ReSolution Issue 7 : Quarterly Newsletter of NZDRC & NZIAC

ReSolution®—New Zealand Dispute Resolution Centre / New Zealand International Arbitration Centre

WINTER 2014

Welcome to our seventh edition of ReSolution® in which we bring

you commentary, articles and reviews on topical matters relating

to domestic and international dispute resolution.

Family law reforms

Justice Minister Judith Collins introduced the Family Court Proceedings Reform

Bill to Parliament on 27 November. The Bill introduces many changes to the family

law system in New Zealand and makes significant changes to the Care of Children Act

2004 (COCA) and the Family Courts Act, which is re-named the Family Disputes

(Resolution Methods) Act 1980 (FDRMA).

The Bill is aimed at encouraging faster, less adversarial resolution of family disputes

through requiring parties to disputes about children to participate in an out-of-court

family dispute resolution process, and a parenting information programme, before

applying to the Family Court.

Primarily, the court will now be a last resort for dispute resolution of family issues. The

main impetus of the Bill is to focus on personal interaction with the dispute resolution

process and to remove the delays and expense involved in the court process.

The primary service to replace the court system is a family dispute resolution (FDR)

service. The service involves a mediator assisting the parties to discuss and reach

familial arrangements without the need of a lawyer or judge, although legal

representation is not prohibited. The service is not free, however there is subsidised

government funding available for those who are eligible.

Inside this issue:

Supreme Court Confirms Power to Grant Declaratory and Anti-Suit Injunctive Relief Even Where No Arbitration is

Commenced or Proposed

19

The Devil is in the Detail:

Multi-Tiered Dispute Resolution Clauses Must

be Certain and Specific

24

Breach of Fair and

Equitable

Treatment Standard

(ICSID)

26

Getting to “Yes” too

soon:

When Negotiations

Create Obligations

34

Technology Contracts, limitations of Liability and

Interim Injunctions:

AB v CD

36

Disclosure of Partial

Settlements

In Multi-Party Litigation

40

Arbitration in Singapore

2013:

A Year in Review

42

Is it an Arbitration

Agreement? 49

Model Clauses 55

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Issue 7

Editorial


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FDR Centre launched

We are delighted to announce the launch of the New Zealand Family Dispute Resolution Centre (FDR Centre). The

FDR Centre is a wholly owned subsidiary of NZDRC and was established in response to recent government reforms

that have changed the way parents and guardians are required to manage care and contact arrangements for

children.

The FDR Centre provides fully administered nationwide FDR, Mediation, Conflict & Communication Coaching, and

Counselling services for families in conflict and relationships in difficulty. The Centre’s services are flexible and cover

all aspects of family and relationship conflict including:

The FDR Centre helps families resolve issues privately without going to court. Importantly our services allow parties

to resolve all issues privately in the one forum i.e. parenting matters and relationship property, parties are welcome

to be assisted at mediation by a lawyer (or any other person), and there is no time limit on the provision of FDR

Services (or any other Service) – the parties can have as much time as they need to properly work through the

issues.

The FDR Centre works with New Zealand's most respected accredited FDR providers and preparatory counsellors, family and relationship mediators, conflict & communication coaches, and counsellors. The FDR Centre is dedicated to: • providing timely, professional, cost effective FDR services and general family and relationship dispute

resolution services; • assisting families to self-resolve matters relating to the care of children putting the welfare and best interests

of children first, and without recourse to the Family Court; • achieving positive and lasting outcomes for parents and guardians, children, and other family/whānau

members; and

• fostering learning, collegiality and professional development for the providers of its services.

• Parenting / Care and contact issues

• Relationship property

• Extended family issues

• Repartnered / blended family issues

• Adolescent / teenage issues

• Gender issues

• Sexuality issues

• Separation

• Multi generational issues

• Multi cultural relationships

• Adult family and elder care

• Illness and disabilites


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The FDR Centre’s comprehensive website can be found at www.fdrc.co.nz. With its well developed procedural rules

and simple online application forms, the website provides an efficient and user friendly portal to its professional and

efficient services.

International: ICCA 2018

- Australasia to host the world’s largest arbitration event and its coming to a place near you!

Thanks to the joint bid effort of the Australasian Council for International Commercial Arbitration (ACICA) and AMINZ,

the 2018 ICCA conference has been confirmed as being hosted in Sydney, with an add-on event in Queenstown.

The bid won out over Moscow, Kuala Lumpur and Hong Kong and is seen as a nod to Australasia’s growing

reputation as an international commercial arbitration centre.

NZIAC was pleased to support the joint ACICA/AMINZ bid and we are delighted that ICCA members and conference

delegates will have the opportunity to experience first hand the expertise of the Australasian arbitral community and

to enjoy the hospitality that the region is renowned for.

NZIAC was established to provide an effective forum for the settlement of international trade, commerce, investment,

and cross-border disputes in the Australasian/Pan Pacific region and to promote New Zealand as a seat and venue for

international commercial arbitrations and mediations.

With its well developed and trusted legal system, world class infrastructure and ‘safe nation’ status, New Zealand is

ideally positioned to become the region’s premier dispute resolution hub to handle the expected growth in complex,

cross border commercial and investment disputes. We cannot help but benefit from the exposure the ICCA

conference will bring.

NZIAC soon to launch new Rules

NZIAC will launch a new and substantially revised edition of its International Arbitration Rules in the next few months

following a comprehensive 18 month revision process. The new Rules are robust, certain and innovative in their

commercial commonsense approach to challenging issues such as appointment, urgent interim relief, expedited

procedures, joinder, confidentiality, representation, mediation, expert evidence, appeals and costs. The Rules provide

both a framework and detailed provisions to ensure the efficient and cost effective resolution of international

disputes. The Rules are set out in a manner designed to facilitate ease of use and may be adopted by agreement in

writing at any time before or after a dispute has arisen.


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The new Rules are tailored to meet the needs and requirements of global and regional commercial parties and are

fundamentally and purposively directed to ensuring the resolution of international commercial disputes in a manner

that is efficient, cost-effective, and certain.

NZIAC’s new International Arbitration Rules will allow NZIAC to offer a world-class dispute resolution service to global

and regional commercial parties and place NZIAC at the cutting edge of international arbitration. There is no question

that the proposed release of the Rules in 2014 will be keenly followed and will undoubtedly mark one of the most

significant developments on the international arbitration scene this year.

The New suite of Rules includes Expedited Arbitration Rules as the default for lower value claims, International

Mediation Rules and Arb/Med Rules to meet the growing need for these processes in the region and to provider

certainty in the delivery of those services.

Recent and proposed changes to New Zealand law

Having passed its first reading, the Judicature Modernisation Bill will bring many changes to New Zealand court

processes. The Bill proposes changes that will also affect the Arbitration Act 1996. These changes include:

• Recognition of emergency arbitration procedures as interim relief before full arbitration is conducted; and

• Where parties are unable to agree on an arbitrator, a more efficient procedure for arbitrator appointment.

The Trans-Tasman Proceeding Act 2010 came into force on 11 October 2013. The Act harmonises the business

regime in Australia and New Zealand. Some noteworthy effects that the Act has are:

• There is no need to seek judicial leave or prove domestic connection in order to serve proceedings on an Australian, or vice versa a New Zealander. The parties are treated as if they were resident in the country where the proceedings initiated.

• There is the ability to seek a stay of proceedings arguing that it is more appropriate to have the case tried under Australian (or New Zealand) jurisdiction.

• Choice of court of Australia or New Zealand must be respected. • Generally, registration of a civil judgment in Australia will enforce the judgment in New Zealand and

vice versa.

Interestingly, the Australian Government Productivity Commission released its draft report on 8 April 2014 concerning

the ‘Access to Justice Arrangement’. Recommendation 8.2 encompasses dispute resolution management plans and

encourages all government agencies to accelerate the development of dispute resolution management plans.


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Public promotion of the plans should also occur to promote certainty and consistency. These encouragements and

other views in the draft report indicate a possible future shift in policy change to a mandatory publication of dispute

management plans.

The smoking gun

Often talked about – seldom found in practice, the ‘smoking gun’ is almost folkloric, but a recent case in New York

shows that if you look hard enough and in the right place, or the parties are just plain clueless, you may stumble

upon one!

The bankruptcy and collapse of the law firm Dewey & LeBoeuf has lead to astounding smoking gun evidence against

ex-employees of the firm. You would think most people would just know better but emails that circulated within the

firm contained incriminating evidence due to easy discussion of the firm’s financial situation and plans around this.

According to the New York Times, the emails contain phrases such as “cooking the books”, “fake income” and

“accounting tricks”. The auditor of the firm was described as “clueless”, with emails indicating a plan to find another

clueless auditor for the coming year.

Five former executives of the firm, including the former chairman, are being charged by the Securities and Exchange

Commission with misrepresentation and manipulation of the firm’s condition prior to the bankruptcy, a debt of

approximately $150 million. Additionally, the Manhattan DA has a 106-count indictment for certain members of the

firm.

The founding father of modern international arbitration

Pierre Lalive, the founder of the ICC Institute of World Business Law, passed away on March 8, 2014 at the age of

91. As a leading specialist in international disputes, Professor Lalive was committed to the development of

international business law.

As a co-founder of the independent and international law firm Lalive based in Geneva, Professor Lalive’s career was

long and notable. Among many other significant achievements, he has represented many states at the International

Court of Justice, authored more than 200 publications, has been President of UNIDROIT Conferences, and was

founder, editor-in-chief and chairman of the ASA Bulletin. The Universities of Lyon, Paris II, Brussels and Rome all

granted Professor Lalive the title of Doctor honoris causa, awarded between 1982-1996.


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The ICC Institute of World Business Law is dedicated to developing business law and strengthening the ties of

international business to the legal profession. Professor Lalive’s contribution to the industry and community and

facilitation of international business will not be forgotten and will continue to be appreciated for many years to come.

His was truly an inspirational life. Vale Pierre Lalive.

What constitutes reasonable endeavours?

With the decision of the High Court of Australia in Electricity Generation Corporation v Woodside Energy Ltd;

Woodside Energy Ltd v Electricity Generation Corporation [2014] HCA 7 (5 March 2014), the proper approach to

interpreting ‘reasonable endeavours’ clauses was back in the news again. The Court decided that ‘reasonable

endeavours’ as a contractual obligation does not require parties to sacrifice commercial or business interests.

On the facts of the case, the parties had a contractual agreement to “use reasonable endeavours” and to “take into

account all relevant commercial economic and operational matters.” The HCA overturned the Court of Appeal’s

decision and determined that the contract was a business arrangement made at arm’s length and therefore the

contract should be interpreted in a business-like way. Interpreting the clause as a whole, no sacrifice was required

for the reasonable endeavours obligation to be fulfilled – it is not an absolute or unconditional obligation.

The Court noted three general points on interpreting reasonable endeavour clauses:

1. An obligation to use reasonable endeavours is not an absolute or unconditional obligation;

2. The nature and extent of the obligation imposed is necessarily conditioned by what is reasonable in the

circumstances, which can include circumstances that may affect an obligee's business; and

3. Some contracts which have a reasonable endeavours term also contain their own internal standard of what

is reasonable through an express reference relevant to the business interests of an obligee (see CPC Group

Ltd v Qatari Diar Real Estate Investment Company [2010] EWHC 1535 (Ch) at [252]).

By observing that reasonable endeavours are conditioned by what is reasonable in the circumstances, it is uncertain

whether the HCA has widened the interpretation of what is reasonable. The Court affirmed its earlier judgments in

Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 in which it was held

that the interests of the opposing party "could not be paramount in every case" and in Terrell v Mabie Todd &Co Ltd

(1952) 69 RPC 234) where it was held that the reasonable endeavours obligation does not need to be satisfied if

actions would risk “certain ruin of the company or utter disregard of the interests of the shareholders.”

With a balance to be struck between own commercial interests and the said obligation, the authorities offer no

precision as to just where that balance lies. What is clear however is that, at least so far, a “reasonable endeavours”


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obligation is not an absolute or unconditional term that requires a party to sacrifice its own commercial interests!

Arbitral tribunal’s treatment of meritless arguments withstands scrutiny of Court

The full Federal Court of Australia in Gujarat NRE Coke Limited v Coeclerici Asia Pte Ltd [2013] FCAFC 109 recently

made it clear that a party to an international arbitration will not be able to prevent enforcement of an arbitral award

on the basis that the arbitral tribunal failed to give it an opportunity to develop arguments where those arguments

had no prospects of success.

The arbitral tribunal had decided that certain arguments put forward by Gujarat, but never explained at the time they

were advanced or subsequently, had no prospects of success and ultimately proceeded to issue the award.

In the circumstances of the case, the Court found the Arbitral Tribunal's decision to proceed to an award “entirely

understandable” and held that Gujarat "had no right to some leisurely expanse of time to think up and develop

points".

The case emphasises that the right of a party to present its case will depend on the particular circumstances of the

case. The decision in Gujurat indicates that any agreed limitations on the parties' rights to make oral submissions or

other agreed procedural limitations will be a relevant consideration in determining the opportunity afforded to each

party to present its case and will ultimately inform how a court will view the tribunal's treatment of the parties. A

reasonable opportunity to present a case is not an unlimited one.

The decision of the court is very fact sensitive and a tribunal’s treatment of the right of a party to make its case will

ultimately relate to considerations particular to the case. It should be noted that the parties in this case had

contractually agreed to limitations on the ability of parties to make oral submissions. A denial of procedural fairness

could easily in different circumstances amount to a breach of natural justice rendering any award unenforceable.

Refusing to enforce international arbitration awards

In two separate cases, South Korean courts have recently refused to enforce arbitral awards in accordance with the

New York Convention.

The first case, between NDS Group Ltd and KT Skylife, saw the Southern Seoul District Court refuse to enforce an

arbitral award against the Korean state-invested monopoly broadcaster KT Skyline after finding the award was not


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specific enough.

In the second case, the Seoul High Court refused to enforce an award against the state-run insurance company

Korea Resolution & Collection Corporation, after finding there was no arbitration agreement between the parties.

Both cases have been appealed.

IBA guidelines on party representation in international arbitration

On May 25 2013, the IBA Council approved the Guidelines on Party Representation in order to provide a system for

clarity and certainty around party representative’s actions in international arbitration.

Parties can agree to adopt the guidelines in whole or in part. An arbitral tribunal may also apply them after

consultation with the parties.

The Guidelines cover, among other things, ex parte communication between representatives and arbitrators

(guideline 7), candour and honesty (guidelines 9-11), and the requirement to inform parties of the obligations of

retaining and disclosing documents, concealment of evidence and Requests to Produce (guidelines 12-17).

The most anticipated guidelines are guidelines 24 and 26. Guideline 24 concerns representative conduct in witness

preparation. While the non-specific nature of the guideline leaves room to manoeuvre, commentators believe the

guideline is closer to the common law rather than civil law tradition.

Guideline 26 enables the Tribunal to sanction representative misconduct. Suggested actions that might be taken by a

tribunal in light of misconduct are admonishment, drawing adverse inferences from legal arguments or assessment of

evidence, and apportionment of costs having taken into consideration any representative’s proven misconduct.

Anti-suit injunction despite no commenced arbitration proceeding

In AES Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35, the

UK Supreme Court has confirmed the jurisdiction of the English courts to declare that a claim can only properly be

brought in arbitration, and grant anti-suit injunctions restraining court proceedings brought in breach of an arbitration

agreement, even in the absence of an actual, intended or proposed arbitration.


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The two parties had a concession contract concerning operation of hydroelectric facilities in Kazakhstan. The

Concession Agreement was governed by Kazakh law, but contained an ICC arbitration clause with a London seat.

While the arbitration clause did not contain an express choice of law, it was common ground that the arbitration

agreement was governed by English law.

In 2004, in a proceeding brought by the Republic of Kazakhstan, the Kazakh Supreme Court held that the arbitration

clause in the Concession Agreement was void.

In 2009, JSC brought court proceedings against AES in Kazakhstan seeking information about the value of the

concession assets. AES applied to stay the proceedings by reference to the arbitration clause, but this application was

dismissed by the Kazakh court on the basis that the Kazakh Supreme Court had annulled the arbitration clause by its

2004 decision.

