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.

 

Andrew Burr

Andrew Burr

Email: andrew.burr@arbdb.com.
Tel: +44 (0)20 3514 9020

After spending over thirty years of his professional life as a member of Atkin Chambers, Andrew Burr took an extended editorial sabbatical in 2014-2015 to complete the fifth edition of Delay and Disruption in Construction Contracts (informa law from Routledge (ilfR)) (DDCC5) and International Contractual and Statutory Adjudication (Wiley Blackwell (WB)).

This renewed his interest in legal writing and he has decided to leave chambers, in order to pursue a number of further publishing projects. In addition, he will continue to accept Direct and Public Access work as counsel and will develop his third party neutral practice with ArbDB Chambers, through which, he will accept any instructions to act as adjudicator, arbitrator, dispute board member and mediator

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About Andrew Burr

Email: andrew.burr@arbdb.com. Tel: +44 (0)20 3514 9020 After spending over thirty years of his professional life as a member of Atkin Chambers, Andrew Burr took an extended editorial sabbatical in 2014-2015 to complete the fifth edition of Delay and Disruption in Construction Contracts (informa law from Routledge (ilfR)) (DDCC5) and International Contractual and Statutory Adjudication (Wiley Blackwell (WB)). This renewed his interest in legal writing and he has decided to leave chambers, in order to pursue a number of further publishing projects. In addition, he will continue to accept Direct and Public Access work as counsel and will develop his third party neutral practice with ArbDB Chambers, through which, he will accept any instructions to act as adjudicator, arbitrator, dispute board member and mediator