©2011. YAR - Young Arbitration Review • All rights reserved.
1 • YAR • OCTOBER 10, 2013
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YAR
YOUNG ARBITRATION REVIEW
Under40 International Arbitration Review
www.yar.com.pt
[INTRODUCTORY NOTE – THE INEVITABLE RISE OF ARBITRATOR CHALLENGES] by Agostinho Pereira de Miranda • [AN
INTRODUCTION TO INVESTMENT ARBITRATION AND ITS PROSPECTS IN RELATION TO THE KINGDOM OF SAUDI ARABIA]
by Henry Clarke • [A CRITIQUE OF WRITTEN FORM REQUIREMENTS OF THE INTERNATIONAL ARBITRATION AGREEMENTS]
by Hosna Sheikahattar • [REVIEW OF ARBITRATION IN BRAZILIAN OIL INDUSTRY] by Eduardo Helfer, Gilvan Luis Hansen and
Sérgio Pauseiro • [CORPORATE DISPUTES AND ARBITRATION IN BRAZIL] by Thereza Frauches and Juliana Fonseca • [CORPORATE
DISPUTES AND DECISIONS RENDERED BY THE BRAZILIAN SUPERIOR COURT OF JUSTICE REGARDING ARBITRATION IN
2013] by Caio Gabra and Daniel Becker • [APPOINTMENT AND ROLE OF ARBITRATORS IN PORTUGAL: CONFLICTS OF INTEREST,
IMPARTIALITY AND INDEPENDENCE] by Rui Botica Santos and Manuel Sequeira • [ASYMMETRICAL ARBITRATION CLAUSES
UNDER THE PORTUGUESE LAW] by Duarte Gorjão Henriques [REPORT ON YAR’S FIRST ARBITRATION EVENT IN BRAZIL –
August 2013] by Pedro Sousa Uva and Gonçalo Malheiro
THE YOUNG ARBITRATION REVIEW IS AVAILABLE ONLY TO SUBSCRIBERS AND MAY ONLY BE DISTRIBUTED ONLINE, OR BY ANY OTHER MEANS, BY YAR
©2011. YAR - Young Arbitration Review • All rights reserved.
2 • YAR • OCTOBER 10, 2013
YAR
YOUNG ARBITRATION REVIEW EDITION
EDITION 11 • OCTOBER 2013
DIRECTORS
Pedro Sousa Uva
Gonçalo Malheiro
INTRODUCTORY NOTE
Agostinho Pereira de Miranda
AUTHORS
Henry Clarke
Hosna Sheikahattar
Eduardo Helfer
Gilvan Luis Hansen
Sérgio Pauseiro
Thereza Frauches
Juliana Fonseca
Caio Gabra
Daniel Becker
Rui Botica Santos
Manuel Sequeira
Duarte Gorjão Henriques
EDITING
Rita Pereira
SUBSCRIPTIONS
To subscribe to YAR – Young Arbitration Review, please contact young.arbitration [email protected]
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©2011. YAR - Young Arbitration Review • All rights reserved.
©2011. YAR - Young Arbitration Review • All rights reserved.
3 • YAR • OCTOBER 10, 2013
[ARTICLES]
1 - INTRODUCTORY NOTE
THE INEVITABLE RISE OF ARBITRATOR CHALLENGES
by Agostinho Pereira de Miranda
2 - AN INTRODUCTION TO INVESTMENT ARBITRATION AND ITS
PROSPECTS IN RELATION TO THE KINGDOM OF SAUDI ARABIA
by Henry Clarke
3 - A CRITIQUE OF WRITTEN FORM REQUIREMENTS
OF THE INTERNATIONAL ARBITRATION AGREEMENTS
by Hosna Sheikahattar
4 - REVIEW OF ARBITRATION IN BRAZILIAN OIL INDUSTRY
by Eduardo Helfer Farias, Gilvan Luis Hansen
and Sérgio Gustavo de Mattos Pauseiro
5 - CORPORATE DISPUTES AND ARBITRATION IN BRAZIL
by Thereza Valladares Souza Frauches and Juliana Soares Porto Fonseca
6 - CORPORATE DISPUTES AND DECISIONS RENDERED
BY THE BRAZILIAN SUPERIOR COURT OF JUSTICE
REGARDING ARBITRATION IN 2013
by Caio Gabra and Daniel Becke
7 - APPOINTMENT AND ROLE OF ARBITRATORS IN PORTUGAL:
CONFLICTS OF INTEREST, IMPARTIALITY AND INDEPENDENCE
by Rui Botica Santos and Manuel Sequeira
8 - ASYMMETRICAL ARBITRATION CLAUSES UNDER
THE PORTUGUESE LAW
by Duarte Gorjão Henriques
9 - REPORT ON YAR’S FIRST ARBITRATION EVENT IN BRAZIL
– AUGUST 2013 by Pedro Sousa Uva and Gonçalo Malheiro
10 - NEWS & EVENTS
©2011. YAR - Young Arbitration Review • All rights reserved.
4 • YAR • OCTOBER 10, 2013
[INTRODUCTORY NOTE]
THE INEVITABLE RISE
OF ARBITRATOR CHALLENGES
By Agostinho Pereira de Miranda
“The arbitral process cannot compensate for the
Quite the contrary: in the not too distant past parties were too
harm done by poor arbitrators”
willing to accept manifestly dependent or biased arbitrators.
