International Commercial Arbitration

Lecture 2

 Arbitration is not necessarily cheaper than the court

process.
 Fiona Trust & Holdings Corp v Privalov [2007] is the
leading case for ICA.
 Seat of Arbitration is a jurisdictional seat, not a physical
one, that decides which national court has jurisdiction
over the case. Third party neutral ground. If the parties
want to remove arbitrators, they will have to file claims
in the national courts at the seat of arbitration.

Disadvantages
•Expensive
• Limits on arbitrator’s powers
• Advantages such as finality and confidentiality are lost if matter
is appealed to national courts e.g.

Privacy & Confidentiality

Manchester City Football Club Ltd v The Football Association

Premier League Ltd & Others [2021] EWCA Civ 1110 and CPR
39
• chancellor of the High Court Sir Julian Flaux held that Moulder
J had made the correct evaluative assessment in ordering that
the Merits Judgment and the Publication Judgment should be
published.
Held:

• Publication would not lead to disclosure of significant

information. Only the dispute’s existence and the arbitration
would be disclosed which were already in the public domain and
that the substance of the underlying disclosure dispute would not
be disclosed.
• There was a ‘legitimate public interest in how disputes between
the Premier League and member clubs are resolved and, in
particular, in the allegations of structural bias made by the club
which appears to have led to a change in the rules’.
• Although both parties objected to publication of the judgments,
the parties’ wishes warranted careful scrutiny.
• In so far as the Merits Judgment confirmed the entitlement of
the PL to claim specific performance against member clubs, it
was in the public interest and significant.
• MC’s argument that publication of the judgments would cause it
prejudice or detriment should be treated with ‘considerable
scepticism’ and the potential damage to MC’s relations with
commercial partners was ‘unconvincing’ given the fact that any
commercial partner would conduct due diligence and learn of the
investigation

Section 24 Arbitration Act 1996 – Power of the court to

remove the arbitrator

Section 67 – Challenging the arbitral award

Section 68 Procedural irregularities

Without cooperation of the other side, more money and

more delays. Therefore, arbitration is not usually cheaper
than the court process. Penalties for non – compliance apply.

Article 1507 French Act – will accept oral arbitration

agreements. Big step forward.

UNCITRAL Arbitral rules: non – binding rules. Reflects modern

arbitration practices and procedures. Also contains the rule
of party autonomy in print.
 Lecture 3

Arbitration Agreement

The bedrock of arbitration.

• Arbitration is consensual, voluntary process so agreement is
significant evidence.
• Need consent of parties – arbitration ousts the jurisdiction of the
national courts. Courts always start with a pro – arbitration stance.
• Agreement also reflects the principle of party autonomy.
• Becomes extremely significant when e.g. enforcing the award under
the NYC – requires written copy of the agreement.

Arbitration clauses (future disputes) and submission agreements

(existing disputes). Boilerplate provisions, usually at the end of the
wider commercial contract.
Scope and construction

Fiona Trust & Holdings Corp v Privalov [2007] UKHL 40 Lord

Hoffmann

• “Arbitration is consensual. It depends upon the intention of the

parties as expressed in their agreement. Only the agreement can tell
you what kind of disputes they intended to submit to arbitration. But
the meaning which parties intended to express by the words which
they used will be affected by the commercial background and the
reader's understanding of the purpose for which the agreement was
made. Businessmen in particular are assumed to have entered into
agreements to achieve some rational commercial purpose and an
understanding of this purpose will influence the way in which one
interprets their language.” (para. 5)
“In my opinion the construction of an arbitration clause should
start from the assumption that the parties, as rational
businessmen, are likely to have intended any dispute arising
out of the relationship into which they have entered or
purported to enter to be decided by the same tribunal. The
clause should be construed in accordance with this
presumption unless the language makes it clear that certain
questions were intended to be excluded from the arbitrator's
jurisdiction.” (para. 13)

The Doctrine of Separability

Arbitration agreement survives if main agreement fails.

s7 Arbitration Act 1996:

Fiona Trust & Holdings Corp v Privalov [2007] UKHL 40 Lord

Hoffmann:

