W11: Arbitral Awards

Question 1

Concept: Destination of an Int’l Arb. = The Award

Answer 1

1. Parties to transborder transactions who go to the trouble and expense of taking their disputes to int’l arb. do so expecting that unless a settlement is reached along the way, the process will lead to an award
   - Also expect that sub: any right of appeal/recourse, the award = final and binding upon them
   - UNCITRAL Arb. Rules Art 34(2): All awards shall be made in writing and shall be final and binding on the parties. The parties shall carry out awards w/out delay
   - ICC Rules: Every award shall be binding on the parties. By submitting the dispute to arb. u/the Rules, parties undertake to carry out any award w/out deal and shall be deemed to have WAIVED their right to any form of recourse insofar as such waiver be validly made
2. All ‘Awards’ = ‘Final’, i.e., dispose ‘finally’ of the issues decided in them (sub: any challenge procedure for correction/interpretation); and are ‘binding’ on the parties
   - The award that disposes ‘finally’ of all outstanding issues = Final Award; the outcome of arbitral proceedings that have been contested thru out.
   - HOWEVER, it may embody an agreed settlement b/w the parties = Consent Award/Award on Agreed Terms
   - In case party has failed/refused to participate = Default Award

Question 2

Concept: Definition of Award

Answer 2

1. No int’lly accepted definition of ‘Award’.
2. Nearest definition - NYC Art. I(2): The term ‘arbitral awards’ shall incl. NOT ONLY awards made by arbitrators appointed for each case, but ALSO those made by permanent arbitral bodies to which parties have submitted
3. Proposed definition - ML (attempt to find a definition that encompasses not only final, but also partial awards): ‘Award’ means a final award which disposes of all issues submitted to the tribunal, and any other decision which finally determines any Q. of substance/of its competence/of procedure (ONLY IF tribunal terms its decision an ‘award’)
   - Need to distinguish b/w final awards and other decisions that are not final = complicated
   - ML contemplates there may be more than 1 award during the course of arb.
   - E.g., Challenge on Jurisdiction - Partial o Final Award - if Partial then may be challenged in competent court w/in 30 DAYS of notification to the parties
4. Time Limit for Challenge: begins to run from the date on which award was issued.
   - Once final award made, may be impossible to challenge any element that flows from a previous UNCHALLENGED partial award
   - ONLY an Award will qualify for R and E u/relevant int’l conventions (incl. NYC).
5. ‘Award’ should be reserved for decisions that finally determine the substantive issues w/which they deal.
   - Distinguishing b/w awards (concerned w substantive issues) and procedural orders and directions (concerned w conduct of the arb.)
   - Procedural Orders and Directions do NOT have status of awards as they may be called into Q. after final award has been made (e.g., as evidence of ‘bias’, or ‘lack of due process’)

Question 3

Types: Categories of Award

Answer 3

1. ‘Final Award’ customarily reserved for an award that completes the mission of the arbitral tribunal
2. Sub: exceptions, the delivery of a final award renders the tribunal FUNCTUS OFFICIO: it ceases to have further jurisdiction wrt dispute, and the special relationship that exists b/w the tribunal and the parties during the proceedings ends
   - Tribunal should NOT issue a final award until it is satisfies that its mission has actually been completed
   - If there are outstanding matters to be determined (e.g., costs), the tribunal should issue an award expressly designated as a partial award

Question 4

Types: Partial

Answer 4

1. Effective way of determining matters that are susceptible to determination during the course of proceedings, which once determined, may save considerable time and money for all involved
2. Power to use partial awards may derive from the AA or the Applicable Law
3. Where AA incorporates int’l/institutional rules of arb., these generally contain provisions for making such Partial awards
   i. ICC Rules: Define ‘award’ to incl. ‘interim, partial, or final’ award)
   ii. LCIA Rules: The tribunal may make separate awards on diff.issues at diff. times - such awards shall have the same status and effect as any other award made by the tribunal
4. In Ad Hoc Arb., utal to make express provisions in the submission agreement for the tribunal to issue partial awards, if deems fit
   - Where power NOT expressly conferred, may nevertheless be conferred by operation of law
   - EAA 1996 S. 47

DISADVANTAGE:

i. Further avenue for judicial review (and consequent delay) created
- may occur on an application by one of the parties to confirm/annul/set-aside the partial award
ii. ML limits potential for delay by specifying: application to review a partial award on jurisidiction must be lodged w/in 30 DAYS of receipt of notice of the ruling, with NO APPEAL beyond the first level of court in which decision os made
- relevant decision need not have title ‘award’ to be sub: judicial review/confirmation