On 31 July 2009, AES issued proceedings before the English Commercial Court, seeking a declaration that the

arbitration clause was valid and enforceable, and an anti-suit injunction restraining JSC from continuing with the

Kazakh proceedings.

The English Commercial Court granted an interim injunction, but AES remained concerned that JSC would seek to

bring further court proceedings in Kazakhstan in breach of the arbitration agreement and sought to maintain the

injunction.

At first instance, JSC’s challenge to the English courts’ jurisdiction was dismissed and the Court upheld the anti-suit

injunction and granted a declaration that JSC could not bring the claim that was the subject-matter of the Kazakhstan

proceedings, or any other claim arising out of the Concession Agreement, other than by way of ICC arbitration

proceedings in London.

JSC appealed the decision to the Court of Appeal, which upheld Burton J’s decision. JSC then appealed to the

Supreme Court. The Supreme Court dismissed JSC’s appeal.

The judgment helpfully clarifies that the English courts’ jurisdiction to grant anti-suit injunctions to restrain foreign

court proceedings brought in breach of an arbitration agreement derives from s37 of the Senior Courts Act 1981 (the

SCA 1981) and not from s44, or any other provision of, the Arbitration Act 1996 (the 1996 Act).

The case is analysed in detail in an article by Sarah Garvey, Manish Aggarwal and Angeline Welsh from Allen & Overy

titled: ‘Supreme Court Confirms Power to Grant Declaratory and Anti-Suit Injunctive Relief Even Where

No Arbitration is Commenced or Proposed’.


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The devil is in the detail

The English High Court has recently provided guidance as to the extent to which parties are bound to follow the

preliminary, 'conciliatory' steps in such clauses, before seeking relief from a court or arbitrator.

In Tang v Grant Thornton International & Ors [2012] EWHC 3198, the Court upheld the tribunal’s finding that it had

jurisdiction to determine the claim, despite the preliminary steps having not been taken or enacted correctly.

The Court observed that sufficient certainty and unequivocal commitment and an ability to objectively determine

when the clause has been fulfilled is required in order for the court to uphold it.

In the article “The devil is in the detail” by Buddle Findlay, the case is discussed in detail and the authors are left

to conclude that if multi-tiered clauses are to have teeth, they must be expressed unequivocally and in sufficient

detail to enable a Court to enforce them without having to 'fill in the gaps'. This will mean specifying not only

timeframes, but also clear and detailed procedures.

Fair and equitable treatment

In a recent ICSID case it was claimed that an FET standard in a BIT between Romania and Sweden was breached

when Romania repealed incentives offered for investments in parts of Romania’s deprived regions. Christian Leathley

of Herbert Smith Freehills discusses the case in depth in ‘Breach of fair and equitable standard (ICSID)’.

In brief summary, the claimants had made investments in Romania on the basis that incentives would be available for

10 years according to the BIT, however Romania repealed the incentives on the grounds of accession to membership

in the EU.

The arguments before the tribunal concerned the interaction of the provisions of the Accession Treaty and the BIT,

and which should prevail.

The European Commission backed Romania’s argument concerning the prominence of EU law, the Europe Agreement

and the Vienna Convention on the Law of Treaties over the BIT. These authorities supported the requirement of

phasing out the Incentives.

The Tribunal determined that as Romania was not a member of the EU at the time of signing the BIT there was no

conflict of treaties, but EU law was necessary for the interpretation of the BIT due to the intent of the parties when


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entering into the BIT.

The Tribunal held that the repeal of the incentives was not a definite breach of the FET standard due to the impetus

for repealing being for accession to the EU. However, it found the actions of Romania upholding some of the

claimant’s obligations under the BIT while removing the incentives resulted in a breach of the standard.

The Tribunal found that Romania had made specific promises to the claimants in terms of the incentives and their

duration and, combined with the element of inducement for the BIT the incentives had, Romania was in breach of

the FET standard. The Tribunal held there was no bad faith, but observed that the lack of transparency in informing

the claimants of the changes was a contributing factor.

The claimants sought RON2,655.23 million (EUR597 million as stated in the award) in damages. The majority of the

amounts were sought in respect of lost profits. In the event, the tribunal awarded the claimants RON376 million

(around EUR83 million), plus interest. It has been reported that if interest is considered, total damages will reach

USD 250 million (around EUR 184 million).

The award touches on a number of issues that are not settled in the field of international investment treaty

arbitration. The fact that, in some respects, the arbitrators in this case were unable to make a unanimous decision,

coupled with the shifting majority/minority, is a testament to the number of unsettled issues with which the tribunal

had to deal.

Simple negotiations creating obligations

Lawyers who conduct negotiations conduct them as agents of their clients. As the recent British Columbia Court of

Appeal decision in Hartsfield v Terra Nova Royalty Corp 2013 BCCA 417 Hartslief v. Terra Nova Royalty Corp., 2013

BCCA 417 shows, this seemingly academic point can have important real-world consequences.

In ‘Getting to “yes” too soon: when negotiations create obligations’ Andrew Cunningham of Stikeman Elliott,

one of Canada's leading business law firms discusses a case that concerned the negotiation of a settlement package

for a terminated executive. Neither party was present at negotiations. Draft settlement terms were exchanged

between counsel for the two sides over a period of several weeks until finally the two solicitors agreed over the

phone that the most recent draft terms were acceptable.

The problem was that the solicitor who was acting for the company intended that the deal would be final and binding

only after his client had satisfied itself, by means of an exit interview, that certain representations made by its ex-


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employee in the agreement were accuratebut the lawyer for the ex-employer had not clearly indicated to the other

side the intention of his client to postpone final settlement until certain actions had been completed.

Unfortunately for him and his client the Supreme Court of British Columbia held that failure to communicate the

clients wish for further requirements did not prevent the negotiations being final and binding.

The Court applied the usual test concerning legal obligations – they arise when the essential provisions of the

contract have been agreed upon. According to the law of agency, the lawyers’ representation of the parties bound

the parties to the concluded contract.

On appeal to the Court of Appeal, the Court upheld the decision, rejecting the argument that one party’s

understanding that the agreement was a ‘sign and close’ agreement prevented the contract from being binding. The

Court observed that both parties must have this intention and understanding in order for this to be the case.

Limitation of liability versus liquidated damages

Where a party to a contract attempts to wrongfully terminate that contract, the ‘innocent’ party can apply for an

interim prohibitory injunction to restrain such action in order to protect its business pending a full determination of

the matter.

In the article ‘Technology Contracts, Limitations of Liability and Interim Injunctions: AB v CD’, Angela

Fouracre of Bristows LLP discuss the recent UK Court of Appeal case of AB v CD [2014] EWHC 1 (QB) where the

Court looked at whether a party applying for an injunction to restrain the other from terminating a licence (allegedly

in breach of contract) was able to rely, in its favour, upon the fact that damages would not be an adequate remedy

as the contract contained a provision limiting the recoverable damages to below what might otherwise have been

awarded as a matter of general law.

In this case, an injunction claim against termination of a contract was decided by discussing whether a clause in the

contract that limited damages recoverable in a future action for wrongful termination could weigh against the

determination of the injunction. The determination of the injunction was to be based on whether damages are an

adequate remedy if the proposed termination occurred and was later deemed unlawful.

The case concerns conflicting authority and Stuart-Smith J determined that there is a distinction to be made between

a liquidated damages provision, the purpose of which is compensation of the claimant’s full loss, and limitation

provisions that remove certain categories of damage from the scope of loss.


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In the result damages were found to be an adequate remedy even though they were likely to fall below the losses

actually suffered and the application for an injunction was rejected. Leave to appeal has been granted and the Court

of Appeal will no doubt confirm the authority on this issue.

Partial settlements in multi-party disputes

Many disputes such as our own home grown leaky building disputes are complex, and may involve a large number of

defendants with greatly varying degrees of exposure. In this circumstance, "smaller players" with minimal exposure

or parties who simply want the certainty of a negotiated settlement may wish to settle with the plaintiff, however

other defendants may not want to do so.

In Canada, “B.C. Ferry Agreements”, also known as “Pierringer Agreements”, are arrangements the courts have

approved of allowing a plaintiff to settle claims with different defendants in multi-party disputes. The resultant

settlement will mean the defendant is insulated from third party claims by the remaining defendants for contribution

to the plaintiff’s loss, and the plaintiff maintains its ability to sue the defendants who have not been settled with.

The article by Gordon Buck and Scott Harcus from Alexander Holburn Beaudin + Lang LLP titled “Canada:

Disclosure of Partial Settlements in Multi-Party Litigation” discusses these agreements and the issues of

whether they must be disclosed to the other defendants of the proceeding and whether the amounts of settlement

must also be disclosed.

While the answer to the first query is a definitive yes, that the agreements must be disclosed, the courts have now

determined that there is no requirement to disclose the amounts of the settlement between the parties.

The case has interesting parallels with leaky home litigation in New Zealand where partial settlements with one or

more defendants are commonplace.

Related third parties

In Victoria, leave to appeal to the Court of Appeal has been granted in the case of Flint Ink NZ Ltd v Huhtamaki

Australia Pty Ltd [2013] VSCA 381. The appeal concerns a request by Flint Ink NZ for a stay of a third party claim by

Huhtamaki Australia.

Huhtamaki Australia joined Flint Ink NZ as third party to a claim against them. Flint Ink NZ applied for a stay on the


Issue 7

grounds that the arbitration agreement between Flint Ink NZ and Huhtamaki NZ should be prioritised.

The court at first instance refused to recognise sufficient proximity of Huhtamaki Australia with Huhtamaki NZ. If

there was sufficient proximity and Huhtamaki Australia was found to be claiming through or under Huhtamaki NZ, the

arbitration agreement between Flint NZ and Huhtamaki NZ would be prioritised and it is likely a stay on court

proceedings would be granted.

The case outlined the extended definition of ‘party’ to an arbitration agreement and discusses s 7 of the International

Arbitration Act 1974 (Cth). On appeal, it can be expected that these concepts will be discussed further, the outcome

of which will be important.

Arbitration in Singapore

In the article ‘Arbitration in Singapore 2013: A year in review’ Jonathan Choo, a Partner & Head of Arbitration

& Dispute Resolution at Olswang Asia LLP discusses the prominent arbitration cases from Singapore in 2013. The

cases cover a range of issues including remedies that are ‘active’ versus ‘passive’, multi-tier arbitration clauses,

pathological clauses and the standard of review. The cases indicate the direction Singapore has taken in its

interpretation of arbitration law at present.

Of note is the case of PT First Media TBK (formerly known as PT Broadband Multimedia TBK) v Astro Nusantara

International BV and others [2013] SGCA 57, where it was decided that the debtor of an arbitration award can resist

enforcement despite not actively challenging the tribunal’s jurisdiction ruling at an earlier stage of the arbitration. The

tribunal had no jurisdiction over the relevant third parties involved.

The grounds of the decision were based on art 16(3) of the Model Law (which is incorporated into the Singapore

International Arbitration Act (Cap 143A)) and the choice of remedies that it allows.

At first instance in the High Court, the court determined that failure to challenge the tribunal’s award decision within

the prescribed time precludes resistance of enforcement of the award at a later stage.

The Court of Appeal overturned this decision in deciding that parties have the option to choose active remedies at the

seat, or passive remedies at the place of enforcement.


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Is it an arbitration agreement?

In Carr & Anor v Gallaway Cook Allan [2014] NZSC 75 (20 June 2014) the Supreme Court recently reversed the Court

of Appeal holding that an arbitration agreement, expressed to be subject to the right of appeal to the High Court on

any “questions of fact” was invalid and, in exercise of the discretion available under article 34, set the resulting award

aside.

The decision highlights the importance of drafting arbitration clauses with care and in the article “Is it an

arbitration agreement?” I discuss the case and the lessons to be learnt.

Some recent note-worthy cases from various jurisdictions…

Non-disclosure of draft expert reports

The High Court in QBE Insurance (International) Limited v Steward Motorsports European Limited [2013] NZHC 3457

determined that inferences cannot be drawn from an expert refusing to waive privilege. Section 56 of the Evidence

Act 2006 was stated as the authority for this.

In overturning the judgment at first instance, Asher J found it was unfair for the court to place weight against an

expert’s report due to refusal to disclose the initial report. The disclosure of the final report does not waive privilege

of the initial report.

The case of Jackson v Marley Davenport Ltd [2004] EWCA Civ 1225 was relied on. In that case, legal privilege was

deemed upon the making of a report by an expert for legal advisers in the course of them giving advice to clients or

discussion of a case. This proposition of English law was upheld by the High Court as the rule in New Zealand.

Innocent party needs to prove ability to execute contract for damages

Upon repudiation of a contract, the English Commercial Court has determined that the innocent party must prove

that if the repudiated obligations were fulfilled, the innocent party would be able to perform its side of the bargain.

Damages are compensation for the loss of the contract if the innocent party is unable to perform the contract. If

proof of execution is not required, the innocent party may be granted the contract price upon assessment of the

damages which is different to loss of the contract.


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The case is Flame SA v Glory Wealth Shipping Ltd [2013] EWHC 3153 (Comm) and the court overruled the arbitration

panel’s award to the innocent party of USD 5 million. The assessment of loss is deciding what would have happened

but for the repudiation.

The Court referred to the House of Lords’ decision in Golden Strait Corporation v Nippon Yusen Kubishiki Kaisha

[2007] UKHL 12 which determined that facts known at the arbitration hearing but not at the time of repudiation must

be taken into account in order to determine the amount to be awarded in damages.

Lump sum costs

The Full Federal Court of Australia awarded a lump sum costs order to the appellant in Coeclerici Asia (Pte) Ltd v

Gujarat NRE Coke Ltd [2014] FCA 130 concerning an arbitration. The award was granted to the appellant by the

arbitral tribunal in the UK and the appellants applied to the Federal Court of Australia to enforce the award. The

appellants were successful and the case went on appeal to the Full Federal Court.

On the facts, the prospect of the Respondents paying the costs of taxation was poor due to their financial state, and

taxation costs would be complicated, time-consuming and expensive. Therefore the court awarded the lump sum cost

order.

The Court determined that it was viable to make a lump sum costs order due to its discretion under r40.02(b) of the

Federal Court Rules 2011. In this case, the costs were awarded in replacement of costs being taxed and the court

held this should be done where fair, logical and reasonable, and “whenever the circumstances warrant”. Reference to

the dispute resolution principles of speed, efficiency and inexpensiveness are to be used in determining this.

The Court also determined that the Applicants were able to take enforcement steps outside of Australia despite an

undertaking made to the Court that it would refrain from seeking an order of a similar nature or take enforcement

steps in any other jurisdiction. The entitlement to enforce the award in other countries once a decision is made in

one jurisdiction is found in the Convention on the Recognition and the Enforcement of Foreign Arbitral Awards 1958.

There was no concern for double recovery as details of any recovery achieved in jurisdictions outside Australia would

be provided by the appellant.

Validity of unilateral jurisdiction clauses

In recent years, the French Cour de cassation has found that a one-way jurisdiction clause is not enforceable because

it violates art 23 of the Brussels Regulation (Mme X v Bank Privee Edmond de Rothschild). This is due to the one-way

jurisdiction clause being potestative – having no mutuality of obligation.


Issue 7

A one-way jurisdiction clause is where one party can bring proceedings in only one jurisdiction, while the other party

has the ability to bring proceedings in a number of jurisdictions.

The English Commercial Court has recently determined that such jurisdiction clauses are valid under English law –

Mauritius Commercial Bank Ltd v Hestia Holdings Ltd [2013] EWHC 1328 (Comm). Obiter of the case indicated that

one-way jurisdiction clauses even more one-sided than the subject clause would not violate the public policy found in

art 6 of the European Convention on Human Rights which ensures equal access to justice.

Article 6 was noted to be concerned with equal access to justice, in a forum as chosen by the parties.

The validity of the ‘Dallah principle’

The Dallah principle originated from the UK Supreme Court case of Dallah Estate and Tourism Holding Company v

The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46 where it was determined that there is no

obligation to participate in an arbitration or take steps in the seat of arbitration if a party denies being a party to an

arbitration agreement. This is even when a tribunal has ruled positively on its own jurisdiction.

