Cambridge University Press
9781107008786 - The Principles and Practice of International Commercial Arbitration - By Margaret L. Moses
Frontmatter/Prelims

The Principles and Practice of International Commercial Arbitration

Second Edition

The Principles and Practice of International Commercial Arbitration provides the reader with immediate access to understanding the world of international arbitration. Arbitration has become the dispute resolution method of choice in international transactions. This book explains how and why arbitration works. It provides the legal and regulatory framework for international arbitration, as well as practical strategies to follow and pitfalls to avoid. It is short and readable, but comprehensive in its coverage of the basic requirements, including the most recent changes in arbitration laws, rules, and guidelines. The second edition includes updates on rules and guidelines, such as the arbitration rules of the ICC, the SCC, the ACICA, and UNCITRAL, as well as the 2010 IBA Rules on the Taking of Evidence in International Arbitration. In this book, the author includes insights from numerous international arbitrators and counsel, who tell firsthand about their own experiences with arbitration and their views of the best arbitration practices. Throughout the book, the principles of arbitration are supported and explained by the practice, providing a concrete approach to an important means of resolving disputes.

Margaret L. Moses is Professor of Law at Loyola University Chicago School of Law. She teaches international commercial arbitration, international business transactions, European community law, international trade finance, and contracts. Professor Moses is also the Director of the International Program at Loyola and coaches the Vis Moot International Arbitration teams, which compete in Vienna and Hong Kong.


The Principles and Practice of International Commercial Arbitration

Second Edition

Margaret L. Moses

Loyola University Chicago School of Law


Cambridge University Press
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Cambridge University Press
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Information on this title: www.cambridge.org/9781107401334
© Margaret L. Moses 2008, 2012

This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press.

First edition published 2008
Second edition published 2012

Printed in the United States of America

A catalog record for this publication is available from the British Library.

Library of Congress Cataloging in Publication data

Moses, Margaret L.
The principles and practice of international commercial arbitration / Margaret L. Moses. – 2nd ed.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-107-00878-6 (hardback) – ISBN 978-1-107-40133-4 (pbk.)
1. Arbitration and award, International. I. Title.
K2400.M65 2012
341.5ʹ22–dc23 2011044158
ISBN 978-1-107-00878-6 Hardback
ISBN 978-1-107-40133-4 Paperback

Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party Internet websites referred to in this publication and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.


