The Resolver August 2017 (Summer)

ACTION STATIONS

It’s time to defend ADR

LET'S TAKE THE LEAD IN ADR EDUCATION

HOW TO SUCCEED AT THIRD-PARTY FUNDING

SUMMER 2017 CIARB.ORG

DON'T MISS THIS! Mediation Symposium PAGE 21

CORRUPTION What are the warning signs?

CIArb International Arbitration Conference – Paris 7-8 December 2017 Membership

Events

Dispute Appointment Service

12 Bloomsbury Square

The European and American angle will be considered in the final and concluding conference to take place in Paris in December. This two-day conference will showcase lectures and panel discussions, and feature important speakers in the arbitration field.

Topics include: New trends in arbitration rules The EU-Canada Comprehensive Economic and Trade Agreement (CETA) and arbitration The EU-US Transatlantic Trade and Investment Partnership (TTIP) and arbitration The impact of Brexit on arbitration The Art of Advocacy: the Civil and Common Law Styles The role of arbitrators between facts, law and justice New YorkSolutions Branch to Current Problems The Civil-Common Law Dichotomy: Practical Book online: www.ciarb.org

Arbitration

Adjudication

Mediation

For more information please contact: events@ciarb.org

Registered charity number: 803725 Š Chartered Institute of Arbitrators 2017

International Arbitration

Expert Determination

Leader

CONTACTS

Work continues to expand CIArb’s global reach As I pass the halfway mark of my term of office, I am turning my focus to making an international impact

Chartered Institute of Arbitrators 12 Bloomsbury Square, London WC1A 2LP, UK T: +44 (0)20 7421 7444 E: info@ciarb.org W: ciarb.org Membership T: +44 (0)20 7421 7447 E: memberservices@ciarb.org PR and Communications Nikki Nang Nilar T: +44 (0)20 7421 7481 E: nnangnilar@ciarb.org Marketing T: +44 (0)20 7421 7481 E: marketing@ciarb.org Education and Training T: +44 (0)20 7421 7439 E: education@ciarb.org Events T: +44 (0)20 7421 7427 E: events@ciarb.org Venue and Facilities Giles Andrews T: +44 (0)20 7421 7423 E: gandrews@ciarb.org Governance and Legal Services Tom Cadman E: legal@ciarb.org Dispute Appointment Service Keisha Williams E: DAS@ciarb.org © THE RESOLVER is published on behalf of the Chartered Institute of Arbitrators (CIArb) by Think, 8th Floor, Capital House, 25 Chapel Street, London NW1 5DH +44 (0)20 3771 7200 thinkpublishing.co.uk

Editor Caitlin Mackesy Davies Sub-editors Kirsty Fortune, Sian Campbell Designers Andrew Bell, Alistair McGown, Matthew Ball, Callum Lewis Advertising Sales Tom Fountain tom.fountain@thinkpublishing.co.uk Group Account Director John Innes john.innes@thinkpublishing.co.uk This magazine aims to include a broad range of opinion and professional issues and articles do not necessarily reflect the views of CIArb nor should such opinions be relied upon as statements of fact. All rights reserved. This publication may not be reproduced, transmitted or stored in any print or electronic format, including but not limited to any online service, any database or any part of the internet, or in any other format in whole or in part in any media whatsoever, without the prior written permission of the publisher. While all due care is taken in writing and producing this magazine, neither CIArb nor Think accept any liability for the accuracy of the contents or any opinions expressed herein.

DISCLAIMER: The contents of this publication are not intended to be a substitute for either general or specific legal advice on individual matters, and readers are strongly encouraged to seek competent legal advice.

Registered Charity No. 803725

Energy Arbitration Conference in Houston, Texas

T

his issue marks the halfway point of my presidential year and the CIArb community can already be proud of its achievements this year. It has organised high-profile events and training, run an effective dispute appointment service acclaimed by ADR users, and created essential ties worldwide with those committed to the improvement of conflict resolution and access to justice.

During the organisation of the CIArb flagship conferences, I travelled throughout North America to meet with CIArb members in New York, Toronto and Houston, in the hope of encouraging a higher level of communication between CIArb branches and the involvement of all CIArb members, especially the younger generation.

With a view to promoting and positioning the Institute at the forefront of rapidly expanding markets, my efforts during the last months have also been concentrated on expanding the network of CIArb branches and on strengthening CIArb’s presence in the Middle East and Asia.

There has also been a focus on encouraging the implementation of the rule of law and of the education of judges in this region.

During the months to come, I will be consolidating this work, drawing on the intellectual gatherings and exchanges facilitated by CIArb, and ensuring that this year’s accomplishments have a lasting and meaningful impact on the international arbitration community.

Professor Dr Nayla Comair-Obeid C.Arb President of CIArb

INSIDE THIS ISSUE

4 11

THE OPENER Corporate membership unveiled, Canada Branch launches, training Q&A and more OPINION Education will help bridge the ADR knowledge gap, says Nikki Nang Nilar

12

ANALYSIS Chris Wilford urges the global ADR community to act now

15

INSIGHT How to succeed in securing third-party funding

ACTION STATIONS

It’s time to defend ADR

LET'S TAKE THE LEAD IN ADR EDUCATION

HOW TO SUCCEED AT THIRD-PARTY FUNDING

16

IN DEPTH Mathew Rea considers how arbitrators can help combat corruption

20

LAW Is an arbitration agreement between highway builders valid?

The court decides

21

CALENDAR CIArb training opportunities and featured events

22

WORLD VIEW Why Kuala Lumpur is fast becoming Asia’s arbitration centre

SUMMER 2017 CIARB.ORG

DON'T MISS THIS! Mediation Symposium PAGE 21

CORRUPTION What are the warning signs?

OFC_Preferred_Cover.indd 1

13/07/2017 10:45

CIARB.ORG SUMMER 2017 3

SUMMER 2017

The opener Members gather for AGM

T

he 102nd Annual General Meeting of CIArb took place at 12 Bloomsbury Square, London on 1 June. The meeting was attended by members from branches around the world.

Members voted unanimously to adopt the Annual Accounts – which reported net income of £789k and net assets of £6.7m – the Trustees’ Annual Report and the Report of the Auditors for the year ended 31 December 2016, and to authorise the Trustees to fix the auditors’ remuneration.

CIArb would like to thank those members who were present.

COLLABORATION

CIAMEN MADRID AND CIARB

The International Centre for Arbitration, Mediation and Negotiation (CIAMEN) of the University Institute for European Studies, CEU San Pablo University, Madrid, awarded certificates to 24 participants in the fourth edition of the ‘Superior Course of

4 SUMMER 2017 CIARB.ORG

Corporate membership category launches CIArb has launched a new membership category for corporates, which gives them the opportunity to access all the benefits of CIArb membership across an organisation.