In The London Steamship Owners Mutual Insurance Association Ltd v the Kingdom of Spain [2013] EWHC 2840

(Comm), the English High Court concluded that the Dallah principle is fundamentally important and it should not be

contravened unless “the interests of justice so require”.

In that case, it was decided that the Respondent (Spain) can wait until the Claimant seeks to enforce the award to

raise its objection. This is despite the Respondent not having participated in the arbitration while having grounds for

objecting to the tribunal’s jurisdiction.

The judge did acknowledge that there may be reasons in future cases for the Dallah principle to not carry as much

weight.

Visiting Delegation from Vietnam

Recently NZIAC hosted a delegation of 9 public servants from Party Committee of Hi Chi Minh City, Vietnam. All

delegation members are highly qualified and working within the legal areas of Government administrative and justice

organisations. We spent an interesting afternoon discussing, similarities and differences between the Countries, how

Domestic Arbitration works in New Zealand and the advantages of choosing New Zealand as seat for International

Arbitration.


Issue 7

It was a most enjoyable afternoon and a chance to further develop our relationship with colleagues from the wider

Asia Pacific Region.

NZIAC Director John Green (centre) and NZDRC Panellist Gaye Greenwood (left of John)

with the visiting Vietnamese Delegation

I wish to take this opportunity to thank all our contributors who have support our efforts and allow us to share with

you, papers and articles of interest and of world class standard. We are really most grateful for the support that we

receive from dispute resolution professionals, law firms, and publishers locally and around the globe that allows us to

bring you a broad perspective on the law and evolving trends in the delivery and practice of domestic and

international dispute resolution.

Contributions of articles, papers and commentary for ReSolution® are always welcome, and we look forward to

publishing an interesting array of industry relevant articles this year.

I do hope you find this Issue of ReSolution® interesting and useful. Please feel free to distribute ReSolution® to your

friends and colleagues – they are most welcome to contact us if they wish to receive our publications directly.

Regards,

John Green

Editor


Issue 7

In AES Ust-

Kamenogorsk

Hydropower Plant JSC

v AES Ust-

Kamenogorsk

Hydropower Plant LLP

[2013] UKSC 35, the

Supreme Court has

confirmed the

jurisdiction of the

English courts to

declare that a claim

can only properly be

brought in arbitration,

and grant anti-suit

injunctions restraining

court proceedings

brought in breach of

an arbitration

agreement, even in

the absence of an

actual, intended or

proposed arbitration.

In AES Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk

Hydropower Plant LLP [2013] UKSC 35, the Supreme Court has confirmed the

jurisdiction of the English courts to declare that a claim can only properly be brought in

arbitration, and grant anti-suit injunctions restraining court proceedings brought in

breach of an arbitration agreement, even in the absence of an actual, intended or

proposed arbitration.

Following the ECJ’s decision in Allianz SpA & anr v West Tankers Inc (Case C 185/07)

[2009] 1 AC 1138, the English courts would not grant such an anti-suit injunction where

the court proceedings in question are commenced or continued in foreign jurisdictions

that are within the regime of the Brussels Regulation or the Lugano Convention.

The judgment also clarifies that the English courts’ jurisdiction to grant anti-suit

injunctions to restrain foreign court proceedings brought in breach of an arbitration

agreement derives from s37 of the Senior Courts Act 1981 (the SCA 1981) and not from

s44, or any other provision of, the Arbitration Act 1996 (the 1996 Act).

Background

The dispute between the appellant, Ust-Kamenogorsk Hydropower Plant JSC (JSC) (a

subsidiary of the Republic of Kazakhstan), and the respondent, AES Ust-Kamenogorsk

Hydropower Plant LLP (AES), arose out of a 1997 concession agreement pursuant to

which AES had the right to operate a hydroelectric power plant in Kazakhstan (the

Concession Agreement). The Concession Agreement was governed by Kazakh law, but

contained an ICC arbitration clause with a London seat. While the arbitration clause did

not contain an express choice of law, it was common ground that the arbitration

agreement was governed by English law.

In 2004, in a proceeding brought by the Republic of Kazakhstan, the Kazakh Supreme

Court held that the arbitration clause in the Concession Agreement was void, on the

basis that: (1) the clause sought to refer tariff disputes to arbitration in violation of

SUPREME COURT CONFIRMS POWER TO GRANT DECLARATORY AND ANTI-SUIT INJUNCTIVE RELIEF EVEN WHERE NO ARBITRATION IS COMMENCED OR PROPOSED

- Sarah Garvey, Manish Aggarwal & Angeline Welsh


Issue 7

In 2009, JSC brought

court proceedings

against AES in

Kazakhstan seeking

information about the

value of the

concession assets.

AES applied to stay

the proceedings by

reference to the

arbitration clause, but

this application was

dismissed by the

Kazakh court on the

basis that the Kazakh

Supreme Court had

annulled the

arbitration clause by

its 2004 decision.

On 31 July 2009, AES

issued proceedings

before the English

Commercial Court,

seeking a declaration

that the arbitration

clause was valid and

enforceable, and an

anti-suit injunction

restraining JSC from

continuing with the

Kazakh proceedings.

Kazakhstan public policy; and (2) the reference in the clause to the ICC Arbitration

Rules was not a reference to the ICC, thereby leaving the arbitral institution unspecified.

In 2009, JSC brought court proceedings against AES in Kazakhstan seeking information

about the value of the concession assets. AES applied to stay the proceedings by

reference to the arbitration clause, but this application was dismissed by the Kazakh

court on the basis that the Kazakh Supreme Court had annulled the arbitration clause by

its 2004 decision.

On 31 July 2009, AES issued proceedings before the English Commercial Court, seeking

a declaration that the arbitration clause was valid and enforceable, and an anti-suit

injunction restraining JSC from continuing with the Kazakh proceedings. The English

Commercial Court granted an interim injunction, and JSC subsequently withdrew the

request for information which was the subject of the Kazakh proceedings. However, AES

remained concerned that JSC would seek to bring further court proceedings in

Kazakhstan in breach of the arbitration agreement and sought to maintain the

injunction.

JSC challenged the court’s jurisdiction, mainly on the basis that the English courts had

no power to grant injunctive relief in circumstances where the party seeking that relief

(in this case, AES) had not commenced, and did not intend to commence, arbitration

proceedings. JSC argued that a party could only obtain injunctive relief under s44 of the

1996 Act during a current or proposed arbitration; that the 1996 Act superseded the

general power to issue an injunction under s37 of the SCA 1981 (which provides that

“the High Court may by order (whether interlocutory or final) grant an injunction or

appoint a receiver in all cases in which it appears to the court to be just and convenient

to do so”); and, to the extent that s37 of the SCA 1981 was available to grant an anti-

suit injunction, its use was limited to the same circumstances as the use of s44 of the

1996 Act. JSC also argued that AES should not be granted declaratory relief because

this was a matter for the arbitral tribunal in accordance with the principle of

“Kompetenz-Kompetenz” reflected in certain provisions of the 1996 Act.

At first instance, Burton J dismissed JSC’s challenge to the English courts’ jurisdiction,

upheld the anti-suit injunction and granted a declaration that JSC could not bring the

claim that was the subject-matter of the Kazakshstan proceedings, or any other claim

arising out of the Concession Agreement, other than by way of ICC arbitration


Issue 7

Lord Mance (with

whom Lord

Neuberger, Lord

Clarke, Lord Sumption

and Lord Toulson

agreed) delivered the

Supreme Court

judgment, dismissing

JSC’s appeal.

proceedings in London. Burton J recognised that s44 of the 1996 Act was not applicable

here because there was no actual or proposed arbitration. However, he held that the

court could grant an anti-suit injunction under s37 of the SCA 1981.

JSC appealed the decision to the Court of Appeal, which upheld Burton J’s decision. JSC

then appealed to the Supreme Court.

Supreme Court judgment

Lord Mance (with whom Lord Neuberger, Lord Clarke, Lord Sumption and Lord Toulson

agreed) delivered the Supreme Court judgment, dismissing JSC’s appeal. The key

aspects of the Supreme Court judgment are discussed below.

(a) Enforceability of rights inherent in an arbitration agreement The Supreme Court

recognised that an arbitration agreement not only gives rise to a positive right

to arbitrate disputes in a particular forum but, like an exclusive choice-of-court

clause, also contains an equally fundamental negative right not to be sued in

any forum other than in the forum specified in the agreement. The

enforceability of this negative aspect of an arbitration agreement is not

conditional upon an arbitral proceeding being on foot, proposed or brought.

(b) Inter-relationship between the 1996 Act and s37 of the SCA 1981 In terms of

the interplay between the provisions of the 1996 Act and s37 of the SCA 1981,

the Supreme Court held that:

(i) Independently of the 1996 Act, the English court has a well-established general power under s37 of the SCA 1981 to injunct foreign proceedings brought in breach of a London arbitration agreement, even where arbitral proceedings are not on foot or in contemplation. There is nothing in the 1996 Act which abrogates or precludes the use of this power by the English courts. (ii) The English courts’ power to grant anti-suit injunctions to restrain foreign proceedings in breach of an arbitration agreement (whether on an interim or final basis and whether at a time when arbitral proceedings are or are not on foot or proposed) is found in s37 of the SCA 1981 (and not in s44 of the 1996 Act).

(iii) The general power provided by s37 of the SCA 1981 must, however, be exercised “sensitively” and, in particular, “with due regard for the scheme and terms of [the 1996 Act] when any arbitration is on foot or proposed”. It is also open to a court under s37, if it deems fit, to grant any anti-suit injunction on an interim basis, pending the outcome


Issue 7

The Supreme Court

recognised that, in

some cases, the

appropriate course

would be to leave it to

the foreign court

before which

proceedings are

brought in breach of

an arbitration

agreement to

recognise and enforce

the parties’

agreement. The court

emphasised that, on

the particular facts of

this case, the grant of

declaratory and

injunctive relief was

justified because of

the Kazakhstan courts’

refusal to enforce the

parties’ arbitration

agreement on

grounds that were

unsustainable under

English law (which

was accepted as the

law governing the

arbitration

agreement).

of current or proposed arbitration proceedings, rather than a final basis.

(c) “Kompetenz Kompetenz” and power of English courts to determine issues of

arbitral jurisdiction conclusively The Supreme Court also confirmed the court’s

general inherent power to declare rights and make a “final and binding

declaration” about arbitral jurisdiction, consistently with the scheme of the 1996

Act. The Supreme Court clarified that the 1996 Act was not intended to provide

“a complete code of arbitration law”, or a complete and workable set of rules for

the determination of all jurisdictional issues relating to arbitration in all

situations. Sections 30 (which reflects the principle of “Kompetenz-Kompetenz”),

32, 44 and 72 of the 1996 Act do not apply where, as in the present case, no

arbitration proceedings are on foot or contemplated.

The Supreme Court also referred to: (i) its previous judgment in Dallah Real

Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government

of Pakistan [2010] UKSC 46, [2011] 1 AC 763 to emphasise that the

“Kompetenz-Kompetenz” doctrine does not mean that an arbitral tribunal has

the exclusive power to rule on its jurisdiction, or that the court of the seat of

arbitration cannot determine whether the tribunal has jurisdiction before the

tribunal itself has ruled on it; and (ii) the jurisprudence under s9 of the 1996 Act

in relation to the English courts’ power to stay domestic legal proceedings

brought in breach of an arbitration agreement, where the courts (rather than an

arbitral tribunal) determine the existence or otherwise of arbitral jurisdiction

conclusively and at the outset.

(d) Grant of anti-suit injunctive relief may not always be appropriate

The Supreme Court recognised that, in some cases, the appropriate course

would be to leave it to the foreign court before which proceedings are brought

in breach of an arbitration agreement to recognise and enforce the parties’

agreement. The court emphasised that, on the particular facts of this case, the

grant of declaratory and injunctive relief was justified because of the Kazakhstan

courts’ refusal to enforce the parties’ arbitration agreement on grounds that

were unsustainable under English law (which was accepted as the law governing

the arbitration agreement).


Issue 7

Note: Allen & Overy LLP acted for the

successful respondent, AES, in this appeal.

Power to serve s37 anti-suit proceedings out of the jurisdiction Civil Procedure

Rules 62.2 and 62.5 empower English courts to grant permission to serve out of

jurisdiction where an arbitration claim affects “arbitration proceedings (whether

started or not)” or “an arbitration agreement”. The Supreme Court held that

these provisions were “wide enough” to embrace a claim for an anti-suit

injunction under s37 of the SCA 1981.

Comment

The decision is a practically significant one, and has been welcomed by the arbitration

community. The Supreme Court has confirmed that a party to an arbitration agreement

does not need to commence, or undertake to commence, an arbitration in order to

invoke the jurisdiction of the English courts to protect and enforce the arbitration

agreement. Prior to this decision, both s44 of the 1996 Act and s37 of the SCA 1981

were thought to be potentially available to a party seeking an anti-suit injunction from

the English courts to restrain a threatened or actual breach of a London arbitration

agreement.

This gave rise to uncertainty about the precise inter-relationship between those two

provisions. The Supreme Court’s judgment has removed this uncertainty by clarifying

that a party seeking an anti-suit injunction is required to apply under s37 of the SCA

1981, and not under s44 of the 1996 Act. The fact that s44 of the 1996 Act (which

contains various restrictions) does not apply to the grant of an anti-suit injunction also

potentially gives the court a broader scope to grant this type of relief.

Sarah Garvey PSL Counsel/Head Lit KH & Trn Having qualified as a barrister Sarah joined the Litigation department at Allen & Overy LLP. Sarah has worked on a wide range of commercial matters, including banking disputes, complex cross border fraud actions, disputes arising out of the sale and purchase of companies, oil and gas disputes and shareholder disputes.

Manish Aggarwal Associate

Angeline Welsh Counsel Angeline specialises in international arbitration and public law. She advises on both commercial arbitrations as well as those brought under investment treaties and has experience of arbitrations conducted under the UNCITRAL, LCIA, ICC and ICSID rules. Angeline has particular expertise in court proceedings related to arbitration disputes including anti-suit injunctions and the enforcement of arbitral awards.

Author Profile - Allen Overy LLP - www.allenovery.com


Issue 7

It is common for

major commercial

contracts to contain

'staged' dispute

resolution clauses,

culminating in the

issue of court or

arbitration

proceedings as a final

step. The English High

Court has recently

provided guidance as

to the extent to which

parties are bound to

follow the preliminary,

'conciliatory' steps in

such clauses, before

seeking relief from a

court or arbitrator.

It is common for major commercial contracts to contain 'staged' dispute resolution

clauses, culminating in the issue of court or arbitration proceedings as a final step. The

English High Court has recently provided guidance as to the extent to which parties are

bound to follow the preliminary, 'conciliatory' steps in such clauses, before seeking relief

from a court or arbitrator.

In Tang v Grant Thornton International & Ors [2012] EWHC 3198 (Ch), the contract

between the parties provided for two steps to be taken before either of them was able

to refer a dispute to arbitration (Preliminary Steps).

After a dispute arose, the Chief Executive recused himself from attempting to resolve it,

meaning that step one of the Preliminary Steps was not fulfilled. Moreover, as no board

members put themselves forward to act as the panel, the panel contemplated by step

two was not constituted. After the defendants referred the dispute to arbitration, the

plaintiffs claimed that the Preliminary Steps were conditions precedent to arbitration and

that, as they had not been fulfilled, the arbitral tribunal had no jurisdiction to determine

the dispute. The tribunal disagreed and the plaintiffs appealed to the High Court.

The Court upheld the tribunal's jurisdiction, holding that the relevant test as to whether

a clause such as those setting out the Preliminary Steps ought to be given legal effect

is:

• Whether the provision prescribes without the need for further agreement

a sufficiently certain and unequivocal commitment to commence a

process

• From which may be discerned what steps each party is required to take

to put the process in place

• And which is sufficiently clearly defined to enable the court to determine

objectively:

ο what under that process is the minimum required of the parties to

the dispute in terms of their participation in it; and

ο when or how the process will be exhausted or properly terminable

THE DEVIL IS IN THE DETAIL: MULTI-TIERED DISPUTE RESOLUTION CLAUSES MUST

BE CERTAIN AND SPECIFIC - Buddle Findlay


Issue 7

While decisions of the

English High Court are

not binding in New

Zealand, this

judgment is relevant

to those involved in

drafting dispute

resolution clauses in

this country.

without breach.