“…the invalidity or rescission of the main contract does not

necessarily entail the invalidity or rescission of the arbitration
agreement. The arbitration agreement must be treated as a ‘distinct
agreement’ and can be void or voidable only on grounds which relate
directly to the arbitration agreement. Of course, there may be cases in
which the ground upon which the main agreement is invalid is
identical with the ground upon which the arbitration agreement is
invalid. For example, if the main agreement and the arbitration
agreement are contained in the same document and one of the parties
claims that he never agreed to anything in the document and that his
signature was forged, that will be an attack on the validity of the
arbitration agreement.” (para. 17)

New York Convention Article 2(1), Article 2(2), Article 4(1a)

7(2) Need for written form

Singapore Arbitration Act s2A

Arbitrability – which type of disputes can be resolved by arbitration;
not all cases can be arbitrable

Anti-suit injunction – interim remedy which a party can apply for at

the seat of arbitration to stop another party from bringing or
continuing proceedings in another jurisdiction.

3 stage test required by English common law conflict of laws rules:

1. Is there an express choice of law?
2. If not, is there an implied choice of law
3. if not, with what system of law does the AA have its closest and
most real connection?

Tutorial 3

1. Harmonised arbitration practices and rules which have been

developed by practitioners. Helps to keep international relations
at a peaceful level. LCIA – London Court of International
Arbitration, institutes that administer arbitration. Foundation of
arbitration – arbitration agreement. If the parties entered the
arbitration agreement by coercion, fraud or undue pressure, the
arbitral award is considered null and void. Arbitrators are
selected by the parties, who are usually experts in their field.
Judges are appointed by the State. Decision of arbitration =
arbitral award. It’s final and binding. If parties do not accept the
award, they can go to court. Levels of formality may vary in
arbitration. Nature of the arbitration must be commercial, or
some jurisdictions won’t allow it. Commercial transactions
include services/sales of goods in exchange for money.
Mediation agreement is the award of the mediation, like an
arbitral award. Conciliation agreement is the outcome of the
conciliation.
2. Section 51(2a) New York Convention –
The Theoretical debate: Seat and Delocalisation
1. Delocalisation theory
• international commercial arbitration should remain free from the
constraints of national laws and therefore the lex arbitri.
• does not and should not have any connection to the legal
mechanisms and controls of the seat of arbitration--it should
remain detached from the lex arbitri.
• Only the "judicial seat" of arbitration should form part of
international commercial arbitration, and any territorial links to
municipal laws should be disregarded.
• should not be "anchored" in the national legal system where the
award was rendered, and only the country where the award is
being enforced or recognised should maintain control.

• Jan Paulsson:
"The sometimes-used expression "floating arbitration' is not entirely
satisfactory, because all arbitral awards may, and frequently do, "float'
… the question is not so much whether an award may float--this
seems beyond dispute--but whether it may also drift, that is to say
enjoy a potential for recognition in one or more enforcement
jurisdictions without being ultimately anchored in the national legal
system of the country where it was rendered.“ (Paulsson, "Arbitration
Unbound" (1981) 30 I.C.L.Q. 358).

2. Seat Theory
• seat theory is perceived as orthodoxy
• places importance upon the territory or state within which
arbitration is to take place in regulating the arbitral process.
• Role of the courts at the seat of arbitration become vital.
• Emphasis on continuing role of courts.
• S1 of the Arbitration Act 1996 – party autonomy
Applicable law to the substance

Soleimany v Soleimany

Father-son duo fell into dispute and referred to the Jewish law. The
Jewish courts gave an award against the son.

English court is not to enforce a valid arbitration award when

It was found that it was a common intention of the parties to commit

an illegal act.

If the award was a foreign judgement, the Court of Appeal refused to

recognise due to public policy.

Lectures 8 & 9 - Power & Jurisdiction of the Arbitral Tribunal

General considerations

• Powers of the arbitrator arise from:

– Will of the parties (party autonomy – see previous
lectures)
– Duties e.g. act fairly, impartially, independence
– Law of place of enforcement
– Law governing the arbitration agreement
– Seat of arbitration (lex arbitri)
Cf to courts/judges – one system and immunity
• Parties may challenge award at enforcement (see New York
Convention) or challenge the award itself (see later lecture) or
under rules governing the arbitration by making applications to
the national courts at the seat.
• Powers of arbitrators linked to issue of jurisdiction (1) defining
he extent of arbitrator’s jurisdiction (what issues to determine) –
linked to the issues so if the parties refer 3 issues to the tribunal
the arbitrators must only convene on these 3 issues (2) and the
validity of the agreement
The law governing the arbitration agreement may impact on the
arbitrators’ duties. Lex arbitri will have mandatory laws... Judges are
immune, can remove themselves.

