Brief overview of arbitration in 2018: Achmea, Brexit and Prague Rules, among other hot topics
2018 has been another significant year for international arbitration, with certain topics being repeatedly mentioned and discussed in different fora worldwide. As the new year starts, Garrigues’ International Arbitration Group makes a brief overview of the most outstanding developments in international arbitration in 2018, including the impact of the Achmea case, Brexit, the Prague Rules and much more.
For instance, in the Investment Treaty arbitration sub-sector, November 2018 saw the signing of the new renegotiated United States-Mexico-Canada Agreement (USMCA), which updates and amends the former NAFTA agreement. The USMCA will come into effect following the completion of TPA procedures, including a Congressional vote on an implementing bill in the USA. The agreement adds a 16-year “sunset” clause and a review-clause every six years, at which point the US, Mexico, and Canada can decide to extend the USMCA.
In Europe much debate has followed the landmark ruling Achmea, in which the European Court of Justice (ECJ) found an arbitration clause in an international investment agreement (IIA) between two European Union (EU) member states incompatible with EU law. Intra-EU Bilateral Investment Treaties (BITs) with arbitration clauses are affected, meaning that enforcement of awards stemming from such tribunals within EU will become increasingly difficult, while outside the EU it might remain possible. But also more complex questions as to the future of extra-EU BITs may be affected. This ruling is likely to have significant consequences and fuel the ongoing debate about intra-EU investment protection and the future of an investor-state dispute settlement mechanism (ISDS) in 2019.
On a darker page of arbitration, the international community has been shocked by the Doha´s Lower Criminal Court decision to uphold charges against well-known arbitrators Sami Houerbi and Samir El Annabi of Tunisia and Nathalie Najjar of Lebanon and to sentence them in their absence to three years’ imprisonment. The convictions relate to the arbitrators’ decision to transfer a dispute they were hearing away from the jurisdiction of the Qatar International Centre for Conciliation and Arbitration (QICCA) and have been condemned by the international arbitration community, practitioners noting the harm done to Qatar’s reputation as an arbitral venue.
As regards commercial arbitration, a number of arbitral institutions have amended their rules in an effort to further promote efficiency, cost savings, transparencyand diversity in international arbitration. These include the Hong Kong International Arbitration Centre (HKIAC), the German Institution of Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit or DIS), the Vienna International Arbitration Centre (VIAC) and the Japan Commercial Arbitration Association (JCAA).
The International Centre for Settlement of Investment Disputes (ICSID) has invited comments on rules amendment proposals published in August and a vote from ICSID Convention Contracting States is expected either in 2019 or 2020.
The end of 2018 also saw the ICC issue an updated guidance on the conduct of arbitration under its rules.
The launch of the new so-called “Prague Rules” on the Taking of Evidence in International Arbitration took place on 14 December 2018. The Prague Rules promote a “civil law” approach within the conduct of arbitral proceedings, including more pro-active and inquisitorial powers to arbitral tribunals, with the ultimate aim to increase efficiency in international arbitration and to reduce costs. Overall, the Prague Rules aim to complement the IBA Rules -which, in the opinion of some practitioners, reflect a more “common law” and adversarial approach to managing arbitration- and increase the arbitral tribunal’s power in the conduct of the arbitration proceedings. Specifically, several provisions of the Prague Rules have sparked debate amongst practitioners, which shall continue in the upcoming year. These include Article 1.1 ( possibility that the Prague Rules are applied at the arbitral tribunal’s own initiative, after hearing the parties) Article 2.4.e (possibility that the arbitral tribunal expresses its preliminary views at the case management conference) and Article 9.2 (possibility that an arbitrator acts as a mediator to assist in facilitating the amicable settlement of the case).
A related aim of diversity is shared by a number of institutions, with the ICC first revealing in June 2018 the nomination of a Court with full gender parity and unprecedented diversity, the new composition of the Bureau of the Court comprising 17 Vice-Presidents, including nine women.
The commercial arbitration community has been discussing in length the impact of Brexit, particularly as regards London’s future position as a global international arbitral seat. Based on current studies carried out by Queen Mary/White & Case International Arbitration Survey launched on 9 May 2018, the prognosis for London at present would appear as stable, but only time will tell to what extent this may have to be revised depending on the eventual outcome of Brexit in 2019 and onwards.
Other hot topics of 2018 include the impact of EU´s Global Data Protection Regulation (GDPR) in international arbitration, the wider use of Third Party Funding according to 2018´s study carried out by Queen Mary/ICCA, cyber-risks and security and its impact on international arbitration, and how China´s Belt and Road initiative may change arbitration worldwide.
2019 shall surely see these topics being developed further. Revisions to arbitration rules are anticipated in 2019 at the Dubai International Arbitration Centre (DIAC), the London Court of International Arbitration (LCIA), the International Centre for Dispute Resolution (ICDR) and the China International Economic Trade Arbitration Commission (CIETAC).
Also revised arbitration legislation is expected to enter into force of in, for example, Sweden, Switzerland and India.