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BHATIA INTERNATIONAL RATIO UNDER THE SCANNER AT INDIAN SUPREME COURT

In this post, SUMIT RAI briefly addresses some of the most important submissions made by the parties arguing in favour of confirming the Bhatia International ratio during the widely followed five-member constitutional bench review by the Indian Supreme Court.

As reported earlier, a five judge constitutional bench of the Indian Supreme Court has started hearing arguments in the widely followed review of the Bhatia International ratio. I review here, some of the most important arguments made in favour of confirming the ratio.

This decision of a three member bench of the Supreme Court had allowed for application of Part I of the Arbitration & Conciliation Act, 1996 (“Indian Act”) to arbitration seated outside India. Before moving on with the post, let me lay some background for those not initiated with the controversy, so that you follow the issues in contention in the present review: Read the rest of this entry

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DOES THE 2G LICENSE CANCELLATION AMOUNT TO EXPROPRIATION BY INDIA?

In this post, SUMIT RAI speculates on a possible investment treaty claim against India for the cancellation of 2G licenses following the Supreme Court decision of 2nd February 2012.

In 2011, the issue of corruption at the highest levels of governance dominated political and social debates in India. Allegations of loss to the exchequer to the tune of 300 billion rupees in the 2008 allotment of 2G spectrum for mobile telephony, shocked the nation. This probably also came as a shock to a large number of foreign investors – by then having infused huge capital in telecom companies. The telecom minister was made to resign and since has been in jail. Many corporate heads of Indian telecom companies also visited prison for a brief time and are now out on bail pending final investigation and prosecution.

Some citizens and NGOs filed a writ petition in the Indian Supreme Court under Art. 32 of the Constitution alleging that the grant of 122 2G spectrum licenses in 2008, following a first-cum-first-serve policy and at 2001 prices was in violation of citizens’ fundamental rights of the Constitution. On 2nd February 2012, the Indian Supreme Court upheld the petitioners’ contentions and cancelled all 122 licenses (the judgment in Centre for Public Interest Litigation v. Union of India is available here). The Court held that 2G spectrum is a natural resource and that “the State is the legal owner of the natural resources as a trustee of the people and although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles including the doctrine of equality and larger public good”. Read the rest of this entry

EMERGENCY ARBITRATOR: A MERE ‘À LA MODE’ FEATURE OF MODERN ARBITRATION RULES?

In this post, PANAGIOTIS CHALKIAS discusses the new trend of institutional rules providing for emergency arbitrator prior to the appointment of the arbitral tribunal.

After the recent amendments to the Rules of Arbitration of the International Chamber of Commerce, it has become clear that a new trend has been established with respect to interim measures requested prior to the constitution of the arbitral tribunal. This trend has already been espoused by a number of arbitral institutions, including AAA (ICDR), CPR, SCC, SIAC, ACICA, and P.R.I.M.E. Finance . The revised version of the Swiss Rules of International Arbitration will also include new provisions on Emergency Relief. These recent developments beg the question of the utility of such mechanism, whether demonstrated in the course or in the end of international arbitration proceedings.

Starting first with the number of emergency arbitrator requests – the arbitral institutions receive only modest numbers of such requests (see reports of SIAC, SCC , and AAA). And when such requests have been made, they have been seldom granted. One possible reason behind this rare use is the overcoming burden of proving not only the urgency of the application (as defined in article 26.2 of the UNCITRAL Arbitration Rules) in the sense of conventional interim measures requests. There needs also to be an “emergency” in the sense that the requested interim measures cannot await until the constitution of the arbitral tribunal. Thus, the period has been shortened from the time needed to deliver a final award to the time it takes to empanel the arbitrator(s). Read the rest of this entry

ALLOCATION OF COSTS IN SUMMARY PROCEEDINGS UNDER R. 41(5), ICSID RULES

In this post, MARIJA SOBAT, questions the principle of ‘pay-your-own-way’ applied to allocation of costs in summary proceedings under ICSID Rules.

Rule 41 (5) came to life with the 2006 amendments to the ICSID Arbitration Rules. It is beyond the scope of this post to delve in great detail into the Rule itself. It suffices here to say that the provision was introduced to allow a party to raise an objection in limine litis that a claim is “manifestly without legal merit” and to ask a tribunal to summarily dismiss such patently frivolous claim by a reasoned award. The rationale behind this Rule was, among other things, to shorten duration of the proceedings and reduce the costs where a party is bringing a patently frivolous claim. It is interesting to see how ICSID tribunals, which confirmed frivolity of the claim, had decided on allocation of costs (Trans-Global v Jordan, Global Trading v Ukraine, RSM Production v Grenada) and what impact these decisions may have on the future application of the Rule. In this post I will explain how the proper allocation of costs in summary proceedings could influence on reducing the number of manifestly frivolous claims brought before the ICSID tribunals.

