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DIAC consults on revised arbitration rules

34880560 - dubai downtown night scene, uae, beautiful modern buildings, bright glowing lights, luxurious travel and tourism

The Dubai International Arbitration Centre (DIAC) has issued a draft of its DIAC Arbitration and Conciliation Rules 2016 (DIAC Rules 2016) for comments. The institution becomes the latest in a long line from around the world seeking to bring its administered arbitration rules into step with modern arbitration practice and user expectations.

Earlier this month, the Arbitration Rules of the Singapore International Arbitration Centre (SIAC) entered into force to much acclaim, including for the first time an early dismissal procedure, and the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) is consulting on its revised rules due to launch on 1 January 2017.

What are the proposed changes?

The current version of the DIAC Arbitration Rules came into effect in May 2007 and the arbitral institution is one of the most prominent in the Middle East.

Although the DIAC Rules 2016 do not represent a complete re-write, as was the case, for example, with the London Court of International Arbitration (LCIA)’s 2014 Arbitration Rules, there are a number of proposed amendments and new articles.

Overall, the DIAC Rules 2016 will align the institution more closely with its counterparts in Europe, Asia and the United States.

Some of the proposed changes include:

  • removal of the express ‘in writing’ requirement for agreements to submit to DIAC arbitration (art 2.1), which is in line with the approach taken by, for example, SIAC
  • improved clarity on tribunal jurisdiction. For example, in the proposed new art 6.1, the tribunal’s jurisdiction is unaffected by any allegation that the contract which contains the arbitration agreement is non-existent or null and void, provided the tribunal upholds the validity of the arbitration agreement, which is akin to art 6.9 of the Arbitration Rules of the Court of Arbitration of the International Chamber of Commerce (ICC)
  • more detailed guidance on the tribunal appointment process (arts 8.3 and 8.4) •
  • a change to the permissibility of the sole arbitrator or chairman being of the same nationality as one of the parties (art 10.1)
  • under the DIAC Rules 2016, the tribunal shall notify the parties of the date of the preliminary meeting within 10 rather than 30 days (art 23)
  • a new provision pursuant to which, prior to signing any award, the tribunal shall submit the final draft of the award to the Secretariat, who many provide comments if deemed appropriate (art 38.8), which is akin to, for example, the ICC’s art 33 award scrutiny process
  • additional articles for proposed insertion into the DIAC Rules 2016 after consultation include:
    • a detailed expedited procedure
    • an alternative tribunal appointment process
    • the availability of conciliation proceedings
    • emergency arbitration proceeding

An unofficial comparison document showing the changes between the DIAC Rules 2007 and the DIAC Rules 2016 can be accessed here.


Stalemate—jurisdiction and the primacy of arbitration agreements

35065920 - chess figures on the brown wooden table backgroundThe intervention of the Delhi High Court in the cases of Videocon Industries v Union of India and Cairn India limited v Union of India illustrate that courts in India are now, more than ever, taking positive steps to give primacy to an arbitration agreement. Nakul Dewan, independent advocate and arbitrator practicing out of Singapore, Delhi and London, analyses the details.

What was the background to this pair of cases?

The parties entered into a contract, through a consortium, with the Union of India for the exploration and production of hydrocarbon resources. The contract was governed by the laws of India whereas the arbitration agreement was governed by the laws of England. Parties had chosen Kuala Lumpur (Malaysia) as the seat of the arbitration.

Two separate arbitrations arose out of the contract. Under the first arbitration (Videocon v Union of India) it was contended that pursuant to an agreement between the parties to hold hearings in London, the seat of the arbitration shifted from Kuala Lumpur to London. The second arbitration (Cairn v Union of India) dealt with the issue of whether the arbitral tribunal had become functus officio after rendering its award, despite having directed that the claimant was entitled to be awarded costs. The Union of India filed applications before the Delhi High Court, seeking injunctions in both the arbitrations.

What were the decisions of the lower courts?

The single judge of the Delhi High Court assumed jurisdiction and issued anti-arbitration injunctions in both cases. The decisions were based on the reasoning that since Indian law was the substantive law applicable to the contract, courts in India were bound by an earlier Supreme Court decision in Videocon Industries v Union of India (2011) 6 SCC 161 that had pertained to the same proceedings and declared Kuala Lumpur to be the seat of the arbitration.

What was the reasoning of the appellate court?

The High Court allowed both the appeals and set aside both decisions of the lower court. It noted that the lower court had assumed jurisdiction by placing reliance on the fact that the contract was governed by the laws of India, and that this was ‘ex facie-contrary to law’.