To be eligible for corporate membership, an

Arbitration’ in March. The programme is taught in Spanish and offered in collaboration with CIArb. Approval of the exam on 2 June gave eligible

organisation must demonstrate the values of CIArb and already have at least one member of CIArb as an employee.

CIArb Corporate Members will: l expand their international network;

l demonstrate their commitment to professionalism in ADR; l be able to use a CIArb corporate member logo and be listed in a Corporate Member Directory; l access globally recognised

participants the opportunity to join as members of CIArb.

CIARB CANADA

CANADA DAY SEES NEW BRANCH OPEN

CIArb celebrated the launch of its new Canada Branch, appropriately, on Canada Day, 1 July 2017, marking that country's 150th anniversary and bringing the number of CIArb branches to 38.

qualifications and ADR training; and l enjoy a variety of other opportunities to promote their organisation.

FIND OUT MORE www.ciarb.org/ corporate

Dr Paul A Tichauer FCIArb is chair of the Branch Committee made up of highly qualified arbitrators, mediators, former judges and educators from across Canada. They include Vice Chair Daniel R Bennett QC FCIArb, Honorary Secretary Julie G Hopkins FCIArb and Honorary Treasurer Daniel Urbas FCIArb. Find out more at ciarbcanada.org

The opener SINGAPORE The country was the first to launch the Arbitration Intelligence Questionnaire

ARBITRATION

Five years of family focus

F INDUSTRY INTELLIGENCE

AIQ rolls out

O

n 8 June, the Arbitrator Intelligence Questionnaire (AIQ) was made available for public participation, following launch events in Singapore, Hong Kong and Kuala Lumpur.

The AIQ is intended to replicate, through feedback data systematically collected at the end of cases, the kinds of information about arbitrators’ case management and decisional history that is currently gathered through ad hoc personto-person telephone calls. It is hoped that the collection of this data will help to promote fairness, transparency, accountability and diversity in international arbitrator appointments. At the end of a case, parties can provide objective information and professional assessments of arbitrators’ case management and decision making, which will be made available to the international arbitration community.

As Professor Catherine Rogers, founder of Arbitrator Intelligence, recently explained, the project was conceived to address the difficulties of obtaining information on arbitrators, particularly those faced by parties from developing countries.

CLASS OF 2017 Congratulations to the CIArb Fellows awarded C.Arb status this year: l Mrs Obosa Akpata (Nigeria) l Mrs Folashade Abosede Alli (Nigeria) l Mr Michael Black QC (UK) l Dato' WSW Davidson (Malaysia)

l Chief Joe Gadzama (Nigeria) l Mr Allen Gichuhi (Kenya) l Mr James Kihara (Kenya) l Mr Calvin Nyachoti (Kenya) l Mr Lucas Ochieng (Kenya) l Mr Niels Schiersing (Europe) l Mr John Wright (UK)

WHY IS IT TIME FOR THIS INITIATIVE?

92%

of respondents to a recent survey by Berwin Leighton Paisner on diversity in international arbitration wanted more information about new and less wellknown arbitrators In a Kluwer blog post in February, three out of the 10 Hot Topics in International Arbitration for 2017 were transparency, the arbitrator selection process and diversity FIND OUT MORE AT arbitratorintelligence.org

ODR LUMINARY HONOURED In April, Ethan Katsh, ‘the father of ODR’, received the 2017 D’Alemberte Raven Award, which was created by the American Bar Association Section of Dispute Resolution to recognise outstanding service in dispute resolution.

amily arbitration is five years old. It was launched in 2012 by the Institute of Family Law Arbitrators, and there are currently 215 family law arbitrators in England and Wales, all CIArb members.

Family arbitration has grown most recently to include resolution of disputes regarding children, in addition to the established areas of matrimonial finance, cohabitant and joint property disputes, finances for children, and disputed will and estate claims.

Going forward, the Forum of Family Arbitrators (FFA) – the voice of qualified solicitors, barristers and retired judges committed to offering a solution to disputes outside the court – is looking forward to playing a growing role in the dispute resolution ‘family’.

As Nadia Beckett MCIArb, Chair of FFA, explains: “We have seen what other areas of arbitration have achieved and we aspire to this. As arbitrators, we all know and appreciate the benefits to potential litigants: control of the process, limiting the cost, speed, choice of venue and arbitrator and, importantly in sensitive family arrangements, privacy and confidentiality.

“We know we have a long road ahead to make family arbitration just as successful as commercial arbitration, and we appreciate CIArb’s support in getting our message across and making our presence felt.”

CIARB.ORG SUMMER 2017 5

The opener

Caroline Kenny QC FCIArb

I

n May, Caroline Kenny QC FCIArb was elected President of CIArb Australia. The Resolver asked her about her background and the future for ADR down under.

What is your current role?

I’m an international arbitrator and barrister, a member of the London Court of International Arbitration, a panellist for nominating authorities in Singapore, Hong Kong, China, Vietnam, Malaysia and Australia, and have been appointed Chairman and sole arbitrator in international arbitrations.

What’s your most notable achievement in ADR to date?

I have more than 30 years’ experience in dispute resolution, so there’s a lot to choose from! One notable landmark was when my ruling on jurisdiction was upheld by the Singapore High Court and led to new law on an arbitrator’s right to determine jurisdiction even when the validity of the arbitration agreement was in dispute

CIARB YMG

Alive-ly debate Brexit, Trump and the prospect of a zombie apocalypse were among the topics raised in support of the opposing theses at the CIArb Young Members Group debate on the future of investment treaty arbitration, organised with students from Sciences Po’s Economic and Arbitration Master’s course and hosted

by White & Case, Paris. More than 100 students and practitioners attended the lively – at times heated – event.

6 SUMMER 2017 CIARB.ORG

(Malini Ventura v Knight Capital Pte Ltd [2015] SGHC).

What is the most important issue for ADR at present?

As past Chair of CIArb Australia’s Education Committee and someone who has taught the diploma course in international arbitration, I understand the value of globally recognised qualifications and how crucial they will be as demand for dispute resolution services – and high-quality professional advice – grows around the world.

What’s the outlook for ADR in Oz? It’s an exciting time. In October, Sydney will host the International Bar Association’s annual conference, and next year it will host the biennial International Council for Commercial Arbitration Congress. I look forward to working with my CIArb colleagues to promote the benefits of international arbitration and Australia as a business dispute resolution destination.

