COMPLEX ARBITRATIONS: MULTIPARTY AND MULTICONTRACT DISPUTES UNDER THE ICC RULES OF ARBITRATION Galina Zukova MGIMO, Moscow 15 March 2013 International Arbitration Practice, Paris Riga Graduate School of Law
Defining “complex disputes” § Complex disputes: § State & state entity involvement § Investment cases § Large amounts in disputes § Procedural challenges § Etc. § For the purposes of this presentation: § Multiple parties arbitrations § Multiple contracts arbitrations White & Case 1
Presentation plan 1. Overview of the problem 2. Examples of transactions involving multiple parties and multiple contracts 3. Issues arising in multi-party and multi-contract arbitrations 1. Multiple parties 1. From the outset 2. Joinder of additional parties 3. As a result of consolidation of cases 2. Multiple contracts 1. From the outset (Request/Answer(s)) 2. As a result of consolidation of cases 3. Constitution of the Arbitral Tribunal 4. Costs 5. Parallel (arbitral) proceedings White & Case 2
Overview of the problem § Is there a need for a special regulation? § ICC Statistics: § 796 cases in 2011 § Approximately 1/3 of cases: multilple parties § One case filed in 2007 had 28 different parties! § 2012 ICC Rules of Arbitration § Other Rules follow… White & Case 3
Importance of the arbitration agreement White & Case 4
Jurisdiction in Multiparty and Multicontract Scenarios: Two Dimensions Each party must have agreed to arbitrate: with all other parties to the arbitration More than two parties Art. 6(4)(i) to have all the claims heard in a single arbitration Multiple Arbitration Agreements Art. 6(4)(ii) White & Case 5
Scenarios of multi-party and multi-contract arbitrations § Single contract with more than two parties § SPA, STA § Single contract plus relevant non-signatories § Agents and other representatives § Third-party beneficiaries § Assignees § Non-signatories within the same group of companies: other companies of the group, directors, shareholders (piercing of corporate veil) § Related contracts with the same parties § Related contracts with different parties § Construction § M&A Acquisition guarantor § Joint venture contracting with third party White & Case 6
The Role of the ICC Court § Determination of prima facie existence of an arbitration agreement or arbitration agreements, Article 6(3) + § Article 6(4)(chapeau): one arbitration agreement § Article 6(4)(i): one arbitration agreement and multiple parties § Article 6(4)(ii): multiple arbitration agreements (NB: => multiple contracts) § Constitution of the Arbitral Tribunal § Fixing the costs § Scrutiny of the draft Award White & Case 7
Article 6(4)(i): one arbitration agreement and multiple parties § The arbitration shall proceed between those of the parties with respect to which the Court is prima facie satisfied that an arbitration agreement under the Rules that binds them all may exist § The threshold for the Court’s decision : 1. The contract on which the claims are based contains an arbitration clause 2. The arbitration clause refers to arbitration under the auspices of the ICC 3. The contract containing the arbitration clause is signed by all of the parties OR § If not signed by all the parties, the non-signatory party/ies participated in the negotiation, execution, performance or termination of the contract containing the arbitration clause White & Case 8
Examples of transactions involving multiple parties 1. 1 project 2. 1 contract 3. 4 parties a) A D B C Av. C - can D intervene? - can C implead D? b) A v B, C&D - can B, C or D counter-claim against A? - can B make a cross-claim against C&D? c) A&B v C&D - appointment of arbitrators? White & Case
Multicontract Arbitration: Setting The Boundaries § When? § Claims arising out of or in connection with more than one contract § Single arbitration § One or more arbitration agreements under the Rules § Question to answer: § could all the parties have together in a single arbitration? agreed to have their claims heard White & Case 10
Article 6(4)(ii): Multiple arbitration agreements § The arbitration shall proceed as to those claims with respect to which the Court is prima facie satisfied § that the arbitration agreements may be compatible § The Court considers: § Constitution of Arbitral Tribunal: number, method, time-limits § Place of arbitration § Language § Considerations of applicable law AND § that all the parties to the arbitration may have agreed that those claims can be determined together in a single arbitration § The Court considers: § Whether all parties are signatories to all contracts § The “group of companies” exception § The “at least one contract” exception § Same economic transaction considerations White & Case 11
Examples of transactions involving multiple contracts 1. 2. 3. 1 project 3 contracts 2 parties A v B for disputes under contracts Nos. 1, 2 and 3 (“arising under this Agreement”) A B A B White & Case
More examples: A v. B § The disputes concern 3 contracts for the development, construction and fitting out of the … Office Centre (the "Project") …, namely: 1. Shell and Core Contract: a contract dated … 2005 between the Respondent (as Employer) and the Claimant (as Contractor) for the design and construction of the shell, core and associated infrastructure works at the … Office Centre. 2. Building A Fit-Out Contract: contract dated … 2008 between the Respondent (as Landlord) and the Claimant (as Contractor) relating to the fit-out of floors 2 to 15 (inclusive) of Building A within the … Office Centre. 3. Building B Fit-Out Contract: contract dated … 2008 between the Respondent (as Landlord) and the Claimant (as Contractor) relating to the fit-out of floors 2 to 15 (inclusive) of Building B within the … Office Centre. White & Case 13