It also stated that the proper forum to challenge an award could only be the courts of the seat of arbitration, and for this reason only a court of competent jurisdiction in Kuala Lumpur could entertain a challenge to any decision of the arbitral tribunal. A court seated in India would not have such jurisdiction.

What will the consequences be for the procedure in each arbitration?

A unique stalemate has occurred in the arbitration between Videocon and Union of India. Courts in India are bound by the Supreme Court decision to the effect that Kuala Lumpur is the seat of arbitration. Consequently, as noted by the High Court of Delhi, it would be unable to assume jurisdiction in relation to this arbitration. However, the High Court of Malaysia has also held that it has no jurisdiction, on account of the seat being shifted to London following the parties’ agreement. As Videocon has consented to not initiate any challenge before a court in London, nothing can proceed before the English courts. Therefore, unless the Court of Appeal in Malaysia overrules the decision of the High Court of Malaysia there would be very little room for moving forward. In fact, the High Court of Delhi noted:

[B]ut since the highest court in Malaysia had yet to pronounce upon the issue, we leave it at that with prayers on our lips that hopefully the highest Court in Malaysia passes an order which can break the impasse.

The only available remedy for the parties in the matter between Cairn and Union of India is also to approach the courts in Malaysia. It is likely that the Union of India would approach the competent court in Kuala Lumpur under section 44 of the Malaysian Arbitration Act which empowers the High Court to determine the quantum of costs in the event the arbitral tribunal fails to specify it in its award. However, since the tribunal has not been declared as functus officio, it could continue to proceed and ascertain the issue of quantum of costs in terms of its earlier order.

In light of this decision and of the previous history of these two cases, what are the prospects for Indian courts becoming more arbitration-friendly and deferring more regularly to tribunals and to the courts of the relevant seat?

This decision reflects that courts in India are now, more than ever, consciously taking steps to give primacy to an arbitration agreement. Apart from the instant decision, the recent judgment of the Delhi High Court in Mcdonald’s India Pvt Limited v Vikram Bakshi (FAO (OS) 9/2015), rendered on 21 July 2016 is another example of this shift. The appellate bench of the Delhi High Court in Mcdonald’s set aside the order of the single judge which had issued an anti-arbitration injunction on the ground that no arbitration agreement existed between the parties. Setting aside the anti-arbitration injunction on the ground that prima facie an arbitration agreement existed, the Delhi High Court noted that:

[C]ourts need to remind themselves that the trend is to minimise interference with arbitration process as that is the forum of choice.

The decision in Mcdonald’s lends support to the proposition that the judiciary in India is indeed making positive strides towards respecting the agreement to arbitrate.

What other lessons can be drawn from this decision?

This decision, however, brings out that even though an agreement to arbitrate would eventually be given effect, parties must be cautious against using complicated clauses in their arbitration agreements, so as not to expend precious time in long-drawn litigation. As costs are typically not awarded by Indian courts, a party averse to proceeding with arbitration can entangle the counter party in the web of an Indian court litigation, with minimalistic cost consequences.

Nakul Dewan is a barrister practicing out of Singapore, Delhi and London. He accepts appointments both as counsel for international arbitration and international litigation and as an arbitrator. He has a broad base of expertise in the fields of international arbitration, banking and finance, international commercial law, mining, energy and natural resources. He has been appointed as arbitrator by the SIAC and has extensive experience as counsel in ICC, LCIA, SIAC, UNCITRAL and ad hoc proceedings.

Interviewed by Jane Crinnion. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.




Olympic standards of arbitration

37448720_xlFrom the Euros to the Rio Olympics, the summer of 2016 will see athletes from across the world participate in a number of high profile sporting events.  Paul J Greene, founding partner of Global Sports Advocates LLC, and Dr Ian Blackshaw, international sports lawyers, examine the Court of Arbitration for Sport’s (CAS) responsibilities around international sporting events.

What is the primary function of the CAS?

Dr Ian Blackshaw (IB): The CAS, also known by its French acronym of TAS (Tribunal Arbitral du Sport), was established in 1983 and began operations on 30 June 1984.

Its main role is to settle sports-related disputes through arbitration and mediation. In other words, extra-judicially—that is, outside the ordinary courts’ system. Its founders intended the CAS to become ‘the supreme court of world sport’ and, during its 32 years of existence, it is becoming recognised as such, both within and outside the international sporting world, having built up a discrete and uniform body of ‘sports law’, which can be applied internationally.