For information on CIArb in Australia, go to ciarb.net.au

l Professor Neil H Andrews (above) delivered the Roebuck Lecture on ‘Improving Arbitration: Responsibilities and Rights’: “Arbitration’s rule book should not become an ever-expanding spider’s web in which the parties are eventually eaten alive in a leisurely arachno-fest.”

Full address at bit.ly/RoebuckFull l Sir Anthony Colman C.Arb spoke at the London Branch AGM on ‘Cost and Delay in International Arbitration’: “Conflict of interest, and in particular perceived or ‘imputed’ bias, provides an almost limitless opportunity for obstruction of the arbitral process … I suggest that this has now become an obsession in the field of international arbitration at least.”

Full address at bit.ly/ColmanAGM l His Honour Judge Keyser QC, at the Wales Branch ADR Symposium, provided his view on the place of ADR in today’s justice system: “Mediation can give people ‘ownership’ of the outcome.

But it’s wrong to suppose that everyone necessarily wants ownership of the outcome … Not everyone wants to do that. Lots of people want someone to blame.

A judge will do as well as anyone else in that regard.”

Full address at bit.ly/2qAEMem

SHUTTERSTOCK

60-SECOND INTERVIEW

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The opener CIARB NORTH AMERICA

Sell-out energy event CIArb’s North American Branch hosted a sell-out conference in Houston in April on ‘Energy Disputes in Times of Crisis’ (pictured below), which rounded up key themes facing the world of energy arbitration.

A discussion on the challenges of managing such disputes in the context of geopolitical changes was followed by a session on the latest methods of presenting damages.

The conference looked at the critical factors in deciding on the right energy arbitrator. It also

When two wrongs can make a right Negotiations work best when both sides have matching personality traits, even if they are both disagreeable, according to a study released by the University of Georgia Terry College of Business and published in the Journal of Applied Psychology.

More than 200 individuals were interviewed about their

MEDIATION REVISED RULES: HAVE YOUR SAY CIArb is consulting on changes to its Mediation Rules, and a draft set of new rules has been created on which members are welcome to contribute their views. For example: do you feel

8 SUMMER 2017 CIARB.ORG

personalities then randomly assigned a role in a mock negotiation. After a settlement was reached, participants were surveyed about their perceptions of the process and their partner.

The researchers found that negotiations between individuals with similar scores on agreeableness and extroversion tended to go more smoothly, finish more quickly and leave both parties with better impressions of the other than negotiations between dissimilar individuals.

the rules effectively address the relevant issues and satisfy the needs of mediation users?

Send any comments you may have by no later than 31 August 2017 to Elina Zlatanska at ezlatanska@ciarb.org View the full draft rules at bit.ly/DraftRules

Access a full event report at bit.ly/2rU6HcQ

CIARB LONDON

String of spring seminars CIArb’s London Branch hosted a range of seminars over the spring months, including a May event, chaired by John Tackaberry QC C.Arb and hosted by White & Case LLP, that looked at the past, present and future of investment arbitration.

David Goldberg C.Arb (White & Case) gave an overview of investment disputes involving states in the CIS region. He acknowledged the significant level of criticism levelled at investment treaty claims, and noted the “bitter fight

between the ICSID regime and EU law” as a key area of concern.

Dr Guido Carducci C.Arb addressed issues relating to intra-EU BITs, with reference to EU case law and current proposals. Finally, Alexander Uff (Shearman & Sterling) provided his perspective on proportionality in investment arbitration.

For speaker papers and further details of London Branch events, go to londonarbitrators.org

IKON IMAGES

RESEARCH

covered tips on effective advocacy in energy arbitration, the role of courts in giving support to and upholding the core principles of international commercial arbitration, and the challenges of arbitrating large, complex oil and gas ‘mega energy’ cases.

The event concluded with an open forum on whether the world of commercial arbitration needed radical change to keep its users happy.

The opener DEVELOPMENT

NEW PATHWAYS

New topics for CPD

Towards 21st century training

This autumn, two more continuing professional development courses roll out at CIArb’s London base

As our regional training programme begins, we spoke to a pair of CIArb members implementing the changes RASHDA RANA SC FCIArb delivered the first training for Regional Pathways Leaders (RPLs) Why is it important that training has a regional focus?

Despite global harmonisation, important differences remain in ADR practice geographically. As CIArb is a global network, there needs to be consistency and harmony in the syllabus, curriculum and materials.

What’s been achieved so far?

We now have a product that can be rolled out at the same level of standard universally.

Any member going through the new Pathways can be assured that they are getting the same training whether they are in London, Lagos or Las Vegas.

Who will most benefit from these changes?

All members will benefit. The materials have been produced to a high standard to assist trainers in teaching at a high level of competence, and centralised assessment will mean all candidates sit the same exam at the same time, eradicating unintended regional deviations.

What is the most important thing the changes will bring?

The best courses in the world!

The changes bring our training into the 21st century. As it strives for another century of excellence, CIArb can provide the highest levels of service in the courses it provides.

DR KAREN AKINCI FCIArb, will serve as an RPL for the UK and Europe

What’s most exciting for you in taking on the role of RPL? Being part of a new initiative that I know is going to be extremely successful.

How will the new roles make a difference?

They will ensure a standard of excellence across the board.

The materials also cater for different learning styles. They are available online in recognition of the fact that our members are professionals who generally have a full-time job. Even the busiest person will be able to get the most out of their study.

The most important thing you learned in your RPL training?

That even though the system is being centralised, tutors are free to use their own teaching styles. The training introduced a rubric for giving feedback to tutors, which I found very useful because it can be offputting for people when their teaching technique is criticised, especially if, like me, they have been lecturing for many years.

What are you most looking forward to in your role?

To get out there and start training tutors. I sincerely believe it gives us the opportunity to ensure excellence in our graduates.

l Islamic Banking and Finance. This three-day course is designed to provide a thorough understanding of the practice and procedure of Islamic banking and finance, and the role of arbitration within it. l Executives ADR. This three-part course will

PUBLICATIONS

New Journal Editor named

Professor Stavros Brekoulakis ACIArb of Queen Mary University of London School of Law (right) has been appointed Editor and Chair of the Editorial Board of Arbitration: The International Journal of Arbitration, Mediation and Dispute Management with effect from

give participants insight into private dispute resolution methods so they are able to engage in an effective way with advocates, counsel and decision makers.

Go to www.ciarb.org/ training-anddevelopment for details of dates and costs

1 January 2018.

With support from the Executive, a virtual board of experts will also be put together from across the world and ADR disciplines as we seek to make the Journal central to the work of the Institute, raising its profile, reach and quality.

BY THE NUMBERS

Education and training highlights

119 131 delegates attended our flagship conference in Dubai in March

100 MORE THAN

responses to our survey on CPD courses were received.