Applying those principles to the case before it, the Court found that the Preliminary

Steps were not a condition precedent to arbitration. In particular:

• The relevant clause was too nebulous in terms of the process and too

equivocal in terms of content. In particular, there was no guidance as to the

quality or nature of the attempts to be made to resolve a dispute or

difference

• The two month 'delay' period referred to in the clause should not be

interpreted as a permanent bar on commencing arbitration if no panel was

established, or seized of the dispute

• It was unrealistic to contend that if no panel was constituted, no arbitration

could be commenced, even long after the request for conciliation would

have been required to be referred to the second stage.

While decisions of the English High Court are not binding in New Zealand, this judgment

is relevant to those involved in drafting dispute resolution clauses in this country. It

reinforces that if multi-tiered clauses are to have teeth, they must be expressed

unequivocally and in sufficient detail to enable a Court to enforce them without having

to 'fill in the gaps'. This will mean specifying not only timeframes, but also clear and

detailed procedures.

Author Profile—Buddle Findlay

www.buddlefindlay.com

Graeme Hall

Sherridan Cook

Willie Palmer

Kirsten Windmeyer

Laura O'Gorman

Scott Barker


Issue 7

In Ioan Micula and

others v Romania

(ICSID Case No.

ARB/05/20), an ICSID

tribunal considered

whether Romania was

in breach of the

Sweden-Romania

bilateral investment

treaty.

In Ioan Micula and others v Romania (ICSID Case No. ARB/05/20), an ICSID tribunal

considered whether Romania was in breach of the Sweden-Romania bilateral

investment treaty.

The majority of an ICSID tribunal (Laurent Lévy and Stanimir Alexandrov) held that

Romania breached the fair and equitable treatment standard in the Sweden-Romania

bilateral investment treaty by repealing incentives offered regarding investments made

in some of the country’s deprived regions. A different majority (Laurent Lévy and

Georges Abi-Saab) dismissed the claimants’ allegation that Romania had breached the

umbrella clause in the BIT due to lack of evidence. The tribunal also discussed the role

of EU law within the context of investment treaty disputes.

The award is of interest as it discusses in detail the FET standard and even proffers a

test in respect of the stability aspect often considered to fall within the scope of FET.

The award also concludes (departing from other cases) that unilateral declarations

made by a state would fall within the scope of an umbrella clause. Finally, the

discussion in the award of EU issues is topical, given the number of ongoing disputes

where the inter-relation between EU law and investment treaty arbitration is in issue.

Background

The Agreement between the Government of the Kingdom of Sweden and the

Government of Romania on the Promotion and Reciprocal Protection of Investments

dated 1 April 2003 (BIT) contains the following relevant provisions:

• A fair and equitable treatment (FET) standard, which requires each contracting

party to ensure fair and equitable treatment of the investments by investors of

the other contracting party (Article 3.2).

• An “umbrella clause”, which requires each contracting party to observe any

obligation it has entered into with an investor of the other contracting party with

regard to their investment (Article 2.4).

BREACH OF FAIR AND EQUITABLE

TREATMENT STANDARD (ICSID) - Christian Leathley


Issue 7

The dispute arose

from Romania’s

revocation of some

economic incentives

for the development

of some of its

impoverished regions

(Incentives). The

Incentives were

created by legislation

enacted in 1988 by

Emergency

Government

Ordinance 24/1988

(EGO 24). This

legislation made

available to investors

tax incentives,

including custom duty

exemptions. Within

the EGO 24

framework, the

claimants (two

individuals, Ioan

Micula and Viorel

Micula) and three

companies based in

Romania (European

Food SA, Starmill SRL

and Multipack SRL)

made investments in

Romania….

Facts

The dispute arose from Romania’s revocation of some economic incentives for the

development of some of its impoverished regions (Incentives). The Incentives were

created by legislation enacted in 1988 by Emergency Government Ordinance 24/1988

(EGO 24). This legislation made available to investors tax incentives, including custom

duty exemptions. Within the EGO 24 framework, the claimants (two individuals, Ioan

Micula and Viorel Micula) and three companies based in Romania (European Food SA,

Starmill SRL and Multipack SRL) made investments in Romania. They argued that these

investments were made in reliance on the expectation that the Incentives would be

maintained for a ten year period. Within the context of its efforts to become an EU

member state, Romania revoked the Incentives in February 2005.

In August 2005, the claimants commenced an ICSID arbitration arguing that Romania

had violated the BIT. Romania objected to the tribunal’s jurisdiction. On 24 September

2008, the tribunal rendered its Decision on Jurisdiction and Admissibility, dismissing

Romania’s objections.

In the merits phase of the arbitration, the parties disagreed on issues of applicable law

and, in particular, the role of EU law within the context of the dispute. Romania argued

that the BIT must be interpreted consistently with EU law. Specifically, it argued that:

• The tribunal should take into account the wider juridical context in which the BIT

between Romania and Sweden was negotiated and concluded. The conclusion of

the BIT was a direct consequence of the European Union Association Agreement

(Europe Agreement) and in the context of Romania’s accession to the EU. The

Europe Agreement and the EC Treaty were relevant rules of international law that

should be considered when construing the BIT under Article 31(3)(c) of the

Vienna Convention on the Law of Treaties (VCLT).

• The treatment of foreign investors under the BIT could not be divorced from

Romania’s obligations under the Europe Agreement and the EC Treaty. Sweden

and the other EU member states expected Romania to take all measures needed

to comply with EU law, which entailed the removal of the Incentives. As such, the

BIT should not be construed as signifying that Romania was in breach of it by

implementing measures mandated by EU law.

As an alternative argument, Romania maintained that, if the BIT were to be found


Issue 7

On the substantive

issues, the claimants

argued that, through

its legislation and the

issuance of some

permits to grant the

Incentives, Romania

committed to the

claimants for a ten

year period, in return

for the claimants

making large

investments “in one of

the poorest and least

developed regions of

Romania”.

incompatible with EU law, the latter should prevail on the basis of the principle lex

specialis derogat legi generali: in respect of state aid, EU law would be more specific

than the BIT.

The European Commission, as amicus curiae, made submissions largely consistent with

Romania’s position. In particular, the European Commission argued that the tribunal

should take into account EU law on state aid when making a decision.

The claimants argued that there was no conflict between the BIT, on the one hand, and

the Accession Treaty of 25 April 2005 (Accession Treaty) and the EC Treaty, on the

other. The Accession Treaty and the EC Treaty were not in force in respect of Romania

when the BIT was concluded. If there was a conflict between these treaties, then the

BIT would prevail:

• Because the preservation of rights provision in Article 9(2) of the BIT would

apply, ring-fencing the rights granted to investors under the BIT.

• As lex posterior under Article 30(3) of the VCLT.

• As lex specialis, given that it is a treaty with a more delimited scope of application

than the Accession Treaty and the EC Treaty.

The claimants added that, even if under EU law Romania was obliged to phase out the

Incentives, this would not excuse Romania’s alleged breaches of the BIT and

international law. According to the claimants, pursuant to Article 12 of the ILC Articles

on State Responsibility, the origin or character of a breach is irrelevant in determining

the existence of a breach of an international obligation.

On the substantive issues, the claimants argued that, through its legislation and the

issuance of some permits to grant the Incentives, Romania committed to the claimants

for a ten year period, in return for the claimants making large investments “in one of

the poorest and least developed regions of Romania”. Romania’s commitment gave rise

to a right of the claimants to receive the Incentives for ten years, or at least a legitimate

expectation that they would benefit from those incentives for that period. The claimants

contended that Romania’s revocation of the Incentives in 2005 breached its

commitments or, alternatively, undermined the claimants’ legitimate expectations.

Furthermore, the revocation of the Incentives was unfair and unlawful, and, in

particular, that the Incentives were compatible with EU law.


Issue 7

A majority of the

tribunal held that

Romania was in

breach of the FET

obligation in the BIT.

A different majority

dismissed the claim

based on the umbrella

clause, due to lack of

evidence.

Specifically, the claimants argued that the revocation of the Incentives:

• Breached the umbrella clause in the BIT.

• Breached Romania’s obligation to afford the claimants FET.

• Unreasonably impaired the enjoyment of the claimants’ investment.

• Amounted to an expropriation without compensation.

In essence, Romania argued that the claimants bore the risk of regulatory change. In

any event, it had exercised its powers in a non-discriminatory fashion and to advance

public welfare, so it could not be concluded that it breached the BIT.

More specifically, Romania argued that the claimants did not establish in the arbitration

that Romania had promised not to change the incentive regime in issue. Even if it had

made such a promise, Romania argued that the claimants did not rely on it to make

their investments or, if they did, that reliance was unreasonable. Romania also

contended that the changes in the incentive regime did not violate the BIT as its actions

were reasonably related to a rational policy, namely EU accession.

Decision

A majority of the tribunal held that Romania was in breach of the FET obligation in the

BIT. A different majority dismissed the claim based on the umbrella clause, due to lack

of evidence.

Applicable law

The tribunal observed that Romania was not a party to the EU when the BIT was

negotiated and concluded in 2003. There was therefore “no real conflict of treaties”.

The tribunal further considered that the relevant issue in this case was whether EU law

plays a role in the interpretation of the BIT. In this regard, the tribunal considered the

following:

• Given that the BIT does not contain any reference to the EU or to accession, the

tribunal indicated that it could not assume that, by entering into the Accession

Treaty or by Romania’s accession to the EU, either Romania, or Sweden, or the

EU sought to amend, modify or otherwise detract from the application of the BIT.

• The BIT was part of Romania’s strategy to develop economically to obtain


Issue 7

The majority of the

tribunal (Laurent Lévy

and Georges Abi-

Saab) followed the

ruling in Eureko v

Poland, and concluded

that “any” obligations

entered into with

regard to investments

would be protected by

the umbrella clause.

The tribunal reasoned

that the existence of

an “obligation” should

be determined

according to

“governing law”, in

this case, Romanian

law.

accession.

• There was no reason to assume that Sweden and Romania had any intent to

defeat their obligations under any of the applicable treaties when they entered

into each of them, and the tribunal must interpret each treaty (in particular, the

BIT) according to the intent of the parties.

In this regard, the tribunal noted that the parties “appeared to agree” that EU law

formed part of the factual matrix of the case. It noted that this was especially relevant

in relation to the issue of whether Romania acted fairly and equitably. In fact, in its FET

analysis (see below), the tribunal found that the repeal of the Incentives was motivated

by concerns arising from Romania’s accession to the EU. It seems that this would have

helped Romania persuade the tribunal that it did not breach the FET standard.

However, the fact that Romania phased out the Incentives but kept some of the

claimants’ related obligations under EGO 24 (which was not the result of EU pressure)

led to a majority finding that Romania was in breach of the FET standard.

Breach of the umbrella clause

The majority of the tribunal (Laurent Lévy and Georges Abi-Saab) followed the ruling in

Eureko v Poland, and concluded that “any” obligations entered into with regard to

investments would be protected by the umbrella clause. The tribunal reasoned that the

existence of an “obligation” should be determined according to “governing law”, in this

case, Romanian law. The majority concluded that the claimants had not provided

enough evidence and legal argument on the content of Romanian law for the tribunal to

find the existence of an obligation protected by the umbrella clause. Accordingly, the

majority dismissed this claim.

Stanimir Alexandrov, dissenting, considered that it was not necessary for the claimants

to establish that there was a vested or actionable obligation under Romanian law. In his

view, it would suffice to show that Romania undertook a firm commitment towards the

claimants.

Breach of the FET standard

The tribunal observed that the BIT did not provide much assistance in respect of the

meaning of the terms “fair” and “equitable”. It suggested that the real question was

how the terms “fair” and “equitable” should be applied to the facts of the case. The


Issue 7

The tribunal then

discussed the

transparency and

consistency duties

that would arise out of

the FET standard.

Although it relied

upon Tecmed v

Mexico (ICSID Case

No. (AF)/00/2) in this

respect, it suggested

that transparency and

consistency should be

gauged against the

circumstances of the

case, so the

obligations placed

upon a state are

realistic.

tribunal pointed out that the determination of the content of the FET standard does not

depend on idiosyncratic views. It should be based on state practice and judicial or

arbitral case law or other sources of international law. The tribunal added that the

conduct in question does not need to be egregious to amount to a violation of the FET

standard.

It was common ground between the parties that the FET standard should be interpreted

considering the object and purpose of the BIT, as reflected in its Preamble. In the

tribunal’s view, the object and purpose of the BIT was to intensify economic co-

operation between Sweden and Romania. Bearing that in mind, the tribunal stated that

it favoured a balanced view of the goals of the BIT similar to that adopted by the

tribunal in Saluka Investments BV (Netherlands) v Czech Republic.

The tribunal discussed a number of types of conduct that would violate the FET

standard, namely conduct that is substantially improper (for example, conduct that is

arbitrary, manifestly unreasonable, discriminatory or in bad faith). It then analysed the

protection granted by the BIT in respect of regulatory changes. The tribunal indicated

that the FET standard in the BIT could not be interpreted as the equivalent to a

stabilisation clause. It observed that a state may always change its legislation, taking

into consideration that:

• An investor’s legitimate expectations must be protected.

• The state’s conduct must be substantively proper (that is, not arbitrary or

discriminatory).

• The state’s conduct must be procedurally proper (namely, in compliance with due

process and fair administration).

If a change in legislation fails to meet these requirements, while the legislation may be

validly amended as a matter of domestic law, the state may incur international liability.

The tribunal then discussed the transparency and consistency duties that would arise

out of the FET standard. Although it relied upon Tecmed v Mexico (ICSID Case No.

(AF)/00/2) in this respect, it suggested that transparency and consistency should be

gauged against the circumstances of the case, so the obligations placed upon a state

are realistic.


Issue 7

As to the

reasonableness of

Romania’s actions, the

tribunal concluded

that Romania’s repeal

of the Incentives was

motivated by the EU’s

demands and found

that Romania had

acted reasonably in

respect of the

changes to the

Incentives, except in

respect of one aspect:

Romania’s decision to

maintain the

claimants’ obligations

(as investors) despite

the abolishment of the

Incentives.

Having set the scene for the application of the FET standard, the majority of the tribunal

(Laurent Lévy and Stanimir Alexandrov) found that Romania was in breach of the BIT.

The majority found that Romania made specific promises to the claimants in respect of

the Incentives and their duration in particular. The majority also found that Romania’s

conduct had included an element of inducement that required Romania to stand by its

statements and its conduct. The majority concluded that it was reasonable for the

claimants to believe that the Incentives were legal under Romanian law and would be

maintained for the full ten year period.

As to the reasonableness of Romania’s actions, the tribunal concluded that Romania’s

repeal of the Incentives was motivated by the EU’s demands and found that Romania

had acted reasonably in respect of the changes to the Incentives, except in respect of

one aspect: Romania’s decision to maintain the claimants’ obligations (as investors)

despite the abolishment of the Incentives.

The majority also concluded that Romania failed to act transparently by failing to inform

the claimants in a timely manner that the regime would be terminated before its stated

date of expiration.

The tribunal did not find evidence on the record that Romania had acted in bad faith

and therefore dismissed this allegation.

In light of its finding on the FET standard, the tribunal considered it unnecessary to rule

on the unreasonable impairment and expropriation arguments advanced by the

claimants.

The claimants sought RON2,655.23 million (EUR597 million as stated in the award) in

damages. The majority of the amounts were sought in respect of lost profits. In the

event, the tribunal awarded the claimants RON376 million (around EUR83 million), plus

interest. It has been reported that if interest is considered, total damages will reach

USD 250 million (around EUR 184 million).

Comment

The award touches on a number of issues that are not settled in the field of

international investment treaty arbitration. The fact that, in some respects, the

arbitrators in this case were unable to make a unanimous decision, coupled with the


Issue 7

Author Profile

Christian Leathley

Partner

Herbert Smith Freehills

www.herbertsmithfreehills.com

Christian specialises in

international commercial and

investment arbitration. He

acts for individuals,

corporations and sovereign

states across major industry

sectors, from energy and

technology to construction,

engineering, mining, media

and telecommunications.

