This blog entry will first provide some basic reasons why businesses should use arbitration, and then provide specific reasons why US startups should locate their arbitration outside their country using an online arbitration process.
First the reasons for arbitration:
Court cases take time, even for disputes that are relatively simple or over small amounts of money. You should use an arbitration process with rules from an institution that allow you to flexibly resolve disputes faster. If your arbitration is managed properly, you could get results in a third of the time required in court proceedings.
Litigation in court can be extraordinarily expensive, even in the preparation until the day before you get to court. This is over and above the time you sit waiting for money owed to you to come in. This high cost adds unnecessary stress to your business life and may scare you away from actually making claims. Your arbitration, properly designed or using good institutional rules, could be streamlined to avoid costly courtroom-style procedures. A properly designed arbitration process will prevent you getting muscled out by a party that is much richer than you. Continue reading “Why US startups should use online arbitration with an international seat”
When is an interim arbitral award a final arbitral award?
When final is redefined to be “final until revised.”
This is what was done by the Singapore Court of Appeal in
PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation,  SGCA 30
See the following at para 51:
51. The term ‘final’ award can be understood in a number of ways. First, it can refer to an award which resolves a claim or matter in an arbitration with preclusive effect (ie, the same claim or matter cannot be re-litigated). Even provisional awards are ‘final’ in this sense. As Born states (at pp 3013-3014):
‘… Even awards granting provisional relief can be considered to be “final”, notwithstanding the fact that they will be superseded by subsequent relief, because they finally dispose of a particular request for relief … [E]very award rendered during the course of an arbitration, before its final conclusion, is “final” because of the preclusive effect that it enjoys.’
Continue reading “Lessons from Persero: Everything gets to be final.”
Justice delayed is justice denied. The Persero Cases are three cases fought out in Singapore between 2011 and 2015 that relate to the enforcement of arbitral awards from construction contracts. They are a series of fascinating battles between two Indonesian parties (PT Perusahaan Gas Negara (Persero) TBK, an Indonesian company, and CRW Joint Operation, an Indonesian joint operation (a jv that doesn’t involve the setting up of a new legal entity) to a FIDIC construction contract with the amount in dispute ranging between 13 and 18 million dollars. The cases are complex and bring up numerous important points that merit mention as separate blog posts. This particular post highlights the potential implications of time and costs in arbitration, if done badly.
Consider the timeline:
Continue reading “Time, Costs, Lessons from the Persero arbitration”
[Editorial Note: Since this post was published, the outlook for arbitration in India has brightened. A revised version of this post will be published in due course]
Recently, on 10 May, 2013, the Supreme Court of India decided a case (ANTRIX CORP. LTD. Vs. DEVAS MULTIMEDIA P. LTD.) that appears to have bolstered the viability of international commercial arbitration in India (there have been other similar recent decisions in the last few years.)
The facts were:
Antrix, an Indian government owned entity and Devas Multimedia entered into a contract which contained an arbitration clause that said that in the event of a dispute, the parties will arbitrate their dispute using either the UNCITRAL or the ICC Rules (bad drafting.)
When Devas referred a contractual dispute to the ICC, Antrix, the government entity, possibly attempting to delay proceedings, attempted to constute a separate tribunal under the UNCITRAL rules after not replying to the ICC efforts at constituting a tribunal, thereby creating a dispute as to the identity fo the arbitrators. Then they asserted that the governing law of the agreement and the arbitration was Indian law (quoting Dicey, no less) and that under section 11 of the Arbitration and Conciliation Act, 1996 (the “Act”) if the parties do not agree on the choice of arbitrators or do not follow the agreed upon procedure then one party could petition the Chief Justice of the Supreme Court of India to supervise the process.
The reasoning was very suspect. Antrix maintained that the choice of rules should have been made after the constitution of the tribunal and that the unilateral reference to an ICC tribunal (as opposed to the UNCITRAL tribunal) violated the arbitration agreement. This line of reasoning is strange, since it is unclear exactly how one is to constitute a tribunal if one does not choose the institutional rules under which it is to be constituted. A chicken and egg situation.
Continue reading “Judicial Intervention in Arbitration in India”
This blog post sets out some of the bases on which a party can challenge the enforcement of an arbitral award in England.
In England, The Arbitration Act, 1996 (the “Act“) provides a number of bases on which awards may be challenged, including section 67 (substantive jurisdiction, i.e. whether an arbitration agreement was in place underpinning the tribunal’s actions), section 68 (“serious irregularity”, i.e. where a tribunal “has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected”) section 33 (general duties to be impartiality and expeditiousness), and points of law in section 69.
However, in Lesotho Highlands, the House of Lords made it clear that errors of law and adjudication are not generally grounds for setting aside awards, i.e. a court will generally not be willing to overturn an award on the basis of the merits of the case.
I was faced with counsel on the other side that agreed to our choice of NY law in a contract but objected to our arbitration clause in the following manner:
“We have a policy against using arbitration, since it is expensive and doesn’t provide for injunctive relief.”
This response shocked me because this was experienced legal counsel from a very large company saying this.
Their opinion on cost irritated me because the arbitration clause we had proposed referred to an institution which would appoint one arbitrator and use simplified procedural rules for small disputes (some institutions will even have documents-only procedures as a default to keep costs low and procedures as short lived as possible. For example, the IEAC (www.expeditedadr.com )
But the whole notion that injunctive relief is not available under arbitration got me thinking.
Continue reading “Interim Arbitral Awards”
Every time I review the arbitration clauses in our template agreements, I wonder about the most succint, least ambiguous, way in which I can draft the arbitration clause.
The standard arbitration clause provided by the AAA is 50 words.
Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
Ken Adams’s revision (from his blog at http://www.adamsdrafting.com/my-version-of-the-aaa-standard-arbitration-clause/)
As the exclusive means of resolving through adversarial dispute resolution any disputes arising out of this agreement or [describe the subject matter of the contract], a party may demand that any such dispute be resolved by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and each party hereby consents to any such disputes being so resolved. Judgment on the award rendered in any such arbitration may be entered in any court having jurisdiction.
Continue reading “Brevity in Arbitration Clauses”