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Focus on Arbitration Session 2:
How to keep your arbitration from going off
the rails, when faced with a reluctant opponent
Richard Smith – Partner, Litigation
Angeline Welsh – Senior Associate, Litigation
4 November 2010
Season Two
2010 Seminar Schedule
Thursday 4 November
12.30-1.30pm
Bishops Square
Focus on Arbitration Session 2: How to keep your arbitration from
going off the rails, when faced with a reluctant opponent
Richard Smith - Partner, Angeline Welsh - Senior Associate
Monday 8 November
Good Harvest or scorched earth?
12.30-1.30pm
Bishops Square
Emma Slessenger - PSL Counsel
Wednesday 10 November
Climate Change and Carbon in M&A Transactions
12.30-1.30pm
Bishops Square
José Cofre - Senior Associate
Wednesday 17 November
Regulatory Update 2: Market Update on Recent Regulatory Issues
9-10am
Bishops Square
Speakers from the Financial Services Regulatory Practice
Thursday 18 November
Financing Infrastructure Assets
9-10am
Bishops Square
Conrad Andersen - Partner, David Lee – Partner
Wednesday 24 November
Asset Finance Portfolio Transfers
12.30-1.30pm
Bishops Square
Tim Elliott - Counsel, Harry Upcott - Partner
Friday 26 November
Construction of Commercial Contracts
12.30-1.30pm
Bishops Square
Richard Hooley - Professor, King’s College London
Tuesday 30 November
Lehman Brothers Update
12.30-1.30pm
Bishops Square
Paul Cluley - Partner, Jennifer Marshall - Partner
Thursday 2 December
Investing in Russian Strategic and Politically Sensitive Sectors:
Demystifying the Legal and Regulatory Puzzle
9-10am
Bishops Square
Tuesday 7 December
9-10am
Bishops Square
Anton Konnov - Partner, Vladimir Zenin - Senior Associate
Regulatory Update Series: No.3
Market Update on Recent Regulatory Issues
Speakers from the Financial Services Regulatory Practice
Thursday 9 December
Developing a Nuclear Power Plant
9-10am
Bishops Square
Gareth Price - Partner
Friday 10 December
Focus on Directors’ Duties
12.30-1.30pm
Bishops Square
Alice Englehart - Senior Associate, Joanna Page - Partner
Thursday 16 December
Sovereign Immunity Waiver Clauses: When are they necessary and do they
work?
9-10am
Bishops Square
Karen Birch - Senior PSL, Sarah Garvey - PSL Counsel, Jason Rix - Senior PSL
Allen & Overy LLP
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Focus on Arbitration Session 2:
How to keep your arbitration from going off
the rails, when faced with a reluctant opponent
(12.30pm – 1.30pm)
Richard Smith
Angeline Welsh
Summary
It's all very well having a well drafted arbitration agreement, but what happens if a party refuses to honour it? This
session focuses on the key strategic considerations when faced with a reluctant party to an arbitration, who worse
still, attempts to derail the arbitral process. In particular, this session will look at what tools are available to get
things back on track and asks: What can the tribunal itself do? How useful are the courts? How can you best protect
the arbitral award for enforcement?
© Allen & Overy LLP 2010
Speaker Biography
Richard Smith is a partner in the International Arbitration group of Allen &
Overy. In addition to his commercial arbitration caseload, Richard
specialises in arbitration related proceedings in the English Courts, including
preventing the breach of arbitration agreements. Richard has led some of the
most important legal actions in this area, including representing the
successful parties in Weissfisch v Julius, A v B, C v D and AES UstKamenogorsk v UK Ust-Kamenogorsk JSC.
Richard Smith
Partner – Litigation
Contact
Tel +44 (0)20 3088 3734
richard.smith@allenovery.com
Angeline is a senior associate in the International Arbitration group in Allen
& Overy’s London office. Angeline has particular experience in advising on
applications for urgent interim relief in support of arbitration before arbitral
tribunals and the English Commercial Court. Her practice includes disputes
arising under both commercial contracts and investment treaties, and she has
acted as counsel in arbitrations, conducted under the LCIA, ICC and
UNCITRAL rules.
Angeline Welsh
Senior Associate – Litigation
Contact
Tel +44 (0)20 3088 4093
angeline.welsh@allenovery.com
© Allen & Overy LLP 2010
Notes
How to keep your arbitration from
going off the rails
Richard Smith & Angeline Welsh
4 November 2010
© Allen & Overy LLP 2010
1
Introductions
Richard Smith
Angeline Welsh
Partner
London
020 3088 3734
richard.smith@allenovery.com
Senior Associate
London
020 3088 4093
angeline.welsh@allenovery.com
© Allen & Overy LLP 2010
© Allen & Overy LLP 2010
2
Notes
Remind me – why arbitration?
– Neutral Forum
– Favourable enforcement regime
© Allen & Overy LLP 2010
3
When things go off the rails…
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–
–
–
–
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Ignoring the arbitration
Challenging the arbitrators
Commencing rival litigation proceedings
Taking steps to interfere
Challenge to the award
Resisting enforcement of awards
© Allen & Overy LLP 2010
© Allen & Overy LLP 2010
4
Notes
1.
