Week 4 Arbitration (I)

Question 1

What is the starting point in dispute resolution?

Answer 1

Court proceedings

Question 2

How to determine applicable jurisdiction in Court proceedings?

Answer 2

Brussels I Recast Regulation -
- Default is place of domicile of defendant (Art 4)
- Can be sometimes the place of applicant (Art 7)

Question 3

How to determine applicable procedural law in court proceedings?

Answer 3

In the Netherland, it’s the Dutch Code of Civil Procedure.

Question 4

What law, in the Netherlands, determines the applicable law if its arbitration?

Answer 4

If the place of arbitration is the Netherlands, then its the Dutch Code of Civil Procedure

Question 5

Which Book to look at when determining procedural law for arbitration in the Netherlands

Answer 5

Book 4 Dutch Code of Civil Procedure

Question 6

What two kinds of law should you distinguish in arbitration?

Answer 6

Substantive law and procedural law

Question 7

To determine procedural law, it is enough to be linked to the place where the proceedings are being held. True or false?

Answer 7

True - where arbitration is held, is a jurisdictional issue. Once, determined where it’s held you know the procedural law or it can also be based on what the arbitration clause says in the contract

Question 8

Contract has certain provisions and they usually cede to the substantive law of the country that has jurisdiction. True or false?

Answer 8

True

Question 9

What general principles to use in proceedings?

Answer 9

ECHR

Question 10

If there is no agreement regarding solving the dispute at hand, where do we go?

Answer 10

To court

Question 11

Alassini/Telecom Italia

Answer 11

National legislators may impose a mandatory rule to first settle the dispute out of court given it meets the following 6 criteria:
(1) does not result in a decision which is binding on parties’
(2) does not cause a substantial delay for the purposes of bringing legal proceedings,
(3) suspends the period for the time-barring of claims,
(4) does not give rise to costs – or give rise very low costs – for the parties, and only if
(5) the proceedings may be accessed not solely by electronic means, and
(6) interim measures are possible in exceptional cases where the urgency of the situation so requires

Question 12

What is the difference between mediation and arbitration?

Answer 12

In mediation, if we have a dispute and we bring it to the mediation stage, then the parties themselves essentially are deciding on the issue. The mediator is a facilitator that helps parties resolve their own problems.
In arbitration, both parties bring their position to the panel of arbitrator(s) and the arbitrator(s) decide, who will either reject reward the claim. So the decision in the dispute is not made by the parties themselves, but rather by the arbitrator.

Question 13

What is arbitration?

Answer 13

Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute.

Question 14

Why is arbitration the preferred method of dispute settlement in international commercial disputes?

Answer 14

Because parties can agree where the place for arbitration would be, and thus the applicable law.
So a US party and a Dutch Party can use Paris as the place for arbitration, and thus French procedural law Is applicable.

Question 15

Who is an arbitrator(s)

Answer 15

It is a non-governmental person (or tribunal) that renders a decision (the arbitral award)

Question 16

What other form of ADR does arbitration resemble?

Answer 16

Expert determination -
Expert is nominated by party and gives a decision and this leads to an obligation
E.g., in the Netherlands, everyone is obliged to enter into a health insurance company, and an insurance company cannot deny someone who wants to have an insurance policy. If there is a conflict, and there is no arbitration clause, and neither party wants to go to court, we can have expert determination where there is a board you can go to and they can determine what is going on and what the next steps should be.
The award is enforceable in the same manner as a court judgement
In the international context, recognition and enforceable in many countries (see New York Convention 1958)

Question 17

Relation between an arbitration clause and a choice of law clause in an agreement?

Answer 17

If there is an arbitration clause in the contract, but the parties choose an institution, then you know that the choice of law is the national procedural law of the seat of arbitration

Question 18

Why choose arbitration?

Answer 18

Neutrality of the tribunal (i.e., staying outside the other party’s court)
Influence of parties on the selection of arbitrators (choosing arbitrators with expertise in the field of issue)
Confidentiality
Finality of the award

Question 19

What is the finality and binding status of arbitral awards?

Answer 19

In general: awards are final and binding by the arbitrator/tribunal and there is no right to appeal

Question 20

How to make appeal of an arbitral award possible?

Answer 20

For appeal to be possible, there has to be a specific provision in the agreement that allows for an appeal.

Question 21

What are the limited grounds to set aside/challenge an arbitral decision?

Answer 21

Art 1065 DCCP; Art 34 UNCITRAL Model Law; NY Convention

Question 22

What is the most essential aspect for arbitration?

