Professor Ferrari named President of the Thailand Arbitrator Committee established at the Thailand Arbitration Center

On June 7, 2016, Professor Ferrari, the Director of the Center, was appointed President of the Thailand Arbitrator Committee established at the Thailand Arbitration Center (THAC). The tasks of the President of the Arbitrators Committee are outlined in the Arbitrator Committee Rules. In light of these Rules, Professor Ferrari will preside of the meetings in which the Thailand Arbitrator Committee will take decisions of the challenges to the arbitrators. As President of the Arbitrator Committee, Professor Ferrari will, however, be the sole responsible for appointments and removals of arbitrators.

The EU Proposal for an Investment Court System

The Center is pleased to announce this September’s session of the Forum of the Center for Transnational Litigation, Arbitration and Commercial Law, entitled “The EU Proposal for an Investment Court System”. The event will take place on Monday, 12 September 2016, from 6.00 – 8.00 pm, in the Lester Pollack Colloquium Room, Furman Hall 900 (245 Sullivan Street, New York, NY 10012).

It is a great pleasure to be able to announce that on the occasion of this session Dr. Inka Hanefeld will give a talk on the aforementioned topic and that Professor Robert Howse and Barry Appleton agreed to act as commentators.

Dr. Inka Hanefeld LL.M. (New York University), Attorney-at-law (New York), is a German and New York qualified lawyer specialized in dispute resolution and, in particular, in arbitration. Inka is the founding partner of the German dispute resolution law firm Hanefeld Rechtsanwälte, Hamburg, Germany. In 2013, Inka was appointed as arbitrator to the panel of arbitrators at the Centre for Settlement of Investment Disputes (ICSID) by the German Government. In 2015, Inka became Vice-President of the ICC International Court of Arbitration. Since 2015, she is also court member of the London Court of International Arbitration (LCIA) and designated member of the ICDR International Panel of Arbitrators. Inka primarily acts as arbitrator and counsel in domestic and international arbitration proceedings in the fields of international trade, industrial plant and machine building, energy, banking & finance, as well as in post-M&A and investor-State disputes. Her expertise has been recognized in various international rankings.

Robert Howse is the Lloyd C. Nelson Professor of International Law at NYU School of Law. Professor Howse received his B.A. in philosophy and political science with high distinction, as well as an LL.B., with honours, from the University of Toronto, where he was co-editor in chief of the Faculty of Law Review. He also holds an LL.M. from the Harvard Law School. He has been a visiting fellow at the London School of Economics and visiting professor at Harvard Law School, Tel Aviv University, Hebrew University of Jerusalem, the University of Paris 1 (Pantheon-Sorbonne), Tsinghua University, and Osgoode Hall Law School in Canada and taught in the Academy of European Law, European University Institute, Florence. He is a frequent consultant or adviser to government agencies and international organizations such as the OECD, the World Bank, UNCTAD, the Inter-American Development Bank, the Law Commission of Canada and the UN Office of the High Commissioner for Human Rights. He was a contributor to the American Law Institute WTO project. He is a co-founder and co-convener of the New York City Area Working Group on International Economic Law and serves on the American Bar Association Working Group on Investment Treaties. Professor Howse serves on the editorial boards of the London Review of International Law, Transnational Legal Theory, The Journal of World Trade and Investment, among others. Professor Howse’s article with Ruti Teitel “Beyond Compliance: Rethinking Why International Law Really Matters” was awarded the Global Policy Best Article Prize 2010 (shared with Joseph Stiglitz et al). Prior to pursuing legal studies, Howse held a variety of posts with the Canadian foreign ministry, including as a member of the Policy Planning Secretariat and a diplomat at the Canadian Embassy in Belgrade.

Barry Appleton is the Managing Partner of Appleton & Associates International Lawyers in Toronto. He is a member of the bars of Ontario, New York, the District of Columbia and the US Court of International Trade.  For more than twenty years, he has practiced international investment treaty arbitration under the NAFTA. bilateral investment treaties, appearing as lead counsel in many international arbitrations He also has represented client submissions at the World Trade Organization. Mr. Appleton is the author of the three volumes of NAFTA: Legal Text and Interpretative Materials, (Thomson West, 2007), the treatise Navigating NAFTA (Carswell,1994) and many articles involving the adjudication of international investment treaty law issues. He is the global editor of Westlaw’s Investor-State Reports and Investor- State Digest. He also acts as the Vice Chair of the International Arbitration Committee of the American Bar Association Section on International Law and co-chairs the International Arbitration Committee’s Investment Treaty Working Group which is currently drafting a Report on the EU Investment Court Proposal.