Question 5

Partial Awards: Advantages

Answer 5

1. ISSUES CONCERNING APPLICABLE LAW:
   - Dispute as to the law(s) applicable to the merits
   - Not resolved at early stage, then parties must argue their respective cases by ref: diff. systems of law
   - May need to introduce evidence from lawyers experienced in these diff. systems
   - Advice: Tribunal should issue a preliminary decision on Q. of applicable law
2. SEPARATION CLAUSES (JURISDICTION, LIABILITY, QUANTUM):
   - Where issues of liability may be separated from those of quantum
   - Determination of an issue of liability in favour of respondent may make it unnecessary for tribunal to investigate Q. of quantum
   - Even if NOT determinative, decision by tribunal on certain issues of principle may well encourage parties to reach settlement on quantum (usually well aware of costs likely to be involved if the tribunal itself has to fo into detailed quantification of a claim - taking evidence from accountants, technical experts, etc.)
   - DANGERS:
   i. nature and presentation of dispute may change during course of proceedings
   ii. process if rendering partial award = expensive and time consuming
   - ADVICE: Tribunal should only issue partial award on request of both parties (where only one party - must take submissions of and hear out both parties)
3. LIMITATION CLAUSES IN A CONTRACT:
   - A Partial award on the meaning and effect of limitation clauses will help define the amount of the claim, and may make the prospect of settlement more likely

Question 6

Types: Foreign and Domestic Awards

Answer 6

1. INDIA:
   i. Foreign Awards (R and E) Act 1961: defines a foreign award as an award made in another country on differences b/w persons arising out of legal relationships, whether contractual or not, considered to be commercial u/law in force in India
   ii. Indian SC: HELD -
   a) a lawsuit could be stayed only upon the Courts satisfaction that relationship of the parties to the AA is one that should be considered ‘commercial’ and that this term be given a broad meaning
   b) the term ‘domestic award’ means an award made in India, whether to not this is in a purely domestic context; thus definition will include ‘a domestically rendered’ award in domestic arb./int’l arb.

Question 7

Types: Default

Answer 7

1. Where one party (usually respondent) fails/refuses to partake
   - may occur from outset or during (as a result of change of mind/strategy)
2. Task of tribunals not to ‘rubber stamp’ claims presented to it, rather, it must make a determination of these claims - take on the burden of testing the assertions made by the Active Party, and must call for such evidence and legal argument reqd. for the purpose
3. Award made in favour of Active Party - need to ensure it’s effective
   i. Award recites in detail procedure followed
   ii. Efforts made to communicate Active Party’s case to the Defaulting Party (to give that party every opportunity to present its case)
   iii. Motivations/Reasons given in the award should (w/out being lengthy) reflect tft the tribunal has genuinely addressed the merits, to show a reasoned determination has been made
   iv. Deal w any Q’s of jurisidiction that appear relevant, whether or not raised by one of the parties
   - ICSID Arb. Rules Rule 42(4): The Tribunal shall examine the jurisdiction of the Centre and its own competence in the dispute and, if it is satisfied, decide whether the submissions made are well-founded in fact and in law
   - If followed, LESS RISK of money spent by Active Party in obtaining award being wasted as a result of subsequent decision by national courts that the award in UNENFORCEABLE

Question 8

Types: Additional

Answer 8

1. When tribunal renders award that does not address all issues presented, parties may w/in a ltd. time frame, request an additional award to remedy this gap
2. Most arb. rules provide for it, but where not expressly provided for, there’s generally a procedural tool by which they can be accomplished
   - EXCEPTION: ICC Rules - provide for correction of clerical/typographical errors, as well as interpretation of awards, but NOT for rendering of award based on party’s objection that tribunal failed to consider an issue presented (result of scrutiny process of the ICC Court)

Question 9

Types: Consent (and Termination of Proceedings w/out Award)