Ignoring the arbitration
– The Tribunal can proceed regardless
e.g. Article 15.8 of the LCIA Rules, Article 6.3 of the ICC Rules,
Article 28.2 of the UNCITRAL Rules
– Still possible for the recalcitrant party to challenge the award
or resist enforcement
– High risk strategy
© Allen & Overy LLP 2010
2.
5
Challenging the arbitrators
– Challenges can come in various different forms:
– Court applications to remove an arbitrator
– Applications to Institutions to revoke the appointment of an
arbitrator; e.g Article 10.2 and 10.3 of the LCIA Rules
– Recent debate on barristers appearing before arbitrators from
the same chambers
© Allen & Overy LLP 2010
© Allen & Overy LLP 2010
6
Notes
2.
Challenging the arbitrators
– Solutions:
– Select good seat
– Do not engage in unilateral discussions with the arbitrator
– Beware issues which might give rise to conflicts
© Allen & Overy LLP 2010
3.
7
Rival litigation proceedings
– Problem:
– Litigation on two fronts
– Enforcement issues
– Solutions:
– Application to stay court proceedings
– Anti-suit injunction
© Allen & Overy LLP 2010
© Allen & Overy LLP 2010
8
Notes
Stay of rival proceedings
– A stay must be granted or a reference to arbitration made
unless the court finds: “that the said agreement is null and
void, inoperative or incapable of being performed.”
– NYC Art II(3)
– Section 9 of the English Arbitration Act
– E.g. Premium Nafta v Fili Shipping
© Allen & Overy LLP 2010
9
Anti-suit injunctions
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–
–
–
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Directed at the party, not foreign court
Secondary to stay
Importance of the seat
No longer available intra-EU
E.g. AES UST – Kamenogorsk HHL JSC v UST –
Kamengorsk HHP JSC
© Allen & Overy LLP 2010
© Allen & Overy LLP 2010
10
Notes
4.
Taking steps to interfere
– Problem:
– Aggressive tactics – the anti-arbitration injunction
– Rarely granted in theory
– But recent examples from India, Pakistan, Brazil, Ethiopia,
Belize, Indonesia
© Allen & Overy LLP 2010
4.
11
Taking steps to interfere
– Solutions:
– Seek to overturn the injunction
– Ignore the injunction
– Directions from the Tribunal in investor/state cases
– Salini v Ethiopia
“It is unacceptable for a state party to invoke its own law in
an effort to avoid the effect of an arbitration agreement
that it has freely entered into. For similar reasons, it is
unacceptable for a state party to resort to its own courts
for the same purpose.”
– Pre-emptive anti-suit injunction
© Allen & Overy LLP 2010
© Allen & Overy LLP 2010
12
Notes
5.
Challenge to the award
– Grounds for challenges vary by jurisdiction but can include:
– Lack of substantive jurisdiction
– Serious irregularity
– Appeal on questions of law
– Possible annulment proceedings
© Allen & Overy LLP 2010
5.
13
Challenge to the award
– Insulating the award from challenge:
1. Consider specific decision from arbitral tribunal on
jurisdiction
2. Cross yours is and dot your ts
3. Exclude appeal on the law (which most institutional rules
do)
4. Select a good seat
© Allen & Overy LLP 2010
© Allen & Overy LLP 2010
14
Notes
6.
Resisting enforcement of an award
– Very limited grounds under the NYC for refusing to enforce
an award.
– List is exhaustive and includes:
–
–
–
–
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Lack of notice/absence of due process
Incapacity
Lack of substantive jurisdiction
Non-arbitrable issues
Contrary to public policy
© Allen & Overy LLP 2010
6.
15
Resisting enforcement of an award
– Steps to insulate award on enforcement include:
– ensure proper notice is given of all the proceedings
– do not submit a notice/request dealing with narrow
issues
– arbitrability or mandatory Law points at place of
enforcement
© Allen & Overy LLP 2010
© Allen & Overy LLP 2010
16
Notes
6.
Protecting the assets
– Award is only as good as the assets.
– Research where assets are up front (consider all NYC
countries)
– Consider interim measures to preserve assets
© Allen & Overy LLP 2010
17
Conclusion
– All is not as bad as it first appears…
– Minimise risks by choosing a good seat
– Beware of issues which might give rise to conflicts
– If face rival/aggressive court proceedings, act quickly
– Be mindful of issues on enforcement
© Allen & Overy LLP 2010
© Allen & Overy LLP 2010
18
Notes
Questions?
These are presentation slides only. The information within these slides does not constitute
definitive advice and should not be used as the basis for giving definitive advice without
checking the primary sources.
Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term
partner is used to refer to a member of Allen & Overy LLP or an employee or consultant
with equivalent standing and qualifications or an individual with equivalent status in one of
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© Allen & Overy LLP 2010
© Allen & Overy LLP 2010
19
Notes
© Allen & Overy LLP 2010
Notes
© Allen & Overy LLP 2010
Notes
© Allen & Overy LLP 2010
Notes
© Allen & Overy LLP 2010
One Bishops Square London E1 6AD United Kingdom Tel +44 (0)20 3088 0000 Fax +44 (0)20 3088 0088
These are seminar notes only. The information within this document does not constitute definitive advice and should
not be used as the basis for giving definitive advice without checking the primary sources.
In this document ‘Allen & Overy’ means ‘Allen & Overy and/or its affiliated undertakings’. Any reference to a partner
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