ALTERNATIVE DISPUTE RESOLUTION (ADR)
LECTURE # 3 and #4
BY Naima Ahmed
Summarize
 Premium Nafta v Privalov [2007] UKHL 40 (also known as Fiona Trust) - summarise the
decision on one side of A4 paper, 12 point size – bring this to class.
 ***Emmot v Michael Wilson & Partners Ltd [2008] 1 Lloyd’s Rep 616
 Adhoc-Institution arbitration
 READ – summarise C v D bring to class.
 Define –International Commercial Arbitration
OUTLINE #1
1. Negotiation: the nature or negotiations. Power in dispute processes. , Representative
negotiations.
2. The Processaral shape of negotiations.
3. Adhoc and Institutional arbitration.
4. Nature of Arbitration Agreement
OUTLINE #2
1. Law applicable to Arbitration Agreement
2. Separability of Arbitration agreement (A.A)
3. Discuss cases-Fiona trust , C v D, Dallah
Learning Outcome
By the end of these series of 2 seminars, you should:
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Understand the process of negotiation
legal issues relevant to arbitration agreements;
Understand the requirements for a valid and effective arbitration agreement;
Assess the validity and effectiveness of a sample arbitration agreement;
Understand the principles of separability and its limitations;
Be able to determine the proper law of the arbitration;
Understand how an arbitration agreement comes to an end
Negotiation and its Process
Defined as Goldberg, Sander, and Rogers in Dispute Resolution: Negotiation, Mediation,
and Other Processes (1992) define negotiation as “communication for the purpose of
persuasion.” Negotiation is a process in which parties to a dispute discuss possible
outcomes directly with each other. Parties exchange proposals and demands, make
arguments, and continue the discussion until a solution is reached, or an impasse
declared.
Types
 INTEREST-BASED NEGOTIATION
 RIGHTS-BASED NEGOTIATION
 POWER-BASED NEGOTIATION
What are Principles of negotiation?
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“The reason to negotiate is to produce something better than the results that you can
obtain without negotiation” (Fisher et al., 1991). The goal is to reach an agreement that is
acceptable to all parties, to which they remain committed, and which they indeed
implement. This is the essence of interest-based negotiations, which has the following
principles:
INTERESTS–NEEDS
Interests are needs (food, shelter, security, and so on), desires, aspirations, fears,
hopes, and concerns. Positions are what we want and demand. The interests are the reasons
behind the position.
ALTERNATIVES
Alternatives are those actions that one can take outside the negotiations, alone or
possibly with a third partner, but without the party with whom one negotiates. The
alternative that yields the best outcome for you is called the BATNA (Best Alternative.
The BATNA is the “best alternative to a negotiated agreement.” If any of your
alternatives without negotiation is better than the deal on the negotiating table, you
Having a BATNA provides us with the ability to negotiate effectively, and provide
the answers to the following:
● What are our alternatives if this negotiation reaches a dead end?
● Do we have an alternative at all if the negotiations fail?
● Which agreement do we consider (the one which is at least as good as our
BATNA)?
OPTIONS
In developing the options use the following criteria:
● generate a list of options.
● Look to the interests in order to generate a broad range of options to choose
from.
● Include options that will answer both parties’ needs and interests.
STANDARDS AND CRITERIA
Objective standards and criteria can be used in the negotiations to enable both parties to perceive
the process as fair and legitimate. Objective standards and criteria
include:
● market value of an asset or a resource
● the law regarding the matter being discussed
● precedents
● opinion of an expert
COMMUNICATION
spoken words, level and tone of speech, body language, and any other
means that parties use to signal to one another.
exercise “active listening” (which will be discussed in Section
RELATIONSHIP
● Separate the people from the substance;
● Consider that there are differences in the way in which people in other cultures
value interpersonal relationships as a precondition to holding negotiations.
AGREEMENT AND COMMITMENT
An agreement should be specific, realistic, operational, clear, and understood by all
parties. It should be specific as to who will do what, how, when, and where.
In the agreement the parties should commit to what they have agreed. Before
signing an agreement one should ask:
● Does the agreement anticipate future contingencies, to avoid surprises and
disappointments that may result in motivation not to uphold it?