The CAS deals not only with purely sporting disputes, such as eligibility issues and doping offences under the World Anti-Doping (WADA) Code, under which the CAS is the final ‘Court of Appeal’, but also deals with sports business disputes, arising under, for example, sports sponsorship, broadcasting and sports agency agreements.

The CAS has its seat in Lausanne, Switzerland, and, as such, is subject to Swiss Law. Its decisions (awards) are subject to appeal, in limited circumstances, to the Swiss Federal Supreme Court (Tribunal Federal Suisse), which is also based in Lausanne. CAS awards are rendered by single arbitrators or by a panel of three arbitrators, who may choose not to hold an oral hearing, but to decide the dispute on a review of documents filed in the case. CAS awards are enforceable under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958.

The official languages of the CAS are English and French. The CAS is governed—administratively and financially—by the International Council of Arbitration for Sport (ICAS). CAS arbitration proceeds in accordance with the CAS code of sports-related arbitration, the latest version of which dates from 1 January 2016 and CAS mediation is governed by the CAS mediation rules of 1 September 2013, as amended on 1 January 2016.

The CAS sets up non-permanent bodies (called ad hoc tribunals) to settle disputes arising at major sporting events, such as the Olympic Games, the Commonwealth Games and the Euro Football Championships. The first CAS ad hoc division was set up for the 1996 Atlanta Summer Olympic Games (the Centennial Games) and have operated ever since at the Summer and Winter Games. The CAS ad hoc division will again be in session for the 2016 Rio Summer Olympic Games.

Paul J Greene (PG): The CAS is the Supreme Court for sport, the highest authority to preside over sports-related disputes in the world. The CAS, based in Lausanne, Switzerland has two divisions—an ordinary division and an appeals division. The CAS could preside over any dispute as long as there is a link to sport and an arbitration clause that grants it jurisdiction.

The ordinary division most often presides over disputes involving a contractual disagreement between sporting bodies where the parties have agreed to CAS jurisdiction through a dispute resolution clause.

The most common type of matters to end up in the appeals division are:

  • appeals of FIFA decisions ranging from disciplinary and eligibility matters to monetary and contractual disputes between teams, players, governing bodies, leagues, or others, and
  • appeals under the WADA Code involving anti-doping rules violations by athletes

Appeals of sports governance decisions are also not uncommon since international federations under the International Olympic Committee (IOC) umbrella agree to CAS as the ultimate arbiter of all decisions.

How does the additional ad hoc division created for CAS during the Olympics function and how does this differ from the main responsibilities of CAS?

PG: Since 1996, the CAS ad hoc division has presided over each Olympics to resolve disputes on-site. The CAS Olympic ad hoc panel consists of a group of handpicked sports arbitrators (typically 12 in all) from across the globe. The group of arbitrators presides in three-member panels that must render a decision in 24 hours. There is no filing fee. The CAS ad hoc division is completely free.

In Rio 2016, for the first time, the CAS ad hoc division will have a special doping panel on-site to hear cases involving athletes competing that are charged with an anti-doping rules violation. The IOC has previously handled doping cases on-site at the Olympic Games. A decision of the CAS ad hoc anti-doping panel will be appealable to the CAS appeals division.

IB: The CAS ad hoc division is in session ten days preceding the opening ceremony of the Olympics, especially to deal with eligibility disputes, and during the Summer and Winter Olympic Games, and is required to render decisions concerning disputes relating to the Olympics within 24 hours of any disputes being referred to it.

The proceedings are free of charge, but the parties in dispute, of course, must pay for any lawyers employed to represent them, as well as any translator’s fees. Normally, parties in dispute before the CAS have to pay a non-refundable CAS court office fee of 1,000 Swiss Francs and to share the costs of the CAS arbitrators or mediators.

Special rules of procedure are laid down for each CAS ad hoc division. These include the law to be applied by the CAS ad hoc division arbitrators, which is very wide indeed:

‘The Panel shall rule on the dispute pursuant to the Olympic Charter, the applicable regulations, general principles of law and the rules of law, the application of which it deems appropriate.’

CAS ad hoc division panels tend generally to be more flexible on procedural matters.

What is CAS mediation and how does it work?

IB: CAS mediation was introduced on 18 May 1999.

Article 1, para 1 of the CAS mediation rules, effective as of 1 September 2013 and amended on 1 January 2016, defines mediation in the following terms:

‘CAS Mediation is a non-binding and informal procedure, based on a mediation agreement in which each party undertakes to attempt in good faith to negotiate with the other party, and with the assistance of a CAS mediator, with a view to settling a sports-related dispute’.

