International Commercial Arbitration

1
International Commercial Arbitration

• Lec2 Arbitration Agreement

2
Readings

• Zhao, Xiu-wen,
• International Commercial Arbitration Law, 2004,
• Chapter 3
• Redfern Hunter,
• Law Practice of International Commercial
  Arbitration, 2005,
• Chapter 3

3
Definition of Arbitration

• Existence of Dispute
• What is dispute?
• Hayter v. Nelson (1990)
• Existed dispute
• Future dispute
• Consensus on Reference of Dispute to a Third
  Person
• Binding Decision to Be Given

4
Forms of Arbitration

• Ad hoc Arbitration
• Submission of a dispute to an arbitral tribunal
  formed for this special case by selected
  arbitrator(s) under the rules selected by the
  parties
• Institutional Arbitration
• Submission of a dispute to an institution
  administrating arbitration case to be decided by
  a tribunal formed for this special case under the
  rules of the institution as a default choice or
  rules selected by the parties arbitrators to
  selected by the parties or by the institution
  where no selection made by the parties

5
Definition of Agreement

• NY Convention
• Each Contracting State shall recognize an
  agreement in writing under which the parties
  undertake to submit to arbitration all or any
  differences which have arisen or which may arise
  between them in respect of a defined legal
  relationship, whether contractual or not,
  concerning a subject matter capable of settlement
  by arbitration.

6
Forms of Arbitration Agreement

• Arbitration Clause
• A clause set in the Contract
• All disputes arising out of or in connection of
  this contract shall be submitted to CIETAC for
  arbitration in accordance with its Arbitration
  Rules for a final and binding decision.
• Arbitration Agreement
• An agreement materially separated from but in
  relation to the Contract

7
Forms of Arbitration Agreement

• Agreement in Writing
• Zambia Steel Building Supplies Ltd v James
  Clark Eaton Ltd 1986
• It was a dispute arising out from an oral
  contract. However, a written draft of the
  contract, within which there was an arbitration
  clause, was sent to the buyer during the
  negotiation. No objection from the buyer has
  ever been made. Both parties performed their
  obligations under the oral contract before a
  dispute occurred. The buyer sued the seller in a
  court, saying that there was no arbitration
  agreement in writing

8
Forms of Arbitration Agreement

• Agreement in Writing
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9
Forms of Arbitration Agreement

• Agreement in Writing
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10
Forms of Arbitration Agreement

• Agreement in Writing
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11
Contents of Arbitration Agreement

• Dispute, Consent, Submission
• Clause giving a choice
• William Co v Chu Kong Agency Co Ltd Anor
  1993
• A B/L contained a clause saying all disputes
  under the B/L shall be resolved by arbitration or
  litigation in PRC in accordance with Chinese law.
  The plaintiff brought a claim against the
  defendant in the High Court of HK. The defendant
  then request a stay

12
Contents of Arbitration Agreement

• Dispute, Consent, Submission
• Clause giving a choice
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13
Defective Arbitration Agreement

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14
Defective Arbitration Agreement

• Arbitration Agreement without Arbitration
• David Wilson Homes Ltd v Survey Services Ltd 7
  David Jonathan Marshall (2001)
• Any dispute or difference arising hereunder
  between the Assured and the Insurers shall be
  referred to a Queens Counsel of the English Bar
  to be mutually agreed between the Insurers and
  the Assured or in the event of disagreement by
  the Chairman of the Bar Counsel.

15
Defective Arbitration Agreement

• Uncertainty in Appointment of Arbitrator(s)
• Downing v Al Tameer Establishment (2002)
• In case the difference cannot be settled through
  mutual consultation, the matter shall be
  submitted for arbitration by three arbitrators to
  be appointed by each of the parties hereto whose
  award shall be final and binding.

16
Defective Arbitration Agreement

• Choosing Both Arbitration and Court Proceedings
• Arbitration in Hong Kong before the Court.

