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NATIONAL COURT INTERVENTION IN ARBITRATION AS AN INVESTMENT TREATY CLAIM

Published online by Cambridge University Press:  12 May 2011

Richard Garnett
Richard Garnett
Affiliation:
Professor, Melbourne Law School, University of Melbourne; Consultant, Freehills. Email: [email protected]
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Extract

International commercial arbitration has long been a popular method for resolving cross-border business disputes. The opportunity for parties to choose their adjudicators and the dispute resolution procedure, the scope for privacy and the greater capacity for enforcement of awards compared to court judgments are all important reasons that parties prefer international arbitration over litigation. Reinforcing this trend in favour of international commercial arbitration has been a general consensus among national courts and legislatures that support, rather than interference, should be provided to the arbitral process. Such a philosophy is apparent, for example, in the requirements in the widely adopted New York Convention for States to recognize and enforce both foreign arbitration agreements and awards, and in international instruments such as the 1985 UNCITRAL Model Law on International Commercial Arbitration, which authorize national courts to assist, rather than intervene, in the conduct of arbitrations within their borders. Moreover, international commercial arbitration has proven to be sufficiently flexible as a dispute resolution method to be used both in disputes between private parties, and between private and State entities.

Type
Shorter Articles
Information
International & Comparative Law Quarterly , Volume 60 , Issue 2 , April 2011 , pp. 485 - 498
Copyright
Copyright © 2011 British Institute of International and Comparative Law

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References

1 See, for a full discussion, S Schwebel, International Arbitration: Three Salient Problems (Cambridge, Grotius Publications, 1987) 61.

2 ibid.

3 J Paulsson, Denial of Justice in International Law (CUP, Cambridge, 2005) 69.

4 For two recent cases where courts were unwilling to review decisions by governments on the exercise of the right to diplomatic protection see Khadr v Prime Minister of Canada 2010 SCC 3 para 44 (Sup Ct Can) and Kaunda v President of the Republic of South Africa (2004) 136 ILR 152 para 77.

5 Himpurna v Indonesia interim award of 26 September 1999, final award of 16 October 1999, in (2000) XXV Yearbook of Commercial Arbitration 109.

6 Salini Costruttori SpA v The Federal Democratic Republic of Ethiopia ICC Arbitration No. 10623/AER/ACS Award Regarding the Suspension of the Proceedings and Jurisdiction, 7 December 2001 extracted in E Gaillard (ed), Anti-suit Injunctions in International Arbitration (Juris Publishing Inc, 2005) Annex 4, 227.

7 Salini, ibid paras 128, 134, 177–178; Himpurna paras 113–114.

8 For England see Bank Mellat v Helliniki Techniki [1983] 3 WLR 783, 789 (CA per Kerr LJ); for the United States see Scherk v Alberto Culver 417 US 506, 519 (1974) (US Sup Ct) and for Australia see American Diagnostica v Gradipore (1998) 44 NSWLR 312.

9 See eg Belgium: Code Judicaire art 1717; France: Code Of Civil Procedure art 1494.

10 See eg A Redfern and M Hunter, Law and Practice of International Commercial Arbitration (Sweet and Maxwell, London, 2004) 412.

11 See eg M de Boisseson, ‘Anti-Suit Injunctions Issued by National Courts at the Seat of the Arbitration or Elsewhere’ in Gaillard (n 6) 69 and Paulsson (n 3) 152.

12 In the Matter of the Arbitration of Certain Controversies between Chromalloy Aeroservices and Egypt 939 F Supp 907 (DDC 1996). See also Omnium de Traitement et de Valorisation (OTV)(France) v Hilmarton (UK) (1997) XXII Yearbook of Commercial Arbitration 696 (Decision of the French Cour de Cassation 10 June 1997).

13 In Stran Greek Refineries and Stratis Andreadis v Greece [1994] 19 ECHRR 368 the ECtHR held that Greece had violated art 6(1) of the European Convention on Human Rights, providing for a right of access to a tribunal, where it passed a law which invalidated certain arbitral awards ahead of a hearing before the Greek courts in which the State had sought to have an award set aside. Such a law amounted to a repudiation by Greece of its obligation to arbitrate.

14 See eg US–Argentina BIT art II(2)(a).

15 ibid art IV(1).

16 See eg US–Ecuador BIT art II(7). In Chevron Corporation (USA) v Ecuador, Partial Award on the Merits 30 March 2010 para 244, this provision was said to provide ‘a distinct and potentially less demanding test’ than that required to show a denial of justice under customary international law.

17 See eg Australia–Philippines BIT art 14(b) and (c).

18 See eg National Iranian Oil Company (NIOC) v Israel (French Cour de Cassation 1 February 2005) referred to in Paulsson (n 3) 155–157.

19 The Salini and Himpurna cases above both involved such conduct.

20 Among many examples see Benteler v Belgium (1985) 8 European Commercial Cases 101 and Framatame SA v Atomic Energy Organisation of Iran (1982) (ICC Case No. 3896) referred to in Salini v Ethiopia at para 161.

21 Schwebel (1987) (n 1) 63–64 citing the example of the seizure of the property of the Anglo-Iranian Oil Company by Iran in 1951.

22 Benteler v Belgium (1985) 8 European Commercial Cases 101; Schwebel (1987) (n 1) 60–66 and ‘Anti-Suit Injunctions in International Arbitration: An Overview’ in Gaillard (n 6) 12; Paulsson (n 3) 149–157 and Mann, FA, ‘State Contracts and International Arbitration’ (1967) 62 British Yearbook of International Law 26–29Google Scholar. While some writers on investment law refer to denial of justice as being exclusively judicial in nature (eg C McLachlan, L Shore and M Weinger, International Investment Arbitration (OUP, Oxford, 2007) 226), it is clear that the concept also embraces conduct by a state's executive in relation to an arbitration on the basis that ‘justice is universally denied’ in such a situation; see Schwebel (1987) (n 1) 65.