Answer 9

1. Where parties arrive at settlement during proceedings, they may simply implement the settlement agreement and thus REVOKE mandate of tribunal; ie., jurisdiction and powers conferred on tribunal by parties are terminated
2. Desirable for terms of settlement to be embodied in award, b/c:
   i. easy enforcement of future obligation if contained in award (see NYC)
   ii desirability (where state/agency involved) of having definite and indetifiable ‘result’ of arbitral proceedings, i.e., award - may be passed to apt. paying authority for implementation
   - signature of arbitrators on Consent Award = measure of approval by the tribunal to agreement reached by parties
   - may help to meet politically motivated criticism of those responsible for taking the decision to reach a compromise settlement
3. CAPACITY TO COMPROMISE: If parties are entitled to refer a dispute to arb., they are entitled to reach a compromise wrt that dispute
4. Settlement is invariably welcomed, and may be possible to have it recorded in an Agreed Award
   - UNCITRAL Rules Art. 36(1)
   - ICC Rules, Art. 32
5. NOTIFICATIONS:
   i. Notifying tribunal of a settlement will ensure that it doesn’t incur further frees and expenses (other than agreed Cancellation Fees)
   ii. Such notification might lead to a refund of advance payments made to cover fees and expenses, since actual costs may well be less than expected if case is settled w/out a hearing
   iii. Desirable to out terms of settlement into an enforceable form when there is an element of future performance
6. ORDERING PERFORMANCE OF UNLAWFUL ACT:
   i. manufacture of int’lly banned drug
   ii. smuggling of contraband
   iii. agreement that manifestly contravenes competition/antitrust laws
   - Earlier: Tribunal has no discretion
   - MODERN rules and legislation: Permit Tribunal to REFUSE to make a Consent Award

Question 10

Contents of Award

Answer 10

Dictated primarily by AA and law governing the arb. (Lex Arbitri):

1. The AA
2. Unambiguous
3. Determination of the Issues
4. Reasons
5. Different ways of giving reasons

Question 11

Contents: Details

Answer 11

1. THE AA:
   - Usually provides that the award is to be final and binding
   - Follows that award should deal w all matters ref: arb., insofar as they’re NOT dealt w by interim/partial awards
   - Rarely provide for contents
   - Incorp. set of arb. rues; which also provide that award should deal w matters like costs, interest, etc.
   - Even if not specifically reqd., giving go reasons is a practice that should be followed unless there’s some v. good reason not to
2. UNAMBIGUOUS:
   - Award reqd. to be unambiguous and dispositive.
   - Ambiguity is often capable of being cured:
   i. by tribunal interpreting award at request of the parties (or one of them)
   ii. by an application to the relevant national court for an award to remit the award back to tribunal for clarification
   - similar position when award contains inconsistent provisions
3. DETERMINATION OF THE ISSUES:
   - Award must be dispositive; i.e., must constitute an effective determination of the issues in dispute
   - Not enough for tribunal to issue a vague expression of opinion
   - Award must be formulated in an imperative tone: ‘we award’, ‘we direct’, ‘we order’, or equivalents
   - If there’s more than one respondent, and a monetary award is made in favour of claimant, it is essential for the tribunal to make it clear whether one, and if so which one of the respondents has the obligation to make the payment - or whether it’s joint and several
   - LIMITATIONS: Awards should not direct parties to perform an illegal act, or require the parties to do anything that may be considered contrary to public policy; nor may the award contain any directions that are outside the scope of authority of the tribunal
4. REASONS:
   - Ways in which reasons are given in awards varies considerably
   - Sometimes, reasoning/motivation is set out w extreme brevity; some may run into 100s of pages, including a detailed review of evidence and arguments put fwd. by parties, followed by closely reasoned conclusion
   - ICSID: calls for reasoned award w/out exceptions
   - ICC Court: deems awards insufficiently reasons to be defective as to form; to be remitted to tribunal for amendment prior to approval wrt Art. 33
   - UNCITRAL Rules = ML: reasons should be given unless parties agree otherwise
   - General consensus for reasoned/motivated award: European Convention on ICA 1961, Art. VIII
5. DIFFERENT WAYS OF GIVING REASONS:
   - General practice - devote more time and space in award to giving reasons for determination of the legal arguments that to a review of the factual issues
   - What is needed is an intelligible decision, rather than a legal dissertation
   - Object: keep reasons for a decision as concise as possible, wrt nature of dispute
   - Parties want to read the essential reasoning underlying the decision, not a lesson in law

