Call for Papers: 2019 Taipei International Conference

2019 Taipei International Conference on Arbitration and Mediation

The Chinese Arbitration Association, Taipei (CAA) and the Asian Center for WTO & International Health Law and Policy, College of Law, National Taiwan University (ACWH) are to jointly host the “2019 Taipei International Conference on Arbitration and Mediation” on August 15 & 16, 2019 in Taipei, Taiwan. The conference theme is “A New Wave of Reflections and Reforms in International Arbitration and Mediation”. Arbitration experts and scholars are welcome to provide unpublished academic papers and case studies on any one of the following topics:

1. Reform initiatives in international commercial arbitration (such as the Prague Rules comparing to the IBA Rules in the area of evidence taking).
2. Possible reforms of the ICSID Rules.
3. The blurring distinction between international investment arbitration and international commercial arbitration (such as the trend of commercial arbitration centers handling investor-State disputes).
4. The new Convention on the Enforcement of International Settlement Agreements and its corresponding UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation, 2018.

I. Important Dates (based on Taipei time)

1. Abstract submission deadline: April 10, 2019
2. Abstract acceptance notification: April 20, 2019
3. Full paper submission deadline: May 20, 2019
4. Full paper acceptance notification: June 10, 2019
5. Conference dates: August 15 & 16, 2019

II. Review process

1. The review process will be divided into two stages: the initial stage of review and the final stage of review. “Articles passing the review process” refer to the submitted abstracts/articles that have passed both the initial and final stage of review.
2. The initial stage of review: Applicants will need to submit their abstracts of the papers before the abstract submission deadline. He/she will be informed of the result of initial review on April 20, 2019. The applicants whose abstracts pass the initial stage of review will need to submit their full papers before the full paper submission deadline.
3. The final stage of review: Applicants whose full papers pass the final review process will be invited to present at the conference. They will also be encouraged to submit their papers to the Contemporary Asia Arbitration Journal (CAAJ) for a peer-review process seeking possible publication.
4. Details pertaining to a peer-review process and submission policy of CAAJ can be found at the ACWH website at http://www.ntu.law.acwh.tw/publication.php.

III. ​Award

The best paper selected by the Review Committee will be granted an award of USD 500 for his/her airfare to travel to Taipei for the Conference and a certificate jointly issued by the CAA and the ACWH. The author has to present his/her paper at the Conference so as to be qualified for this USD 500 reimbursement. The host will provide local accommodations during the conference. In the case of co-authors, please note that they will share the USD 500 reimbursement and only one author will be provided with the local accommodation.

IV. Conference/Paper Language

All the papers need to be written and presented in English.

V. Guidelines for Abstract / Paper Submission

1. Abstract: The total number of words in the content of an article for submission should be within 500 words.
2. Full paper: The total number of words in the content of an article for submission should be between 5,000 to 10,000 words. Authors are strongly encouraged to use blue book citation for their submissions.

VI. Abstract Submission Format

Prospective author is invited to submit your abstract submission and your curriculum vitae in the format of a Word file or PDF file to wtocenter@ntu.edu.tw. The abstract submission must include the following information:

1. Title
2. Author: Name, contact information, e-mail address
3. Abstracts: A maximum of 500 words
4. Keywords: A maximum of ten keywords

VII. Contact information

Sunny Guan Ye Li (Ms), Asian Center for WTO & International Health Law and Policy College of Law, National Taiwan University College of Law
(Official website: http://www.ntu.law.acwh.tw/)
Tel: +886-2-33663366 ext. 55234
Fax: +886-2-33668965
Email: wtocenter@ntu.edu.tw

Pei-Jung Li (Ms), Chinese Arbitration Association, Taipei
(Official Website: http://www.arbitration.org.tw/english/index.php)
Tel: +886-2-27078672 ext. 51
Fax: +886-2-27078642
Email: peijungli@adr.org.tw

Bilateral Arbitration Treaties: Are BATs Blind to Existing International Structures and Realities?

by Avani Agarwal

In November 2012, Gary Born proposed the idea of a Bilateral Arbitration Treaty (BAT), in a speech aptly titled “BIT’s, BAT’s and Buts” (available as an essay in the 13th Young Arbitration Review). He suggested developing a system of international treaties whereby countries decide that a particular set of international disputes (such as commercial ones) arising between their respective nationals will be resolved via international arbitration as the default mechanism. Domestic courts in both countries would refuse to hear these disputes and would refer them to arbitration instead. The involved states would determine what procedural rules would be followed in the default arbitration. He qualified his idea by pointing out that the parties actually involved in the dispute could either opt out of the arbitration or alter the procedural mechanism, if they so desire. He based his optimism about the success of such a system on the relative success seen by the International Investment Arbitration framework. 