23 If, however, the arbitration agreement is domestic in nature, that is, between a State and a local corporation and governed by local arbitration law, State frustration of the process is less likely to be a breach of universal principles of international arbitration law: see Duke Energy Electroquil Partners v Ecuador ICSID Case No. ARB/04/10 Award of 18 August 2008 para 396.

24 Waste Management Inc v United Mexican States Case No. ARB(AF)/00/3 Award of 30 April 2004 para 123.

25 Saipem SpA v Bangladesh ICSID Case No. ARB/05/7 Award of 30 June 2009 para 147.

26 Schwebel (2005) (n 6) 13; Himpurna para 187.

27 See Section IV.

28 Saipem v Bangladesh para 157.

29 Moreover, the global trend toward judicial ‘assistance’ rather than interference in arbitration should hopefully reduce the number of cases where the conduct of state courts is called into question.

30 Art V(2)(a).

31 Art V(1)(c).

32 UNCITRAL Model Law art 11; Pacific International v Tsinlien Metals and Minerals Co (HK) Ltd [1993] 2 HKLR 249.

33 Art 12(2).

34 Art 34.

35 Paulsson (n 3) 204–205.

36 Such as in the Loewen case; see Loewen Group Inc v United States of America ICSID Case No. ARB(AF)/98/3 Final Award 26 June 2003 para 135.

37 Paulsson (n 3) 69, 84–86.

38 Mondev International Ltd v United States of America 6 ICSID Rep 181 (2002); Waste Management Inc v United Mexican States (n 24).

39 Schwebel (2005) (n 6) 14–15, F Bachand, ‘The UNCITRAL Model Law's take on Anti-Suit Injunctions’ in Gaillard (n 6) 112.

40 See eg Arbitration Act 1996 (UK) s 30.

41 Waste Management Inc v United Mexican States Case No. ARB(AF)/00/3 Award of 30 April 2004 para 98; Jan de Nul NV v Arab Republic of Egypt ICSID Case No. ARB/04/13 Award of 6 November 2008 para 188.

42 Loewen Group n 36 above; Jan de Nul NV v Arab Republic of Egypt para 258; Chevron v Egypt (n 16) para 321; Paulsson (n 3) 130.

43 McLachlan, Shore and Weiniger (n 22) 231–233; D Wallace, ‘Fair and Equitable Treatment and Denial of Justice: Loewen v US and Chattin v Mexico’ in T Weiler (ed), International Investment Law and Arbitration (Cameron May 2005) 669, 699.

44 Bjorklund, A, ‘Reconciling State Sovereignty and Investor Protection in Denial of Justice Claims’ (2005) 45 Virginia Journal of International Law 809Google Scholar, 858.

45 See (n 23).

46 ibid 399.

47 Schwebel (1987) (n 1) 117.

48 ibid 121.

49 Schwebel (2005) (n 6) 13.

50 Saipem SPA v Bangladesh para 128.

51 ibid para 181.

52 Duke Energy Electroquil Partners v Ecuador para 394.

53 Decision of 3 July 2002 reported at (2003) 19 Arbitration International 182.

54 Procedural Order No. 2 of 16 October 2002 reported at (2003) 18 ICSID Rev-Foreign Investment Law Journal 293.

55 ibid 300.

56 Schwebel (2005) (n 6) 12.

57 C Greenwood, ‘Anti-Suit Injunctions in International Arbitration: A Public International Lawyer's Perspective’ in Gaillard (n 6) 151.

58 Republic of Ecuador v Chevron Corporation 2011 US App LEXIS 5351 (2nd Cir CA 17 March 2011) *15.

59 Bachand (n 6) 91.

60 The ‘Oriana’ and the ‘Tunisie’ [1966] 1 Lloyd's Rep 477 (injunction refused due to applicant's delay in seeking relief).

61 Weissfisch v Julius [2006] EWCA Civ 218 para 33.

62 [2007] EWHC 5571 (Comm).

63 [2007] EWCA Civ 1124.

64 [2007] EWHC 2729 (Comm).

65 J Lew, ‘Anti-Suit Injunctions Issued by National Courts to Prevent Arbitral Proceedings’ in Gaillard (n 6) 32.

66 See eg SATCOM International Group PLC v ORBCOMM International Partners LP 49 F Supp 2d 331 (SDNY 1999).

67 URS Corporation v The Lebanese Company for the Development and Reconstruction of Beirut 512 F Supp 2d 189 (D Del 2007).

68 ibid 208.

69 Lac d'amiante du Canada Ltee v Lac d'amiante du Quebec Ltee 1999 Can LII 13500 (QCCA) (injunction ordered to enjoin foreign arbitration).

70 Compagnie Nationale Air France v Mbaye 2003 Can LII 35834 (QCCA) and Frank Jonkman and Sons Ltd v DGT—Volmatic A/S 2004 Can LII 29287 (ONSC) (injunctions both refused).

71 ibid para 128.

72 ibid para 130.

73 Ibid para 133.

74 ibid para 144.

75 ibid para 155.

76 ibid para 157.

77 ibid para 158.

78 ibid para 159.

79 ibid para 161.

80 ibid para 186.

81 ibid para 166.

82 ibid para 167.

83 ibid para 181.

84 ibid para 183.

85 See SGS v Pakistan (n 53).

86 See Helnan International Hotels A/S v Egypt ICSID Case No. ARB/05/19 (Annulment Proceeding) Decision of the Ad Hoc Committee 14 June 2010.