Question 12

Effects of Award

Answer 12

1. Res Judicata
2. Existing Disputes
3. Subsequent Disputes
4. Effect on Third Parties

Question 13

Effects: Res Judicata

Answer 13

1. A legal right/obligation/any facts, specifically put in issue and determined by a court/tribunal of competent jurisidiction ca NOT later be put back into Q b/w the same parties
2. Despite general recognition, application of principle of Res Judicata varies b/w jurisdictions
   i. COMMON LAW: Estoppel of RJ broadly falls into 2 categories:
   a) Cause-of-Action Estoppel: prevents either party from re-litigating the same action against the other
   b) Issue Estoppel: prevents a party from questioning/denying an issue already decided in previous proceedings b/w the same parties
   ii. CIVIL LAW: apply RJ only as cause-of-action estoppel, said to attach only to the dispositive part of the judgment/award NOT to reasons (strictly applied in: Switzerland, Germany, and Sweden; less so in France, Belgium, the Netherlands, and Italy)
3. PREVENTION OF DIFFICULTIES: ICA Committee of the ILA - creating a transnational body of rules that could be ref: as guidance/adopted by parties if they so choose
4. APPLICABILITY: Doctrine can be applicable in int’l arb. in a variety of ways. 3 diff. aspectsL
   i. Effect of an award on existing disputes b/w parties
   ii. Effect on subsequent disputes b/w the parties
   iii. Effect on third parties

Question 14

Res Judicata: Existing Disputes

Answer 14

1. Extends to cases in which arbitrators = amiable compsoiteurs
2. Court/tribunal would dismiss the action on the ground that issues had been disposed of = res judicata (AKA Claim Preclusion)
   - US LAW: bars claims that could have been, but were not asserted in a prior arbitral proceeding
   - If Award deemed invalid/set-aside, the nullified award does NOT operate as RJ in any subsequent proceedings
   * Pyramids arbitration: claimant started an ICSID arb. after ICC Award was nullified in French courts
3. ILA endorsed basic application of RJ - depends on the TRIPLE IDENTITY TEST (same parties, same subject matter, same claim for relief)
   - ILA Recommendation 3 of Part II: Award has conclusive and preclusive effects in further arbitral proceedings if:
   i. it has become final and binding in the country of origin, and there’s no impediment to recognition in the country of the place of subsequent arb.
   ii. it has decided on/disposed of a claim for relief which is sought/is being reargued in the further arb. proceedings
   iii. it is based upon a cause of action which is invoked in the further arb. proceedings/which forms basis for the subsequent arb. proceedings
   iv. it has been rendered b/w the same parties

Question 15

Res Judicata: Subsequent Disputes

Answer 15

1. Because there’s no doctrine of Stare Decisis in arb., the previous decision of a tribunal will NOT be binding on any subsequent disputes that arise b/w the same parties over diff. subject mater or a diff. cause of action (even if related)
2. Does NOT follow that a previous decision = necessarily irrelevant to resolution of a subsequent dispute b/w same parties
   - necessary to consider the principle issue of estoppel: precludes a party in subsequent proceedings from contradicting an issue/legal consequence of factors that has already been raised and decided in earlier proceedings, even if cause of action in both is NOT identical
3. English Privy Council: Notwithstanding a confidentiality agreement concluded by the parties to an arb. not to disclose material generated therein to third parties, an award rendered in that arb. could be relied upon by one of the parties in subsequent arb. to found a plea of ISSUE ESTOPPEL
   - The second arb. took place b/w the same parties and concerned the same clause u/same reinsurance agreement as the first arb.
   - Relying on an ISSUE ESTOPPEL in a subsequent arb. = ‘species of enforcement of the rights given by the (previous) award’ = legitimate use of the earlier award NOT a breach of the confidentiality agreement
4. US Courts: also invoked principles of COLLATERAL ESTOPPEL/ISSUE PRECLUSION - to exclude issues raised in lit. that were previously adjudicated fully and fairly during an arb. and vice-versa
5. An arbitral award has preclusive effects in the further proceedings as to a claim, cause of action, or issue of fact/law - which could’ve been raised, but was NOT in proceedings resulting in that award; PROVIDED: raising of any such new claim, cause of action, or new issue of fact/law = procedural unfairness/abuse
   - ILA Recommendations 4 and 5 of Part II