For more on Christian:

www.herbertsmithfreehills.com/

people/christian-leathley

Other relevant Arbitration

articles can be found on the

Herbert Smith Freehills

website:

http://hsfnotes.com/arbitration/

shifting majority/minority, is a testament to the number of unsettled issues with which

the tribunal had to deal. One such issue concerns the umbrella clause. In the award, the

majority (Laurent Lévy and Georges Abi-Saab) appears to consider that “obligations”

arising from unilateral declarations would be protected by the umbrella clause. Other

tribunals construing the term “entered into” (which is employed in the BIT) have

concluded that an umbrella clause would protect only contractual undertakings (for

example, CMS v Argentina (ICSID Case No. ARB/01/8)). Mr Alexandrov advanced a

more expansive construction of the umbrella clause in the BIT: he saw some

stabilisation elements that would have been protected by the umbrella clause.

Given the breadth of the terms used by most investment treaties containing umbrella

clauses, it is unclear whether the debate as to the meaning of these clauses has a

foreseeable end. (Indeed, there is inconsistent jurisprudence as to whether umbrella

clauses cover all contractual obligations concluded by a host state (see, for example,

Noble Venture v Romania (ICSID Case No. ARB/01/11) and Eureko v Poland (ad hoc)),

or only some of them (for example, SGS v Pakistan (ICSID Case No. ARB/01/13) and El

Paso v Argentina (ICSID Case No. ARB/03/15).)

The role of EU law in respect of intra-EU investment treaty disputes is another issue as

to which arbitral tribunals have held different views. The tribunal suggested that EU law

would be part of the factual background to the case. By contrast, in Electrabel SA v

Hungary (ICSID Case No. ARB/07/19), the arbitral tribunal considered that EU law was

applicable law. There are a number of pending cases in which this is an issue in dispute.

The tribunal discussed in some detail the scope and application of the FET standard. In

so doing, it attempted to find a middle-ground in relation to some of the aspects of the

FET standard. For example, in respect of the stability strand in the FET standard, the

tribunal attempted to formulate a balanced test to determine when legislative change

would not contravene a treaty (that is, where an investor’s legitimate expectations are

protected and the state’s conduct is both substantially and procedurally proper). It

remains to be seen whether the tribunal’s formulation would help clarify the fuzzy

contours of the FET standard. Furthermore, although the tribunal relied upon the

Tecmed formulation in respect of transparency and consistency, it distanced itself from

an application that could, in the words of the tribunal in Saluka v Czech Republic

(UNCITRAL) as quoted in the award, “impose upon host States obligations which would

be inappropriate and unrealistic.”


Issue 7

Lawyers who conduct

negotiations conduct

them as agents of

their clients. As the

recent British

Columbia Court of

Appeal decision

in Hartslief v. Terra

Nova Royalty Corp.,

2013 BCCA 417

(CanLII) shows, this

seemingly academic

point can have

important real-world

consequences.

Lawyers who conduct negotiations conduct them as agents of their clients. As the

recent British Columbia Court of Appeal decision in Hartslief v. Terra Nova Royalty

Corp., 2013 BCCA 417 (CanLII) shows, this seemingly academic point can have

important real-world consequences. The case concerned the negotiation of a settlement

package for a terminated executive. Drafts were exchanged between counsel for the

two sides over a period of several weeks until, finally, the two solicitors agreed over the

phone that the most recent draft terms were acceptable.

So far, so good. The problem was that the solicitor who was acting for the company

intended that the deal would be final and binding only after his client had satisfied itself,

by means of an exit interview, that certain representations made by its ex-employee in

the agreement were accurate. Unfortunately for him and his client, the B.C. Supreme

Court found that he had not made this intention clear to the other side. This left the

court with no choice but to apply the usual test respecting the coming into existence of

binding obligations, i.e. that legal obligations arise when agreement is reached on the

essential provisions of the contract. The fact that, in this case, that point had been

reached in the course of dealings between the parties’ respective solicitors – without

ratification by the clients themselves and before anyone had signed anything – did not

matter. The principles of agency state that agents stand in the shoes of those whom

they represent. The situation was therefore no different in principle than it would have

been had the parties themselves conducted the negotiations. In either case, the mutual

affirmation of the proposed terms in the phone call would have sufficed to create an

enforceable agreement.

At the Court of Appeal, counsel for the company argued that the company and the

solicitor conducting the negotiations on its behalf had intended the deal to be a “sign

and close” transaction, meaning that there was no deal prior to execution of the final

agreement. He further urged the court to consider the fact that, at several earlier points

in the negotiations, the lawyer had had to go back to the company for approval of

proposed terms. He also argued that the Supreme Court’s ruling failed to take into

account established commercial practice and could thus adversely affect the practice of

GETTING TO “YES” TOO SOON: WHEN NEGOTIATIONS CREATE OBLIGATIONS

- Andrew Cunnigham


Issue 7

While it agreed with

counsel for the

appellant that the

issue is important, in

the end the decision

to affirm the B.C.

Supreme Court’s

ruling was not a

difficult one. As

Madam Justice

Newbury wrote:

[T]he law in my view is

clear and well-

understood: unless a

solicitor clearly

communicates the

contrary to those with

whom he or she is

negotiating, a solicitor is

the agent of his or her

client and thus may bind

the client to an

agreement such as this.

After all, a solicitor “acts

for” the client.

commercial law.

The Court of Appeal rejected each of these contentions. Firstly, it stated, solicitors

understand how the principles of agency work: there is no reason to exempt them from

an elementary principle of law that applies to all agents. Secondly, the fact that, weeks

before, the company’s solicitor had responded to certain draft terms by stating that he

had to check with his client first did not – contrary to counsel’s argument – put the

other side “on notice” that the solicitor acting for the company did not have the

authority to bind it. (To the contrary, the court noted that the fact that he had not

responded in the same fashion later in the negotiations, and specifically at the time of

the fateful phone call, might well have suggested to the other side that such

consultations were no longer required.) Finally, one party’s understanding or intention

that negotiations are to proceed on a “sign and close” basis will not ordinarily displace

the law with respect to the formation of binding obligations unless all parties share that

understanding or intention. This last point was strongly supported by the Ontario case

of Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 79 D.L.R. (4th)

97 (Ont. C.A.), a ruling that the B.C. courts have subsequently accepted as

representing the law of British Columbia. Because the company’s intention that this

would be a “sign and close” deal was not clearly communicated to the other side, the

required mutual understanding or intention had not been created, the Court of Appeal

held in affirming the lower court’s decision.

While it agreed with counsel for the appellant that the issue is important, in the end the

decision to affirm the B.C. Supreme Court’s ruling was not a difficult one. As Madam

Justice Newbury wrote:

[T]he law in my view is clear and well-understood: unless a solicitor clearly

communicates the contrary to those with whom he or she is negotiating, a solicitor

is the agent of his or her client and thus may bind the client to an agreement such

as this. After all, a solicitor “acts for” the client.

Author Profile—Andrew Cunningham Stikeman Elliott LLP—www.stikeman.com

Andrew Cunningham is a Knowledge Management lawyer in the Toronto office of Stikeman Elliott. He writes or edits many of the firm's current awareness publications, particularly in the areas of contract,

commercial law and mergers and acquisitions.


Issue 7

Where a party to a

contract attempts to

wrongfully terminate

that contract, the

‘innocent’ party can

apply for an interim

prohibitory injunction

to restrain such action

in order to protect its

business pending a

full determination of

the matter.

Where a party to a contract attempts to wrongfully terminate that contract, the

‘innocent’ party can apply for an interim prohibitory injunction to restrain such action in

order to protect its business pending a full determination of the matter. In the recent

technology case of AB v CD [2014] EWCA Civ 229 the Court of Appeal looked at

whether a party applying for an injunction to restrain the other from terminating a

licence (allegedly in breach of contract) was able to rely, in its favour, upon the fact that

damages would not be an adequate remedy as the contract contained a provision

limiting the recoverable damages to below what might otherwise have been awarded as

a matter of general law.

Background

CD owned the intellectual property rights in an eMarketplace – a “cloud-based”

electronic platform used to buy and sell goods and services. AB was licensed to market

and to sell certain support and maintenance services for this eMarketplace to potential

participants (the “Licensing Agreement”). The exploitation of that licence was AB’s only

business and AB had only one ‘buy side’ customer who regularly paid for maintenance

and support services.

CD gave notice to AB that it intended to terminate the Licensing Agreement. AB

asserted that CD was not entitled to terminate the Licensing Agreement, the

consequence of which would permanently destroy AB’s business as it would lose its only

source of income from its one customer.

Immediately before the termination date, AB commenced arbitration proceedings (the

Licensing Agreement contained an arbitration clause) and applied at the same time for

an interim injunction in the High Court to require CD to perform its obligations under

the Licensing Agreement and to restrain CD from terminating the Licensing Agreement,

pending an award in the arbitration.

TECHNOLOGY CONTRACTS, LIMITATIONS OF LIABILITY AND INTERIM INJUNCTIONS:

AB V CD - Angela Fouracre


Issue 7

The application turned

on whether damages

would be “an

adequate remedy” for

AB should CD’s

termination

subsequently be held

to have been

unlawful.

The High Court found

that the exclusion of

liability for loss of

profits and cap on

recoverable damages

in the Licensing

Agreement should not

be taken into account

when determining

whether damages

would be an adequate

remedy.

Guidelines for granting interim injunctions

The Court’s jurisdiction to grant an interim injunction may be exercised whenever it

appears to be just and convenient to do so1 and the guidelines for the proper approach

to the exercise of that very broad discretion are set out in American Cyanamid Co v.

Ethicon Ltd [1975] AC 396, that is:

• Whether there is a serious question to be tried;

• Whether damages would be an adequate remedy; and

• Where the balance of convenience lies (that is, the respective inconvenience or

loss to each party should an Order be granted).

High Court decision

The application turned on whether damages would be “an adequate remedy” for AB

should CD’s termination subsequently be held to have been unlawful.

The High Court found that the exclusion of liability for loss of profits and cap on

recoverable damages in the Licensing Agreement should not be taken into account

when determining whether damages would be an adequate remedy. Even though these

exclusions of liability were an effective block to any claim for loss of profits by AB, even

if CD’s termination proved to be unjustified, this was part of the price that AB agreed to

pay when it entered into the Licensing Agreement so was not ‘unjust’. Accordingly, the

application for an injunction was refused.

However, unusually, the High Court judge (Stuart-Smith J) added a postscript to his

judgment indicating that that he felt some unease at the result and considered that

there was tension between the authorities in this area and accordingly granted

permission for AB to appeal.

The Court of Appeal’s view

The only issue on appeal was whether the High Court judge was right to disregard the

effect of the limitation clause when considering whether damages would be an


Issue 7

This recent

development is helpful

to any party seeking

to protect itself from

the unlawful

termination of a

contract which could

have a material effect

on its business in that

it provides clarity in

an area in which there

had previously been a

lack of authority.

adequate remedy for AB.

It was decided that it could not be just that, even in the case of the most gross and

cynical breach of contract, if the only losses suffered were of the kind that would be

excluded by the contract, that no injunction would lie and the contract-breaker would

be able to walk away from its obligations with impunity. The primary obligation (and

commercial expectation) of a party is to perform the contract. The requirement to pay

damages in the event of a breach is a secondary obligation, and an agreement to

restrict the recoverability of damages in the event of a breach cannot be treated as an

agreement to excuse performance of that primary obligation2. The ‘rule’ that an

injunction should not be granted where damages would be an adequate remedy should

be applied in a way which reflects the substantial justice of the situation.

Accordingly, the appeal was allowed.

Impact of the decision

CD had argued that it could not be right that in every case where the ‘victim’ of a

threatened breach of contract sought an interim injunction he could rely on the

existence of an exclusion or limitation clause to claim that damages would not be an

adequate remedy. The Court of Appeal rejected this argument – a claimant would still

have to show that if the threatened breach occurs there is a substantial risk that he will

suffer loss that would otherwise be recoverable but for the provision in question. This

only opens the door to the exercise of the Court’s discretion and the fact that the

restriction in question was agreed may, depending on the circumstances, be a relevant

consideration – as may the scale of any shortfall and the degree of risk of that shortfall

occurring. Lord Justice Ryder suggested that the question to be asked on application for

injunctive relief should be re-cast as “Is it just in all the circumstances that a claimant

be confined to his remedy in damages?”.

This recent development is helpful to any party seeking to protect itself from the

unlawful termination of a contract which could have a material effect on its business in

that it provides clarity in an area in which there had previously been a lack of authority.

While, on the face of it, it might appear that this decision could strengthen the position

of applicants seeking interim injunctions in similar circumstances, an injunction remains


Issue 7

an entirely discretionary remedy and each case will continue to be determined on its

own specific set of facts.

Author Profile— Angela Fouracre—Bristows— www.bristows.com

Angela is an Associate in the firm's Commercial Disputes team and deals with a broad range of

international and domestic commercial and corporate disputes. Angela frequently advises clients, often in

the TMT and Financial Services sectors, on disputes arising out of high value commercial contracts and

transactions. She also advises on copyright infringement, misuse of confidential information, debt recovery and

insolvency-related issues. Angela is experienced in many forms of dispute resolution, including high value litigation in the

High Court as well as domestic and international arbitration and mediation.

Family Dispute Resolution Centre (FDR Centre)

The New Zealand Family Dispute Resolution Centre (FDR Centre) provides a fully administered nationwide FDR, Mediation, Conflict & Communication Coaching and Counselling service for families in conflict and relationships in difficulty in New Zealand. Director, John Green, says “the FDR Centre was established in response to recent government reforms that have changed the way parents and guardians are required to manage care and contact

arrangements for children.”

“The FDR Centre works with New Zealand's most respected accredited FDR providers and preparatory counsellors,

family and relationship mediators, conflict & communication coaches, and counsellors” says Mr Green.

The FDR Centre provides fully administered nationwide FDR, Mediation, Conflict & Communication Coaching and Counselling services for families in conflict and relationships in difficulty. It’s services are flexible and cover all

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• Adult family and elder care

Notes:

1Section 37(1) of the Senior Courts Act 1981 2Here, the Court of Appeal relied heavily upon

its earlier judgment Bath and North East

Somerset District Council v. Mowlem plc

[2004] BLR 153


Issue 7

Construction disputes are often complex, and may involve a large number of defendants

with greatly varying degrees of exposure. In this circumstance, "smaller players" with

minimal exposure or parties who simply want the certainty of a negotiated settlement

may wish to settle with the plaintiff, however other defendants may not want to do so.

Over the years, the Courts have approved a variety of arrangements to encourage

partial settlements in multi-party litigation. The most common of these is what is known

in British Columbia as a "B.C. Ferry Agreement", and in Alberta and Ontario as a

"Pierringer Agreement". Though the names are different, the basic structure of these

agreements is the same.

In brief, a B.C. Ferry or Pierringer Agreement provides a mechanism for a plaintiff to

settle claims against some, but not all, of the defendants, while preserving the plaintiff's

right to pursue the non-settling defendants and at the same time insulating the settling

defendants from being brought back into the litigation through third party proceedings.

This type of agreement generally includes the following elements:

• The plaintiff accepts a defined sum in full satisfaction of its claim against

one or more of the defendants;

• The plaintiff discontinues the action as against the settling defendants and

gives a covenant not to sue the settling defendants;

• The liability of the settling and non-settling defendants is segregated

through an amendment to the plaintiff's pleadings to waive any right to

claim from the non-settling defendants any portion of damages that the

Court might ultimately assign to the settling defendants at trial.

Once this type of agreement is implemented, the non-settling defendants are only

jointly liable for their collective proportionate share of liability, and therefore they

cannot assert claims for contribution and indemnity as against the settling defendants.

Since the non-settling defendants cannot be required to pay more than their

proportionate share of damages, the settling defendants are effectively insulated from

being brought back into the litigation through third party claims.

DISCLOSURE OF PARTIAL SETTLEMENTS

IN MULTI-PARTY LITIGATION

Gord Buck works in Commercial Litigation, Construction and

Engineering, Environmental, and Insolvency and Restructuring Practices at Alexander Holburn

Beaudin + Lang LLP in Vancouver Canada. He

maintains a broad civil litigation practice with an emphasis on professional liability defence,

environmental and contaminated site litigation, and the resolution of construction and commercial

disputes.