Unfortunately, this optimism appears to be misplaced. Recently, both investors and countries have been letting go of international arbitration in investment treaties, with countries like India terminating existing agreements and negotiating new ones without Investor State Dispute Settlement (ISDS) mechanisms. More than two hundred lawyers and economists have urged that the USA take similar actions, based on fears that ISDS leads to unaccountability and uncertainty. This movement against investment arbitration appears to be dictated by realities of the existing arbitration and social structures. This post seeks to analyse these concerns and the impact they will have on a network of BATs.

Consent and Party Autonomy. -The consent of the parties is the foundation of any arbitration proceeding, as recognised by courts across the globes. BATs, as previously pointed out, invert the traditional model and do away with this requirement. Born has acknowledged this concern but his response does not seem satisfactory. Giving parties the option to opt out of arbitration is in no way the same thing as requiring them to consent to it. Rather, it is a much lower standard of intent. It is possible to envisage at least some instances where the arbitration will lack active consent from both parties. Courts do uphold pathological clauses but it could be precisely because they reflect the intent of the parties to arbitrate, not the contrary (consider clauses that don’t meet some formal requirements). Moreover, there is an additional level of scrutiny by the arbitration tribunal to ensure that the agreement was valid and the tribunal is competent under the contract to proceed.

The requirement of consent is not a formalistic tool that can be done away with. It reflects real concerns of both the judiciary and commercial entities. It is widely recognized that access to an independent, fair and neutral court is fundamental and necessary. Given that courts are an established and familiar system for most parties, it is possible that they are comfortable with litigation. Further, a fundamental feature of arbitration is that it is final and allows for appeals on very limited factors. A lack of appeals may be seen as grossly unjust by some parties as it implies that they would be helpless against an award they find incorrect or unfair. These two issues were the primary focus of the petition signed by various lawyers and economists against ISDS. Further, in a study conducted in New Zealand, it was shown that a large number of businesses were wary of arbitration. If justice is a subjective idea and parties suspect that arbitration does not do justice, then the necessity of consent serves to ensure that the deeply entrenched ideal of fair trials is not compromised on.

Inequity in Bargaining Positions. – In the structure imagined by a BAT, there are two primary levels of negotiation- states and parties. Arguably, states would be on equal footing and would have the ability to take their particular needs into account. However, some states (such as small and developing countries) need more investments and trade than others. A series of investigative articles highlight how poorer countries have consistently been exploited by foreign businesses via the threat of investment arbitration proceedings.

 Once BATs start being finalized, traders may grow to prefer doing business in countries that offer default arbitration. This means that some states will need BATs more and will thus have a lower bargaining position. Additionally, states don’t really have the freedom to alter BATs to suit the needs of their people. As Born himself notes, “If these BATs are too different from each other, transaction costs will increase and the full potential of efficiency, simplicity, and fairness inherent in the idea of BATs will not be fully realized” (as co-author of a programme paper available here). This means that businesses will prefer countries with similar BATs. Thus countries that need more foreign trade will end up sacrificing other priorities in order to be bound by a model of treaties that may not be the best for them.

At the level of individuals and businesses, the New Zealand Study has found that small and medium sized enterprises, even in a developed country, are inexperienced in arbitration. It is not difficult to imagine transactions between such companies and larger, multinational organizations. In a BAT, it is possible that the disenfranchised party will be forced into arbitration and may even be exploited into agreeing to unfamiliar procedural rules.

Issues with Third-Country Enforcement. – Born has himself stated that universal enforceability is one of the most important benefits of arbitration. It is true that a BAT would streamline enforceability in the contracting states. However, the same cannot be said for third countries.  Currently, the New York Convention is used to guarantee third country enforceability. It requires that an arbitration agreement be in writing. A BAT necessarily does away with this requirement. This creates the possibility of non-contracting states using different standards for enforcing an award. It is impossible to currently predict whether third countries would be willing to apply more liberal requirements to the enforcement of an award (As pointed out by Bruno Guandalini in his article “Bilateral Arbitration Treaties and Efficiency” published in the 38th Issue of Revista Brasileira de Arbitragem (2013)). If and when such enforcement is necessary, parties may have to conclude an arbitration agreement anyway in order to assure it.