● Do we have the authority to sign this agreement?
● Does the other side have the authority to sign this agreement?
● Do we want a tentative agreement, subject to final approval?
● Do we want an interim agreement that covers only part of the issues and leaves
the rest for a further and final agreement?
Execrise 10-12 min
What are some international/domestic examples on negotiation? Explain and write down in class.
Arbitration Agreement
Pls read:
1. Premium Nafta v Privalov [2007] UKHL 40 (also known as Fiona Trust)
2. C v D [2007] EWCA Civ 1282
Nature of Arbitration agreement
 As a contract
 Parties to this contract
o Dallah v Government of Pakistan [2009] CA decision at para 61: “If the person
opposing recognition or enforcement of an award can prove that he was not a
party to the relevant arbitration agreement, it will rarely, if ever, be right to
recognise or enforce it solely on the grounds that he has failed to take steps to
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challenge it before the supervisory court”. Decision upheld by the SC in [2010]
UKSC 46.
o Capacity
o Third parties
o Multiparties
 Several parties in one contract
 Several contracts with different parties
 Class actions: Stolt-Nielsen SA et al v AnimalFeeds Int’l Corpn. No 081198 (Apr 27, 2010) – imposing class arbitration on parties who have not
agreed to authorise class arbitration is inconsistent with the FAA, so award
was set aside because arbitrators exceeded their powers (decision of US
SCourt).
Purpose of the contract
o Consent of parties
o Established jurisdiction of tribunal
o Excludes or limits jurisdiction of the court
o Source of powers of the tribunal
Arbitration clause v submission agreement.
Finality of arbitration – see:
o Shell Egypt West Manzala GmbH & another v Dana Gas Egypt Ltd [2010] 1
Lloyd’s Rep 109
Arbitration agreement and non-signatories. See:
o In Brazil: Trelleborg Industri AB v Anel, decision of the Sao Paolo CA of 24 May
2006
o Chaval Navegacao Ltda v Liebherr Brasil Guindastes e Maquinas Operatrizes
Ltda, decision of the Superior Court of Justice of 3 August 2006.
Law applicable to the arbitration agreement
 The same law as the proper law of the substantive contract – Sonatrach Petroleum Corpn
v Ferrell Int’l Ltd [2002]
 The law of the seat of arbitration – C v D [2007] EWCA Civ 1282***
Separability or Autonomy of the Arbitration Agreement
 Meaning
 Rationale
 Limits
 Governing law
 Prima Paint v Flood & Conklin Mfg Co, 388 US 395 (1967)
 SNE v Joc Oil Ltd, YBCA 384 (1990)
 Heyman v Darwin [1942] AC 356
 Premium Nafta v Privalov [2007] UKHL 40 (also known as Fiona Trust)
 Ertel Bieber & Co v Rio Tinto Co [1978] AC 260 – on illegality of arbitration clause.
Formal Validity
This proves existence of the agreement
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Applicable law – art II, NYC, art 7 ML
Writing requirement
Signature
Standard clause or special provision
Incorporation by reference
Arbitrability
Substantive Validity
Proves what the parties agreed
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Applicable law
Capacity of the parties
Robobar Ltd v Finncold SAS, YBCA 739 (1995) – gives a very good distinction between
formal and substantive validity.
Effect of valid arbitration agreement
 Recognition and enforcement of arbitration agreement – art II(3) NYC
 Award may be refused recognition and enforcement – art V, VII, NYC
 Obliges national courts to stay proceedings or deny jurisdiction
 Claim for damages where it is breached – Kallang Shipping SA Panama v AXA
Assurance Senegal and Sotrade Denizcilik Sanayi VE Tikaret AS v Amadou Lo, The
Duden, [2008] EWHC 2761 (Comm).
