, which may result in a defensive response from the Treasury. Organisations reliant on contractors, freelancers, agency workers and the self-employed need to ensure that their staffing models keep pace with change in this area.

A national living wage

In 2016, the national minimum wage rate in UK increased significantly for workers aged 25 and over, with the introduction of a supplement the government termed, “the National Living Wage”.  This increment was accompanied by a promise of further rises in the following four years, the first of which takes effect from 1 April 2017, raising the statutory minimum pay level to £7.50 per hour for those aged 25 and to £7.05 for 21 to 24 year olds.

Applying these revised minimum pay rates has been a challenge for many UK employers. Employers need to be careful if they plan to vary employees’ existing terms and conditions to absorb the higher rate national living wage. Depending on the approach taken, such actions could be challenged by staff as unlawful.

Employment tribunal changes

There is one aspect of employment tribunal practice that has dominated the headlines in recent years and that is the introduction of tribunal fees. There is no doubt that the government is coming under increasing pressure to justify current fee-levels. In January 2017 it revealed the outcome of its fee review and launched a consultation on new proposals to change the fees remission scheme. The planned changes are relatively minor and fall a long way short of satisfying those who have called for an overhaul of the fees regime. That fight continues on 27 March, when the Supreme Court hears Unison’s appeal against the rejection of its legal challenge by the Court of Appeal. Although the government acknowledges that “there does appear to be evidence that fees have discouraged some people from bringing proceedings” it states that there is “no conclusive evidence that anyone has been prevented from doing so.”

Of more immediate impact is the introduction of a new online database of employment tribunal decisions allowing new decisions of the tribunal to be viewed online. Previously, the fact a claim has been pursued and the names of the parties required a trawl through paper documents held centrally at Bury St Edmunds, meaning many cases passed unnoticed by the wider public. Employers and claimants should be prepared for increased press interest and the potential use of such information by both sides to support their own contentions.

 Boosting apprenticeship funding

A high-profile manifesto pledge of the UK government on re-election in 2015 was the improvement and expansion of apprenticeships over a five year period. Pivotal to the government plans for apprenticeship growth is the question of funding and to generate greater financial support, from April 2017, an apprenticeship levy is to be introduced for employers with a payroll bill exceeding £3 million. The levy, of 0.5% of the salary bill, will be collected through the employer’s normal PAYE systems, alongside usual income tax and national insurance contributions. Employers paying the levy will have full access to their contributions to fund their apprenticeship needs but it also envisaged that many will not utilise their contributions in full, leaving a surplus the government can apply for the benefit of others, especially smaller, non-levy paying organisations.

In summary, while it is true that Brexit is diverting the government’s attention, it is also apparent from the above that there is still much to occupy employers and their lawyers in the interim.

The Wait is Over: The ICC’s New Expedited Procedure Rules (and other Updates)

The year 2017 could mark an important turning point for institutional international arbitration. On 20 October 2016, the International Chamber of Commerce (“ICC”) adopted a list of important revisions to its Rules of Arbitration (“ICC Rules”)[1].  By the time this article is published, for example, new “Expedited Procedure Rules” will have come into effect on 1 March 2017. These revisions aim to improve the efficiency and transparency of ICC arbitration.  Time will tell if they actually will.

Through the years, a number of concerns have been raised by parties – individuals, businesses, states, and international organizations – adopting or considering adopting institutional arbitration as a means of resolving their international disputes. These concerns are numerous, yet three common threads are a general desire to make international arbitration more affordable, a wish for more efficient tribunals, and a call for a change in a culture that is often seen as opaque. At the heart of this debate, and fueling calls for change, are an increase in the length of hearings, a significant increase in the breadth and volume of document production, delays in obtaining awards, and the absence of an obligation on the part of certain institutions to provide reasons for institutional decisions that impact an arbitration. Such calls are not surprising since international arbitration was born of the desire to provide parties with a low-cost, effective and efficient alternative to litigation before the courts.  One illustration of the problem has been a significant decline in the number of so-called small cases (i.e. claims involving amounts below US$ 1 million) administered by the ICC[2].