More examples: A v. B § Contract 1: § All disputes arising in connection with the present Contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules. The arbitration proceedings will take place in Paris, France London, England. § Contract 2: § Any dispute arising under or in connection with the Contract shall be referred to arbitration in Paris with ICC rules to apply; each Party to appoint an arbitrator … § Contract 3: § All disputes arising in connection with the present Contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules. The arbitration proceedings will take place in Paris, France. White & Case 14
Examples of transactions with multiple parties and multiple parties 1. 2. 3. 1 project 3 contracts 4 parties A v B, C&D? 3 arbitrations? A B C D White & Case
Examples of transactions with multiple parties and multiple parties § N (United Kingdom) vs/ 1. Person P (Bulgaria) 2. Person P- ESTABLISHMENT (Liechtenstein) 3. LTD JOINT VENTURE N Person PESTABLISHMENT (Cyprus) § Guarantee signed by Claimant and Respondent 1 § Shareholders Agreement relating to Respondent 3, signed by Claimant and Respondents 2 and 3 § Share Purchase and Subscription Agreement signed by Claimant and Respondents 1, 2, 3: "All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with the said Rules. The seat or place of arbitration shall be Vienna, Austria. The language of the arbitration shall be English. " White & Case 16
Joinder of Additional Parties (Article 7) § Terminology § Joinder § Additional Parties § Equal treatment between the parties § Right to identify parties without decision from the ICC Court § The Additional Party’s agreement is necessary to modify the arbitration clause § Participation in the constitution of the arbitral tribunal § Time Limitation: Constitution of the Arbitral Tribunal § Notion of Parties to the Proceedings: Participation in a claim § Issues of jurisdiction subject to decision of Arbitral Tribunal and, as the case may be, prima facie jurisdiction control by the ICC Court § Article 6(3) § Article 6(4)(i) White & Case 17
What is Consolidation? (Article 10) § Where there at least two separate ICC arbitrations pending and one or more parties to one of the arbitrations wants them to be merged into a single proceeding White & Case 18
Consolidation § Administrative act by the Court not subject to reconsideration by the Arbitral Tribunal § The Court may, at the request of a party, consolidate two or more arbitrations pending under the Rules into a single arbitration, in 3 instances: 1. The parties have agreed to consolidation; or 2. All claims are made under the same arbitration agreement; or 3. Where the claims in the arbitrations are made under more than one arbitration agreement, § the arbitrations are between the same parties, and, § the disputes arise in connection with the same legal relationship, and § the Court finds the arbitration agreements to be compatible. White & Case 19
Constitution of the Arbitral Tribunal • Participating in arbitral tribunal constitution is a fundamental right • What happens when there are multiple parties? Multiple claimants or respondents (Article 12(6)) • Where there are multiple claimants or multiple respondents, and where the dispute is to be referred to three arbitrators, the multiple claimants, jointly, and the multiple respondents, jointly, shall nominate an arbitrator for confirmation pursuant to Article 13. Additional parties (Article 12(7)) • Where an additional party has been joined, and where the dispute is to be referred to three arbitrators, the additional party may, jointly with the claimant(s) or with the respondent(s), nominate an arbitrator for confirmation pursuant to Article 13. White & Case 20
Constitution of the Arbitral Tribunal § What happens when the multiple parties failed to jointly nominate the arbitrator and agree on the constitution of the arbitral tribunal? § Dutco case § French Cour de Cassation considered the principle of equality in the appointment of arbitrators as a matter of public policy White & Case 21
Constitution of the Arbitral Tribunal Article 12(8) of the Rules: a reaction to Dutco • In the absence of a joint nomination pursuant to Articles 12(6) or 12(7) and where all parties are unable to agree to a method for the constitution of the arbitral tribunal, the Court may appoint each member of the arbitral tribunal and shall designate one of them to act as president. In such case, the Court shall be at liberty to choose any person it regards as suitable to act as arbitrator, applying Article 13 when it considers this appropriate. White & Case 22
Scrutiny of the Award by the ICC Court Article 33 Before signing any award, the arbitral tribunal shall submit it in draft form to the Court. The Court may lay down modifications as to the form of the award and, without affecting the arbitral tribunal’s liberty of decision, may also draw its attention to points of substance. No award shall be rendered by the arbitral tribunal until it has been approved by the Court as to its form. White & Case 23
Costs § General rule: § Advance on costs on the basis of the amount in disputes § Multiple claims: Article 36(4): § Where claims are made under Article 7 [joinder of additional parties] or 8 [claims between multiple parties], the Court shall fix one or more advances on costs that shall be payable by the parties as decided by the Court… White & Case 24
Enforcement of the arbitral award New York Convention, Article V 1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: […] (c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration […] (d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties […] White & Case 25
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