Please note that the Chatham House rule applies.

Center co-sponsors an evening conference for female arbitration practitioners

The Center co-sponsors an event organized under the auspices of ARBITRALWOMEN. The International Network of Women in Dispute Resolution to be held at the office of Bryan Cave on 15 September 2016, from 6.00 pm to 9.00 pm. The speakers will be Gabrielle Nater-Bass, Homburger (Switzerland), Claudia T. Salomon, Latham & Watkins (New York), Emma Lindsay, Bryan Cave (New York), Anna Tevini, Shearman & Sterling (New York), Rocío Digón, International Chamber of Commerce (New York), Yasmine Lahlou, Chaffetz Lindsey (New York), amd Katie Hyman, Akin Gump Strauss Hauer & Feld (Washington, D.C.). For the program brochure, please click here.

Professor Ferrari and Dr. Friedrich Rosenfeld publish paper on “Bridging the Gap between Investment and Commercial Arbitration at the Enforcement Stage”

Professor Franco Ferrari, the Director of the Center, and Dr. Friedrich Rosenfeld, a former scholar-in-residence at the Center and currently a Global Adjunct Professor at NYU Law in Paris, a Visiting Professor at the International Hellenic University in Thessaloniki and Lecturer at Bucerius Law School in Hamburg, have just published a paper in the NYU Journal of Law & Business (vol. 12: 295) analyzing the interaction of between the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958(New York Convention) and international investment law. The starting point of their analysis are the cases in which the domestic authorities in the country where enforcement of an arbitral award is sought unduly interfere with the enforcement instead of taking the arbitration-friendly stance required by imposed by the New York Convention. In these instances, a success in arbitration proceedings may turn out to be a mere pyrrhic victory. This holds true, in particular, where all of the debtor’s assets are located in one jurisdiction. Here, a contracting state’s compliance deficit with the New York Convention cannot be mitigated by seeking enforcement in a different contracting state. In response to these shortcomings, investors have begun to exploit the linkages between the New York Convention and the regime of international investment law. And it is on these linkages that the authors have focused.

Professor Diego P. Fernandez Arroyo appointed member of the ICSID Panels of Arbitrators and Conciliators by the Republic of Argentina

On July 5, 2016, the Republic of Argentina appointed Professor Diego P. Fernandez Arroyo, a professor of law at Sciences Po Law School in Paris, and formerly a scholar-in-residence of the Center as well as a Global Professor at the NYU Paris Campus, to the ICSID Panels of Arbitrators and Conciliators. The ICSID is a forum for international investment dispute settlement that was established by a 1966 convention.

Professor Arroyo teaches subjects related to international dispute resolution, arbitration, conflict of laws, and comparative law and his books and articles have been published in more than twenty countries. He is actively involved in the practice of international arbitration as an independent arbitrator and an expert. He represents Argentina at the UNCITRAL Working Group on Arbitration. Professor Fernández Arroyo is also a member of the Curatorium of the Hague Academy of International Law, a former President of the American Association of Private International Law, and the current Secretary-General of the International Academy of Comparative Law. Professor Fernández Arroyo is actively involved in the practice of international arbitration as an independent arbitrator and an expert. He has developed several projects in the field of arbitration and international business law for the European Union, the Andean Community, the MERCOSUR, and the Latin-American Integration Association. He has published several books and a number of articles and notes in publications of more than 20 countries.