Interviews are also being carried out to identify needs and trends, and inform future development

candidates have completed introduction courses using the new online multiple-choice question assessment CIARB.ORG SUMMER 2017 9

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Opinion

Start small, win big Education will help bridge the ADR knowledge gap, comments Nikki Nang Nilar ACIArb

T

he UK alternative dispute resolution sector has experienced significant growth since the Woolf reforms of the late 1990s and the pre-action protocols and Civil Procedure Rules of the civil justice system promoted its use. Despite this, many small businesses and individual entrepreneurs are still unaware of its possibilities.

According to the Federation of Small Businesses (FSB), only 8% of SMEs used ADR to resolve a recent dispute compared with 19% that used the civil courts. Lack of awareness is a key factor, it says, and up to a third of UK businesses stated they were not aware ADR existed at all.1 Recent research conducted by CIArb among its members agrees: a whopping 89% of those surveyed believed there was a lack of SME awareness, while 81% felt that government had a role to play in linking ADR providers with businesses.

What are the stakes? Costs associated with resolving a dispute are considerable. The FSB notes that between 2010 and 2015, around £62 billion was tied up in disputes involving small businesses, equating to £12.4 billion per year during that period.

CIArb is already taking action.

Its policy function is working closely with members to raise awareness and secure action from

policymakers. We highlighted the knowledge gap in our response to the Government’s Industrial Strategy, the ‘Close the Gap’ green paper,2 and support parliamentary groups on ADR to act as a window on the sector. CIArb is also playing a key role in drawing up plans for a Small Business Commissioner to promote ADR as an adjunct to the courts and to enable swifter and more cost-effective access to justice. The Government introduced this as part of the Enterprise Bill and a recruitment drive is now under way For SMEs in particular, CIArb launched the Business Arbitration Scheme for disputes between £5,000 and £100,000 in value.

The fixed-fee scheme gives parties certainty as to costs from the outset, and a final and legally binding award in fewer than 90 days from the appointment of the arbitrator.

There is so much more to do, however, if we are to embed ADR into the mainstream of business operations. Education is critical, with CIArb members frequently raising the issue of the lack of ADR representation in schools, universities and law schools. However, the real need is to join the dots of what is already out there.

Writing in The Times in 2016, past CIArb President Michael Stephens FCIArb called for an ADR Commissioner to be

Real focus will take us across the line ABOUT THE AUTHOR Nikki Nang Nilar ACIArb is PR & Events Executive at CIArb.

FIND OUT MORE For details of the Business Arbitration Scheme, go to bit.ly/BASinfo

appointed as a champion for ADR both in driving education and civil justice reform. He pointed out that UK policymakers have the opportunity to demonstrate global leadership and support the development of international markets for ADR: “London remains the international centre for commercial dispute resolution, but why shouldn’t Birmingham or Manchester, Leeds, Newcastle or Bristol also be great hubs of ADR practitioners?”

The Small Business Commissioner is an important step in the right direction, but we need a real focus on fostering that culture change in dispute resolution – a step change that CIArb and its members will be leading from the front.

1 Tied Up: Unravelling the dispute resolution process for small firms, Federation of Small Businesses (2016) 2 Close the Gap, CIArb (2017) CIARB.ORG SUMMER 2017 11

Analysis

ACTION STATIONS!

GEOPOLITICS

In an age of disruption, divisive politics and alternative facts, Chris Wilford ACIArb explains why the ADR community must become vocal advocates and defenders of our industry

12 SUMMER 2017 CIARB.ORG

T

he ADR community was arguably caught on the hop by the unprecedented scrutiny investor-tostate dispute settlement (ISDS) received during recent trade negotiations, including those for the Comprehensive Economic and Trade Agreement, the Transatlantic Trade and Investment Partnership and the Trans-Pacific Partnership.

With accusations flying of secret courts and secretive arbitrators acting in cahoots with corporations to asset-strip democracies, the community was slow to respond and ceded valuable ground to civil society actors that were just as (if not more) opposed to the concept of free trade as to the intricacies of investment dispute resolution. This debate has opened the door on the world of private dispute resolution and could well presage arguments to come about accountability, ethics, international frameworks and the role ADR plays in society as part of much wider debates – arguments the ADR community must prepare to win.

In the aftermath of Britain’s decision to leave the European Union, the UK general election and the election of Donald J. Trump as US President much has been written by commentators and academics to try to rationalise ‘unexpected’ results, which – as British political strategist (and a mastermind of the Leave campaign) Dominic Cummings has put forward (notably in a Spectator blog of 9 January) – are themselves the result of complex, interconnected developments. These various political upheavals have been reflected by a purported readjustment at the global level, which has seen a rules-based system underpinned by liberal international institutions apparently undermined by a new wave of nationalist populism propelled by fake news and ‘alternative facts’ in a post-truth reality. In charting this shift, the writings of Russian political strategist Vladislav Surkov gain new relevance. His work, which is frequently published under pseudonyms, puts forward a vision of a ‘non-linear’ world marked by the competition of ‘all against all’.

In the short story Without Sky (May 2014), attributed to Surkov but published under the pen name Natan Dubovitsky, the author rails against complexity, and describes a struggle between simple villagers and corrupt, sly city-dwellers who ensnare them in a rural dystopia that remains in the aftermath of a war. In effect, it is an allegory for the notion of nation versus a liberal global order.

Where does this leave ADR? International forms of ADR, such as ISDS or international commercial

The rules-based system has been undermined by nationalist populism CIARB.ORG SUMMER 2017 13

Analysis

ABOUT THE AUTHOR Chris Wilford ACIArb is CIArb’s Head of Policy, Public Affairs and Research.

FORWARD THINKING

Dr Finbarr Livesey, Director of the Master’s in Public Policy at the University of Cambridge, has suggested deglobalisation could see the loosening of economic and social ties. Read more in From Global to Local: The Making of Things and the End of Globalisation.

arbitration, are underpinned by a network of international rules and conventions. The most prominent is perhaps the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), also known as the New York Arbitration Convention or New York Convention, which supports international commercial arbitration.

This United Nations Convention ensures that the courts of contracting states give effect to arbitration agreements and enforce arbitration awards made in other contracting states. With more than 150 countries signed up to the convention, it applies to markets across the globe. While this analysis is not suggesting the New York Convention is under threat, the convention does demonstrate the crucial importance of international frameworks to the ADR community, and therefore the potential risk posed by any shifts in the political environment that sustains these rules.