17
Defective Arbitration Agreement

• Choosing Both Arbitration and Court Proceedings
• Smith Ltd v H S International 1991
• 13. Settlement of Dispute If any dispute or
  difference shall arise between the parties hereto
  concerning the construction of this Agreement or
  the rights or liabilities of either party
  hereunder the parties shall strive to settle the
  same amicable but if they are unable to do so the
  dispute or difference shall be adjudicated upon
  under the Rules of Conciliation and Arbitration
  of he ICC by one or more Arbitrators appointed in
  accordance with those Rules.
• 14. Language and Law This Agreement is written
  in English and shall be interpreted according to
  English law. The Court of England shall have
  exclusive jurisdictions over it to which
  jurisdiction the parties hereby submit.

18
Defective Arbitration Agreement

• Choosing Both Arbitration and Court Proceedings
• The Nerano (1994)
• A written clause in the B/L reads
• The conditions as per relevant charterparty
  dated 02.07.1990 are incorporated in this bill of
  lading and have precedence if there is a
  conflict, English law and jurisdiction applies.
• A printed clause in the B/L reads
• All terms and conditions liberties exceptions
  and arbitration clause of the Charterparty, dated
  as overleaf, are herewith incorporated.

19
Defective Arbitration Agreement

• Conflict between Section Title and Section
  Contents
• Cott UK Ltd v F E Barber Ltd 1997
• Arbitration
• Any dispute or difference arising from the
  construction or performance of the agreement
  shall be referred to the decision of a person to
  be appointed by the Director General of the
  British Soft Drinks Association. The person
  chosen or appointed shall be an independent
  consultant and shall act as an expert and not as
  an arbiter and his decision shall be final and
  binding on the parties.

20
Defective Arbitration Agreement

• Two Seats, One Arbitration
• Lovelock Ltd v Exportles 1968
• Any dispute shall be submitted to arbitration in
  London any other dispute shall be arbitrated in
  Moscow.

21
Defective Arbitration Agreement

• Floating Arbitration Agreement
• The Star Texas 1993
• Any dispute arising under the charter to be
  referred to arbitration in Beijing or London in
  defendant's option.

22
Defective Arbitration Agreement

• Non-Existence of the Arbitral Institution
  Selected
• Lucky-Goldstar International v Ng Moo Kee
  Engineering Limited 1993
• Claims Any dispute or difference arising out
  of or relating to this contract, or the breach
  thereof which cannot be settled amicably without
  under delay by the interested parties shall be
  arbitrated in the 3RD COUNTRY, under the rule of
  the 3RD COUNTRY and in accordance with the rules
  of procedure of the International Commercial
  Arbitration Association. The award shall be
  final and binding upon both parties.

23
Defective Arbitration Agreement

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24
Defective Arbitration Agreement

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25
Arbitrability

• Subjective Arbitrability
• Art. 2060 of the New Code of Civil Procedure
  (France) provides
• (D)ispute concerning public collectivities and
  public establishments cannot be referred to
  arbitration.

26
Arbitrability

• Objective Arbitrability
• Art. 2060 of the New Code of Civil Procedure
  (France) provides
• (o)ne may not submit to arbitration questions of
  personal status and capacity, or those relating
  to divorce or to judicial separation or disputes
  . and more generally in all areas which concern
  public policy.

27
Separability

• Autonomy of Arbitration Agreement
• The status of the main contract does not
  necessarily affect the arbitration agreement.
• Heyman v. Darwins Ltd (1942)

28

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29
Separability

• Autonomy of Arbitration Agreement
• The arbitration agreement may be governed by a
  law different from the governing law of the main
  contract.
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30
Non-Signatory Party to Arbitration Agreement

• Incorporation by Reference
• Assumption
• Agency
• Am. Bureau of Shipping v Tencara Shipyard S.P.A.
  (1999)
• Veil-Piecing
• Carte Blanche (Singapore) Pte., Ltd. v Diners
  Club Int'l, Inc. (1993)
• Estoppel

31
Non-Signatory Party to Arbitration Agreement

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32
Non-Signatory Party to Arbitration Agreement

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33
Enforcement of Arbitration Agreement

• Decline of Jurisdiction
•  
• Dismiss of Court Action
•  
• Stay of Court Proceedings (Common Law
  Jurisdiction)