Powers of Arbitrators

• General principle: the powers of an arbitral tribunal are those

conferred upon it by the parties.
• Limited by the applicable law and mandatory law of seat.
• Powers enable the AT to carry out its functions.
• Note: the principle of party autonomy and the parties’
relinquishing control.
• As the process develops, the AT takes greater control and
therefore balance of power and control shifts from the parties to
AT.

Once the arbitral tribunal is established, the principle of party

autonomy contracts cos some of the power is transferred to the
tribunal. Doesn’t mean that the parties lose party autonomy. A new
contractual is formed, between the two parties and the tribunal. The
parties cannot say that they can amend arbitral procedures. They must
consult the tribunal on changing steps. Article 19 Model Law, where
the arbitration agreement is silent, parties can make…

Sources of powers

1. Powers conferred by the parties

• Directly or indirectly – consider the arbitration agreement.
• Powers conferred will be limited by (1) applicable laws (2)
mandatory laws at seat.
• Direct conferment: parties expressly confer powers on AT, set
out in arbitration agreement, terms of appointment. Include:
– Appointment of experts (if parties wish arbitrator to do
this)
 – Hold hearings – tribunal has the power to call hearings to
extend/amend procedural steps. Indirect conferment of
powers. Ad hoc arbitration
– Receive evidence
– Inspect evidence/attend sites (e.g. construction matters)
• Indirect conferment: parties agree proceedings conducted
according to established arbitral rules (e.g. ICC) – need to
carefully consider provisions or applicable law/law of seat.
Is there anything in the lex arbitri that can restrict the tribunal’s
powers?
Courts have power in appointing and selecting experts in cases.

Powers conferred by operation of law

• Courts derive powers from the state including serious sanctions
for parties disobeying orders, timeframes etc
– See Civil Procedure Rule 1.1 (1) (overriding objective)
• “These Rules are a new procedural code with the
overriding objective of enabling the court to deal
with cases justly and at proportionate cost”
• 1.1(2) “Dealing with a case justly and at
proportionate cost includes…enforcing compliance
with rules, practice directions and orders”
• Sanctions include: strike out; costs sanctions;
contempt of court.
• Parties cannot confer powers of court on AT – reserved for AT,
given by State.
• Remedy some of the problems, national courts have power on
behalf of the AT or law (e.g. lex arbitri) provides powers to AT
e.g. AA 1996 s38(3) AT can order security for costs.
Section 38(3) Arbitration Act 1996

1. Establishing the AT
Broad powers to determine appropriate procedure. – Section 33
General duties of the tribunal, Section 34(1) Tribunal to decide all
procedures and matters (“It shall be for the tribunal to decide all
procedural and evidential matters, subject to the right of the parties to
agree any matter.”)
 – Work with the parties (party autonomy).
– AT will be bound by need to uphold principles of justice
and due process.
2. Determining the applicable law
– Arbitration agreement is silent on applicable law issues,
seat of arbitration.
– UNCITRAL Rules art 18(1): provides AT powers to
determine seat.
– UNCITRAL Rules 35(1): AT determine applicable law.
– AT will hear arguments if parties in dispute.
– Institutional arbitration – AT will determine seat in NYC
jurisdiction.
3. Language in proceedings – Section 34(2b) - the language or
languages to be used in the proceedings and whether translations of
any relevant documents are to be supplied; look at arbitration
agreement if there is problems with language.
– Silent in arbitration agreement and rules do not provide
guidance then AT must decide.
– Usual approach – language of underlying contract.
– But may decide bilingual arbitration (with/without
translators/interpreters).