Born’s comparisons to BITs are more than just overly optimistic. Insofar as the proposal relies on the Bilateral Investment Treaty (BIT) structure, it fails to note the significant differences that merit a separate analysis of BATs. Most prominently, BITs arose out of a necessity that does not compel a network of BATs and the conceptualisation of constructive consent is drastically different in the two models.

Bilateral Investment Treaties are entered into with the primary goal of creating a favourable environment for international investors, where they are treated fairly and their assets are not expropriated without due process. An undeniable part of such an environment is that there be some accountability if the state does not uphold its side of the bargain. The doctrine of sovereign immunity imposes a natural hurdle in this process. Consequently, states create comprehensive dispute resolution systems and agree in advance to arbitration. Needless to say, such a situation is unlikely to arise in commercial transactions.

In an investment treaty, the state agrees to international arbitration in advance, but only on behalf of itself. Investors make no such promise until a dispute actually arises. At that point, they have the option of pursuing domestic remedies or entering into an arbitration. Thus, both parties to the arbitration have personally displayed their intent to arbitrate before the process begins. On the other hand, a BAT would require that two states give advance consent to arbitration on behalf of their citizens or even individuals who run businesses on their territory. There is a distinct absence of actual intent in this case.

Thus, it appears to be that BATs are inflicted by many of the same issues that affect investment arbitrations, without any of the necessities that have so far justified retaining the BIT structure.

Born concluded his speech by pointing out that BATs should not be rejected merely for being innovative. However, they also cannot be accepted simply because they are innovative. When we consider the costs of negotiating such a massive system of treaties, the existing suspicions against arbitration, the practical restraints posed by the current arbitration framework and the social inequities that such a treaty may reinforce or even exacerbate, novelty is simply not reason enough to try.

Save the Date: 15 February 2019 – IV Annual Conference of the Belgian Chapter of the CEA – Arbitration and ADR in BIG construction projects of strategic infrastructure

EFILA is proud to announce the IV Annual Conference of the Belgian Chapter of the CEA regarding “Arbitration and ADR in BIG construction projects of strategic infrastructure”.

Brussels, Friday 15th February 2019 – 13:30 to 19:00
Jones Day’s offices – Rue de la Régence 4, 1000 Bruxelles

13:30 Registration of participants


14:00 Welcome remarks
Vanessa Foncke, Jones Day, Brussels
Emilio Paolo Villano, Capítulo Belga del Club Español del Arbitraje, Brussels

14:15 Keynote speech
Nicolas Angelet, Professor at Université Libre de Bruxelles, Brussels

14:45 PANEL 1 – Investment arbitration: where do we stand?
Moderator: Patricia Saiz, Professor at ESADE Law School, Barcelona
Special discussant: Petra Butler, Professor at Victoria University of Wellington, Wellington
§ The Energy Charter Treaty: is the sky cloudy or is it raining already? Antonio Vázquez-Guillén, Allen & Overy, Madrid
§ Intra-EU BITs after Achmea: the EU standpoint – Tim Maxian Rusche, EU Commission, Legal Service, Brussels
§ The Vattenfall case and the concept of legitimate expectations vs freedom to regulate – Ignacio Santabaya, Jones Day, Madrid

16:30 Coffee break


17:00 PANEL 2 – Dispute resolution in big-scale construction projects
Moderator: Alexander Hansebout, Altius, Brussels
§ When the State or a State-owned entity are the procuring entity or the main contractor: issues, concerns, solutions – Monica Feria-Tinta, 20 Essex Street, London
§ Shaping the dispute resolution mechanism within the supply chain: dos and don’ts – Ioana Knoll-Tudor, Jeantet, Paris
§ Before arbitration: DRB, expert adjudication and more – Lindy Patterson QC, 39 Essex Chambers, DRBF Director & President Region 2, London
§ Financing litigation on big construction projects: the TPF insights – Hannah Van Roessel, Omni Bridgeway, Amsterdam
§ Time is of the essence: extra-costs and time extension in big scale projects – Francesco Andreano, Stairwise, Turin
§ The enforcement of arbitral awards against States or State-owned entities – Jacques-Alexandre Genet, Archipel, Paris


19:00 Conclusive remarks
José Antonio Caínzos Fernández, Honorary President of the CEA, Partner at Clifford Chance, Madrid


19:20 Cocktail reception

This event has been granted 4 CLE Credits by the Ordre des Barreaux Francophones et Germanophone de Bruxelles and the Nederlandse Orde van Advocaten bij de Balie te Brussel .