The adoption and implementation of the Expedited Procedure is an attempt by the ICC to address these concerns and to ensure that ICC arbitration remains an attractive means of international dispute resolution notwithstanding the level of complexity of the case and the amount at stake. While some critics may argue that these changes long overdue, they should nevertheless be welcomed by users of international arbitration as well as by counsel and arbitrators.

In December 2016, in a text published in the ICC Dispute Resolution Bulletin, the President of the ICC International Court of Arbitration, Alexi Mourre, described as follows the spirit and rationale behind the Expedited Procedure Rules:

“Some of our colleagues sometimes say in conferences – half jokingly perhaps, but half seriously as well – that in arbitration parties get to choose two out of the three advantages of quality, speed and limited costs; if you have speed and quality, you should be prepared for increased costs, but with less speed, etc. ICC takes issue with that. Our message is that if the parties so decide, they can get quality, speed and limited costs. This is the aim of ICC’s new Expedited Procedure Rules, adopted by the ICC Executive Board on 20 October 2016.”[3]

As to the Expedited Procedure itself, three elements are particularly noteworthy:

  • Under the Expedited Procedure Rules, notwithstanding any contrary term or provision of the arbitration agreement binding the parties, the Court may now submit the arbitration case to a sole arbitrator (as opposed to a three-person tribunal)[4];
  • Under the Expedited Procedures Rules, the arbitrator has six months from the date of the case management conference to render the award[5];
  • The Expedited Procedures Rules expressly confers very extensive powers on the arbitrator with regard to procedure.

The first of these has obvious and broad ramifications. It has the potential to reduce the problems relating to the constitution of the tribunal including its fees, the number of objections raised, the question of the availability of its members, and the time needed to deliberate and agree on the award. On the other hand, it limits party autonomy in a way that has rarely been seen before. It deprives parties of the traditional ability to appoint one arbitrator each – an arbitrator who may, at least in their view, have a better understanding of their concerns – as members of a three-person tribunal, potentially impacting, some say, the legitimacy or integrity of the award itself.

The second of these elements is also significant. Under the Expedited Procedure Rules, the case management conference has to take place at the latest 15 days after the transmission of the file to the arbitrator[6]. The analysis and the drafting of the award will usually take about a month. If the arbitral tribunal has six months after the case management conference to render the award – which might include one month of deliberation and drafting – the remaining time does not leave much time for the process to unfold. Although in all cases the ICC Court may grant an extension if necessary[7], there will be a tremendous pressure on each participant to the arbitration process to get the work done within a short delay.

Also noteworthy, the Expedited Procedures Rules expressly confers very extensive powers on the arbitrator with regard to procedure. Article 3 provides that:

  • “[…] the arbitral tribunal may, after consultation with the parties, decide not to allow requests for document production or to limit the number, length and scope of written submissions and written witness evidence (both fact witnesses and experts)” (para. 4);
  • “[t]he arbitral tribunal may, after consulting the parties, decide the dispute solely on the basis of the documents submitted by the parties, with no hearing and no examination of witnesses or experts”(para. 5).

It is to be expected that these rules will give rise to claims of due process violation by unsatisfied parties.

In addition to the innovations described above, it is to be noted that Article 23 of the ICC Rules which provides that the first task of a tribunal is to prepare, in collaboration with the parties, a document referred to as “Terms of References” – one of the hallmarks of ICC arbitration – will not apply to the Expedited Procedure[8]. Furthermore, once the arbitral tribunal is constituted under the Expedited Procedure Rules, the parties will not be entitled to present new claims without authorization of the tribunal[9]. Article 3 of Appendix VI of the ICC Rules sets up the elements that the arbitral tribunal could consider to decide whether a new claim should or should not be authorized, namely its nature, its cost implications, the stage of the arbitration, and any other relevant circumstances.