The CAS mediation rules, art 2 define a ‘mediation agreement’ as follows:

‘A mediation agreement is one whereby the parties agree to submit to mediation a sports-related dispute which has arisen or which may arise between them.

A mediation agreement may take the form of a mediation clause inserted in a contract or that of a separate agreement.’

In other words, mediation may be invoked under an express or an ‘ad hoc’ mediation reference clause agreed at the time a dispute arises.

Although mediation is expressly excluded (CAS mediation rules, art 1, para 2) for disciplinary and doping cases, mediation is very appropriate for settling the commercial/financial issues and consequences (for example, loss of lucrative sponsorship and endorsement contracts), which often follow from a doping case—particularly where the sports person concerned was wrongly accused of being a drugs cheat. For example, Dianne Modahl would probably have been better advised to try to settle her claims for compensation brought in 2001 against the British Athletic Federation through CAS mediation rather than through the English courts.

If the parties in dispute prefer to settle their differences by mediation—and many do because of the special characteristics and dynamics of sport—the CAS model mediation clause is as follows:

‘Any dispute, any controversy or claim arising under, out of or relating to this contract and any subsequent of or in relation to this contract, including, but not limited to, its formation, validity, binding effect, interpretation, breach or termination, as well as non-contractual claims shall be submitted to mediation in accordance with the CAS Mediation Rules.’

If mediation proves to be unsuccessful, although mediation providers usually claim a success rate of around 85%, the CAS recommends the following additional clause to be inserted in a contract to cover the above contingency:

‘If, and to the extent that, any such dispute has not been settled within 90 days of the commencement of the mediation, or if, before the expiration of the said period, either party fails to participate or continue to participate in the mediation, the dispute shall, upon the filing of a Request for Arbitration by either party, be referred to and finally settled by CAS arbitration pursuant to the Code of Sports-related Arbitration. When the circumstances so require, the mediator may, at his own discretion or at the request of a party, seek an extension of the time limit from the CAS President.’

Thus, the CAS offers disputing parties the possibility of a ‘med-arb’ dispute resolution process—mediation to identify the issues and arbitration to settle them.

Upon filing the mediation request, the administrative fee stipulated in mediation rules, art 14 must be paid and the day on which this request is received by the CAS court office shall be considered as the date on which the mediation proceedings commenced.

Pursuant to the CAS mediation rules, art 6, the CAS president chooses the mediator from the list of CAS mediators drawn up in accordance with the provisions of the CAS mediation rules, art 5. The mediator appointed must be and remain independent of the parties. The parties may be represented or assisted at their meetings with the mediator (the CAS mediation rules, art 7). The representative must have full authority to settle the dispute alone, without consulting the party they are representing.

Under the CAS mediation rules, art 8, the procedure to be followed in the mediation shall either be agreed by the parties themselves or determined by the mediator. This is a slight deviation from the general principle that the mediator is the one who controls the procedural aspects of the mediation. But the parties are required to:

‘…cooperate in good faith with the mediator and…guarantee him the freedom to perform his mandate to advance the mediation as expeditiously as possible.’

The role of the mediator is laid down in the CAS mediation rules, art 9, which recognises the basic concept of mediation—namely, that the mediator acts as a facilitator and may act in any manner ‘he believes to be appropriate’ but may not impose any solution of the dispute on either of the parties.

The mediation rules, art 10 provides for the confidentiality of the mediation process subject to the normal exception of making any disclosure as required by the law. And further provides that:

‘No record of any kind shall be made of the meetings…[and] [a]ll the written documents shall be returned to the party providing these upon termination of the mediation, and no copy therefore shall be retained.’

The CAS mediation rules, art 10 also makes provision for the mediation to be conducted on a ‘without prejudice’ basis, expressed in the following terms:

‘The parties shall not rely on, or introduce as evidence in any arbitral or judicial proceedings:

  • (a) views expressed or suggestions made by a party with respect to a possible settlement of the dispute;
  • (b) admissions made by a party in the course of the mediation proceedings;
  • (c) documents, notes or other information obtained during the mediation proceedings;
  • (c) documents, notes or other information obtained during the mediation proceedings;
  • (e) the fact that a party had or had not indicated willingness to accept a proposal.’

The CAS mediation rules, art 11 deals with the questions of when and how the mediation may be terminated and provides as follows:

‘Either party or the mediator may terminate the mediation at any time.