Answer 22

Consent of the parties.
Because you give up your right to litigation.
Parties thus bind themselves to submit to the arbitration differences that may arise in the future (arbitration clause) or has arisen (submission agreement) - See art 1020(1) DCCP/Art 7 UNCITRAL Model Law

Question 23

The agreement to arbitrate excludes the jurisdiction of the national courts. True or false?

Answer 23

True (except for interim measures)

Question 24

The agreement to arbitrate comes into existence when…

Answer 24

an irrevocable offer from one party to arbitrate is accepted by the other party (unless formal requirements apply)

Question 25

What is the most important general rule in Dutch Contract Law for an arbitration agreement to be valid?

Answer 25

Consent

Question 26

Is an oral agreement to arbitrate valid?

Answer 26

In Dutch Contract Law - yes (because consent is the most important, doesn’t matter whether consent in writing or oral)
In a different law, however, it may require an agreement in writing for the contract to be in force

Question 27

What happens if you cannot agree on the alternative dispute resolution form?

Answer 27

Then the Court has jurisdiction! You go to litigation

Question 28

How to determine the applicable substantive law (the law governing the contract)

Answer 28

Often times it is chosen by the parties
If no substantive law chosen by the parties, then the arbitral tribunal will determine the applicable law on the basis of Private International Law (e.g., Rome I Regulation) (In the EU you have many regulations such as Rome I, Brussels I bis, etc.)

Question 29

How to determine the procedural law in arbitration?

Answer 29

If the arbitration is institutional: then it is the rules of the chosen institution
If not institutional: then lex arbitri (the arbitration law of the place of arbitration) applies - so, if the place of arbitration is the Netherlands, then Book 4 Dutch Code of Civil Procedure or can also be UNCITRAL Model Law
Basically, if institution rules are not applicable, then lex arbitri (place of arbitration) applies

Question 30

If the local rules do not define a specific issue (e.g., rules of evidence), where should you look towards?

Answer 30

International standards

Question 31

What is institutional arbitration?

Answer 31

Arbitration administered by an arbitration institution.
The proceedings are governed by the standing set of rules from the chosen institution.
There is supervision by a professional staff of proceedings and there is a review of the award.
It is the more expensive form of arbitration.

Question 32

What is ad hoc arbitration?

Answer 32

An ad hoc arbitration is any arbitration in which the parties have not selected an institution to administer the arbitration.
UNCITRAL Arbitration Rules are the most frequently used framework for ad hoc arbitration.
It’s less expensive (no institution fees).
Parties have a lack of control on the proceedings, work of the arbitrator, and fees.
It is better to do for the arbitrator.

Question 33

What is the composition of the arbitral tribunal?

Answer 33

Parties are free to determine the number. In general, can choose between one (sole arbitrator) or three (panel of arbitrators)
See: Art 10 UNCITRAL ML/Art 1026 DCCP

Question 34

How to determine appointment of the arbitrator(s)?

Answer 34

In general, each party appoints one arbitrator, and both arbitrators jointly appoint the chair/third arbitrators (Art 11 UNCITRAL)

Question 35

Article that details acceptance of the arbitrator appointment in the DCCP?

Answer 35

Art 1029(1) DCCP: Acceptance of the mandate in writing

Question 36

Importance of independency for arbitrators

Answer 36

There must be disclosure at the beginning and during proceedings.
IBA Guidelines on Conflicts of Interest in International Arbitration is essential.

Question 37

What article(s) to use to challenge the arbitrator?

Answer 37

Art 1033 DCCP/Art 12 UNCITRAL ML

Question 38

ECJ Mostaza Claro

Answer 38

Background: Insurance policy created a clause that disputes must be exclusively solved by arbitration
Question: Is the clause in question fair or unfair in light of the Council Directive on Unfair Terms in Consumer Contract?
Ruling: The clause is fair because in the same clause, there was a section which said that if there was arbitration, then all the costs will be born by the insurance instead of the Doctor. This is fair because there is no financial burden on the Doctor, and both parties will get the opportunity to state their story which is similar to Court proceedings where the tribunal applies the rule of the right to be heard

Question 39

What is the ex officio responsibility of an arbitrator?

Answer 39

As an arbitrator, I must give a view to the issue and not have to wait until the parties make a problem with it.

Question 40

What happens if you agree to arbitration, but a party starts court proceedings?

Answer 40

Article 1022 DCCP – court will decline jurisdiction if party invokes arbitration clause timely.
Also, it depends on the position taken by the defendant.