Scope of arbitration agreement
 Disputes covered by the arbitration agreement
 Particular contractual relationship
 Non-contractual claims
 Set-off and counter claims
Termination of arbitration agreement
 By agreement of the parties
 Lack of objection to the jurisdiction of the courts.
o John Downing v Al Tameer Est, Shiekh Khalid Al Ibrahim [2002] All ER (Comm)
545
o Multiplex Construction Pty Ltd v Suscindy Mgt Pty Ltd [2000] NSWSC 484
 Null and void
o Where steps are taken in the proceedings before a national court: Belcourt v
Grivel SLR et al, 2009 WL 3764085, decision of the District court of Utah, USA.
o Accentuate Ltd v Asigra Inc [2009] EWHC 2655 (QB) – as agents under the
Commercial Agents (Council Directive) Regulation 1993 is mandatory (as held in
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Ingmar GB Ltd v Eaton Leonard Technologies Ltd [2000] ECR I-9305) so that the
choice of an arbitration seat or proper law of the underlying contract which will
not give effect to the Regulation is null & void or inoperative for purposes of s
9(4) EAA.
Inoperative clauses: evidences parties’ intention to arbitrate but the clause may be vague,
ambiguous or pathological.
o Referral to non-existent institution: Distributor v Manufacturer, YBCA, 1997, vol
XXII, p 266 (referred parties to ICC)
o Hennex Corp v GMI Inc, YBCA, 1990, vol XV, p 594 (referred parties to JCAA)
o Institution no longer in existence having been abolished by statute – Dalimpex Ltd
v Janicki [2003] 172 OAC 312 (CA, Ontario)
o Referral to arbitration in an unspecified third country – Lucky Goldstar Int’l (HK)
Ltd v Ng Moo Kee Eng Ltd, YBCA, 1995, vol XX, p. 280 (referred parties to ad
hoc arbitration)
o Clause can become inoperative through its waiver – ACD Tridon Inc v Tridon
Australia Pty Ltd [2002] NSWSC 896, YBCA, 2004, vol XXIX, p 533
Incapable of being performed
Drafting Exercise
 agree to arbitrate
 scope of the agreement
 finality of award
 institution or rules
 seat of arbitration
 arbitrators: number, method of appointment & qualification, appointing authority
 language of arbitration
 time
 costs
 confidentiality
 waiver of sovereign immunity
Defective arbitration clause
 Inconsistency
 Uncertainty
 Relevance of court attitude – see: Lucky Goldstar Int’l (HK) Ltd v Ng Moo Kee Engr Ltd
[1993] 2 HKLR 73
Cases
 Fiona Trust and Holding Corp v Privalov [2008] 1 Lloyd’s Rep 254 also known as
Premium Nafta Products Ltd & Others v Fili Shipping Co Ltd & Others [2007] UKHL 40
 Entico Corp Ltd v UNESCO [2008] 1 Lloyd’s Rep 673
 Dallah Real Estate & Tourism Holding Co v Ministry of Religious affairs,
Government of Pakistan, [2009] EWCA Civ 755, [2009] WLR (D) 250 – on parties to
the arbitration agreement. See the UKSC decision at [2010] UKSC 46 where the decision
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of the CA was upheld but note that the Paris Court of Appeal came to the opposite
decision.
Braes of Doune Wind Farm (Scotland) Ltd v Alfred McAlpine Business Services Ltd
[2008] 1 Lloyd’s Rep 608
City of London v Sancheti [2008] EWCA Civ 1283, [2009] Bus LR – to be bound by an
arbitration agreement, one has to be party to the agreement.
C v D [2007] 2 Lloyd’s Rep 367, [2007] EWCA Civ 1282, (in the HC – [2007] EWHC
1541 (Comm))
Tamil Nadu Electricity Board v ST-CMS Electric Co Pte Ltd [2008] 1 Lloyd’s Rep 93
Lupex v Nigeria Overseas Chartering & Shipping Ltd [2003] 15 NWLR (pt 844): SC
decision on upholding arbitration agreements.