Scott Harcus works in Insurance, Defamation + Reputation Risk Management, Insolvency + Restructuring, Environmental

and Construction + Engineering Practices at Alexander Holburn

Beaudin + Lang LLP. His practice is civil litigation based

with a focus on insurance coverage, bodily injury and property damage, products liability, defamation, and

contaminated sites litigation.

www.ahbl.ca

- Gordon Buck & Scott Harcus

Gordon

Buck

Scott

Harcus


Issue 7

Given the frequent use of these types of agreements in multi-party lawsuits, particularly

construction claims, it is not surprising that there has been significant litigation over

these agreements. A number of recent decisions have focused on the question of

whether these agreements have to be disclosed to the other parties to the litigation,

and if so, whether the requirement to disclose extends to disclosing the actual amounts

paid by the settling defendants.

The Courts' answer to the first question has generally been "yes". In one of the leading

cases on this issue, Amoco Canada Petroleum Co. v. Propak Systems Limited1, the

Alberta Court of Appeal confirmed that partial settlement agreements in multi-party

actions must be disclosed to all other parties to the litigation prior to trial, and that the

terms of the agreement should also be disclosed to the Court.

The answer to the second question has proved more vexing. While Courts in Alberta

and British Columbia have generally held that the actual settlement amounts were not

relevant and thus not subject to disclosure, it was not until July 2013 that the Supreme

Court of Canada provided a definitive answer. The Court's decision in Sable Offshore

Energy Inc. v. Ameron International Corp.2 confirmed that, absent "exceptional

circumstances", the amount the settling parties paid does not have to be disclosed to

the remaining non-settling defendants.

In Sable, the plaintiff entered into a Pierringer agreement to settle the action against

some, but not all, of the defendants, and disclosed the terms of settlement to the non-

settling defendants but withheld the actual amounts paid. The nonsettling defendants

took the position that they were entitled to know the amounts paid by the settling

defendants, but Sable claimed settlement privilege over the information. The trial court

sided with Sable, but the Nova Scotia Court of Appeal took the opposite view and

ordered the amounts disclosed.

In ruling that the settlement amounts were privileged and did not have to be disclosed,

the Supreme Court placed great emphasis on encouraging resolution of disputes before

trial, and that the public interest in facilitating settlement outweighed any interest the

non-settling defendants might have in learning the settlement amounts. In coming to its

decision, the Court also confirmed that the "content of successful negotiations" is

protected by settlement privilege and not subject to disclosure. While the Court held

that settlement privilege may be displaced if some overriding public interest in

Given the frequent

use of these types of

agreements in multi-

party lawsuits,

particularly

construction claims, it

is not surprising that

there has been

significant litigation

over these

agreements. A

number of recent

decisions have

focused on the

question of whether

these agreements

have to be disclosed

to the other parties to

the litigation, and if

so, whether the

requirement to

disclose extends to

disclosing the actual

amounts paid by the

settling defendants.


Issue 7

disclosure is shown, this will likely only apply in very rare cases.

The decision by the Supreme Court in Sable brings some welcome certainty to this area

of law. Plaintiffs and defendants in multi-party litigation can enter into settlement

negotiations with the assurance that any financial arrangements they may make will not

have to be disclosed to the other parties except in very narrow or unusual

circumstances. This assurance of confidentiality is often a key requirement for

successful settlement negotiations in complex cases.

As we enter 2014, we look back at significant Singapore Court decisions of 2013

involving arbitration which we think arbitration practitioners will continue to discuss,

moving into the years beyond. Given the number of recent cases in which parties have

sought to challenge awards against them, we also present a modest proposal about

how indemnity costs might be used to discourage parties from launching unmeritorious

challenges to arbitral awards.

BUILDING DISPUTES TRIBUNAL TE TARAIPIUNURA MO NGA TAUTOHE WHARE

An Authorised nominating Authority under the Construction Contracts Act 2002

• New Zealand’s only independent, nationwide, specialist building and construction dispute

resolution service.

• Highly skilled, experienced, and respected adjudicators, arbitrators and mediators.

• Comprehensive and professional case management services.

• Comprehensive, informative, and user friendly website.

• FIXED FEE service for low value claims.

• NO APPOINTMENT FEES - FREE on-line nomination service within 24hrs.

P + 64 9 486 7143

E [email protected]

www.buildingdisputestribunal.co.nz

Article Footnotes

1. 2001 ABCA 110 2. 2013 SCC 37

ARBITRATION IN SINGAPORE 2013: A YEAR IN REVIEW

- Jonathan Choo


Issue 7

Astro v Lippo – A Lesson in “Active” and “Passive” Remedies; Model Law and IAA a Departure from English Law

The dispute between the Astro Group and the Lippo Group has grabbed headlines in the

international press and was likely the most talked about case in 2013. This was because

of the personalities involved (two titans of Asian business) and also the sums awarded

by the Tribunal in favour of the Astro Group (about US$300 million).

The Lippo Group’s recent successful appeal before the Singapore Court of Appeal has

reduced the sum payable to Astro by over 99 per cent.

From a legal perspective, the Court of Appeal’s decision in PT First Media TBK (formerly

known as PT Broadband Multimedia TBK) v Astro Nusantara International BV and others

and another appeal [2013] SGCA 57 is interesting for two reasons.

First, the Court of Appeal’s holding that parties have a “choice of remedies” under the

UNCITRAL Model Law (as adopted by the International Arbitration Act (Cap 143A)),

means that parties with a jurisdictional challenge have the option of either taking the

“active” step of challenging the jurisdiction of the Tribunal at the outset (directly to the

Tribunal and any subsequent appeals to the supervisory Courts if necessary), or taking

the “passive” stance and raising a jurisdictional challenge only when the winning party

seeks to enforce the award against them.

From a practical point of view, the choice of active and passive remedies being available

to parties may very well influence the tactics adopted by parties who are on the wrong

end of a preliminary jurisdictional ruling. There are strong arguments why a party may

want to apply to the supervisory Court to initiate a quick challenge to a Tribunal’s

jurisdictional ruling, for example, so that the arbitration can proceed with greater

certainty. However, there are equally compelling (and practical) reasons why that may

work against the party. In reality, a party may fear that its very act of challenging a

Tribunal’s preliminary jurisdictional ruling will risk antagonising the Tribunal. Now,

parties facing this dilemma will feel more confident in knowing that at least in the case

of domestic international awards, they are not constrained to make a quick challenge,

but can instead choose to keep their powder dry and resist recognition and any

enforcement of an award.

The dispute between

the Astro Group and

the Lippo Group has

grabbed headlines in

the international press

and was likely the

most talked about

case in 2013. This was

because of the

personalities involved

(two titans of Asian

business) and also the

sums awarded by the

Tribunal in favour of

the Astro Group

(about US$300

million).


Issue 7

The Court of Appeal’s decision marked a departure from the decision of the Singapore

High Court which held that in an arbitration seated in Singapore, the failure of a party to

challenge the jurisdiction within a certain statutory period acted as an absolute time-bar

such that the party was no longer entitled to raise that point when resisting the

recognition and enforcement of the award.

The second point of interest is the Court of Appeal’s affirmation that Singapore law on

arbitration has departed from English law as a result of Singapore’s adoption of the

UNCITRAL Model law. It held at paras [54] and [55] that:

… the Model Law, which was crafted in such a way as to be acceptable both to common and civil law systems, was to herald a paradigm shift in the Singapore arbitral framework which had until then been guided by the English arbitration regime.. … In the light of the above, it is clear that the scope of the power to refuse enforcement in s 19 could no longer draw direct and complete inspiration from the English authorities once the IAA came into force. The context of the 1950 EAA and the IAA were, to put it simply, informed by different considerations.

Parenthetically, readers may want to read the comments of the High Court in TMM

Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186, which

defended the use of English authorities so long as it was done judiciously. The

Honourable Justice Chan Seng Onn considered at para [48] that, “while it would be

justified to treat English decisions on arbitration with some degree of caution, to ignore

them completely would be throwing the baby out with the bathwater”.

The Court of Appeal’s decision in Astro v Lippo does not necessarily put to rest the

dispute between these two groups. Astro has obtained interim (and garnishee) relief

from a number of other Courts and those proceedings are still on-going. In this respect,

the fact that an award has been set aside by the Courts of the seat in which those

awards were made is a ground to resist recognition and enforcement of those awards in

other jurisdictions. However, the English version of the New York Convention on the

Recognition and Enforcement of Foreign Arbitral Awards 1958 appears to make such

refusal discretionary rather than mandatory.

IRCP v Luftansa: Enforceability of Multi-Tier Arbitration Clauses

- Strict Compliance is Necessary

The Singapore Court of Appeal in International Research Corp PLC v Lufthansa Systems

Asia Pacific Pte Ltd and another [2013] SGCA 55 confirmed the enforceability of multi-

Parenthetically,

readers may want to

read the comments of

the High Court in TMM

Division Maritima SA

de CV v Pacific

Richfield Marine Pte

Ltd [2013] SGHC 186,

which defended the

use of English

authorities so long as

it was done

judiciously. The

Honourable Justice

Chan Seng Onn

considered at para

[48] that, “while it

would be justified to

treat English decisions

on arbitration with

some degree of

caution, to ignore

them completely

would be throwing the

baby out with the

bathwater”.


Issue 7

tier clauses. In this case, the multi-tiered dispute resolution mechanism involved an

escalation clause. The escalation clause was a precondition to arbitration and required

parties to escalate any dispute to their respective management chains for negotiations.

However, the Court of Appeal took issue with the High Court’s view regarding the extent

to which parties had to comply strictly with the pre-conditions stipulated in the multi-tier

clause. In International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and

anor [2013] 1 SLR 973, the High Court held that the multi-tier clause had been

complied with because “there were several rounds of high-level meetings between [the

parties] to resolve the Payment Dispute. The parties have had their attempts at

negotiations and in that respect, the object of [the multi-tier clause] has been met”.

(see para [110])

The Court of Appeal disagreed. Substantial compliance with the escalation clause was

insufficient and instead, actual compliance was necessary. It took a strict approach and

held at para [62] that “[w]here the parties have clearly contracted for a specific set of

dispute resolution procedures as preconditions for arbitration, those preconditions must

be fulfilled”. It remarked that “[i]n the case before us, it could not be said that the

parties intended that some meetings between some people in their respective

organisations discussing some variety of matters would be sufficient to constitute

compliance with the preconditions for arbitration”.

Separately, the Court of Appeal effectively confirmed that the Singapore Courts adopt a

lower threshold than the English Courts in determining whether a multi-tier clause is

sufficiently certain to be enforced. In the English case of Wah (Aka Alan Tang) and

another v Grant Thornton International Ltd and others [2012] EWHC 3198 (Ch), the

English High Court was faced with a very similar (and more detailed) multi-tier clause.

However, the English Court refused to enforce the multi-tier clause on the basis that it

“lack[ed] sufficient definition and certainty to constitute enforceable conditions

precedent to the commencement of arbitration”. (see para [82(1)])

HKL v Rizq: Pathological Clauses Post Insigma v Alstom

In 2009, the Singapore Court of Appeal in Insigma Technology Co Ltd v Alstom

Technology Ltd [2009] 3 SLR 936 upheld a so-called hybrid arbitration clause in which

the arbitration would be administered by the Singapore International Arbitration Centre

Separately, the Court

of Appeal effectively

confirmed that the

Singapore Courts

adopt a lower

threshold than the

English Courts in

determining whether a

multi-tier clause is

sufficiently certain to

be enforced.


Issue 7

(“SIAC”) but using the arbitration rules of the ICC (“ICC Rules”).

Following that decision, the ICC amended its arbitration rules to effectively prevent such

a hybrid arbitration from ever taking effect again. This was achieved through inserting

the words in bold into the current art1(2) of the ICC Rules 2012, which now reads:

The Court does not itself resolve disputes. It administers the resolution of disputes by arbitral tribunals, in accordance with the Rules of Arbitration of the ICC (the “Rules”). The Court is the only body authorized to administer arbitrations under the Rules, including the scrutiny and approval of awards rendered

in accordance with the Rules. It draws up its own internal rules, which are set forth in Appendix II (the “Internal Rules”). (emphasis added)

However, this issue once again reared its head in the cases of HKL Group Co Ltd v Rizq

International Holdings Pte Ltd [2013] SGHCR 5 (“Rizq (No. 1)”) and HKL Group Co Ltd v

Rizq International Holdings Pte Ltd [2013] SGHCR 8 (“Rizq (No. 2)”). The

“pathological” (defective) arbitration clause in question is reproduced below,

unedited:

Any dispute shall be settled by amicable negotiation between two Parties. In case both

Parties fail to reach amicable agreement, all dispute out of in connection with the

contract shall be settled by the Arbitration Committee at Singapore under the rules of

The International Chamber of Commerce of which awards shall be final and binding

both parties …

The prohibition in art 1(2) of the ICC Rules was raised for consideration by the

Singapore High Court in Rizq (No. 2). Critically, the learned Assistant Registrar held that

parties could not be bound by an institution’s mandatory rules so as to prohibit a hybrid

arbitration clause. He held that art 1(2):

cannot curtail the freedom of parties to agree to be bound by the result of an arbitration administered by a different arbitral institution applying the ICC Rules, neither can it curtail the power of the court to give an interpretation to a pathological arbitration clause, where that clause uses language which admits the possibility of different arbitral institutions, which provides a wider range of solutions to the parties (see para [10] of Rizq (No. 2)).

The decision gives rise to some practical issues if, for example, the SIAC decides not to

administer an arbitration using another institution’s arbitration rules. To the best of our

knowledge, of the world’s major arbitration institutions, only the Stockholm Chamber of

Commerce is on record as being willing to administer an arbitration using another

institution’s arbitration rules. The learning point from the case must be that parties

The decision gives rise

to some practical

issues if, for example,

the SIAC decides not

to administer an

arbitration using

another institution’s

arbitration rules. To

the best of our

knowledge, of the

world’s major

arbitration institutions,

only the Stockholm

Chamber of

Commerce is on

record as being willing

to administer an

arbitration using

another institution’s

arbitration rules.


Issue 7

ought to pay more attention to the drafting of their arbitration clauses in order to avoid

a costly and inconvenient jurisdictional fight before the substantive hearing on the

merits.

TMM and BLB – Issue with the Standard of Review?

Two Singapore High Court decisions in 2013 grappled with the appropriate level and

extent of review that the Courts ought to engage in when dealing with an application to

set aside an arbitral award.

Arbitration is meant to be an efficient and expeditious dispute resolution process. The

finality of an arbitral award is encapsulated in the doctrine of minimal curial intervention

as well as the limited grounds on which a party may challenge an award. As the High

Court noted in TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013]

SGHC 186 (“TMM”):

[1] However good or bad in the eyes of a party, the decision of an arbitral tribunal with the requisite jurisdiction is final and binding. … Arbitration will not survive, much less flourish, if this core precept is not followed through by the courts. The integrity and efficacy of arbitration as a parallel dispute resolution system will be subverted if the courts appear unable or unwilling to restrain themselves from entering into the merits of every arbitral decision that comes before it. … [2] Although parties have a right and expectation to a fair arbitral process and the courts should give maximum effect to these safeguards in deserving cases, parties must not be encouraged to dress up and massage their unhappiness with the substantive outcome into an established ground for challenging an award. … Unfortunately, as this case exemplifies, sieving out the genuine

challenges from those which are effectively appeals on the merits is not easy under the present law. (emphasis added)

The learned Judge noted the extent of the problem involved in the review exercise and

bemoaned the situation.

125 Arbitrations are meant to be an efficient alternative to court litigation. This has, unfortunately, not been the case. In these proceedings, TMM provided a compendious record of the Arbitration by way of two affidavits which ran into about 3,200 pages across eight volumes. Excluding oral submission captured in more than 1,300 pages of transcripts, TMM also tendered several rounds of written submissions which totalled 241 pages from cover to cover. I find this to be both unnecessary and unsatisfactory. Especially for challenges against an award founded on the breach of natural justice, the court’s role is, in very general terms, to ensure that missteps, if any, are more than arid, hollow, technical and procedural... Any real and substantial cause for concern should be demonstrably clear on the face of the record without the need to pore over thousands of pages of facts and

Two Singapore High

Court decisions in

2013 grappled with

the appropriate level

and extent of review

that the Courts ought

to engage in when

dealing with an

application to set

aside an arbitral

award.


