subject: New Procedural Rules For International Commercial Arbitrations [print this page] Arbitration is nowadays considered to be the most effective method for resolving business disputes. Indeed, arbitration is used in construction, banking, financial services, intellectual property, energy, insurance and other complex commercial disputes. This is because arbitration fits most legal systems and cultures and can be tailored to the needs of individual disputes.
One feature of arbitration that distinguishes it from traditional judicial resolutionof disputes is that the parties generally have latitudeto choose the procedural rules that will govern the resolution of their dispute.
New IBA Rules for Taking Evidence
The IBA Rules of Evidence were adopted by the resolution of the IBA Council on 1 June 1999. They are intended to govern in an efficient and economical manner the taking of evidence in international commercial arbitrations, particularly those between parties from different legal traditions. Parties and arbitral tribunals may adopt the IBA Rules of Evidence, in whole or in part, to govern arbitration proceedings, or they may vary them or use them as guidelines in developing their own procedures.
The taking of evidence shall be conducted on the principle that each party shall be entitled to know, reasonably in advance of any evidentiary hearing, the evidence on which the other parties rely.
However, since the Ruleswere over a decade old, the IBAdecided that it was time to reflect on practical experience of their use and consider the areas in which they could be improved or refined and thus, on 29 May 2010, the IBA adopted the new IBA Rules on the Taking of Evidence in International Arbitration.
Recent Cases Involving Jurisdiction over Non-Signatories
One of the major advantages of arbitration as a dispute resolution mechanism is that it is chosen consensually by contracting parties. It therefore seems logical to assume that only a party to an arbitration agreement can be compelled to arbitrate with the other party/parties to that agreement, that is, any arbitration necessarily involves only the parties to the said agreement.
However, in some circumstances certain national laws permit a party which is not a signatory to an arbitration agreement to participate in an arbitration proceeding in consequence of the same, either as claimant or respondent. Whereas in court proceedings, joinder of parties is common, it is not oft-heard in respect of commercial arbitrations.
Under French law, it may be possible for a non-signatory to an arbitration agreement to be joined to the arbitration under the "group of companies doctrine" that allows for the extension of the application of the arbitration agreement to one or more companies in the same group as the signatory.
However, French courts and arbitral tribunals applying French law have tended only to extend arbitration agreements to other company/companies in the same group if both:
The non-signatory party has played a part in the execution of contract.
It was the common intention (express or implied) of the parties that the non-signatory be bound by the contract and the arbitration agreement within it.
The first and best-known case on this issue was the Dow Chemical Group v Isover-Saint-Gobain (ICC Case No 4131).
In the United Kingdom, in the case of Peterson Farms Inc v C&M Farming Ltd [2004] EWHC 121 (Comm), the court confirmed that under English law, it is the substantive rather than the procedural law of an agreement which should be applied to identify the parties to an agreement. The Contracts (Rights of Third Parties) Act 1999 (1999 Act) gives rightto a non-signatory to become party to an arbitration agreement.
In Switzerlandthe Swiss Federal Tribunal in the case of YSAL v Z Sarl ATF 129 III 727-4P.115/2003 allowed an extension of the arbitration agreement to a third party on the basis of the written evidence showing its active involvement in the management of one of the contracting parties.
The Availability of "Summary Judgment" and Other Dispositive Motions
Dispositive motions are those that resemble the type of motions led in U.S. civil litigation and that a court would consider dispositiveof a case or of parts of a case. These could be motions for summary judgment or motions to dismiss or strike claims or defenses.
The arbitration rules of the major arbitration providers also do not speak directly on the issue of dispositive motions. But, they include general provisions that give arbitrators wide latitude to conduct the proceedings, including the authority to consider dispositive motions, such as: Article 16.3 of the AMERICAN ARBITRATION ASSOCIATION's International Arbitration Rules, Article 20 of the ICC Rules, Article 14.2 of the LCIA's Arbitration Rules, and Article 15.2 of the UNCITRAL Rules.
Moreover, other institutional arbitration rules provide arbitrators with express authority to entertain dispositive motions, such as: Rule 32(c) of the AMERICAN ARBITRATION ASSOCIATION's Construction Industry Rules, Rule 27 of the AMERICAN ARBITRATION ASSOCIATION's Employment Arbitration Rules, Rule 18 of the JAMS Comprehensive Arbitration Rules, and Rule 12504 of the Financial Industry Regulatory Authority's Code of Arbitration Procedure for Customer Disputes.
Practically, however, it is believed that arbitrators are reluctant to hear and grant dispositive motions. A reason for this could be that:
most arbitration rules do not have rules regarding interlocutory motion; summarydisposition of a case increases the chances of the resulting award being challenged before courts; thereis inhibition to 'cut-short' the process given the absence of the right of appeal in arbitration; and it may also raise concerns lack of justice.
It is not unfair to opine that an ill-advised consideration of a dispositive motion or a grant of a dispositive motion that is later vacated by a court will occasion even more cost and delay and deny the parties the benets arbitration is intended to provide. Nonetheless, dispositive motions are a powerful tool available to streamline proceedings, and arbitrators should not shy away from meritorious dispositive motions that will reduce time and cost. This is important, especially if arbitrationis to deliver on its commitment to offer a faster and cheaper dispute resolution mechanism. Arbitrators should be proactive in considering dispositive motions while being mindful of not affecting a valid right that could adversely affect any of the parties. This could be achieved by discussing with the parties the possible advantages of addressing claims or defenses that are legally insufcient at the earliest opportunity.
by: Robert Neron
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