Registrations on a “First come – First Served” basis at: administracion@clubarbitraje.com

The Notion of “Material Breach” as the Ground to Terminate an Inter-State Arbitration Agreement (Compromis): A Criticism over Croatia v. Slovenia Tribunal’s Approach

Trinh Ba Duong (Geneva MIDS)[1]

Croatia v. Slovenia is an exceptionally rare case which deeply touched the matter of terminating an arbitration agreement between two states, particularly a compromis.[2] The dispute addressed in the partial award arose in the context that there was an ex parte communication between Dr. Jernej Sekolec, the arbitrator appointed by Slovenia, and H.E. Ms. Simona Drenik, an agent of Slovenia. In particular, after the hearing and the beginning of Tribunal’s deliberations, audio files and transcripts of the telephone conversations between these two individuals were published which indicated that Dr. Sekolec disclosed co-arbitrators’ preliminary views and positions during deliberations, and Dr. Sekolec received documents from Ms. Drenik to forward to other arbitrators in support of Slovenia’s arguments.

Croatia attempted to shut down the Arbitration Agreement between Croatia and Slovenia concerning the territorial and maritime dispute (“Arbitration Agreement”) by referring to Article 60(1) of the Vienna Convention on the Law of Treaties (“VCLT”), which enunciates that a ‘material breach’ in a bilateral treaty is the ground for one party to invoke the termination of the treaty. Croatia alleged that such misconducts committed by Slovenia had constituted a material breach. The Tribunal addressed this issue by analyzing the notion of material breach under Article 60(3) of the VCLT. This blog aims to explore the Tribunal’s decision before directing some criticism against its approach.

The Croatia v. Slovenia Tribunal’s approach

There are two circumstances under Article 60(3) where an action constitutes a material breach. The first one is where such action is a repudiation of the treaty, meaning that the defaulting party refuses to fulfil the treaty. This is obviously not the case here, as pointed out by the Tribunal that Slovenia not only did not refuse to fulfil the treaty obligations, which were the obligations to arbitrate, but on the contrary supported the Tribunal to continue its jurisdiction over the substantive dispute.

The second circumstance is where an action violates a provision essential to the object or purpose of the treaty. The Tribunal used the traditional method to seek the object and purpose of a treaty, which was to resort to the preamble, and determined the main object and purpose of the Arbitration Agreement being “the settlement of the maritime and territorial dispute between the Parties in accordance with the applicable rules”. The Tribunal took a further step to say if the breaches of Agreement by Slovenia did not made such object and purpose impossible to be accomplished, such breaches would not be considered material breaches.

After the files had been leaked, the Tribunal was recomposed with the replacement of 2 new arbitrators. The new Tribunal also reviewed the documents forwarded by Dr. Sekolec from Ms. Drenik, and concluded that “[t]hese documents contained no facts or arguments not already present in the written or oral pleadings”. No other breach of confidentiality in the proceedings was raised by the Parties. By taking all the remedial action, the Tribunal decided that the continuation of the proceedings was totally possible, thus dismissed the claim by Croatia that Slovenia’s actions constituted a material breach and led to the termination of the Arbitration Agreement.

Criticism over the Tribunal’s Approach

As can be drawn from the above decision, the Tribunal assessed a ‘material breach’ with regard to whether the remedial actions taken could ‘cure’ the mistakes and made the continuation of the proceedings possible. If they could, such mistakes should not be deemed material breaches. This approach should provoke some criticism.