The impact of changes in the global political system can already be seen in delays to the conclusion of an equivalent instrument on enforcement for international commercial settlement agreements resulting from conciliation at the UN. In jurisdictions such as the US, highly critical media pieces have zeroed in on domestic commercial arbitration, and the Federal Communications Commission even announced in 2016 that it would look into outlawing forced arbitration clauses in contracts for telecommunications services.

This attention, as with the scrutiny of ISDS mentioned at the start of this article, has been coloured by blanket assertions and myths. Yet in a rampant media cycle desperate for the next story, there is often not the hunger for detail required to adequately explain how ADR mechanisms work in different contexts. In the games of perception, this is ADR’s Achilles heel.

TIME FOR ACTION If the ISDS debate was a wake-up call, now is the time for action. The community can prepare for future debates by crystallising key messages about the value of ADR forms that cut across a complex landscape, emphasising their cost-effectiveness and efficiency. It will be important to highlight the robust standards promoted by CIArb and international institutions in the space, as well as establishing a firm evidence base for ADR methodologies, and the value they add both to businesses in resolving disputes and in supporting wider civil justice reform to facilitate access to justice.

A key focus should also be on encouraging those who use ADR to be vocal about its benefits, as well as highlighting the difference between the forms – be they arbitration, mediation, adjudication or online dispute resolution. In doing so, the ADR community will not just be well prepared for future debates, it will be able to proactively demonstrate the value of ADR to wider society.

14 SUMMER 2017 CIARB.ORG

A key focus should be on encouraging those who use ADR to be vocal about its benefits Much of this was outlined by leading practitioner V V Veeder QC FCIArb in his 2015 CIArb Alexander Lecture, ‘What matters about arbitration?’. He opened the lecture by stating: “Life should be good for arbitration and yet there are several who feel that this Panglossian world cannot continue. Like Icarus, arbitration may be flying ever closer to the sun, before plunging into the sea.” He went on to determine that the demise of arbitration can be avoided, provided that three points are taken into consideration: 1. Arbitration cannot do everything: it should not be stretched to encompass disputes that it cannot successfully address, often with minimal consent and negative public support.

2. In England at least, arbitration is a movement from the bottom up: it is not imposed from above.

3. In order to better defend and explain arbitration to others, statistical data demonstrating what users, arbitrators and courts actually do in regard to arbitration is needed.

Ultimately, Veeder concluded: “If users want arbitration, arbitration will continue, as it has always done. It does not depend on the existence of princes or princesses in the European Commission and Parliament or EU budgets. Yet there is still much that we could do to improve arbitration generally.”

ADVOCACY IMPERATIVE To conclude, we live in an era of significant change with an increasing level of global political instability and risk, characterised by the emergence of populist political movements and protectionist policies in key regions such as the US and Europe. In this environment, there could well be a significant hazard of reactive legislation targeted at arbitration and other forms of international private dispute resolution, which could be cast as a threat to national interests.

The ADR community needs to consider its approach to growing international debates about the regulation of the ADR sector, qualifications, levels of experience, transparency and accountability. While the tone of debate will create an increasingly hostile political environment, the confidentiality of ADR processes will remain appealing in practice, and their cost-effectiveness will ensure they remain an attractive domestic option as part of civil justice and business public policy programmes. In any noise and tumult of the future, users must come first – and in ensuring all of us become effective advocates for the sector, the ADR community will be able to face with confidence the challenges that emerge.

Insight

HOW TO...

Succeed at third-party funding

Richard Little MCIArb offers his expertise for parties considering this arbitration finance strategy KNOW WHEN IT’S THE RIGHT CHOICE Third-party funding may be suitable for parties that lack the required resources to bring a claim, for example. Alternatively, a party may want to alleviate cash-flow concerns, take the expense off the balance sheet or hedge the risks associated with arbitration.

Where a party secures funding, the funder will usually cover all the costs associated with the arbitration, including counsel’s fees and disbursement, and the tribunal’s fees. The funder assumes the risk in return for a fee – usually 300% of the sum lent or 35% of the recovered sums – payable if the case is successful.

However, not all cases will lend themselves to third-party funding. Third-party funders are often commercial investors, only funding cases to make a return. They will assess the risk of their investment and limit funding to cases with sufficient monetary value and a high chance of success.

CHOOSE THE RIGHT BACKER Internationally, a plethora of funders are available on the market. This can pose challenges, especially for first-time users who are not familiar with the differences between various funders. Important

factors to consider include the source of the funder’s resources and access to these resources. Ready access will avoid delays that could prejudice a party’s position. Another consideration is the use of a broker, who may facilitate access to the market and can help secure the best possible funding terms.

MAKE AN IRRESISTIBLE CASE A well-presented case and an organised approach are likely to attract more offers from funders. There is an expectation that key documents, including pleadings, underlying evidence and correspondence, will be provided. It may also be useful to give the funder copies of advice notes or counsel’s opinions.

Upon review of the materials, the funder will reach a view on whether or not it will fund the case – a process that can take weeks or even months.

KEEP THINGS ON THE QT Non-disclosure agreements should be entered into to avoid confidential information being disseminated.

It is also important to safeguard against an inadvertent waiver of privilege. The rules surrounding privilege are not always straightforward – for example, where the parties and arbitrators come from different jurisdictions.

ABOUT THE AUTHOR Richard Little MCIArb is a Partner in Commercial Dispute Resolution at Eversheds Sutherland. The author would like to thank Margrit Trein of Eversheds for her assistance with this article.

IKON IMAGES

MINIMISE THE FUNDER’S ROLE The funder will conduct an independent review of the merits of the case to confirm strong prospects of success. The opponent’s financial position and the location of its assets will also be assessed, as this will determine the prospect of recovering its investment and return, and how long it will take to collect any sums. Subsequently, a respondent that knows that a claimant is financed by a funder who has completed this process may well reassess its position and approach inter alia to settlement.

Nonetheless, the funder’s involvement in the proceedings should be minimal. They will not want to run the risk that the funding agreement is held to be contrary to public policy, rendering it unenforceable.

BEWARE A BAD ARBITRATOR CHOICE For the funded party, an arbitrator’s likely approach to the recovery of third-party funding may also affect its choice of arbitrator.

Choosing the wrong arbitrator may have a 35% impact on the ultimate recovery if successful.

Similarly, a respondent may in anticipation choose an arbitrator who will not be sympathetic to the recovery of funding.

LEARN MORE

Based on CIArb’s Third Party Funding: Costs in Arbitration workshop held in May 2017.

Find out more at bit.ly/ CostsInfo

CIARB.ORG SUMMER 2017 15

In depth

CRIMINALITY IN ADR

What are the red flags and remedies for arbitrators who suspect foul play?