Contents

Preface to the Second Edition
xv
Foreword to the First Edition by Eric E. Bergsten
xvii
1             Introduction to International Commercial Arbitration
1
A.            Purpose
1
B.            Defining Characteristics
2
1.            Consent
2
2.            Nongovernmental Decision Makers
2
3.            A Final and Binding Award
2
C.            Advantages of Arbitration
3
D.            Disadvantages of Arbitration
4
E.            The Regulatory Framework
5
F.            Institutional Arbitration v. Ad Hoc Arbitration
9
G.            Arbitral Institutions
10
1.            The International Chamber of Commerce (ICC) International Court of Arbitration
11
2.            The American Arbitration Association's (AAA) International Center for Dispute Resolution (ICDR)
11
3.            The London Court of International Arbitration (LCIA)
12
4.            Other Arbitral Institutions
12
H.            Arbitrations Involving States
13
1.            ICSID Arbitrations
13
2.            The Permanent Court of Arbitration
13
I.            Other Dispute Resolution Methods
14
1.            Mediation
14
2.            Conciliation
15
3.            Neutral Evaluation
15
4.            Expert Determination
15
5.            Mini-Trials
16
6.            Last-Offer Arbitration (Baseball Arbitration)
16
J.            Conclusion
16
2             The Arbitration Agreement
18
A.            Function and Purpose
18
1.            Arbitration Clauses and Submission Agreements
18
2.            Separability
19
B.            Validity
19
1.            The Writing Requirement
21
a.            Recommended Interpretation of Articles II and VII
24
b.            Amendment to Article 7 of UNCITRAL Model Law
25
c.            U.N. Convention on Use of Electronic Communications
28
d.            Other Article 7 Issues
29
e.            Effect of the More Favorable Right Provision
29
2.            A Defined Legal Relationship
31
3.            Capable of Being Settled by Arbitration
32
4.            Null and Void, Inoperable, or Incapable of Being Performed
33
a.            Null and Void
33
b.            Inoperable
34
c.            Incapable of Being Performed
34
C.            Binding Nonsignatories
34
1.            Agency
36
2.            Equitable Estoppel
36
3.            Implied Consent
37
4.            Group of Companies
38
5.            Veil Piercing/Alter Ego
39
6.            Timing of Objections
42
3             Drafting the Arbitration Agreement
43
A.            Essential Requirements
45
1.            Choice of Arbitrators
46
2.            Seat of the Arbitration
47
3.            Language of the Arbitration
48
4.            Substantive Law
48
B.            Additional Provisions
49
1.            International Bar Association Rules on Taking Evidence
49
2.            Preliminary Relief
50
3.            Technical Expertise
51
4.            Multistep Dispute Resolution Clauses
51
5.            Dispositive Motions
52
6.            Legal Fees and Costs
53
7.            Confidentiality
54
8.            Expanded Judicial Review
55
9.            Waiver of State Immunity
56
10.           Multiparty Agreements
57
C.            Conclusion
58
4             Applicable Laws and Rules
59
A.            Importance of the Law
59
B.            Delocalization v. Territoriality
60
1.            Arguments Favoring Delocalization
60
2.            Arguments Opposing Delocalization
61
3.            Some Modern Approaches to Delocalization
61
a.            Sports Arbitrations
62
b.            Online Arbitrations
62
C.            The Lex Mercatoria
64
1.            Definition of the Lex Mercatoria
64
2.            Application of the Lex Mercatoria
66
a.            Contracts between States
66
b.            Contracts between a State and a Private Company
67
D.            The Parties’ Choice of Law
67
1.            The Law Governing the Arbitral Proceedings
68
2.            The Rules Governing the Arbitral Proceedings
69
3.            The Law Governing the Arbitration Agreement
69
4.            The Law Governing Arbitrability
72
5.            The Law Governing the Contract
73
a.            National or International Law
73
b.            Lex Mercatoria
74
c.            Unrelated National Law
74
d.            Dépeçage
76
e.            Renvoi
76
f.            Ex Aequo et Bono and Amiable Compositeur
77
E.            When Parties Fail to Choose the Seat or the Governing Law
78
1.            Failure to Choose a Seat
79
2.            Failure to Choose a Governing Law
79
3.            Conflicts of Laws
80
4.            Voie Indirecte
81
5.            Voie Directe
81
F.            An Arbitrator's Duty to Apply the Law
82
1.            Law or Equity
82
2.            Duty to Render an Enforceable Award
83
3.            Applying the Law
83
a.            The Lex Arbitri
83
b.            Mandatory Law
84
c.            Mandatory Law and Public Policy
84
5             Judicial Assistance for Arbitration
87
A.            Enforcement of Arbitration Agreements
88
1.            Extent of Judicial Review
88
2.            Competence-Competence
91
B.            Anti-Suit Injunctions
95
1.            Anti-Suit Injunctions in the United States
96
2.            Anti-Suit Injunctions in Europe
101
C.            Interim Measures
105
1.            Kinds of Interim Measures
105
2.            Tribunal or Court – Where to Go for Interim Relief?
107
3.            Basis for Interim Measures
110
4.            Enforcement of Interim Measures
111
D.            Court Assistance in Obtaining Evidence
112
1.            Procedural Orders
112
2.            National Laws Concerning Court Assistance
113
3.            Summons Issued by U.S. Arbitrators
114
4.            Tribunal in the United States Seeking Evidence Outside the United States
118
5.            Court Assistance in the United States to Foreign Tribunals
119
6.            Conclusion
120
6             The Tribunal
122
A.            Appointment of Arbitrators
122
1.            How Many Arbitrators?
122
2.            Qualifications
123
a.            Knowledge and Experience
123
b.            Lawyers or Nonlawyers
123
c.            Professors as Arbitrators
124
d.            Language Fluency
125
e.            Availability
125
f.            Reputation
125
g.            Specifications and Requirements
126
3.            Method of Selection
126
a.            Three Arbitrators
126
i.            The Rules
126
ii.           The Practice
127
(1)           Choosing the Party-Appointed Arbitrators (Coarbitrators)
128
(2)           Choosing the Presiding Arbitrator (Chair of the Tribunal)
130
b.            A Sole Arbitrator
132
c.            Ad Hoc Arbitration
133
4.            Interviewing Prospective Arbitrators
134