4. Production of documents – Section 34 (2d)

– Parties dispute on production of documents AT must
determine issues/process.
– Powers to order production.
5. Presence of witnesses – Section 43
– Not same powers as courts.
– AT will have to reply on support of national courts (lex
arbitri).
6. Appointing experts
– Parties have this power, AT’s powers to appoint are
limited.
– AT may seek assistance from another expert if matter is
too complex but must be done before final hearing.
7. Interim measures – remedies and orders during the arbitration
process, preservation of evidence (freezing and search orders, Section
38, important cos you’re dealing with assets and evidence in different
countries and could be destroyed, fraud evidence, interim measures
preserve status quo. )
– Preserve evidence, protect assets.
– Protect the status quo pending outcome.
– Check lex arbitri limits on AT on interim measures.

8. Security for costs – Section 38(3), ICC Rules Art 28(1)

– Form of interim relief.
– Party B (respondent) applies to the AT asking for an order
that Party A (claimant) provide security for its costs in the
event that A loses and there is a possibility that B will not
recover his costs because A short of funds.
– UNCITRAL Rules, ICC, AA 1996 provide AT powers to
make security for costs orders.

Jurisdiction

• AT only has powers to resolve those issues in disputes

submitted by the parties – upholds the will of the parties.
• AT must not exceed its jurisdiction - can be challenged at
enforcement e.g. NYC art 5(1)(c) recognition and enforcement
may be refused where
“the award deals with a difference not contemplated by or not falling
within the terms of the submission to arbitration, or it contains
decisions on matters beyond the scope of the submission to
arbitration.”.
• Total or partial challenge to jurisdiction:
– Partial: whether claim/counterclaims within jurisdiction of
the AT – not questioning whole of AT’s jurisdiction.
• Some of claims do not come within j-d.
• E.g. some issues to be decided by an expert before
going to AT.
• Parties can cure j-d issues by agreement.
– Arbitral tribunal can be challenged during the arbitration
too.
 • Total: questions entirety of AT’s jurisdiction/purporting to act –
whether there is valid arbitration agreement at all. If entirety of
jurisdiction is being challenged, need to consider the whole
arbitration agreement.
– Usually concerns arbitration clauses not submissions
agreement which have been through detailed negotiations
and carefully drafted.
– Party may argue it is not bound by arbitration clause.
– Party challenging may argue that they are not a party to the
commercial agreement.
– Agreement is not in writing so they are not bound.
– Claim is actually time-barred. Look at the applicable law.
– Attacking the arbitration agreement. Threshold is high to
successfully attacking and voiding the agreement. Link
with doctrine of separability.

Separability of arbitration clause

• Universally recognised that arbitration clause is autonomous i.e.

it is independent and separate to the main agreement.
• See s7 AA 1996 recognises doctrine of separability.
• Thus, validity of arbitration clause does not depend on validity
of wider agreement. If wider agreement fails, arbitration clause
does not, it survives.
• 2 elements to rule (1) an AT can rule on its own j-d
(2)arbitration clause is separate and independent from terms of
main contract.
• Policy: (1) keep parties to their agreement to arbitrate (2)
determine issues concerning the wider contract to arbitration.
• Seprability allows AT to assume j-d to determine the issue.
– If decides no agreement the AT’s j-d disappears.
• See Fiona Trust case below.
“Underpinned by the following issues” – use in essay phrase.

Who determines challenge to J-d?

Competence-Competence
 • Competence-competence: AT decides on its own j-d.
• Arbitral rules expressly state this e.g. Art 23(1) UNCITRAL
Rules:
“The arbitral tribunal shall have the power to rule on its own
jurisdiction, including any objections with respect to the
existence or validity of the arbitration agreement.”
• Article 6(9) ICC Rules.
• Article 16 Modern Law
“The arbitral tribunal may rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration
agreement.”
• S30 AA 1996 recognises recognises C-C.
• NB: National courts have final say on AT’s j-d.