Mathew Rea FCIArb explains

IKON IMAGES

D

espite universal condemnation of bribery and corruption in international business, there are fears that they are on the increase. Consequently, given the importance of the role of arbitrators in resolving international business disputes, they may well find themselves increasingly confronted with corruption. So what are the warning signs that criminality might be in the mix? And how can arbitrators combat it?

First, let’s be clear that if it is established in an international arbitration that the contract has been procured through corruption, the contract is, in principle, invalid and void, and the claimant is not entitled to a legal remedy. This was recognised back in 1963 (ICC 1110) when Swedish Judge Gunnar Lagergren, in dismissing a claim brought under a contract found to have been procured through a bribe, said: “A case... involving such gross violation of good morals and international public policy can have no countenance in any court… nor in any arbitral tribunal.”

Historically, however, arbitral tribunals have been reluctant to deal with corruption issues when they do not form a substantive part of a case. Arbitrators do not always feel comfortable investigating signs of corruption, particularly when (as will frequently be the case when both parties have been involved in the corruption) neither party raises the issue.

Arbitrators may also be concerned that the consensual nature of the process, and of their appointment, means that they cannot initiate investigations themselves. Or they may decide not to look into signs of corruption on the basis that such allegations, if proved, would not affect the outcome.

POWER, CORRUPTION AND LIES

16 SUMMER 2017 CIARB.ORG

CIARB.ORG SUMMER 2017 17

In depth In the past, tribunals have taken the view that bribery and corruption allegations are best left to domestic courts, and have viewed their jurisdiction as confined to resolving the commercial disputes only. Arbitrators sometimes feel they lack the powers to force parties to hand over incriminating material and are therefore limited to drawing adverse inferences from a failure to produce documents when a party is requested to do so.

NEW CONSENSUS Attitudes do seem to be changing, however.

Alongside a strengthening international consensus that corruption must be tackled, there is increased concern that arbitrators should not be seen to endorse corrupt contracts, and a recognition that they do have the necessary powers to initiate investigations when there are obvious signs of corruption, and to declare contracts to be unenforceable, or claims inadmissible, when allegations can be proved.

Tribunals are also recognising that if they leave issues of corruption to domestic courts, the result can be enforcement difficulties, which could undermine the choice of arbitration as a method of resolving international disputes. In Valeri Belokon v The Kyrgyz Republic (UNCITRAL), Award of 24 October 2014, for example, a Paris Court recently set aside a $16 million award after the tribunal had wrongly decided not to investigate because it believed there was no “probative and substantial evidence” of corruption.

Given arbitration is the preferred method of dispute resolution in a number of countries where corruption is a particular concern, tribunals have recognised they must be alive to the need to deal with the issue themselves in order to ensure their awards can be enforced. In World Duty Free v Kenya (ICSID Case No. ARB/00/7), an admission of corrupt payments enabled the tribunal to decide that the relevant contract was voidable for illegality and the claim was dismissed. In Metal-Tech v Uzbekistan (ICSID Case No. ARB/10/3), where corruption was alleged by the respondent, the tribunal felt able to infer corruption on the basis of strong evidence and declined jurisdiction.

So when might corruption arise in an arbitration?

One common scenario is that one of the parties, usually the respondent, makes an allegation during the arbitration. Here, tribunals will be concerned to prevent tactical claims of corruption made on

DID YOU KNOW?

57 %

of foreign bribery cases involved the obtaining of public procurement contracts

75 %

of cases involved payments through an intermediary

2/3 of foreign bribery cases involved five sectors:

19% 15% 15% Extractive

Construction

Transportation & storage

10%

Information & communication

8%

Manufacturing

Tribunals that fail to investigate suspicions of illegality risk an accusation of facilitation 18 SUMMER 2017 CIARB.ORG

Source: OECD (2014), OECD Foreign Bribery Report: An Analysis of the Crime of Bribery of Foreign Public Officials, OECD Publishing, Paris

spurious grounds in order to escape from bad commercial deals, or which are intended to cause increased costs and delay, or to discredit the claimant.

At the same time, tribunals will want to avoid the risk of arbitration being perceived as a shelter for corruption and may be reluctant to dismiss such allegations without further investigation, even when they apparently lack substance.

Ultimately, tribunals that fail to investigate goodfaith suspicions of illegality risk an accusation of facilitation if suspicions are not investigated but are later proved to be true.

RED FLAGS Tribunals will also need to be aware of ‘red flags’ in the evidence where none of the parties have raised the issue. In these situations, they may wish, on their own initiative, to investigate to ensure their awards will be enforceable and out of a public duty to investigate corruption. Typical warning signs include: l abnormally high payments or commissions made to individuals or offshore shell companies which show there is little in the way of identifiable goods or services; l lack of details in expenses or accounting records; l a joint venture partner or intermediary that appears unqualified to provide a particular service; l a joint venture partner or intermediary recommended by an employee working for a government customer; l an agent or commercial party with a bad reputation in the press, or working in a country in which corruption is recognised to be an issue; and l ‘silent’ or hidden partners where the beneficial ownership cannot be ascertained.

Such issues will typically arise in countries with endemic corruption (for instance, those flagged up

by Transparency International1) and in bribery-prone sectors. However, ‘street-smarts’ borne of experience are essential in spotting these signals; an inexperienced tribunal may struggle to do so.

Tribunals’ powers to initiate investigations of corruption derive in part from the need for tribunals to ensure the validity of their own mandate, and therefore to ensure, through investigation of the legality of the contract containing the arbitration clause, that they have the necessary jurisdiction and that the claims are properly arbitrable.

Article 41 of the ICC Rules requires a tribunal to “... make every effort to make sure that the Award is enforceable at law”. If a contract was procured through corruption or bribery, it is likely that any arbitration award on that contract will violate international public policy and be unenforceable.

Institutional rules and laws generally empower tribunals to order the production of evidence (for example, section 34(2)(d) of the Arbitration Act 1996, and Article 22.1 of the LCIA Rules). An unjustified failure to comply would entitle a tribunal to draw

adverse inferences and, in some cases, to apply to the court for an appropriate order requiring compliance (see section 42 of the Arbitration Act).

BURDEN OF PROOF As a matter of practice, the burden of proof in international arbitration is generally borne by the party making an allegation. Corruption, however, is often difficult to prove and there is a good argument for saying that once evidence indicative (but not conclusive) of corruption has been produced, the burden of proof should be reversed. If the issue has been raised by the tribunal, the question is likely to be resolved in practice through drawing adverse inferences from a party’s failure to adduce evidence to contradict the allegations.