This appointment brings to four the number of NYU Law community members who have been appointed as arbitrators/conciliators to the ICSID by various governments:

Professor Diego Arroyo, professor of law at Sciences Po Law School in Paris, appointed by the Republic of Argentina

Adjunct Professor Pedro Martinez-Fraga, partner at Bryan Cave, appointed by the United States

Adjunct Professor Brian King, partner at Freshfields Bruckhaus Deringer, appointed by Saint Lucia

Professor Franco Ferrari, Director of the Center for Transnational Litigation, Arbitration and   Commercial Law,  appointed by Saint Lucia

 

Professor Ferrari to speak at the 49th session of the United Nations Commission on International Trade Law

Upon the invitation of the head of the UN Office of Legal Affairs, International Trade Law Branch, who also acts as Secretary to the UN Commission on International Trade Law (UNCITRAL), Professor Ferrari, the Center’s Director, will give a talk on specific aspects of the rule of law at this year’s Commission session. More specifically, Professor Ferrari will address what efforts are being made to avoid that the uniform rules elaborated by UNCITRAL be applied in a way that undermines the very purpose behind the unification efforts leading to those very same rules.

For this year’s Commission session’s program, please click here.

Center co-hosts Tribunal Secretary Accreditation Programme

The Center co-hosts, with the Hong Kong International Arbitration Centre (HKIAC), the world’s first tribunal accreditation programme. As an extension of HKIAC’s award-winning tribunal secretary service, the programme aims to train and accredit a new generation of qualified tribunal secretaries. The programme is organized as a two day workshop featuring practical training by experienced tribunal secretaries, followed by a written exam and oral interview. Those who pass the exam may apply for admission to a list of accredited tribunal secretaries maintained by HKIAC. The programme is taught by an experienced faculty and overseen by an advisory board which includes eminent arbitrators from around the world. For access to the brochure, please click here.

Center co-hosts arbitration seminar at Sciences-Po in Paris

The Center hosts, together with Sciences-Po, a seminar on “how do arbitrators decide” that is to take place on 30 May 2016, from 4.30-6.30 pm. The event’s main speaker will be Eduardo Silva Romero (Dechert Paris), while Prof. Fabien Gélinas (McGill University), Prof. Pierre Mayer (University Paris 1), Ms. Isabelle Michou (Herbert Smith Freehills Paris) and Prof. Franco Ferrari (the Center’s Director)  will act as commentators. The event will be moderated by Prof. Diego Arroyo (Sciences-Po). For more info, click here

How International Should International Commercial Arbitration Be?

This is to announce a conference organized by the Center, together with the Brazilian Arbitration Committee, entitled “How International Should International Commercial Arbitration Be?” The conference will  bring together speakers from the United States and Brazil and will take place on 19 April 2016, from 2.30 -7.30 pm, , in the Lester Pollack Colloquium Room, Furman Hall 900, 245 Sullivan Street, New York, NY 10012. For the full program, please click here.

 

Personal Jurisdiction and Forum Non Conveniens: Are the Two Shores of the Atlantic Getting Closer?

This is to announce this March’s session of the Forum of the Center for Transnational Litigation, Arbitration and Commercial Law, entitled “Personal Jurisdiction and Forum Non Conveniens: Are the Two Shores of the Atlantic Getting Closer?” The event will take place on Monday, 28 March 2016, from 6.00 – 8.00 pm, in the Lester Pollack Colloquium Room, Furman Hall 900 (245 Sullivan Street, New York, NY 10012).

It is a great pleasure to be able to announce that on the occasion of that session, Professor Andrea Bonomi will give a talk on the aforementioned topic and both Professors Linda J. Silberman and Franco Ferrari will comment.

Andrea Bonomi, who received his LL.B from Padua University, holds two Ph.d. degrees (one from Innsbruck University and one from Bologna University), is Professor of Comparative Law and Private International Law at the Faculty of Law and Criminal Justice of Lausanne University (since 2002). Since 2006, Andrea Bonomi is also the Director of the Centre for Comparative, European and International Law at Lausanne University. Andrea Bonomi, who is a former Member of the Swiss delegation at the Hague Conference of Private International Law and the Rapporteur of the Hague Protocol on the Law Applicable to Maintenance Obligations of 23 November 2007, is a Member of the European Group of Private International Law (GEDIP), an Associate Member of the International Academy of Comparative Law, and a member of several other professional associations. He is a prolific author and is currently also the Editor of the Yearbook of Private International Law.