J-d of national courts

• Jurisdiction of national courts to deal with challenges to AT’s j-

d.
• EU: 2001 Brussels Regulations (Council Regulation (EC) No.
44/2001 of 22 December 2000 on jurisdiction and the
recognition and enforcement of judgments in civil and
commercial matters, OJ L 12/1, 16 January 2001):
– Art. 1(2)(d) excludes arbitrations from application of Regs.
– Art. 2: establishes basic rule = persons shall be sued in the
courts of the state in which they are domiciled.
– Potential conflict when claim in one member state but
there is argument that that dispute covered by arbitration
clause, seat in another member state.
– Party avoiding arbitration argues no valid agreement so
courts of its home state had j-d, not at seat.
– Counter this argument by arguing arbitration agreement
excluded from Regs under Art. 1(2).
– Brussels I repealed by Recast Brussels Regulation ((EU)
1215/2012) – currently applying
Who has the power to determine j-d over disputes? National courts or
AT?
• Allianz SpA v West Tankers Inc [2007] UKHL 4:
– WT chartered vessel to Erg under charter party which
contained arbitration clause seat England.
– Collision with jetty in Italian port. Erg claimed
compensation from its insurers and commenced arbitration
in London against WT for policy excess.
– WT denied liability. Insurers paid Erg under policy, then
brought proceedings against WT before Italian courts to
recover sums paid out.
– WT objected to court’s j-d based on existence arbitration
agreement.
– WT, in parallel, bought proceedings in English courts
seeking (1) declaration that dispute with insurers be settled
through arbitration (2) seeking ‘anti suit’ injunction
restraining insurers pursuing Italian proceedings.
– High Court: granted injunction to WT.
– HofL held (1) arbitration was excluded from scope of Regs
by Art. 1(2)(d). No set of uniform rules in relations to
arbitration (as opposed to j-d between national courts set
out in Regs), following Marc Rich, exclusion in Art 1(2)
(d) applies to arbitration proceedings and legal
proceedings in relations to arbitration so anti-suit
injunction addressed to Italian court would not infringe the
Reg. (2) stayed proceedings pending preliminary ruling to
ECJ.
– ECJ held
– although subject matter was arbitration (thus outside
Regs), an antisuit injunction against a MS court would
undermine Regulations effectiveness.
– It was exclusively matter for the courts first seised of the
dispute (i.e. the Italian courts) to determine the validity of
an arbitration agreement relied upon by a respondent in
order to contest its j-d.
– Held such anti-suit injunction was incompatible with Reg.

• The same prohibition on anti-suit was reaffirmed after the

transition to the Recast Brussels Regulation ((EU) 1215/2012)
 • e.g. see Nori Holdings v Bank Otkritie [2018] EWHC 1343
(Comm) court held:
– West Tankers still good law
– Position not changed under Recast Brussels Regulation

• Brexit - The position after the implementation period and

the notion of retained EU law

• UK left the EU on 31 January 2020. The UK’s departure from

the EU led to the repeal of the European Communities Act 1972
• 1972 Act was repealed by the EU Withdrawal Act 2018
amended by European Union (Withdrawal Agreement) Act
2020
• Implementation period under 2020 Act started when the UK left
the EU and ended on 31 December 2020.
• UK ceased to be bound by the (Recast) Brussels Regulation -
revoked by Regulation 89 of the Civil Jurisdiction and
Judgments (Amendment) (EU Exit) Regulations 2019 No 479
• UK accession to Lugano Convention (non-EU members) vetoed
by EU
• LC international treaty between EU and certain non-
EU states for international recognition and
enforcement of judgments in civil and commercial
matters.
• Although non-EU Lugano states are not formally
bound by decisions of the Court of Justice of the
European Union, they are nevertheless obliged to
“pay due account to the principles laid down” in
those decisions.
• UK is not now party to either Brussels or LC, and so
its courts are free to issue anti-suit injunctions in the
European context.
e.g.
QBE Europe SA/NV and Anor v. Generali España de Seguros y
Reaseguros [2022] EWHC 2062 (Comm)
• intention and effect of Spanish statute was not to create a new
and independent legal relationship but merely to enable the
victim to enforce directly against the insurer the same
obligations as those that could have been enforced by the
insured. The exercise of that right came with the obligation to
arbitrate in England.
• There was an obvious English public policy in upholding the
contractual obligation to arbitrate.
English court will:
• assess the issues for itself
• Will seek protect the choice of English jurisdiction or arbitration
without the restrictions under Brussels Regs.

Deutsche Bank AG v RusChemAlliance LLC [2023] EWCA Civ

1144
• High Court in SQD v QYP [2023] EHWC 2145 (Comm)
rejected application for an anti-suit injunction because England
was not the proper forum.
• The English Court of Appeal granted the application to restrain
Russian court proceedings brought in breach of an agreement to
arbitrate in Paris, France.
• On fresh expert evidence, Court of Appeal found the French
courts could not grant an injunction, but English courts could.