Question 16

Res Judicata: Effect on Third Parties

Answer 16

1. An arbitral tribunal has NO POWER to make orders/give directions against someone who is NOT a party to the AA; UNLESS that party has in some way acquiesced in a manner that, w/out actually making him/her party to the AA, indicates an intention on his/her part to be bound by the award
2. DIRECT EFECT: Follows that an award can neither directly confer rights nor impose obligations upon a person who is NOT party to the AA
   - E.g., Award in proceedings b/w an employer and contract u/building contract does NOT have the effect of RJ wrt claim for an indemnity by the contractor against its subcontractor in a subsequent arb. - altho facts may be substantially the same, the second tribunal may come to a diff. conclusion from the first; there’s v. little the subcontractor can do apart from agreeing (w consent of both parties) to be joined as an additional party in the main arb. (gives subcontractor right to present evidence and argument wrt claims that affected it
3. INDIRECT EFFECT:
   i. A third party may be affected by an award where one person is jointly liable w/another who is party to arb. - award would NOT be RJ in any subsequent claim against the third party, but should be of persuasive significance; i.e., tribunal is likely to consider the findings of the earlier award to inform its own findings
   ii. Conversely, possible that an award (even unsatisfied) against one of the persons who was jointly liable would have effect of discharging third party’s liability]
   iii. Where an award orders performance (e.g. wrt delivery of property by one of the parties), it is doubtful whether it is effective if property concerned is temporarily in the hands of the third party u/licence
4. IN PRACTICE:
   i. US: Issue Estoppel can, in certain circumstances, be relied upon in subsequent lit. involving a diff. party
   ii. US & England: Certain parties that are closely linked to the original parties might be bound by an earlier award where the connection is close enough to est. privity b/w such parties
   - English case: HELD - a director of the claimant Co. was a privy of the Co., therefore had an interest in the arb.
   - Int’l Sphere: ARGUED - ‘sister companies’ constituting a single ‘economic entity’ SHOULD ALL be bound by the RJ effect of an award involving one of those companies

Question 17

Interest

Answer 17

1. Payment is common feature of modern business relationships, recognised by most rb. tribunals.
2. EXCEPTION: Muslim countries (e.g. Saudi Arabia), in which law against usury (rib) prevents levying of interest
3. Facts to consider when awarding interest:
   i. BASIS: Basis upon which interest can be awarded
   ii. AMOUNT: How much interest to award
   iii. COMPOUND: Compound interest
   iv. ENFORCEMENT: Enforcing awards that carry interest
   v. POST-AWARD: Post-award interest

Question 18

Interest: Facts

Answer 18

1. BASIS:
   - Right to interest will flow from:
   i. the parties’ underlying contracts; i.e., from a contractual provision for the levying of late payment interest
   ii. by virtue of applicable law:
   a) Bermuda, Hong Kong, England, Scotland: governed by law of Seat
   b) Germany Conflict-of-Laws Rules: Q. of substantive law, thus governed by law of the contract
2. AMOUNT:
   i. Rate
   ii. Start Date
   iii. Currency
   - Most applicable laws leave these Qs to the tribunal’s discretion
   - EAA 1996: empowers tribunal w Seat in England to award interest ‘from such dates, at such rates, and with such rests as it considers meets the justice of the case’
   - Australia, Hong Kong, India, and Singapore enacted laws giving similar discretion in award of interest
   - PROCEDURE:
   i. Tribunal will invite submissions and evidence from the parties on these issues as it would wrt any other issue of relief
   ii. Parties will have opportunity to set out respective positions on rate to be applied, period for which applied, whether a diff. rate (e.g., statutory legal interest rate) should be applied for period following rendering of an award up until payment
   iii. Parties would do well to make an award of interest as easy for a tribunal as possible by providing calculations upon which such an award would be based
3. COMPOUND:
   - Altho the ML does not contain any express provisions concerning interest, recent arb. legislation in COMMON LAW jurisdictions such as England, Ireland, Hong Kong, and Bermuda give arbitral tribunals express power to award compound interest.
   - EAA 1996 S. 49: unless otherwise agreed by the parties, the tribunal may award simple or compound interest
   - EXCEPTIONS:
   i. Canada and US - power to award compound interest varies from state to state and province to province
   ii. Australia and NZ - power to award compound interest is strictly ltd.
   - CIVIL LAW: arb. tribunals typically have the power to award a statutory (or legal) rate of interest, which is simple interest at a rate defined by statute; sub: exceptions
   * Starrett Housing Corp. v Iran
   * Santa Elena arb.
   * Wena Hotels arb.
4. ENFORCEMENT:
   i. @ SEAT: Where parties to a contract have chosen (or are deemed to have chosen) as the substantive law of their agreement a law that prohibits the payment of interest, they can NOT complain if interest is not payable
   - EXCEPTION: may theoretically be possible for the arbitral tribunal to disregard this local law and apply the substantive law of the contract. BUT if the provisions of the local law are mandatory, there is a risk that the award could be attacked and rendered invalid under the law of the place where it was made (Advice: any award of interest should be clearly separated from the other parts of the award)
   ii. @ PLACE OF ENFORCEMENT: If an award cannot be enforced, it is worth no more than a bargaining chip. However, at the time of the arbitration, it is hardly possible for an arbitral tribunal to do more than make an informed guess as to the likely place of enforcement of its eventual award—and even this will be difficult until the arbitral tribunal has formed a view as to which party is likely to win the arbitration
   - ADVICE: in deciding whether or not to award interest, an arbitral tribunal cannot be expected to take into a/c likely consequences of such an award in a potential place of enforcement UNLESS the point is expressly brought to its attention by one or both of the parties, in which case the point would no doubt have to be considered
5. POST-AWARD:
   - In general, also open to arbitrators to set a rate of post-award interest in any amount deemed apt.
   - Often = rate that would apply to a judgment in the country where award is made
   - Modern practice: tribunals often decline to distinguish b/w pre-and-post award interest; INSTEAD, often award a single rate of interest to run for the whole period from a certain date (may incl. date of breach/date on which loss suffered/date of request for arb. - depending on the applicable law, and on the way tribunal decides to exercise any discretion available to to) upto the date of payment of the award
   - In some cases: once an award is enforced in a particular country as a judgment of court, the post-award interest rate may be REPLACED by the rate applicable to civil judgments
   EAA 1996 S. 49(3): permits tribunal to exercise its discretion to award interest up to date of payment