As to the standard of proof, most national arbitration laws and institutional rules leave this question to the arbitrators’ discretion. Generally, tribunals will decide issues on the basis of ‘a balance of probabilities’. On occasion, the seriousness of corruption allegations has led tribunals to require higher standards, such as ‘clear and convincing evidence’ or ‘reasonable certainty’ of corruption (as was the case in Getma International and ors v Republic of Guinea (ICSID Case No. ARB/11/29)), proof ‘beyond reasonable doubt’ or even ‘sufficient to exclude any reasonable doubt’ (as was the case in Bayindir v Pakistan (ICSID Case No. ARB/03/29)).

Of course, corruption, by its nature, will have been deliberately concealed and evidentiary trails destroyed or disguised, and a tribunal’s investigatory powers are limited. In light of this, some tribunals have felt able to exercise their discretion to lower the standard of proof and to base their decisions on inferences and circumstantial evidence that lead to a very high probability of corruption.

One question that can arise is whether, when a tribunal grants no relief on a claim based on rights obtained or otherwise tainted by corruption, the respondent unfairly profits at the claimant’s expense.

In Metal-Tech v Uzbekistan, the tribunal dismissed the claim because of corruption, notwithstanding that result produced a windfall for one party. The tribunal said its decision was necessary “not to punish one party at the cost of the other, but rather to ensure the promotion of the rule of law”.

This is perhaps not a surprising or unfair result in circumstances where, for example, both parties, by participating in corruption, voluntarily take the risk that their contract may ultimately be unenforceable.

In a commercial context, that risk could fall on either side because at the time of the contract neither party can know whether it might end up as claimant or respondent in any dispute.

Tribunals may try to avoid unfairness by granting a sum to the claimant for the value of any work done.

In World Duty Free v Kenya, for example, the tribunal awarded restitution to the claimant despite invalidating

1 Corruption Perceptions Index 2016, Transparency International, published 25 January 2017

CORRUPTION HOTSPOTS According to Transparency International’s Corruption Perceptions Index 2016, the following countries fared worst for perceived levels of public sector corruption: Country Angola Eritrea Iraq Venezuela Guinea-Bissau Afghanistan Libya Sudan Yemen Syria Korea (North) South Sudan Somalia

Score/100 18 18 17 17 16 15 14 14 14 13 12 11 10

CLEANEST COUNTRIES

Rated ‘very clean’ Denmark New Zealand

90 90

Find out more at transparency.org/cpi

ABOUT THE AUTHOR Mathew Rea FCIArb is co-Head of the Global International Arbitration Team at Bryan Cave and a partner in the Commercial Litigation Client Service Group. The author would like to thank Sebastien Krier of Bryan Cave for his assistance with this article.

the contract due to corruption. Last year, the UK Supreme Court decided in Patel v Mirza [2016] UKSC 42 that Mr Patel was entitled to restitution of the amount he had invested under an illegal contract.

However, some may be concerned that these decisions could lead to a crook’s charter: if there is no risk in entering into a corrupt contract because you can always get your money back, why not take the chance?

Nonetheless, tackling bribery and corruption remains high on the international agenda and the role of international arbitration in assisting with these efforts is an important one. Arbitrators appointed in international disputes are in a privileged position to be able to spot and tackle bribery and corruption when it arises. In order to protect the integrity and reputation of international arbitration, they should not hesitate to do so.

CIARB.ORG SUMMER 2017 19

Law

Case note Polytec Overseas Limited v Grand Dragon International Holdings [2017] HKCFI 604 Report by Sabina Adascalitei MCIArb

PARTIES The first plaintiff, Polytec Overseas Limited (POL), is a BVI wholly owned subsidiary of the second plaintiff, Polytec Holdings International Limited (PHIL).

The first defendant, Grand Dragon International Holdings Company Limited (LHK), is a Hong Kong associated company of the second defendant – Guangdong Longhao Group Limited (LG), a PRC company. The third defendant, X, is a shareholder of both LHK and LG and the sole director of LHK. CONTRACTS AND DISPUTE POL and LHK concluded a Cooperation Framework Agreement (BOT), setting out the terms and conditions to establish a joint venture company and to cooperate in developing, constructing and operating highways in mainland China. The BOT contained an arbitration clause stating that “any dispute between the parties in the implementation or performance of the BOT may be submitted to CIETAC in Huanan for arbitration, if the dispute cannot be conciliated”. Pursuant to the BOT, X signed two written guarantees, undertaking various obligations with regard to the highway projects on behalf of himself and LHK.

Further to the BOT, POL, PHIL and LHK concluded two supplemental agreements. The first clarified and supplemented the terms of their relationship. It contained a jurisdictional clause stating that “any dispute of [sic] difference arising or in connection with this agreement should be submitted to the courts of the HKSAR for resolution”.

The second, six-and-a-half years later, noted that the parties had reached a settlement and provided a mechanism for payment; it was silent as to the method of dispute resolution.

In October 2016, POL and PHIL commenced proceedings against LHK, LG and X, claiming that LHK and LG had breached the BOT as well as their fiduciary obligations, and that X was in breach of the guarantee. In response, the

Looking at the alleged inconsistency, the court held that regard should be given to the context of the parties’ dealings

defendants made an application to stay proceedings, relying on the arbitration clause contained in the BOT. The claimants argued that the defendants could not rely on the arbitration agreement, as the BOT arbitration clause and the second supplemental agreement jurisdictional clause were inconsistent.

DECISION To determine the application to stay proceedings, the court relied on Section 20 of the Arbitration Ordinance and Tommy CP Sze v Li & Fung (Trading) [2003], raising four questions: 1. Is there an arbitration agreement between the parties?

2. Is the clause in question capable of being performed?

3. Is there in reality a dispute or difference between the parties?

4. Is the dispute within the ambit of the arbitration agreement?

Looking at the alleged inconsistency, the court held that regard should be given to the context of the parties’ dealings. It took the view that it was not clear that LHK had clearly indicated to the plaintiffs that it was unequivocally exercising its right to litigate and abandoning its right to arbitrate.

The court noted it only needed to form a prima facie view on the existence of the arbitration agreement and should order the stay unless it was clear that the arbitration agreement was inoperative. It concluded that the first supplemental agreement could not override the BOT and so the prima facie condition of valid arbitration agreement had been satisfied.

About the author: Sabina Adascalitei LLB LLM MCIArb is Research and Academic Affairs Coordinator at CIArb Report based on the official translation from Chinese.