Linda J. Silberman is the Martin Lipton Professor of Law at New York University and Co-Director of the Center. She is a leading figure in the United States in private international law and transnational litigation, and her academic and scholarly interests range from numerous areas of commercial law to personal and family matters. At NYU, Professor Silberman teaches a range of courses, including Civil Procedure, Comparative Procedure, Conflict of Laws, International Litigation/Arbitration and International Commercial Arbitration. She is co-author of an important Civil Procedure casebook (now in its 3rd edition) and of a recent book on Comparative Civil Procedure. She was the co-Reporter for the American Law Institute Project–Recognition and Enforcement of Foreign Judgments: Analysis and Proposed Federal Statute, and an adviser to two other American Law Institute projects: Intellectual Property: Principles Governing Jurisdiction, Choice of Law and Judgments in Transnational Disputes and the Restatement Third on International Commercial Arbitration. Professor Silberman is also a Member of the State Department’s Advisory Committee on Private International Law and has been a member of numerous U.S. State Department delegations to the Hague Conference. Professor Silberman combines her scholarship and academic work with other roles, such as special referee, expert witness and consultant in a number of important cases. Her work was cited by the Supreme Court of the United States on several occasions.

Franco Ferrari, who joined NYU on a full-time basis in September 2010, after serving as visiting professor for various years, is also chaired professor of international law at Verona University School of Law in Italy. Previously, he was chaired professor of comparative law at Tilburg University in the Netherlands and Bologna University in Italy. After serving as member of the Italian Delegation to various sessions of the United Nations Commission on International Trade Law (UNCITRAL) from 1995 to 2000, he served as Legal Officer at the United Nations Office of Legal Affairs, International Trade Law Branch (2000-2002), with responsibility for numerous projects, including the preparation of the UNCITRAL Digest on Applications of the UN Sales Convention (2004 edition). Professor Ferrari has published more than 270 law review articles in various languages and 17 books in the areas of international commercial law, conflict of laws, comparative law and international commercial arbitration. Professor Ferrari is a member of the editorial board of various peer reviewed European law journals (Internationales Handelsrecht, European Review of Private Law, Contratto e impresa, Contratto e impresa/Europa, Revue de droit des affaires internationales). Professor Ferrari also acts as arbitrator both in international commercial arbitration’s and investment arbitration’s.

Please note that the Chatham House rule applies.

NYU Arbitration Forum on “Arbitrator Power: A Transatlantic Divide” – 29 February 2016

This is to announce the February 2016 session of the Arbitration Forum of the Center for Transnational Litigation, Arbitration and Commercial Law, entitled “Arbitrator Power: The Transatlantic Divide”, which will take place on Monday, 29February 2016, from 6.00 – 8.00 pm, in the Lester Pollack Colloquium Room, Furman Hall 900 (245 Sullivan Street, New York, NY 10012).

It is a great pleasure to be able to announce that Professor Margaret Moses will give a talk on the aforementioned topic and that Dr. Monique Sasson and Mr. Christian Alberti agreed to act as commentators.

Margaret L. Moses is Professor of Law and Director of International Programs at Loyola University Chicago. A scholar in the field of international commercial arbitration, the second edition of her treatise on international commercial arbitration was published in May 2012 by Cambridge University Press. Her teaching and writings are informed by her participation as an arbitrator or advocate in arbitrations under the auspices of the International Chamber of Commerce, Court of Arbitration and the American Arbitration Association’s International Centre for Dispute Resolution, as well as in ad hoc arbitrations. In addition to arbitration, her areas of interest and research include international business transactions, international letters of credit,  and international trade finance. Her articles on arbitration, international letters of credit, good faith, and other topics have appeared in many U.S. law reviews, as well as in foreign and  international journals. She has been an invited speaker at national and international conferences in many different countries. Professor Moses heads Loyola Chicago’s Vis Moot Arbitration program, which sends students to compete in both Vienna and Hong Kong. She has a J.D. degree from Columbia University School of Law and a Ph.D. degree from Indiana University.
 