Question 19

Costs

Answer 19

• Claim wrt costs incurred by party wrt an int’l arb = any other claim; EXCEPT: cannot be quantified till end of proceedings
• CATEGORIES:
  1. Costs of the Tribunal (incl. charges for admin. of arb. by any arb. institution)
  2. Costs of the Arbitration (incl. hiring hearing rooms, interpreters, transcript prep., etc)
  3. Costs of the Parties (incl. costs of legal representation, expert witnesses, travel expenditure, etc.)

Question 20

Costs: Categories

Answer 20

1. TRIBUNAL:
   - Usually incl. not only fees, and travel-related, and other expenses - payable to the individual members of the tribunal itself, but ALSO any directly related expenses - e.g.:
   i. fees and expenses of any experts appointed by the tribunal
   ii. fees and expenses of any admin secy./registrar or any other incidental expenses incurred by tribunal for a/c of the case
   - In institutional arb., tribunal costs are usually fixed/approved by the institution
2. ARBITRATION:
   - Usually organised and paid directly by the parties, and are disbursed by the parties in equal shares pending the tribunal’s final award
   - Occasionally, where the arrangements are made by the chairman of the tribunal, or by an admin. institution, such costs are paid from the deposits held by the tribunal/institution
   - Generally, parties usually prefer to control these costs themselves rather than give the tribunal what may amount to a ‘blank cheque’ to buy in such services
   - UNCITRAL Rules: requiring the tribunal to inform the parties of the methodology that it proposes to use in determining its costs and expenses (sub: challenge by parties). THEREAFTER, in any award rendered, tribunal must fix its costs and expenses consistently w/this methodology (any party may request the appointing authority or the Secy-Gen. of the PCA to review the calculations)
3. PARTIES:
   - Incl. NOT ONLY the fees and expenses of the legal representatives engaged to represent the parties at the arbitration hearing, but ALSO the costs incurred in the preparation of the case
   - Other professional fees
   and expenses, e.g. those of:
   i. accountants or expert witnesses
   ii. hotel and travelling expenses of the lawyers, witnesses, and others concerned,
   iii. copying and printing charges, as well as telephone, fax, and email expenses.
   All of these costs are likely to be substantial in a major case
   - These costs rarely include any allowance for the time spent on the case by senior officials, directors, or employees of the parties themselves, or the indirect costs of disruption to their ordinary business. The hidden cost of such ‘executive’, or ‘management’, time may be high. It may occasionally even exceed the direct costs. In general, the larger the case, the more executive time is spent on it [Traditionally, such costs have been regarded as part of the normal cost of running a business enterprise or a govt. department, rather than the recoverable costs of the winning party]
   - UNCITRAL Rules: do NOT include such costs in definition of ‘costs of arbitration’
   - ICC Rules: Consider cooperative/disruptive behaviour of parties in awarding costs
   - REASONABLENESS CRITERIA:
   i. Were costs claimed in arb.?
   ii. Was it necessary to employ lawyers in the case in Q?
   iii. Is the amount of costs reasonable?
   iv. Are the circumstances of the particular case such as to make it reasonable to apportion such costs?
   *Yukos Cases