Most importantly, the rules contained in the new Article 30 of the ICC Rules and in the Appendix VI will apply automatically if three conditions are met: (1) the arbitration agreement is concluded after 1 March 2017, (2) the amount in dispute is below US$ 2 million, and (3) the parties have not explicitly chosen to derogate from the expedited procedure[10].  Going forward this means among other things that parties negotiating an arbitration agreement should consider seriously the possibility of “opting-out” where they feel that the Expedited Procedure is not ideally suited to the type of dispute envisaged. An example of an opting-out clause is available at the end of the revised ICC Rules. Such a clause should be drafted carefully keeping in mind that if it is not clear enough, the Expedited Procedure Rules will apply and the parties will be deemed to have agreed to them. In other words, problems might inadvertently arise where arbitration agreements contradict the provisions contained in the Expedited Rules. Without entirely opting-out, the parties could also potentially decide in advance to derogate to some sections of the Rules only, for example to have three arbitrators instead of a sole one. The ICC Court might however have the power to ignore such exemption if it finds that it violates the spirit of the Rules and the Appendix (see: Article 5 of Appendix VI of the ICC’s Rules).

While these Expedited Procedure Rules will apply on an opt-out basis to all arbitration agreements satisfying the conditions mentioned above, the ICC Court retains the power to decide that the Expedited Procedure Rules should not apply in a particular case[11]. The current Rules and explanatory Note to Parties do not indicate on what basis such a decision would be made. One may presume that a key factor will be the level of complexity of the case. This is based on the premise that the amount in dispute does not always – although often – reflect the level of complexity of a case. Following the same logic, parties to a dispute for which the amount in dispute is greater than US$ 2 million, should also consider, where appropriate, the possibility of “opting-in”. Indeed, nothing prevents parties from agreeing to use the Expedited Procedure. On the contrary, this should even be encouraged where the circumstances allow it.

Finally, it is worth mentioning that the fees under the Expedited Procedures Rules, which include the administrative fees paid to the ICC and the fees due to the sole arbitrator, are 20% lower than the fees applicable to other ICC proceedings[12].

These new rules, while novel in the context of ICC arbitration, are largely inspired by the existing rules of arbitration institutions, for example the Singapore International Arbitration Centre (SIAC), and the International Centre for Dispute Resolution (ICDR). As mentioned above, this set of changes form part of a broader effort by the ICC to enhance efficiency and transparency in international arbitration. They are part of a broader reform in which the streamlining procedure has not been left out. The following changes to the ordinary procedure should also be mentioned:

  • Article 23(2) has been amended to reduce the time-limit for the establishment of Terms of Reference from two months to one month;
  • Article 11(4) has been amended, in order to allow the ICC Court to provide reasons for its decisions made on challenges, as well as for other decisions;

Survey after survey shows that arbitration is the preferred disputed resolution mechanism for cross-border disputes. When it comes to decide between institutional arbitration and ad hoc arbitration, users more often than not choose the former. The ICC is itself the love-child of institutional arbitration. In 2016, the annual International Dispute Resolution Survey for Technology, Media and Telecoms Dispute showed that the ICC was the choice of 64% of the respondents. For EU based respondents, this number goes up to 74%[13]. If these revisions to the ICC Rules have the intended effect, that is to reduce the time and cost of arbitrating these claims, they could confirm and increase the existing trend. The manner in which the Expedited Procedure Rules will be applied will be of significant importance considering the many applicable exceptions. This will determine whether or not the entry into force of these rules will be a turning point for the ICC or more like a stone thrown into a pond.

 

[1] These rules are available at http://www.iccwbo.org/Data/Documents/Business-Services/Dispute-Resolution-Services/Arbitration/Arbitration-Rules/ICC-Rules-of-Arbitration-2017-Revision/.

[2] See the ICC Statistics from 1999 to 2015 available at http://www.iccwbo.org/Products-and-Services/Arbitration-and-ADR/Arbitration/Introduction-to-ICC-Arbitration/Statistics/.

[3] Alexis Mourre, “Message from the President” (2016) 2 ICC Bull. 3, at 4.

[4] See Expedited Rules at Appendix VI, Art. 2(1)-(2).

[5] See id, Art. 4(1).

[6] See id, Art. 3(3).

[7] See id, Art. 3(3) and 4(1).

[8] See id, Art. 3(1).

[9] See id, Art. 3(2).

[10] See ICC Rules, Art. 30(1)-(3).

[11] See Expedited Rules at Appendix VI, Art. 1(4).

[12] See id, Art. 4(2) and Appendix III of the ICC Rules.

[13] The report from Queen Mary University of London and Pinsent Masons is available at http://www.arbitration.qmul.ac.uk/research/2016/.