B.            Obligations of Arbitrators
135
1.            Independence and Impartiality
135
a.            The IBA Guidelines on Conflicts of Interest
136
i.            Part I: The General Standards
137
ii.           Part II: Practical Application of the General Standards
138
b.            The 1987 IBA Rules of Ethics for Arbitrators
141
c.            American Arbitration Association–American Bar Association Code of Ethics for Arbitrators in Commercial Disputes
142
d.            Duty to Investigate
144
2.            Other Obligations
145
C.            Challenges to the Arbitrator
147
D.            Flawed Conduct of Arbitrators
151
E.            Replacement of Arbitrators
153
F.            Arbitrator Immunity
153
G.            Costs and Fees
156
7             The Arbitral Proceedings
157
A.            Beginning the Arbitration
158
B.            Preliminary Matters
160
C.            Written Submissions
166
D.            The Hearing
167
1.            Chair Can Decide Procedural Issues
167
2.            Scheduling the Hearings
168
3.            Seat of the Arbitration
168
4.            Language of the Arbitration
169
5.            Local Bar Requirements
169
6.            Closed Hearings
169
7.            Record of Proceedings
170
8.            Technology
170
9.            Time Limits per Side
170
10.           Default of Appearance
171
11.           Expedited Proceedings
172
E.            Presenting Evidence
172
1.            IBA Rules of Evidence
173
2.            Burden of Proof
174
3.            Documentary Evidence
175
a.            Hearsay Evidence
176
b.            Authentication
176
c.            Document Requests
176
d.            Arbitrator Discretion
179
4.            Fact Witnesses
179
a.            Testimony Prior to the Hearing
179
b.            Witness Statements
180
c.            Who Can Testify
180
d.            Meeting with Witnesses
181
e.            Examining Witnesses
181
f.            Arbitrator Intervention
184
g.            Availability of Witnesses
185
h.            Compelling Witness Testimony
185
5.            Expert Witnesses
185
F.            Closing the Hearing
188
G.            Post-Hearing Proceedings
188
8             The Award
189
A.            Difference between “Orders” and “Awards”
189
B.            Types of Awards
190
1.            Final Award
190
2.            Partial and Interim Awards
191
3.            Consent Award
192
4.            Default Award
193
C.            Validity of the Award
194
1.            Formalities
194
2.            Communication
194
3.            Time Limits
195
4.            Concurring and Dissenting Views
195
5.            Scrutiny of the Draft Award
195
6.            Finality, Clarity, and Scope
196
D.            Remedies and Costs
196
1.            Monetary Damages
196
2.            Interest
196
3.            Other Remedies
197
4.            Costs
197
E.            Res Judicata Effect of the Award
198
F.            Confidentiality of the Award
199
G.            Post-Award Proceedings
201
9             Attempts to Set Aside an Award
203
A.            Methods of Challenge
203
B.            Grounds of Challenge
205
1.            Jurisdictional Challenges
205
2.            Procedural Challenges
206
3.            Challenges Based on the Merits
207
C.            Time Limitations
209
D.            Effects of a Successful Challenge
209
10            Enforcement of the Award
211
A.            Application of International Conventions
211
B.            Principles Governing Recognition and Enforcement
212
C.            Requirements for Enforcement
213
1.            Scope
213
2.            Jurisdiction and Forum Non Conveniens
214
3.            Procedures for Enforcement
216
D.            Grounds for Nonenforcement under the Convention
217
1.            Incapacity and Invalidity
217
2.            Lack of Notice or Fairness
220
3.            Arbitrator Acting in Excess of Authority
220
4.            The Tribunal or the Procedure Is Not in Accord with the Parties’ Agreement
222
5.            The Award Is Not Yet Binding, or Has Been Set Aside
222
a.            A Binding Award
222
b.            Effect of a Vacated Award
222
c.            The Article V(1)(e) Loophole
223
d.            The Court's Discretion to Ignore the Article V(1)(e) Loophole
224
e.            Deference to Local Law under Article VII
224
f.            Enforcement of Vacated Awards
224
6.            The Last Two Defenses under Article V
226
a.            Subject Matter Not Arbitrable
226
b.            Public Policy
228
E.            Conclusion
229
11            Investment Arbitration
230
A.            Growth of Foreign Investment and Investment Arbitration
230
B.            Investor Protection
231
1.            The Washington (ICSID) Convention
231
a.            Background
231
b.            ICSID Jurisdictional Requirements
232
i.            Consent
232
ii.           Contracting State or National of Another Contracting State
233
iii.          Legal Disputes and Investments
235
c.            Special Features of ICSID Arbitrations
236
i.            Delocalization
236
ii.           Recognition, Enforcement, and Execution
236
iii.          Publication of Awards
238
d.            Additional Facility Rules
238
2.            Bilateral Investment Treaties
239
a.            Background
239
b.            Substantive Rights
240
c.            Enforcing Rights under a BIT
241
3.            Multilateral Investment Treaties
242
4.            Investor Protection Legislation
243
C.            Overlap of Treaty-Based Rights and Contract-Based Rights
243
1.            The Source of the Right
243
2.            Umbrella Clauses
245
3.            Distinguishing Contract and Treaty Claims
247
4.            Coordinating Contracts with Treaties
250
Appendices    
A.            The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (The New York Convention) (1958)
253
B.            UNCITRAL Model Law on International Commercial Arbitration (original 1985 version)
259
C.            Revised Articles of the UNCITRAL Model Law on International Commercial Arbitration (2006)
273
D.            UNCITRAL Recommendation Regarding the Interpretation of Article II, Paragraph 2, and Article VII, Paragraph 1, of the New York Convention
279
E.            IBA Rules on the Taking of Evidence in International Arbitration
282
F.            IBA Rules of Ethics for International Arbitrators 1987
309
G.            IBA Guidelines on Conflicts of Interest in International Arbitration
314
H.            The AAA–ABA Code of Ethics for Arbitrators in Commercial Disputes
332
I.            Model Clauses
346
J.            Useful Arbitration Websites
349
Index
357



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