Question 21

Remedies

Answer 21

• Tribunal’s power to grant apt. relief is based on the AA and applicable arb. law.
• Basis on which tribunal orders remedial measure flows from the AA and subsequent submission of dispute to arb.
• While an AA could specify the remedial measures to be conferred, common practice = tribunal will be silent on that point
• Tribunal must look into relevant arb. rules/applicable national arb. law to determine types of relief available to it.
• Range of Remedies:
  i. Monetary Compensation
  ii. Punitive Damages and Other Penalties
  iii. Specific Performance and Restitution
  iv. Injunctions
  v. Declaratory Relief
  vi. Rectification
  vii. Filling gaps and Adaptation of Contracts
  viii. Interest (done)
  ix. Costs (done)

Question 22

Range of Remedies

Answer 22

1. MONETARY COMPENSATION:
   i. Payment may represent money due u/contract (debt); or compensation (damages) for loss suffered; or both
   ii. Usually expressed in CURRENCY of the Contract/the Loss
   iii. Transnational projects: not uncommon for ref: several diff. currencies (unless parties agree, the tribunal must receive written/oral submission wrt currency(ies) in which award is to be made
   * Lesotho Highlands case: EEA S. 48 - allows tribunal to order payment of an award in ANY currency (unless otherwise agreed by the parties)
2. PUNITIVE DAMAGES AND OTHER PENALTIES:
   i. Punitive damages are not awarded to compensate the wronged party, but instead to punish and deter the wrongdoer
   ii. Exceptional and extreme measure permitted only, e.g., in cases of FRAUD/SUBSTANTIAL MALICE
   iii. Necessary to look at the law applicable to the substance of the dispute, as well as the law of the seat of the arbitration
   iv. CONCERNS:
   a) Threshold Q of the power of a tribunal to
   impose penal sanctions - depends on the lex arbitri and the provisions of the
   AA
   b) Enforceability - u/NYC in a country that does not itself recognise such remedy [Art. V(2) - refusal of R and E if contrary to public policy]
   v. CAUTION:
   a) They should examine the Q of whether or not such damages may be awarded under the law applicable to the substance of the dispute. b) They should also address themselves to the threshold Q as to whether or not they have power to make such an award, even if a claim for punitive damages is admissible under the law applicable to the substance of the dispute
   vi. ENFORCEABILITY PROBS: Should be left for the courts @ place of enforcement - Preferable: for tribunals to treat any award wrt punitive damages/penalties as an entirely separate clam, to ensure this portion of award is SEVERABLE in even of successful challenge in courts @ place of enforcement
3. SPECIFIC PERFORMANCE:
   - Tribunal may be authorised by the parties/applicable law; unless a contrary intention expressed in AA
   - CIVIL LAW: specific performance is a recognised remedy for breach of contract
   - COMMON LAW: less so ^
   - INT’L ARB.: various tribunals have ordered specific performance, and their decisions have been upheld by state courts
4. RESTITUTION:
   - Seeks to put the aggrieved party in the same position as that in which it would have been had the wrongful act not taken place
   - COMMON LAW: form of specific performance
   - ICA: remedy that is hardly ever used in practice perhaps because international tribunals rightly tend to avoid making awards that are difficult to enforce
   - EAA 1996: unless the parties otherwise agree, an arbitral tribunal has the same powers as an English court ‘to order a party to do or refrain from doing anything’.
   * Temple of Preah-Vihear case: set a standard for the assessment of monetary compensation
   - ESSENTIAL PRINCIPLE: reparation must, as far as possible, wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed:
   i. In kind
   ii. In payment of sum corresponding to the value which a restitution in kind would bear
   iii. Award of damages for loss sustained, not covered by restitution
   * Texaco arb. [overturned in *BP arb.]
   - In Practice: monetary compensation, rather than restitution, is the principal remedy sought and granted in int’l arb.
   * Occidental Petroleum Corp. and Occidental Exploration and Production Co. v Ecuador
5. INJUNCTIONS:
   - No objection in principle to tribunal granting relief by way of injunction, if requested to do so, either on an interim basis or as final relief
   - Tribunal is NOT usually empowered to make effective orders against third parties, and if injunctive relief against third parties is required, it is generally quicker and more effective to seek it directly from a national court
   - Some national courts have also chosen to limit their ability to grant interim relief to cases involving arb. proceedings w a domestic seat (e.g. India)
   * Bhatia Int’l case AND *Venture Global Engineering v Satyan Computer Services Ltd. [OVERTURNED: *Balco case]
6. DECLARATORY RELIEF:
   - Tribunal may be asked t make award that is simply declaratory of the rights of the parties
   - Request for contractual damages usually coupled w a request for a declaration that there has been a breach of contract
   * Aramco arb.
   - Est. legal position definitively and has a binding effect
   - Useful for continuing relationships
   - Capable of recognition, but not enforcement by itself
7. RECTIFICATION:
   - Essentially, a common law Equitable Remedy
   - Virtually unknown in Civil Law countries (tends to be treated the same as ‘adaptation of contracts and filling gaps’)
   - Tribunal may make order for rectification is empowered to do so by parties
   - EAA 1996: a tribunal has the power to ‘order rectification, setting-aside, or cancellation of a deed/other doc’, unless otherwise agreed by parties
   - LCIA Rules Art. 22(1)(g)
8. FILLING GAPS AND ADAPTATION OF CONTRACTS:
   - Tribunal does NOT generally have power to create/write a contract b/w the parties - usually only interpret
   - Almost anything possible by clear consent of parties
   - Modern times: Tribunal has implied consent to ‘fill gaps’ by making determination wrt presumed intention of parties to make contract operable
   * Chickens case (England)
   * Mamidoil cases