The mediation shall be terminated:

  • (a) by the signing of a settlement by the parties;
  • (b) by a written declaration of the mediator to the effect that further efforts at mediation are no longer worthwhile; or
  • (c) by a written declaration of a party or the parties to the effect that the mediation proceedings are terminated.’

The CAS mediation rules, art 12 requires that any settlement of the mediation must be in writing and signed by the mediator and the parties. And further provides that:

‘Each party shall receive a copy thereof. In the event of any breach, a party may rely on such copy before an arbitral or judicial authority.

A copy of the settlement is submitted for inclusion in the records of the CAS Court Office.’

The CAS mediation rules, art 13 deals with the question of failure to settle and includes the following important provision—absolutely fundamental to the process of mediation:

‘In the event of failure to resolve a dispute by mediation, the mediator shall not accept an appointment as an arbitrator in any arbitral proceedings concerning the parties involved in the same dispute.’

The CAS mediation rules, art 14 deals with the equally important subject of the costs of CAS mediations. In addition to the CAS administrative fee of 1,000 Swiss Francs paid by each party, the CAS court office may require the parties to deposit an amount in equal proportions as an advance towards the CAS mediation costs. The parties are required to pay their own mediation costs and, unless otherwise agreed, share equally the other final costs, which include the:

  • CAS fee
  • mediator’s fees calculated on the basis of the CAS fees scale
  • a contribution towards the costs of the CAS, and
  • costs of witnesses, experts and interpreters.

It should be generally noted that, under the CAS ordinary arbitration procedure, the president of the division, before the transfer of the file to the panel, and thereafter the panel may, at any time, seek to resolve a dispute by conciliation (a form of mediation) under article R42 of the CAS code of sports-related arbitration. Any such settlement may be embodied in an arbitral award rendered by consent of the parties.

Can we expect any future developments at the CAS following this summer’s competitions?

PG: The appeals to the CAS by former FIFA President Sepp Blatter and former UEFA President Michel Platini have been the highest profile cases so far in 2016. The CAS reduced Mr Platini’s ban to four years. Mr Blatter’s appeal to the CAS seeking a reduction or annulment of his six-year ban by FIFA for ethics violations is still pending.

In a reflection of the global nature of the CAS, its ‘Essendon Decision’ released in January 2015, which upheld an appeal by the World Anti-Doping Agency and banned 34 Australian rules football players for two years for anti-doping rules violations was a highly-publicised case in Australia.

The recent revelations of doping by Russian athletes are sure to lead to a barrage of appeals to the CAS as the Olympics approach. There are novel legal issues that could be in play if the Russian athletes are banned from the Olympics as a whole. Concurrently, the Euro 2016 tournament in France will almost certainly lead to an increased number of football-related appeals at CAS.

IB: The ICAS is constantly reviewing and, where necessary, in the light of actual cases and situations that have arisen, updating the CAS Code of sports-related arbitration and the CAS mediation rules. There may also be some further changes to the CAS procedural rules as a result of the Pechstein case, but that is a subject in its own right. See the CAS Statement on Pechstein from 27 March 2015. In any event, we shall see what happens.

Where does the CAS have its offices?

PG: The CAS has its main office in the Olympic capital, Lausanne, Switzerland. Lausanne is always the seat of the arbitration, regardless of where the hearing is held. For that reason, Swiss law always governs and all CAS decisions can be appealed to the Swiss Federal Tribunal. There are two decentralized offices in Sydney, Australia and New York, New York.

What else should I know about the CAS?

PG: The two official languages of the CAS are English and French. Cases can be heard in another language if all parties agree.

Provisional relief is available to a party from a CAS panel. A party must show it is likely to succeed on the merits, that it will suffer irreparable harm and whether the interests of the party seeking the provisional measures outweigh the other party’s interests.

CAS follows the European model as opposed to the American model on the issue of costs, meaning the presiding party will be awarded costs in most instances and the losing party will be ordered to pay the prevailing party. A party can appear before CAS on their own, with the assistance of a lawyer or a non-lawyer if they so choose.

If a one-member panel presides, the CAS will appoint the arbitrator. If a three-member panel presides, each party selects an arbitrator and the CAS then selects the chair of the panel. More than 300 CAS arbitrators appear on a list on the website.

For those interested, the CAS will hold a bi-annual conference on 2 and 3 September in Lausanne.

Dr Ian Blackshaw is an international sports lawyers, academic author and member of the Court of Arbitration for Sport. Paul J Greene is a founding partner of Global Sports Advocates LLC.

Interviewed by Ioan Marc Jones. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

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