Firstly, the idea of ‘curing’ a breach is not non-existent, but the VCLT never explicitly provides for the curability of a breach. In a very few exceptional cases, a defaulting party is given the right to cure a breach. An example can be found under Article 48(1) of the United Nations Convention on Contracts for the International Sale of Goods (“CISG”), which allows the seller to cure ‘any failure’ to perform his obligations. However, it only applies to sale of goods in a specified context with a clear expression under the law. The law cannot be assumed to provide an opportunity to cure if it does not express so.[3]

A hypothetical question is, even if the VCLT expressly allowed curability, should the defaulting party be given the right to cure a material breach? From the author’s view, curing breach should be made as an exception rather than a widely accepted practice, especially when it comes to curing a material breach. There has been a lot of debate around whether a fundamental breach should leave a room to be cured under the CISG. Despite the provision under Article 48(1), Article 49 (1) gives the buyer the right to avoid the contract in case of a fundamental breach committed by the seller. It leads to the question whether the seller’s right to cure or the buyer’s right to avoid the contract prevails when a fundamental breach occurs. This would solve the similar puzzle in Croatia v. Slovenia, whether Slovenia’s ability to cure the breach should prevail over Croatia’s right to terminate the Arbitration Agreement under Article 60(1). Some authors have applied a strict interpretation on the CISG that the seller’s offer to cure a fundamental breach cannot stop the buyer from avoiding the contract. However, the buyer shall have the right to choose if he accepts the offer to cure by the seller or declare the avoidance of the contract. Likewise in Croatia v. Slovenia, Croatia’s right to terminate the Arbitration Agreement should not be restricted by the curability, unless Croatia found it more convenient and was willing to accept the cure and continue the proceedings, which was not the case in fact.

Secondly, the notion of ‘curing’ breach per se has problems as some breaches simply cannot be cured. To draw an analogy, when you break an egg, you simply cannot un-break it. The egg here can be associated with either the integrity of arbitral process or the confidence of Croatia in such process. Croatia clearly stated that it ‘cannot further continue the process [of the present arbitration] in good faith’, because the ‘entire arbitral process’ was compromised by the Slovenia’s wrongdoings. Curing such breach just by replacing two out of five arbitrators is impossible. The Croatia’s confidence in arbitration, which brought it entering into the arbitration agreement, is the broken egg that cannot be unbroken.

Croatia’s statement on the loss of confidence is absolutely reasonable. Dr. Sekolec divulged the co-arbitrators’ views, including the views of Judge Guillaume, who was not replaced after the recomposition of the Tribunal. Nothing ensured that Ms. Drenik did not retell such information to other individuals of Slovenian side, or as broadly spoken by Croatia, “no reasonable person would conclude that the actions that have occurred may not have influenced other actors in the arbitration process”.

There are those who uphold the Tribunal’s approach since the erroneous actions by Slovenian side only occurred after the oral hearing and Slovenia’s impropriety could not have done anything to influence the Tribunal’s decision after its recomposition. However, a threat to arbitral process like ex parte communication should not be easily cured and tolerated. Otherwise a party would be willing to take the risk to backslide, knowing that it will not receive any severe punishment in case of getting caught again.

The Tribunal may have looked at the preamble of the Arbitration Agreement as if treating a normal ‘object and purpose’ test which it would have done with other treaties. However, arbitration agreements should be separate from the rest as they also possess unique jurisdictional features by establishing the jurisdiction of an arbitral tribunal. Such jurisdiction is built upon the consent of parties, and parties choose arbitration because of their confidence in the integrity of arbitral process. The Tribunal clearly overlooked the importance of preserving of the integrity of arbitral process and the parties’ confidence in such integrity.

Conclusion

The Tribunal in Croatia v. Slovenia should be criticized for looking at the issue of termination of an inter-state arbitration agreement in an unconvincingly weird angle. The ‘curability’ of a material breach has never been widely accepted in the absence of a clear expression of the law allowing a material breach to be cured. Attempting to fix Slovenia’s catastrophic mistakes with a half-hearted solution, not only did the Tribunal create a bad precedent of unacceptable tolerance to ex parte communication – a considerable threat to arbitration, it also failed to fulfil one of the most important duties – preserving the integrity of the arbitral process.



[1] This blog post is developed upon author’s research at Geneva MIDS. My unlimited gratitude goes to Dr. Brian McGarry for his kind guidance, yet noteworthily everything written herein is author’s own view and taken full responsibility by the author.

[2] In the Matter of an Arbitration under the Arbitration Agreement between the Government of the Republic of Croatia and the Government of the Republic of Slovenia, PCA Case No. 2012–04, Partial Award, 30 June 2016.

[3] Robert A. Feldman and Raymond T. Nimmer, Drafting Effective Contracts: A Practitioner’s Guide (Aspen Law & Business), Section 5.09