- Jan Paulson
That led to complacency and the charge, certainly unjust, that
arbitrators were a ‘Mafia’.
Whether true or not, the story has been recounted in
various different versions: A lawyer acting in an arbitration,
The Grand Old Men of arbitration have slowly been
when faced with the prospect of losing the case, calls the
replaced with Law Technocrats who may lack the charisma of
arbitrator and records the conversation with the single purpose
their older colleagues but frequently do master the procedural
of challenging the latter’s impartiality. That’s what Sam Luttrell
techniques in ways that the former can hardly match. These
in his brilliant book Bias Challenges In International Commercial
Young Turks are helped by developments in hard as well as soft
Arbitration – The Need for a Real Danger Test (Wolters Kluwer,
arbitral law that make their creativity shine all the brighter.
2009) calls the ‘Black Art’ of bias challenge.
An arbitrator has a duty of independence and impartiality
Playing dirty has never been uncommon in the arbitration
to the parties. This is, as an author put it, the Magna Carta of
world. But the frequency of unethical tactics seems to be on the
arbitration. The two concepts are subject to interpretation, but
rise lately, particularly in international commercial arbitration.
every arbitrator is under the obligation to disclose information
The point I wish to make is that the challenge of arbitrators is an
as to enable the parties and indeed the co-arbitrators to decide
area that, if approached lightly, lends itself to significant abuse.
whether they are satisfied of the arbitrator’s independence and
impartiality. Without proper disclosure, the arbitrator runs
I do not mean to say that all challenges are unmeritorious.
the risk of being subsequently challenged by the other side on
©2011. YAR - Young Arbitration Review • All rights reserved.
5 • YAR • OCTOBER 10, 2013
account of a conflict of interest. Whilst the lack of disclosure
the least demanding standard to challenge an arbitrator.
is unacceptable in modern arbitration, some practitioners may
object that there is already a risk of too much disclosure.
It seems debatable to what extent the “reasonable
apprehension” test corresponds to the “justifiable doubts”
The IBA Guidelines on Conflicts of Interest in
standard of the Uncitral Model Law. In fact, as pointed out by
International Arbitration (approved in May 2004) are the
Luttrell, the tests for apparent bias are very different from seat
proper compass to navigate these frequently troubled legal
to seat even among Model Law countries.
waters. They are viewed by some authors as lex mercatoria,
given their growing acceptance in the jurisprudence of arbitral
There is thus ample margin for discussion and indeed
institutions and state courts, as well as and their increasing
for litigation in the years ahead, particularly in countries, such
representation in national arbitration laws.
as Portugal, with little if any case law on this issue. Portuguese
practitioners will undoubtedly seize the opportunity presented
The problem is that the IBA Guidelines have set high
by the new Arbitration Law (Law 63/2011, dated 14 December
standards for disclosure, hence making room for an increase in
2011) when it uses the same language for circumstances of
challenges, particularly in countries where the arbitral culture
disclosure and circumstances of refusal. That is not the approach
has not reached a mature stage yet. More frequent challenges
of the Model Law, and it seems a faux pas in the drafting of the
will make it more difficult to appoint an arbitrator. But that is
Portuguese law.
the price of a process that is meant to be self-policing. And in
any case, frivolous challenges may constitute breaches of the
general obligation to act in good faith.
Challenging an arbitrator should only happen with
good grounds. Otherwise, the challenging party may pay a
price in either credibility or tactical advantage. The grounds
English Law standards to the rescue
for challenge are interpreted strictly by arbitral and judicial
courts alike, particularly when a considerable amount of time
The
majority
of
national
arbitration
laws
and
and resources have already been spent in the arbitration. If the
institutional rules recognize the lack of independence and
challenge appears to be without merit the arbitrator should not
impartiality as justifiable grounds for a challenge. Traditionally,
resign but should instead permit that the matter be dealt with
authors describe two different tests in the context of arbitrator
by the relevant procedure and authority.
challenge: “justifiable doubts” as to the arbitrator’s impartiality
or independence as provided in the Uncitral Model Law
Arbitrators are not judges. More often than not,
(Article 12(2)); or the “real danger” of a lack of impartiality, as
arbitrators are lawyers, i.e., business people with a lot of baggage.
required by English case law (this is in spite of the fact that the
The independence of a party’s own judge will seldom be that
English Arbitration Act makes reference to justifiable doubts
of a state judge. That is yet another reason why the prestige
in Section 24(1)(a). More recently, Sam Luttrell has proposed
of arbitration is irremediably tied to the essential qualities of
new designations derived from English case law, thereby setting
fairness and competence of arbitrators.
three competing tests:
The arguments about the presumed partiality or lack of
(1) The “reasonable apprehension” test (the Sussex
Justices test);
independence of the arbitrator tend to reach a zenith when
counsel, after being served the final award, finds himself or
(2) The “real possibility” test (the Porter v. Magill test);
herself representing the losing party. Armed with the most
(3) The “real danger” test (the Gough test).
refined procedural creativity these zealots of the arbitration
ethics will hardly need to make a surreptitious phone call to
Luttrell argued that, in order to limit the removal of
the arbitrator who spoiled the counsel’s party.
arbitrators for bias, the “real danger” test or, failing that, the
“real possibility” test should be used. This is in no way facilitated
by the circumstance (acknowledged by the author) that the IBA
Agostinho Pereira de Miranda
Guidelines favor the “reasonable apprehension” test, presumably
September 2013
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