Issue 7

submissions. Otherwise, curial recourse against an award will be used (and abused) as an opportunity to invite the court to judge the full merits and conduct of the arbitration. As a further aside, an over-jealous scrutiny of the arbitral tribunal’s decision will also encourage parties to, via the statutorily permitted mechanism of curial recourse, tactically frustrate and delay the enforcement of the arbitral award. …

The Singapore High Court made a similar note of this issue in the subsequent case

of BLB and another v BLC and others [2013] SGHC 196:

[2] … The parties’ opposing positions embody a tension that is becoming increasingly apparent in the context of curial challenges to arbitral decisions. On one hand, the supervisory function of the court requires it to step in to provide relief in cases of genuine challenges. On the other hand, the linked principles of minimal curial intervention and finality in proceedings demand that this power of intervention be exercised warily and only in meritorious cases where statutorily prescribed grounds for setting aside have been established. This tension is further heightened when the losing party attempts to air its grievances before the court as complaints of breaches of natural justice or other established grounds of challenge and in doing so attempts to re-open the arbitration or traverse over the issues in the arbitration. The court must firmly resist any such attempts.

Discouraging Unmeritorious Challenges to Arbitral Awards: Solution in the Form of Costs Orders?

Thus far, the Singapore Courts have not addressed the issue of whether failed

challenges to arbitration awards merits special costs considerations. However, we do

note that the Singapore Court of Appeal has held that indemnity costs would be

awarded when a party institutes Court proceedings in breach of an arbitration

agreement, thereby necessitating an application for the stay of proceedings (see Tjong

Very Sumito and others v Antig Investments Pte Ltd [2009] 4 SLR(R) 732).

One way to discourage parties from launching unmeritorious challenges to arbitration

awards is to penalise them in the form of costs orders. For example, the Hong Kong

Courts’ default position is that indemnity costs will be awarded for an unsuccessful

challenge to an arbitration award, save only in exceptional circumstances.

While an indemnity costs order will still not be a full indemnity for the winning party, it

may be argued that this is probably the most appropriate balance to be struck between

all the competing considerations viz the finality of awards and the Courts’ obligations to

fairly consider applications to set them aside.

“This article was first published in The Singapore Law Gazette'

Author Profile

Jonathan Choo

Jonathan is based in Singapore

and heads up the Arbitration &

Dispute Resolution practice at

Olswang Asia LLP.

He advises and acts for clients in

Singapore, Asia, Europe and the

United States on a broad range

of commercial disputes. As an

experienced arbitration

practitioner, Jonathan has

advised and represented clients

in arbitrations conducted under

most of the major institutional

rules, including the Singapore

International Arbitration Centre

(SIAC) Rules, the International

Chamber of Commerce (ICC)

Rules, the London Court of

International Arbitration (LCIA)

Rules and the United Nations

Commission on International

Trade Law (UNCITRAL) Rules.

For more see:

http://www.olswang.com/


Issue 7

The recent decision of the Supreme Court in Carr & Anor v Gallaway Cook Allan [2014]

NZSC 75 (20 June 2014) highlights the importance of drafting arbitration clauses with

care.

The Supreme Court reversed the Court of Appeal holding that an arbitration agreement,

expressed to be subject to the right of appeal to the High Court on any “questions of

fact” was invalid and, in exercise of the discretion available under article 34, set the

resulting award aside.

The facts

The principal protagonists in this tortured tale are the law firm Gallaway Cook

Allan (GCA) and its former client, Mr Ewan Carr. Seven years ago, Carr settled High

Court litigation concerning a commercial partnership with Mr Rodney Humphries and

associated entities. The settlement agreement required Humphries to transfer farming

and hotel properties to Carr on or before 4pm, 31 May 2007, time being of

the essence. Carr was unable to settle on time and Humphries cancelled the

settlement agreement.

GCA were acting for Carr on the transaction. Carr subsequently challenged the validity

of Humphries’ cancellation in the High Court and then in the Court of Appeal, losing at

both stages.

Carr then set his sights on GCA alleging negligence on the part of the law firm and

claiming damages of $12.5M. The parties agreed to submit the dispute to arbitration

pursuant to an arbitration agreement which included the following provision:

“The parties undertake to carry out any award without delay subject only to such rights

as they may possess under Articles 33 and 34 of the First Schedule to the Arbitration

Act 1996 (judicial review) and clause 5 of the Second Schedule (appeals subject to

leave) but amended to as to apply to “questions of law and fact” (emphasis added).”

IS IT AN ARBITRATION AGREEMENT? - John Green

Author Profile

JOHN GREEN

John is a Chartered Arbitrator, Mediator and

Adjudicator. He also regularly writes and speaks on Dispute Resolution and is the Founder and Director of the Building

Disputes Tribunal, NZDRC and NZIAC & the FDR Centre.

Contact John at [email protected]


Issue 7

The italics and the words in parentheses appear in the agreement.

Both parties participated fully in the arbitration and following a hearing, the arbitrator,

the Honourable Robert Fisher QC, delivered a partial award on 9 May 2011 in which he

held, on the basis of a detailed factual analysis, that the solicitor acting for the

appellants had been negligent but that his negligence was not causative of the inability

of the appellants to settle by the due time and date.

In accordance with what they believed were their rights under the agreement, the

appellants then applied to the High Court for an order setting aside the award or, in the

alternative, for leave to appeal on the grounds of errors of fact and law by the

arbitrator.

The Arbitration Act does not provide for the right of appeal against an arbitral award on

questions of fact and parties cannot, by agreement, create a right of appeal to a court

where no statutory authorisation exists.

The issue then became whether the offending words “and fact” could be severed from

the arbitration agreement leaving the remainder as an enforceable obligation, or

whether the inclusion of an invalid right of appeal infected the agreement to arbitrate to

such an extent as to render it invalid as a whole and requiring the award to be set

aside.

High Court

In the High Court, Ellis J found that the words “and fact” could not be severed from the

arbitration agreement on the grounds that they formed a “fundamental part of the

exchange of promises between the parties” and there would not have been any

agreement to arbitrate had they not been included. In the result Elis J set aside the

award on the basis that the arbitration agreement was not valid under New Zealand

law.

Court of Appeal

The Court of Appeal overturned the High Court decision on the basis that:

The Arbitration Act

does not provide for

the right of appeal

against an arbitral

award on questions of

fact and parties

cannot, by agreement,

create a right of

appeal to a court

where no statutory

authorisation exists.


Issue 7

• the severance of the offending phrase “and fact” would not change the nature and

character of the arbitration agreement;

• the parties’ primary obligations, to which the factual right of appeal was only

subsidiary, would remain unchanged;

• the policy of the law was to give effect to a contractual relationship wherever

possible, despite the existence of a vitiating factor and even more so where parties

have substantially performed the agreement;

• the invalidity was by reason of a statutory prohibition; there was no reprehensible

element to taint the agreement as a whole; and

• if it were wrong on the severability issue, the statutory principles and philosophy

plainly rendered it inappropriate to exercise the discretion to set aside the award.

The Supreme Court

There were three issues for determination by the Supreme Court:

• what constitutes an “arbitration agreement” for the purposes of the Act;

• whether the ineffective words in the agreement could be severed leaving a valid

agreement; and,

• if not, whether the award should be set aside under art 34.

The Arbitration Agreement

The lawyers for GCA and the lawyers for the intervener, AMINZ, argued that an

“arbitration agreement” is merely an agreement to refer the dispute to arbitration and

any additional matters concerning procedure or outcome were collateral and separate.

The Court unanimously rejected this argument, finding at [46] that:

“The fact that different rules apply to the agreement to arbitrate and the procedure

governing the arbitration does not mean that they are separate agreements. In our

view, if parties’ contractual assent to arbitration is made conditional…upon certain

procedural matters or other terms, it must follow that those conditions are part of the

arbitration agreement”.

The lawyers for GCA

and the lawyers for

the intervener,

AMINZ, argued that

an “arbitration

agreement” is merely

an agreement to refer

the dispute to

arbitration and any

additional matters

concerning procedure

or outcome were

collateral and

separate.

The Court

unanimously rejected

this argument,...


Issue 7

The Court found that the context in which “arbitration agreement” is used in the

Arbitration Act indicates that it has a broad meaning going beyond the formal

submission of disputes to the arbitral tribunal that encompasses procedural matters on

which the parties agree.

Severability of invalid contractual provision

The Court took the view that severance is permissible in circumstances where the

invalid promise is subsidiary to the main purpose of the contract, but severance may not

be permitted where it would serve to destroy the main purpose and substance of what

has been agreed and alter the nature of a contract.

The question was therefore one of construction.

In their agreement, the parties had italicised the words “questions of law and fact” and

had further noted “(emphasis added)”. The Court found that this indicated the degree

of importance that the parties attributed to the scope of their ability to challenge an

award on appeal and made it objectively clear that the scope of the appeal right was

central to their agreement to submit their dispute to arbitration.

The Court found that this, along with the factual matrix at the time the parties entered

into the arbitration agreement, indicated that the full rights of appeal was a critical

feature of their agreement and the words at issue constituted a condition so important

and material to their agreement to arbitrate that they were not severable.

Exercise of article 34 discretion to set aside the award

The majority found that the absence of a valid arbitration agreement underpinning the

award was so fundamental a defect that the High Court was correct to exercise the

discretion in art 34(2)(a)(i) to set aside the award.

The Court observed that notwithstanding substantial performance of the arbitration

agreement on the basis of mutual mistaken assumption as to the right of appeal on

questions of fact, there were no circumstances in the case that would warrant the

extraordinary step of upholding an award after it was established that there was no

The Court took the

view that severance is

permissible in

circumstances where

the invalid promise is

subsidiary to the main

purpose of the

contract, but

severance may not be

permitted where it

would serve to

destroy the main

purpose and

substance of what has

been agreed and alter

the nature of a

contract.

The question was

therefore one of

construction.


Issue 7

contractual basis on which the award could have been made.

Justice Arnold dissented on this issue. He concluded that the ground for setting aside an

award under art 34(2)(a)(iv) is a relevant matter in considering the exercise of the

discretion to set aside under art 34(2)(a)(i) and would have refused to set aside the

award observing that the policy underlying the Act should be to refrain from exercising

the discretion to set aside an award where the only defect is that the award is the result

of an agreement as to arbitral procedure which is contrary to a non-derogable

provision.

Poor drafting not uncommon

The issue of poorly drafted arbitration agreements is not one unique to these fair shores

however. Recently the Ontario Superior Court of Justice dismissed a motion to stay an

action in favour of arbitration in 2156775 Ontario Inc v Just Energy 2014 ONSC 3276

finding that the dispute was not captured by the arbitration clause. In that case the

plaintiff sought a declaration that the contracts at issue were void, however the

arbitration agreement limited the scope of disputes subject to arbitration to those

“under [the] agreement”. The court reasoned that the arbitration clause in the

agreement applied only to disputes arising “under” the agreement (i.e. the discharge of

rights and obligations under the agreement) and not to a challenge to the existence of

the agreement itself. On its face the decision is a curious one however, when compared

to other authorities in Ontario which are consistent with English law e.g. Premiun Nafta

Products Ltd v Fili Shipping Company Ltd .

Also in the recent decision of the English High Court in Christian Kruppa v Alessandro

Bendetti & Anor [2014] EWHC 1887 (Comm), the Court held that a clause in a contract

requiring the parties to “endeavour to first resolve the matter through Swiss arbitration”

failing which “the Courts of England [would] have non-exclusive jurisdiction” was not a

binding arbitration agreement.

The lessons!

These cases provide a salutary lesson that care must be taken when drafting arbitration

agreements and that Courts will punish careless drafting by refusing applications to stay

These cases provide a

salutary lesson that

care must be taken

when drafting

arbitration

agreements and that

Courts will punish

careless drafting by

refusing applications

to stay proceedings

and ultimately, and

notwithstanding

substantial

performance by

parties in reliance on

an invalid arbitration

agreement, may set

any resulting award

aside.


Issue 7

proceedings and ultimately, and notwithstanding substantial performance by parties in

reliance on an invalid arbitration agreement, may set any resulting award aside.

While the Court observed in Carr v Gallaway that a contractual provision in an

arbitration agreement that purports to expand recourse to the courts from what the Act

permits may not always be so central to the agreement that severance is impermissible,

it will be a question of construction in any particular case, and inevitably each case will

depend on its own facts.

The short point is to get it right the first time. It’s really not that difficult and arguably a

drafting error such as occurred in this case is inexcusable and the result has been a

wasted arbitration and wasted time and cost for both parties. It will be interesting to

see whether the (likely not insignificant) wasted costs associated with the unenforceable

award become a further issue for these parties and those associated with the arbitration

to debate further.

The case also raises a further important issue and that is one of responsibility on the

part of appointing bodies and arbitrators to ensure there is a valid arbitration agreement

before making or accepting an appointment and embarking on a costly arbitration – but

that is a different story for another day!

The simple solution is of course to use the NZDRC and NZIAC model clauses and rules –

tried, true and unimpeachable – why would you bother to try and craft an ad hoc

agreement and ad hoc rules when failure can result in such a devastating and costly

outcome for the parties!!!

Note: The NZDRC model clauses are included on the following page in this edition of

ReSolution or see the NZDRC website for more details: www.nzdrc.co.nz


Issue 7

The following dispute resolution clauses are recommended for use by parties wishing to refer disputes to arbitration, mediation, expert determination or early neutral evaluation under NZDRC’s Rules. Please note that particular care should be taken when drafting contracts providing for multi-tiered dispute resolution processes. Generally, the intent of such provisions is to have a dispute move progressively from one dispute resolution process to another if resolution is not achieved (usually from least formal to most formal viz negotiation to arbitration), and participation in each process is to be a binding and enforceable condition precedent to moving onto the next step. A simple example set out below is where mediation is made a condition precedent to arbitration. Contracts that merely provide multiple options for various alternative dispute resolution processes are often problematic leaving parties uncertain as to their strict (and enforceable) rights and obligations (if any) imposed under the contract. NZDRC would be pleased to advise and assist you in the preparation of any dispute resolution provisions in commercial contracts.

MEDIATION

FUTURE DISPUTES

Mediation only In the event of any dispute or difference arising out of or in connection with this contract, or the subject matter of this contract, including any question about its existence, validity or termination, the parties shall refer such dispute to mediation by the New Zealand Dispute Resolution Centre (NZDRC) in accordance with NZDRC’s Agreement to Mediate and Standard Terms of Engagement which procedures and rules are deemed to be incorporated by reference into this clause. If the parties are unable to agree upon the identity of a mediator within five (5) working days from the date upon which notice of the dispute is given, the mediator shall be appointed by NZDRC upon the application of any party.

Mediation as a Condition Precedent to Arbitration In the event of any dispute or difference arising out of or in connection with this contract, or the subject matter of this contract, including any question about its existence, validity or termination, the parties shall first refer such dispute to mediation by the New Zealand Dispute Resolution Centre (NZDRC) in accordance with NZDRC’s Agreement to Mediate and Standard Terms of Engagement which procedures and rules are deemed to be incorporated by reference herein.

MODEL

CLAUSES


Issue 7

If the parties are unable to agree upon the identity of a mediator within five (5) working days from the date upon which notice of the dispute is given, the mediator shall be appointed by NZDRC upon the application of any party. If the dispute is not settled by mediation within [ x ] working days of service of notice of the dispute by any party, or such further period as the parties agree in writing, the dispute shall be referred to and finally resolved by arbitration under the NZDRC Arbitration Rules which Rules are deemed to be incorporated by reference into this clause.

EXISTING DISPUTES If a dispute has already arisen and there is no agreement between the parties to refer the dispute to mediation, the parties may enter into an agreement for that purpose and the following clauses are recommended. The words in square brackets should be completed as appropriate and the irrelevant section(s) deleted.