According to Article 61 (2) of the ICSID Convention and Rule 28 of the ICSID Arbitration Rules, in the absence of the parties’ prior agreement, ICSID tribunals have discretion to decide about allocation of costs of the proceedings between parties. In the vast majority of cases, the ICSID tribunals followed “pay-your-own-way” approach. The exception to the rule, ie, allocation of the costs to the loser of the proceedings, occurred in those cases where the tribunals established that a claim was manifestly without legal merit or observed bad faith from a party. Read the rest of this entry

ARGENTINA v. BG GROUP PLC: THE U.S. COURT OF APPEAL’S (MISTAKEN?) DECISION

In this post, MARIA ATHANASIOU analyzes the US Court of Appeals decision (17.01.2012) which vacated the investment tribunal award in BG Group PLC v. Argentina.

On 17 January 2012, the U.S. Court of Appeals for the District of Columbia Circuit  reversed the orders of the U.S. District Court for the District of Columbia (Republic of Argentina v BG Group PLC, 715 F.Supp.2d 108 (D.D.C.2010); Republic of Argentina v. BG Group PLC, 764 F. Supp. 2d 21 (D.D.C. 2011) at  denying the Republic of Argentina’s motion to vacate and granting BG Group’s cross-motion to confirm, the Final Award rendered against the Republic in the international investment arbitration case of BG Group PLC v The Republic of Argentina, and vacated said Award (Republic of Argentina v. BG Group PLC , D.C. Cir. Jan. 17, 2011).  The Court of Appeals heeded Argentina’s argument that the arbitral Tribunal had exceeded its authority (a ground for annulment under Section 10(a) of the Federal Arbitration Act) by ignoring the terms of the parties’ agreement in the form of the Bilateral Investment Treaty between Argentina and the U.K – holding that the Tribunal had disregarded the conditions set forth in Article 8(2)(a) of the Argentina-U.K. BIT when it dispensed BG Group with the obligation to commence litigation before Argentine courts for 18 months prior to initiating international investment arbitration proceedings. Read the rest of this entry

CHEVRON – TWO DECADES OF LITIGATION: IS IT FINALLY OVER?

In this Guest Post, VERONICA ARROYO from Ecuador reports on the never-ending Chevron-Ecuador battle.

2012 began here in Ecuador with a major jolt for Chevron Texaco. On 3rd January, a court in Sucumbios upheld the ruling against Chevron Texaco, through which it ratified the payment of 18 billion dollars against Chevron for environmental damages caused in Ecuador’s rainforest between 1972 and 1990 when Texaco operated in the forest. Texaco became a subsidiary of Chevron in 2001. Chevron has long claimed that a 1998 agreement between Texaco and Ecuador, after a cleanup of 40 million dollars, absolves it of liability. Chevron has also been ordered to publicly apologize for the incident by 1st March 2012, or else face a judgment for double the sum.

 The oil company appealed the initial judgment on the ground that the process had been marked by corruption. While for the plaintiffs, the amount of compensation was not enough to remedy the damage. A bench of three judges heard both the appeals for almost a year and rejected them. Read the rest of this entry

Making a Favourable National Law on Arbitration: How Difficult can it be?

In this post, PANAGIOTIS CHALKIAS reflects on some elements that have considerable influence on success of an arbitration legislation; and why courts shall always play a defining role.

This post ponders over a rather basic question that everyone involved in international commercial arbitration must find intriguing. This question concerns not only governments and legislators but also judges, lawyers, in-house counsels and broadly all dispute resolution practitioners. The purpose of this post is not to provide an exhaustive list of factors pertaining to the enactment and application of a national arbitration statute. I intend to highlight what I think are the three essential elements to take into consideration.

An easy and quick answer to my question would be that the adoption of the UNCITRAL Model Law on International Commercial Arbitration suffices (as of 2011, 66 countries have endorsed this Model Law in their legislation). However, one should ask if this suggested pattern for law-makers is enough to show a favourable preference towards arbitration. Read the rest of this entry