Question 23

Making: Deliberations and Decisions of the Tribunal

Answer 23

1. Tribunal is NOT a permanent court/tribunal; EXCEPT in special cases such as the Iran-US Claims Tribunal
2. May be composed of arbitrators of different professions: accountants, engineers, or whatever the case may require
3. Even if all of the members of the tribunal are lawyers, they will often be of diff. nationalities, w/diff. languages and legal backgrounds
   - They may know each other personally or professionally, OR they may meet for the first time when they come together as a tribunal chosen to resolve a dispute

REACHING DECISION:

i. read the parties’ submissions, the witness statements, and the lever arch files full of photocopied documents
ii. listen to evidence and argument
iii. afterwards: they may not be any wiser, they should certainly be better informed
iv. as case proceeds: each arbitrator will no doubt begin to form his/her own view as to how the various issues that have arisen ought to be determined, but the tribunal should arrive at a decision together.
v. If the tribunal consists of 3 arbitrators, there must be some exchange of views, some dialogue between them, if they are to do so
vi. imp. for chairman not to rush his fellow arbitrators into reaching a definitive decision on all outstanding issues – it IS incumbent on the CM to remind members that their work is only just beginning, and any opinions expressed will be considered provisional
- HOWEVER, it’s crucial to ascertain whether or not consensus seems likely to emerge on one or more issues to be decided
vii. if disagreement - CM begin to earn extra stipend
viii. if consensus clear - CM will generally offer to prepare a first draft of an eventual award for discussion @ later date
- No pressure during first session - opportunity to engage in a relaxed dialogue w each other
- Some systems encourage secrecy in deliberative process (e.g. French Law)
- ICSID Arb. Rules, Rule 15:
a) pvt. and remain secret
b) only members to partake - no other person admitted unless tribunal decides otherwise
- Rule of confidentiality: apply only to deliberations stage, cannot realistically apply to what is said in formal meeting of all members in deliberation room [distinction b/w formal and informal deliberations]
- In Practice: arbitrators exchange views informally, as the case progresses—particularly in the course of the hearing—and then decide how to proceed w/formulation of their award

SOLE ARBITRATOR:
i. Only his/her decision counts

• Ideally, decisions made unanimously
• FALL BACK POSITION: in case of disagreement, (int’l and institutional rules differ):
  i. Majority Voting
  ii. Presiding Arbitrator = Decisive Role

ELEMENTS:

i. Tribunal Psychology
ii. Bargaining Process
iii. Majority Voting
iv. Concurring and Dissenting Opinions

Question 24

Making: Concurring and Dissenting Opinions

Answer 24

1. CONCURRING:
   - Separate/concurring opinion = given by an arbitrator who agrees w the result of the arb., but NOT w/reasoning or the way in which award is formulated
   - Rarely given in commercial arbs.
   - More frequently found in Public Law Arbs. (practice of ICJ tends to be followed)
2. DISSENTING:
   i. B/w States: Right to Submit Dissenting Opinion asserted in 19th Century
   * Alabama Claims arb. (UK v US)
   - ICJ Statute: expressly entitles judges in minority to deliver dissenting opinions (frequently exercised not only in judgments, but also wrt procedural orders, advisory opinions, and interim proceedings)
   ii. Int’l Arbs.: Simply refuse to sign award - dissenting opinion:
   a) annexed to award if other arbitrators agree
   b) delivered to parties separately
   - In either case, dissenting opinion does NOT form part of Award (NOT and Award, but an OPINION)