Posts Tagged UNCITRAL
I was asked yesterday (interview in Dutch) for my thoughts on the Belgian Government’s plans for a Brussels International Business Court. Here goes, in bullet-points format, a slightly extended and more technical version of those preliminary thoughts:
- Three and more’s a crowd. The Belgian move of course is not the first and neither will it be the last. Even pre-Brexit, Member States (and even individual cities within Member States; see Michiel Poesen recently on Frankfort) were vying for the title of preferred place for litigation.
- Brexit evidently may be a game-changer. I have flagged repeatedly that post-Brexit and assuming there will be no deal which would roll-over the UK’s engagement with EU civil procedure law, UK courts will become a lot less attractive. This is due to the more cumbersome recognition and enforcement regime that will be the result of decoupling from Brussels I. The same incidentally does not apply to arbitration. Pre and post Brexit, deal or not, free movement of arbitral awards is subject to the New York Convention.
- Attractiveness as a centre of litigation and legal services is part of regulatory competition. Being known as a place of legal know-how and expedited litigation brings prestige as well as attractive billable hours to the law firms of one’s country.
- Crucially, in an attempt to prise litigation away from London in particular, the use of English in proceedings is always the eye-catcher for the media. However in reality the language of proceedings is to my experience not the defining issue in client’s forum shopping strategies. Know-how of the bench; speed of proceedings; transparency of case-law; and of course ease of recognition and enforcement, are much more so. The Belgian proposal acknowledges as much by touting in particular the ‘collegiality’ and ‘expertise’ of the pool of (domestic and foreign) commercial law experts that will populate the court.
- Unwittingly perhaps but without a doubt, the proposal in flagging the benefits of the BIBC, also highlights the well-known disadvantages of the Belgian courts in ordinary: tardiness of proceedings (the ‘Belgian’ torpedo) in particular. However also very much so, intransparency (as I have repeatedly signalled: access to Belgian case law continues to be highly problematic) and lack of collegiality among the bench: being a judge is a lonely professional existence in Belgium. Professional secrecy rules, practicalities (lack of proper office space), and the aforementioned reporting issues work against Belgian jurisprudence presenting itself as coherent.
- At a technical level, the proposal emphasises repeatedly that the BIBC will be a court. Not an arbitral tribunal. The difference lies particularly in the easy or enforcement. The draft Bill loudly talks the talk in this respect. But does it walk the walk? What a ‘court’ means within the context of EU civil procedure law is of course the prerogative of that EU law: not of the Member States. (I refer to recent blog posts on same). Extensive reference to UNCITRAL’s Model Law on international commercial arbitration is a strange prop to use in the draft, if the idea is to take one’s attention away from arbitration. The BIBC will only take cases in the event of prorogation (choice of court or submission). The pool of judges will mostly be taken from part-timers, not benchers. Most importantly, in my mind: Article 43 of the draft instructs the BIBC, with respect to choice of law, to respect parties’ choice of governing law, and, in the absence of such law, ‘to apply the law determined by the conflict of laws rules which it considers applicable’. This is a copy /paste from Article 28(2) of the Model Law. In footnote the Act suggests that by omitting the third para of said Law (‘The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so’), the Bill emphasises the nature of the BIBC as court. It does not. Courts are simply subject to Rome I and II when it comes to applicable law. They do not just ‘consider a law applicable’.
Much to chew on. My analysis is based on a draft Bill which a little bird sent me. This is probably not the final say on the BIBC. (On an aside: @BIBC is already taken. I can think of one or two Twitter Handles which the BE government may want to snap up before someone else does).
Postscript 26 April 2016: the PCIA Yukos Arbitral award which I refer to below, was later squashed for lack of jurisdiction – that judgment is currently under appeal.
When should a court being asked to apply the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) – the ‘New York Convention‘, look mercifully on forum shopping with a view to the smooth enforcement of such award? That, in essence, was the issue in Yukos v Tomskneft at the Irish High Court. Both Yukos Capital and Tomskneft were originally part of the Yukos group – of PCIA Yukos arbitral award fame. Tomskneft was later transferred to Rosneft. Arbitral proceedings had taken place in Switzerland, Yukos’ attempts at enforcement in Russia failed, as they did in France. Singapore attempts are underway.
The Irish courts involvement at first view looks odd. There are no Tomskneft assets in Ireland, neither corporate domicile of any Tomskneft affiliates. As Kelly J noted, the Irish proceedings effectively would serve as a jack for proceedings in other jurisdictions where Tomskneft does hold assets. Waving a successful enforcement order (even if it were in practice nugatory, given the lack of assets) obtained in a ‘respectable’ jurisdiction, would assist with enforcement proceedings elsewhere.
The New York Convention has a pro-enforcement bias however the Irish (and other, especially common law countries’) arbitration act in enforcement of the Convention, runs alongside the application of Irish civil procedure rules ‘out of the jurisdiction’, being against a foreign defendant: Kelly J (at 59): In implementing the Convention as it did, the legislature did not attempt to dispense with the necessity to obtain leave to serve out of the jurisdiction in a case where the respondent is not normally resident within it.’
US law, too, requires that preliminary to recognising and enforcing a foreign award, in personam jurisdiction must be established. Decision on such remains subject to lex fori. A jurisdiction which all too happily entertains such cases is then said to employ ‘parochial’ or ‘exorbitant’ jurisdictional rules.
In the case at issue, after referencing prior case-law both in Ireland and elsewhere, Kelly J rejected applicant’s request (at 141): It is a case with no connection with Ireland. There are no assets within this jurisdiction. There is no real likelihood of assets coming into this jurisdiction. This is the fourth attempt on the part of the applicant to enforce this award. There is little to demonstrate any “solid practical benefit” to be gained by the applicant. The desire or entitlement to obtain an award from a “respectable” court has already been exercised in the courts of France and is underway in the courts of Singapore.’
Note therefore that the court is not unsympathetic to the attempt at employing successful (even if hollow) enforcement in one jurisdiction as a lever in the real target jurisdiction (the one with the assets). Except, in the case at issue, similar attempts had already been or still were underway elsewhere.
The case is a very good illustration of the attraction (and uncertainty) of forum shopping, in particular at the enforcement stage. As well as a powerful reminder of the in personam jurisdictional rules of the common law.
here); and the circulation of arbitral awards and arbitration-related judgments, including the issue of the conclusive and preclusive effects of prior arbitral awards in relation to conflicting judgments (res judicata issues: including whether the priority which the Brussels I-Regulation concedes to the New York Convention, means that a court in a Member State can or indeed must give priority to a conflicting arbitral award over a judgment of the court of another EU Member State).the existence of parallel arbitration and judicial proceedings (lis pendens issues; see also
A great kick-off to a continuing debate. Geert.