Dr.  Monique Sasson initially qualified as an Italian Avvocato and practiced in Rome (with Studio Legale Chiomenti), where she appeared before arbitral tribunals and Italian courts. In 2000, she joined Herbert Smith’s international litigation/arbitration practice group in London, qualified as an English solicitor (and subsequently as a solicitor advocate), and acted for clients in a number of international arbitration cases as well as litigation matters. In 2009, Monique obtained her Ph.D. degree from Cambridge University, and the following year Kluwer published a revised version of her doctoral thesis under the title Substantive Law in Investment Treaty Arbitration: The Unsettled Relationship Between International Law and Municipal Law. In 2015, Monique joined JAMS as a full time arbitrator, dividing her time between New York and London. Monique currently resides in New York City, is a member of the New York Bar, and serves on the New York City Bar Committee on Arbitration.  She is an associate editor of Kluwer Arbitration Blog, and is the Co-Managing Editor of several ITA publications, including the ITA Arbitration Report and World Trade and Arbitration Materials.  Monique is a Member at Large of the ITA Advisory Board and its Executive Committee.
 
 
Christian P. Alberti is the AVP/Director of the International Centre for Dispute Resolution (ICDR), the international division of the American Arbitration Association (AAA). He supervises the ICDR’s staff and center management activities and oversees hundreds of large complex multi-party arbitrations and mediations covering all types of disputes and industries each year. Prior to joining the ICDR in 2005, Christian headed the Italian Desk of a mid-size law firm in Germany. Christian is the former President and Honorary Member of the Alumni Association of the Willem C. Vis International Commercial Arbitration Moot (MAA). He is regularly invited to speak at international conferences and guest lectures at various law schools about international arbitration and mediation in the United States and abroad. He successfully coaches New York University’s Vis Moot Team since 2007 and its Foreign Direct Investment Moot Team since 2008. He is a founding member of the International Arbitration Club of New York, a member of the Arbitration Committee of the New York City Bar (2012-2015), an associate of Pace University’s Institute of International Commercial Law, as well as a member of various international ADR associations. After studies at the Philipps-University of Marburg, the German University for Administrative Sciences Speyer (DHV) and the University of Queensland he was admitted to practice law in Germany in 2003 and in the State of New York in 2011. He obtained an LL.M. from Tulane University Law School in 2002.
 

Center Hosts 5th Arbitration Moot at Hogan Lovells

NYU’s  Center  for  Transnational  Litigation,  Arbitration  and  Commercial  Law  will  hold  its  Fifth  Annual Arbitration Practice Moot  on  Saturday,  27  February  2016  and  Sunday,  28  February  2016.    The  event  will  be  co-hosted  by  Hogan  Lovells US  LLP  and  NYU’s  International  Arbitration  Association.    The  principal  objective  of  the  NYU  Practice  Moot  is  to provide  a  forum  within  which  students  participating  in  this  year’s  Willem  C.  Vis  International  Commercial Arbitration  Moot  can  refine  their  oral  presentations  by  pleading  before,  and  receiving  constructive  feedback  from, panels of distinguished arbitrators.

For the program please click here.

No Reservations, Hong Kong: A ‘Choice of Remedies’ If the Tribunal Makes a Preliminary Ruling on Its Jurisdiction?

I. Introduction

The ‘choice of remedies’ in international commercial arbitration refers to an award-contesting party’s freedom to opt, without prejudice, between challenging an award via (1) the passive remedy at the enforcement courts, or (2) the active remedy at the seat of arbitration (hereinafter referred to as the “seat”).[1] The former refers to raising objections to the enforcement of an award,[2] while the latter typically refers to an application to set aside an award, but also includes a challenge to a tribunal’s preliminary ruling affirming its own jurisdiction.[3] This ‘choice of remedies’ has been stated to be consistent with the regime under the New York Convention,[4] and to rest at “the heart of [the Model Law’s] entire design”.[5]

Until early 2015, the courts of Hong Kong, a Model Law jurisdiction, had affirmed the ‘choice of remedies’ available to parties contesting a claim made in arbitration.[6] However, the Hong Kong position is imperilled by the Hong Kong Court of First Instance’s (“HKCFI”) decision in Astro,[7] where it held that a party who did not challenge a tribunal’s preliminary ruling affirming its jurisdiction and only reserved its right to do so is not later entitled to raise jurisdictional objections during enforcement proceedings. Astro runs counter to a decision by a court in another Model Law jurisdiction, PT First Media, where the Singapore Court of Appeal (“SGCA”) addressed the same awards that Astro was concerned with, in the course of parallel enforcement proceedings.