20 SUMMER 2017 CIARB.ORG

Calendar

What’s on Selected events and training opportunities for CIArb members

DON'T MISS THIS

CIArb TRAINING AUG – NOV 2017 (Location is London unless specified) KEY l Alternative Dispute Resolution (ADR) l Mediation l Construction Adjudication l Domestic Arbitration l International Arbitration

CIArb Mediation Symposium 27 September, Ashurst, Broadwalk House, 5 Appold Street, London EC2A 2HA. 8.30am–5.30pm The Mediation Symposium ACT offers mediation FAST! practitioners an opportunity Early Bird to improve their skills and Pricing ends practice. This year’s event 2 August explores how mediators might add real value beyond conventional negotiation, and how understanding unconscious or cognitive biases and the world of neuroscience might enhance what we do. A networking reception will follow.

Cost: Early Bird: £110 members; £140 nonmembers; available until 2 August. Then £160 members; £190 non-members Register at: bit.ly/MediationSymposium We are most grateful to our venue sponsor: FORWARD PLANNER l 8 November CIArb’s DAS Convention, London, generously hosted by Locke Lord LLP l 16 November CIArb’s Alexander Lecture, London. Speaker: Professor George A Bermann FCIArb, Columbia Law School. Event followed by CIArb Fellow Graduation Awards l 7–8 December CIArb Flagship Conference, The Synergy and Divergence between Civil Law and Common Law in International Arbitration, Paris l Full details at www.ciarb.org/events

l Introduction to ADR 19 Sep; 14 Nov £480 Also available online. l Introduction to

Mediation 4 Oct £480

l Module 1 Mediation 6–10 Nov £2,400 l Module 2 Mediation 13 Nov £1,560

l Accelerated Route to Fellowship 17–18 Oct £1,860 l Introduction to Arbitration 19 Oct £480 l Module 2 Arbitration 5 months.

Start: 13 Oct £1,320

l Module 4

l Module 3 Arbitration 7 months.

Start: 5 Oct £1,860

l Introduction to

l Module 4 Arbitration 5 months.

Start: 26 Oct £1,320

l Module 3

l Accelerated Route to Membership 28–29 Nov £1,320

Mediation 6 months.

Open entry £660 Construction Adjudication 12 Sep £480

Construction Adjudication 6 months.

Start: 5 Oct £1,860

l Module 4 Construction Adjudication 5 months.

Start: 27 Oct £1,320

l Accelerated Route to Fellowship 24–25 Oct £1,860 l Introduction to International Arbitration 31 Oct £480

l Module 2 International Arbitration 5 months.

Start: 13 Oct £1,320

l Module 3 International Arbitration 7 months.

Start: 5 Oct £1,860 l Module 4 International Arbitration 5 months.

Start: 26 Oct £1,320 l Accelerated Route to Membership 16–17 Aug; 28–29 Nov £1,320 l Accelerated Route to Fellowship 2–3 Aug; 24–25 Oct £1,860 l Diploma in International Commercial Arbitration (Part 1) 9 days, Oxford.

Start: 17 Aug £6,000 l Diploma in International Commercial Arbitration (Parts 1 & 2) 9 days + 4 months, Oxford.

Start: 17 Aug £7,200

FIND OUT MORE Professional training: www.ciarb.org/courses Branch courses: www.ciarb.org/training-and-development Education team: T +44 (0)20 7421 7439 F +44 (0)20 7404 4023 E education@ciarb.org

CIARB.ORG SUMMER 2017 21

WORLD VIEW

KUALA LUMPUR CIArb member to speak Professor Anselmo Reyes FCIArb, a Professor of Legal Practice at the University of Hong Kong, will be the distinguished speaker at the 3rd IPBA Asia-Pac Arbitration Day 2017 on 25 September at the KLRCA Auditorium in Kuala Lumpur. Find out more at klrca.org

On the radar The KLRCA has floated the possibility that it would be renamed the Asian International Arbitration Centre (Malaysia) as part of its intention to play a major role in China’s One Belt, One Road economic and diplomatic initiative.

Watch this space.

By 2016, 618 cases had been recorded at the Kuala Lumpur Regional Centre for Arbitration – 522 in 2016 alone

Thayananthan Baskaran

Asia’s arbitration centre

A

Recent changes look set to cement Malaysia’s ADR role ABOUT THE AUTHOR Thayananthan Baskaran FCIArb is the Chairman of the CIArb Malaysia Branch. He is an adjudicator, arbitrator and mediator based in Kuala Lumpur and at Crown Office Chambers in London. Follow him @TABaskaran on Twitter.

CIArb in Malaysia The Malaysia Branch has a membership of more than 400 professionals and an active Young Members Group, and there is also a Sabah Chapter, launched in 2003. Find out more at ciarb.org.my

rbitration continues to thrive in Malaysia, thanks largely to its strategic location at the centre of Asia, and in the middle of historic trade routes linking China and India. These historic ties mean that Malaysians are fluent in many languages, including Malay, Mandarin, Tamil and Hindi. Its position, then, at the geographical and cultural heart of Asia, makes Malaysia ideal as an Asian arbitration centre.

Recent years have seen a dramatic increase in arbitrations administered by the Kuala Lumpur Regional Centre for Arbitration (KLRCA). Between 1978, when the KLRCA was formed under the auspices of the Asian-African Legal Consultative Organization, and 2010, 22 cases were recorded at the KLRCA. Compare this with 2016, by which time 618 cases had been recorded – 522 in 2016 alone.

The total value of the cases recorded in 2016 was close to $300 million for international cases and in excess of $100 million for domestic cases. Apart from arbitration, the total value of adjudications registered with the KLRCA in 2016 was approximately $360 million. These are the highest numbers the KLRCA has achieved since its resurgence in 2010. The dramatic increase in cases handled by the KLRCA is largely due to the efforts of its Director, Datuk Professor Sundra Rajoo (the immediate past-President of CIArb), who has served in the position since 2010.

22 SUMMER 2017 CIARB.ORG

Due to this dramatic increase in cases handled, a revised version of the KLRCA Arbitration Rules was launched in May 2017 and came into effect on 1 June 2017. The KLRCA Arbitration Rules incorporate the United Nations Commission on International Trade Law Arbitration Rules (as revised in 2013). Two new aspects of the KLRCA Arbitration Rules 2017 are the provisions for the technical review of awards and enhanced provisions on emergency arbitrators.

The technical review allows the Director of the KLRCA to review the award in draft and notify the arbitral tribunal of perceived irregularities as to the form of the award and any errors in the calculation of interest and costs. This will further enhance the enforceability of awards issued in arbitral proceedings administered by the KLRCA. The KLRCA Arbitration Rules 2017 also has enhanced provisions for emergency arbitration.

If the Director allows an application for emergency interim measures, an emergency arbitrator will be appointed within two days and will render an order or award within 15 days. The ability of parties to seek urgent interim measures from an arbitrator rather than the courts will further reduce any reliance a party may need to place on the courts.

Kuala Lumpur enjoys a strategic commercial location

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