Mediation only [Name of first party] and [Name of second party and Ors] hereinafter referred to as the parties, are parties to [define legal relationship] entered into on or about [enter date]. (If Mediator agreed) The parties have agreed that all matters in dispute between them shall be referred to mediation by [Name of Mediator] of the New Zealand Dispute Resolution Centre (NZDRC) in accordance with NZDRC’s Agreement to Mediate and Standard Terms of Engagement which procedures and rules are deemed to be incorporated by reference herein. (If no Mediator agreed) The parties have agreed that all matters in dispute between them shall be referred to mediation by the New Zealand Dispute Resolution Centre (NZDRC) in accordance with NZDRC’s Agreement to Mediate and Standard Terms of Engagement which procedures and rules are deemed to be incorporated by reference herein. If the parties are unable to agree upon the identity of a mediator within five (5) working days from the date of this agreement, the mediator shall be appointed by NZDRC upon the application of any party.

Mediation as a Condition Precedent to Arbitration “[Name of first party] and [Name of second party and Ors] hereinafter referred to as the parties, are parties to [define legal relationship] entered into on or about [enter date]. If the parties are unable to agree upon the identity of a mediator within five (5) working days from the date of this agreement, the mediator shall be appointed by NZDRC upon the application of any party. If the dispute is not settled by mediation within [ x ] working days of the date of this agreement, or such further period as the parties agree in writing, the dispute shall be referred to and finally resolved by arbitration under the NZDRC Arbitration Rules which Rules are deemed to be incorporated by reference herein.

ARBITRATION

FUTURE DISPUTES Any dispute or difference arising out of or in connection with this contract, or the subject matter of this contract, including any question about its existence, validity or termination, shall be referred to and finally resolved by Arbitration in accordance with the Arbitration Rules of the New Zealand Dispute Resolution Centre (NZDRC) for the


Issue 7

time being in force, which Rules are deemed to be incorporated by reference herein.

EXISTING DISPUTES If a dispute has already arisen and there is no extant binding arbitration agreement between the parties, or the parties wish to vary any such agreement, the parties may enter into an agreement for that purpose and either of the following forms of agreement are recommended depending on the arbitration process required. The words in square brackets should be completed and/or the irrelevant text deleted as appropriate.

1. Expedited Commercial Arbitration The Claimant and the Respondent[s] are parties to [define legal relationship] entered into on or about [enter date]. The Claimant and the Respondent[s] have agreed that [all matters in dispute between them/the matters in dispute between them set out in the Schedule attached hereto] shall be referred to Arbitration for final determination in accordance with the New Zealand Dispute Resolution Centre (NZDRC) Rules for Expedited Commercial Arbitration [ECA45/ECA60/ECA90] and that the parties will be bound by the findings of the said Arbitration subject only to such rights as the parties may have under Articles 33 & 34 of the First Schedule to the Arbitration Act 1996 (the Act) and clauses 5(1)(b) & (c) of the Second Schedule to the Act. The Arbitration shall be by a sole arbitrator to be agreed upon by the parties. If the parties are unable to agree upon the identity of an arbitrator within five (5) working days from the date of this agreement, the arbitrator shall be appointed by NZDRC upon the application of any party.

2. Domestic Commercial Arbitration Note: This agreement may be found at Appendix 4 to the Domestic Commercial Arbitration Rules of the New Zealand Dispute Resolution Centre (NZDRC). The Supplementary Agreement to use the AMINZ Arbitration Appeal Tribunal may be found at Appendix 5 to the Rules.

ARBITRATION AGREEMENT

BY AN AGREEMENT made the (day) (month) (year)

BETWEEN (Name of Claimant)

AND (Name of Respondent)

The Claimant and the Respondent are parties to (define legal relationship):

Entered into on or about (enter date):

For, or in relation to (enter detail):

The Claimant and the Respondent have agreed that [all disagreements and matters in dispute between them/the matters in dispute between them set out in the Schedule attached hereto (delete one)] shall be referred to Arbitration before a sole arbitrator for final determination in accordance with the Rules of Arbitration (the Rules) of the New Zealand Dispute Resolution Centre (NZDRC) and that the parties will be bound by the findings of the said Arbitration subject only to such rights as the parties may have under Articles 33 & 34 of the First Schedule to


Issue 7

the Arbitration Act 1996 (the Act) [and Clause 5 of the Second Schedule to the Act (delete if parties wish to invoke AMINZ Arbitration Appeals Rules)]. The Claimant and the Respondent agree to use their best endeavours to agree an arbitrator within five (5) working days of the date of issue of a Notice of Arbitration in terms of the Rules. The parties agree to the use of email for the service of all notices and for all legal requirements in connection with an Arbitration pursuant to this agreement.

Notice to the Claimant: Notices to the Claimant shall be given to an address for service which is: Phone: + 64 Fax: + 64 Mobile: + 64 E-mail: Notice to the Respondent: Notices to the Respondent shall be given to an address for service which is: Phone: + 64 Fax: + 64 Mobile: + 64 E-mail:

I certify: THAT I have read and understood this Arbitration Agreement and the NZDRC Arbitration Rules.

THAT the optional provisions of the Second Schedule to the Arbitration Act 1996 do apply to this Arbitration Agreement [save for the parties expressly agree to exclude all rights under Clause 5 of the Second Schedule to the Arbitration Act 1996 to appeal to the High Court on any question of law arising out of any award made under these Rules and to refer any such appeal to the Arbitrators’ and Mediators’ Institute of New Zealand Inc. Arbitration Appeals Tribunal (delete

this text if parties do not wish to invoke AMINZ Arbitration Appeals Rules) ].

THAT I agree to be bound by the terms of this Arbitration Agreement and the NZDRC Rules of

Arbitration.


Issue 7

DATED this (day) (month) (year)

______________________________

SIGNED by, for, or on behalf of the Claimant

Name and position of signatory

In the presence of:

Name

Address

Occupation

______________________________

SIGNED by, for, or on behalf of the Respondent

Name and position of signatory

In the presence of:

Name

Address

Occupation


Issue 7

SUPPLEMENTAL AGREEMENT TO APPEAL TO AMINZ ARBITRATION APPEAL TRIBUNAL FROM AWARD MADE UNDER NZDRC ARBITRATION RULES

1.0 The parties hereby exclude all rights under Clause 5 of the Second Schedule to the Arbitration Act 1996

(the Act) to appeal to the High Court from any Award made under the NZDRC Arbitration Rules, including any Award or ruling of the Arbitration Appeal Tribunal (AAT).

2.0 The parties further agree that an appeal may be taken by any of them under the Arbitrators’ and

Mediators’ Institute of New Zealand Inc. (AMINZ) Arbitration Appeal Rules as applicable at the time of appeal (AAA Rules) from any arbitral Award made under these Rules. Any appeal shall be conducted in accordance with the requirements of the AAA Rules.

3.0 The parties further agree not to seek to enforce in New Zealand or in any other jurisdiction in terms of

Article 35 of the First Schedule to the Act, any Award that may be subject to an appeal to an AAT unless or until the time for filing an appeal under the AAA Rules has expired and, if an appeal is filed, there has been a Final Award by an AAT under the AAA Rules or the appeal has been withdrawn, abandoned, or dismissed.

4.0 The parties agree that any AAT appointed as a result of any appeal under the AAA Rules, shall, subject to

any limitations expressed in the AAA Rules, have all the powers exercisable by the High Court on an appeal to that Court under Clause 5 of the Second Schedule to the Act save that the AAT shall not have the power to remit the Award back to the original Arbitral Tribunal where that Arbitral Tribunal is unwilling or unable to accept the remission. In the latter case, the AAT itself in its discretion may decide the issues(s) which would otherwise have been remitted.

DATED this (day) (month) (year)

______________________________

SIGNED by, for, or on behalf of the Claimant

Name and position of signatory for Claimant:

In the presence of:

Name

Address

Occupation


Issue 7

____________________________________

SIGNED by, for, or on behalf of the Respondent

Name and position of signatory for Respondent:

In the presence of:

Name

Address

Occupation

EARLY NEUTRAL EVALUATION [Name of first party] and [Name of second party and Ors] hereinafter referred to as the parties, are parties to [[define legal relationship] or [proceedings in the [ ] Court referred to as CIV- ]]. (If Early Neutral Evaluator agreed) The parties have agreed that all matters in dispute between them shall be referred to Early Neutral Evaluation by [Name of Evaluator] in accordance with the Agreement for Early Neutral Evaluation and Rules for Early Neutral Evaluation of the New Zealand Dispute Resolution Centre (NZDRC) which procedures and rules are deemed to be incorporated by reference herein. (If no Early Neutral Evaluator agreed) The parties have agreed that all matters in dispute between them shall be referred to Early Neutral Evaluation by the New Zealand Dispute Resolution Centre (NZDRC) in accordance with NZDRC’s Agreement for Early Neutral Evaluation and Rules for Early Neutral Evaluation which procedures and rules are deemed to be incorporated by reference herein. If the parties are unable to agree upon the identity of an Evaluator within five (5) working days from the date of this agreement, then the Evaluator shall be appointed by NZDRC upon the application of any party.


Issue 7

EXPERT DETERMINATION FUTURE DISPUTES Any dispute arising between the parties shall be referred to Expert Determination by the New Zealand Dispute Resolution Centre (NZDRC) in accordance with the NZDRC Agreement for Expert Determination and Rules for Determination of Disputed Matters by Expert which procedures and rules are deemed to be incorporated by reference herein. If the parties are unable to agree upon the identity of an Expert within five (5) working days from the date upon which notice of the dispute is given, the Expert shall be appointed by NZDRC upon the application of any party. The parties agree that the Expert Determination made by the Expert shall be (delete one) [final and binding upon them in all respects and there shall be no rights of appeal or review] [non-binding and the parties expressly reserve their rights to reject the Determination of the Expert and to instead apply to have the dispute determined by [court proceedings/arbitration (delete one)]].

EXISTING DISPUTES If a dispute has already arisen and there is no agreement between the parties to refer the dispute to expert determination, the parties may enter into an agreement for that purpose and the following clause is recommended. The words in square brackets should be completed as appropriate and the irrelevant section(s) deleted. [Name of first party] and [Name of second party and Ors] hereinafter referred to as the parties, are parties to [define legal relationship] entered into on or about [enter date]. (If Expert agreed) The parties have agreed that [all disagreements and matters in dispute between them/the matters in dispute between them set out in the Schedule attached hereto (delete one)] shall be referred to Expert Determination by [Name of Expert] in accordance with the New Zealand Dispute Resolution Centre (NZDRC) Agreement for Expert Determination and Rules for Determination of Disputed Matters by Expert which procedures and rules are deemed to be incorporated by reference herein. If the parties are unable to agree upon the identity of an Expert within five (5) working days from the date of this agreement, the Expert shall be appointed by NZDRC upon the application of any party. The parties agree that the Expert Determination made by the Expert shall be (delete one) [final and binding upon them in all respects and there shall be no rights of appeal or review] [non-binding and the parties expressly reserve their rights to reject the Determination of the Expert and to instead apply to have the dispute determined by [court proceedings/arbitration (delete one)]]. (If no Expert agreed) The parties have agreed that [all disagreements and matters in dispute between them/the matters in dispute between them set out in the Schedule attached hereto (delete one)] shall be referred to Expert Determination by the New Zealand Dispute Resolution Centre (NZDRC) in accordance with the NZDRC Agreement for Expert Determination and Rules for Determination of Disputed Matters by Expert which procedures and rules are deemed to be incorporated by reference herein. If the parties are unable to agree upon the identity of an Expert within five (5) working days from the date of this agreement, the Expert shall be appointed by NZDRC upon the application of any party.


Issue 7

The parties agree that the Expert Determination made by the Expert shall be (delete one) [final and binding upon them in all respects and there shall be no rights of appeal or review] [non-binding and the parties expressly reserve their rights to reject the Determination of the Expert and to instead apply to have the dispute determined by

[court proceedings/arbitration (delete one)]].


Issue 7

AAA Design & Consultancy Limited (Erne Joyce)

Affiliations: M Soc Constr Law, MNZIBS, LifeMBOINZ

Occupation: Building Consultant

Arcadia Holdings Ltd. (John-Paul Biggelaar)

Affiliations: New Zealand Institute of Building Surveyors

Occupation: Registered Building Surveyor

Building Disputes Tribunal NZ Ltd (BDT)

Affiliations: NZ Society of Construction Law

Occupation: Dispute Resolution - Construction Industry

Construction Cost Management Ltd (George Whitby)

Affiliations: New Zealand Institute of Quantity Surveyors

Occupation: Reg. Quantity Surveyor / Dispute Consultant

FC International Ltd (Fouad El Chikhani)


Patterson Associates Ltd (Andrew James Campbell

Patterson)

Affiliations: NZIA, NZRAB

Occupation: Architect

Quantum® Ltd. (Daniel Johnson)

Affiliations: SCL; DB&H panel of experts, NBNZ & ANZ

panel

Occupation: Quantity Surveyor

Da Vinci Transport Planning Ltd. (Urie Bezuidenhout)

Affiliations: IPENZ Transportation Group

Occupation: Transport planner and traffic engineer

Building Disputes Tribunal NZ Ltd (BDT)


Occupation: Dispute Resolution - Construction Industry

Arcadia Holdings Ltd. (John-Paul Biggelaar)

Affiliations: New Zealand Institute of Building Surveyors

Occupation: Registered Building Surveyor

Construction Cost Management Ltd (George Whitby)

Affiliations: New Zealand Institute of Quantity Surveyors

Occupation: Reg. Quantity Surveyor / Dispute Consultant

Quantum® Ltd. (Daniel Johnson)

Affiliations: SCL; DB&H panel of experts, NBNZ & ANZ

panel

Occupation: Quantity Surveyor

Da Vinci Transport Planning Ltd. (Urie Bezuidenhout)

Affiliations: IPENZ Transportation Group

Occupation: Transport planner and traffic engineer

FOR MORE INFORMATION ON ANY OF THE ABOVE EXPERTS PLEASE VISIT THE DIRECTORY OF EXPERTS ON THE NZDRC WEBSITE

www.nzdrc.co.nz

CONSTRUCTION ENGINEERING

LEGAL

PROPERTY

TRANSPORTATION

NZDRC DIRECTORY OF EXPERTS

AND SUPPORT SERVICES


DISCLAIMER:

ReSolution® is published by NZDRC and NZIAC. ReSolution® is a newsletter and does not purport to provide a comprehensive analysis of the subjects covered or to constitute legal advice. ReSolution® is intended to promote and engender discussion, debate, and consideration of all matters in relation to the development and application of the law, the resolution of disputes, and the processes that are used for the resolution of those disputes. Articles, commentaries and opinions are intended to raise questions rather than to be emphatic statements on the subjects covered and the views expressed are the views of the author and are not necessarily those of the

directors, servants and agents of NZDRC or NZIAC.

Information published is not guaranteed to be correct, current or comprehensive and NZDRC and NZIAC accept no responsibility for the accuracy of any information published in ReSolution® and no person should act in reliance on any statement or information contained in ReSolution®. Readers are specifically advised that specialist legal advice should be sought in relation to all matters in relation to, or in connection

with, the subjects covered and articles published in ReSolution®.

CONTRIBUTIONS

Contributions to ReSolution® are welcome. ReSolution® is published four times a year in March, June, September and December. Readers are invited to submit material to be considered for publication by

email to the editor at [email protected] . Contributions may consist of articles, case notes, book reviews, news of forthcoming events and other matters of interest to readers. Contributors are entirely responsible for the accuracy of case names and citations, quotations and other references, spelling etc. All contributions should

be in final form and in word format.

COPYRIGHT

This issue of ReSolution® and all material and information contained herein are subject to the full protection given by the Copyright Act 1994. In many cases the copyright of individual articles remains the property of the author and articles and commentaries should not be reproduced without first obtaining the express authorisation of the relevant third party copyright owner concerned. If you are in any doubt as to whether a proposed use is covered by this licence please

consult the Editor.

PO BOX 911350 VICTORIA STREET WEST

AUCKLAND 1142 NEW ZEALAND

Phone: (09) 486 7153 Fax: (09) 486 7144

E-mail: [email protected]

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CONTACT DETAILS

ReSolution Issue 7 : Quarterly Newsletter of NZDRC & NZIAC

Documents

Transcript of ReSolution Issue 7 : Quarterly Newsletter of NZDRC & NZIAC