This note examines: (1) Astro’s holding, and (2) the broader question of whether the ‘choice of remedies’ exists if a tribunal has made a preliminary ruling affirming its jurisdiction. Ultimately, this note concludes that there is and should be a ‘choice of remedies’ even when a tribunal has rendered a preliminary ruling on its jurisdiction.

II. Parallel Enforcement Proceedings in Astro and PT First Media

Astro and PT First Media concerned awards (the “Awards”) made against an award debtor (“First Media”) in favour of non-parties to an arbitration agreement. These non-parties had been joined to the arbitration pursuant to Rule 24(b) of the 2007 Singapore International Arbitration Centre Rules (“SIAC Rules”). Although First Media had objected to the joining of the non-parties, it did not invoke Article 16(3) of the Model Law to challenge the tribunal’s preliminary ruling affirming its jurisdiction over the dispute concerning the non-parties (the “Preliminary Ruling”). Instead, First Media continued to participate in the arbitration on the merits, reserving its position on the Preliminary Ruling. First Media also did not subsequently apply to set aside the Awards in Singapore, the seat, within the applicable time limit.

In enforcement proceedings in Singapore, the SGCA held that the Awards had been made in excess of jurisdiction because Rule 24(b) of the SIAC Rules did not grant the tribunal the power to join non-parties to the arbitration.[8] The SGCA thus denied enforcement of the Awards. Importantly, the SGCA held that Singapore’s arbitral framework adopts the Model Law, including the principle of the ‘choice of remedies’.[9] Pursuant to the ‘choice of remedies’, First Media was able to raise its jurisdictional objection at the enforcement proceedings even though First Media had chosen not to challenge the Awards at the seat and instead reserved its position on the tribunal’s jurisdiction. Additionally, the SGCA held that First Media’s conduct did not give rise to a waiver or estoppel, which would otherwise have precluded it from raising jurisdictional objections at the enforcement stage.[10]

The situation in Hong Kong was different. First Media failed to challenge the enforcement of the Awards in a timely manner because it initially thought that it had no assets in Hong Kong.[11] However, First Media subsequently changed its position when the award creditors obtained a garnishee order in respect of a third-party’s debt to First Media. Thereafter, First Media applied for an extension of the applicable time limits and for the enforcement orders to be set aside on the basis of the tribunal’s lack of jurisdiction.[12]

The HKCFI dismissed First Media’s application on two alternative grounds.[13] The first relatively uncontentious ground was that there were no “good reasons” for extending the time limits. This was because First Media’s initial choice to not challenge enforcement was deliberate and had caused a considerable 14-month delay.

The second ground, on the other hand, jeopardises the principle of the ‘choice of remedies’ that the Hong Kong courts themselves had earlier endorsed.[14] Notwithstanding First Media’s reservation on jurisdiction, the HKCFI held that First Media’s conduct breached the principle of good faith under the New York Convention. First Media was thereby precluded from resisting enforcement of the Awards in Hong Kong under Section 44(2) of the Hong Kong Arbitration Ordinance (which gives effect to the New York Convention grounds for non-enforcement).[15]

III. The ‘Choice of Remedies’ and Article 16(3) of the Model Law

The Hong Kong court’s decision effectively abrogates a party’s ‘choice of remedies’ if a tribunal renders a preliminary ruling as to its jurisdiction. The upshot of Astro is that a party’s reservation of its position on the tribunal’s jurisdiction will not preserve its right to raise such objections at the enforcement stage. If Astro is to be followed, a party who objects to the tribunal’s jurisdiction but wishes to continue with the arbitration must challenge the tribunal’s preliminary ruling on jurisdiction at the seat of arbitration under Article 16(3) of the Model Law, or risk being later found lacking in good faith and thereby forfeiting its right to raise its jurisdictional objections during enforcement proceedings. In such a situation, the ‘choice of remedies’ is illusory for a party who wishes to challenge an award both on its merits and on the lack of jurisdiction.