Downing v Al Tameer Establishment [2002] BLR 323
Hussmann (Europe) v Al Ameen Development and Trade [2000] 2 Lloyd’s Rep 83
Robobar Ltd v Finncold, YBCA 739 (1995)
Bonmar Oil NV v Entreprise Tunisienne d’Activites, YBCA 466 (1988)
Kahn Lucas Lancaster Inc v Lark International Ltd, 186 F.3d 210 (2nd Cir 1999)
Sphere Drake Insurance plc v Marine Towing Inc, 16 F.3d 666 (5th Cir 1994)
Compagnie de Navigation et Transport SA v Mediterranean Shipping Company, YBCA
690 (1996)
Tradax Export SA (Panama) v Amoco Iran Oil Company (US), YBCA 532 (1986)
Zambia Steel & Building Supplies Ltd v James Clark & Eaton Ltd [1986] 2 Lloyd’s Rep
225
Lucky Goldstar International (HK) Ltd v Ng Moo Kee Engineering Ltd [1993] 2 HKLR
73
Paul Smith Ltd v H&S International Holdings Ltd [1991] 2 Lloyd’s Rep 127
Sojuznefteexport (SNE) v Joc Oil Ltd, YBCA 384 (1990)
Arab African Energy Corporation Ltd v Olieprodukten Nederland BV [1983] 2 Lloyd’s
Rep 419
Bank Mellat v Helleniki Techniki SA [1984] QB 291
Dow Chemical France et al v Isover Saint Gobain (ICC no 4131) YBCA 131 (1984)
Prima Paint v Flood & Conklin Mfg Co., 388 US 395 (1967)
Options of Chicago v Kaplan & MK Investments Inc, XXII, YBCA 278 (1997); 115 SCt
1920 (1995)
Award in ICC Case no 6850, XXIII YBCA 37 (1998)
Esso v Plowman (1995) 183 CLR 10 – on confidentiality of the arbitration proceedings
Secretary of State for Transport v Stagecoach South Western Trains Ltd [2009] EWHC
2431 (Comm) – on confidentiality of arbitral proceedings.
Sonatrach Petroleum Coprn v Ferrell Int’l Ltd [2002] 1 All ER (Comm) 627 – on law
applicable to the arbitration agreement.
BT plc v SAE Group Inc [2009] EWHC 252 (TCC) – since there is no binding arbitration
agreement between the parties, the AA 1996 did not apply.
Broda Agro trade (Cyprus) Ltd v Alfred C. Toepfer Int’l GmbH [2010] EWCA Civ 1100,
[2010] WLR (D) 246 – party taking steps in an arbitration though he alleges not to be
party to the arbitration agreement can challenge the award.
Additional Reading
 Gary Born, International Commercial Arbitration, Volume I, Wolters Kluwer, 2009,
chapters 3-9 – for a detailed exploration of the arbitration agreement.
 Margaret Moses, International Commercial Arbitration, CUP, 2008, chapter 3 on drafting
the arbitration agreement
Exercise
What are the essential requirements of an arbitration agreement?
What are the formal validity requirements of an arbitration agreement?
Analyse the doctrine of separability of the arbitration agreement.
What is the relevance of the writing requirement as it relates to arbitration agreements?
What is meant by ‘null and void, inoperative and incapable of being performed’ in art II
(3) NYC?
6. Is confidentiality of the arbitration proceedings, documents and awards desirable?
7. Draft an arbitration clause and justify the points included and give reasons for those left
out.
8. What major defects can you spot in the following clauses and how would you amend
them:
1.
2.
3.
4.
5.
a. “Any differences between the parties, including with respect to interpretation,
which they cannot resolve by agreement, shall be amicably resolved by arbitration
under the English Supreme Court. There shall be three arbitrators, one each to be
nominated by the parties and the chairman to be agreed. If the parties and the
party nominated arbitrators cannot agree on the chairman, the appointment shall
be made by the president of the court of international arbitration in London or
Paris. The venue of the arbitration shall be in the city where the chairman lives
and the arbitration shall be conducted in accordance with internationally accepted
rules.”
b. “Any dispute or claim by one party against the other, or any difference relating to
the interpretation of this agreement, shall be amicably resolved by arbitration
under the rules of the international arbitration court. The arbitration shall be held
in London or Shanghai at the exclusive choice of the defendant. The sole
arbitrator shall be Dr (Mrs) Plant of the School of Law, University of Lagos,
Nigeria.
NEXT CLASS #4 read
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Pg 13 to 48 –IFC manual
Chapt 5 and 7 –Chatterjee book
Pg205-230-Dispute resolution and lawyers.
Read –Cv D, Dallah v Govt of Pak case
Draft Arbitration Agreement