Accordingly, it is difficult to reconcile Astro with the Hong Kong court’s previous position affirming the ‘choice of remedies’.[16] As one commentary notes, “[e]ither [First Media] did have a right to choose its remedies, or it did not”.[17] An application of a ‘good-faith principle’ to restrict the exercise of the right to a ‘choice of remedies’ effectively renders such a right non-existent.

One way to cut the Gordian knot is to argue that the ‘choice of remedies’ becomes unavailable if a tribunal renders a preliminary ruling affirming its jurisdiction.[18] In other words, that a party cannot choose remedies because the failure to invoke Article 16(3) of the Model Law (or its equivalent) to challenge a tribunal’s preliminary ruling on jurisdiction precludes that party from subsequently raising jurisdictional objections, whether at the seat or before an enforcement court. Ghilbrazade, a proponent of this view, argues that the final text of Article 16(3) drew “a clear line between the challenge mechanism under Article 16(3) being the sole recourse” and the availability of the ‘choice of remedies’ where there was no preliminary ruling on jurisdiction.[19] In support of her view, Ghilbrazade cites case law from Canada,[20] Australia,[21] Hong Kong,[22] and particularly, Germany.[23] However, as will be shown in the following paragraphs, there are several flaws in Ghilbrazade’s arguments that undermine her position.

First, the Model Law drafters did not intend a party’s failure to engage Article 16(3) to preclude it from raising jurisdictional challenges before an enforcement court. The discussions on the text of Article 16(3) were only considered in the context of challenges that a dissatisfied party could raise at the seat, and not in the broader context of challenges that could be raised in enforcement courts.[24] This is reflected in the travaux préparatoires on earlier drafts of Article 16(3), where the seat’s intervention under Article 16(3) was regarded as an alternative to setting aside proceedings under Article 34, but was silent as to the position vis-à-vis enforcement proceedings.[25] Thus, it is unsurprising that the Analytical Commentary on an earlier draft of Article 16(3) recognised a party’s right to object to the tribunal’s preliminary ruling on its jurisdiction during enforcement proceedings, even though this was not explicitly mentioned in text of the said earlier drafts.[26] While the Secretariat Note on the final draft of Article 16(3) is silent as to whether this choice remained possible,[27] nothing in the travaux préparatoires indicates that the position expressed in the Analytical Commentary was to be changed. Therefore, it would be disingenuous to suggest that the adopted version of Article 16(3) was intended to be the sole recourse to challenge a tribunal’s preliminary ruling on its jurisdiction.

Second, the cases cited by Ghilbrazade do not corroborate her position:[28] these cases only considered Article 16(3) in the context of (a) setting aside proceedings at the seat;[29] or (b) finding an estoppel at the enforcement stage.[30] These cases are thus consistent with two aspects of PT First Media, namely, the SGCA’s (1) finding that waiver or estoppel could effectively annul the ‘choice of remedies’; and (2) obiter dicta that failure to challenge a tribunal’s preliminary ruling on jurisdiction will likely preclude a party from raising further jurisdictional challenges at the seat but not before enforcement courts.[31]

Lastly, despite Ghilbrazade’s heavy reliance on German case law,[32] German courts appear open to allowing a party to raise jurisdictional challenges at enforcement proceedings even though it failed to challenge the tribunal’s preliminary ruling on jurisdiction. The Oberlandesgericht Hamm (“OLG Hamm”) has previously held that an award debtor could not raise jurisdictional objections at the enforcement stage because it had continued participating in the arbitration on the merits without reserving its position on the tribunal’s preliminary ruling affirming its jurisdiction, and thereby violated the principle of fair conduct of proceedings.[33] Thus, the converse consequence of the OLG Hamm’s holding is that an award debtor who reserves its position on the tribunal’s jurisdiction can raise jurisdictional objections at enforcement proceedings even though it had failed to challenge the preliminary ruling. In fact, the OLG Hamm went further to suggest that if the abovementioned award debtor had made a reservation, the award creditor would have had the burden of applying to the court at the seat to conclusively determine the tribunal’s jurisdiction.[34]

Accordingly, neither the travaux préparatoires of Article 16(3) itself nor case law supports the view that the Model Law’s ‘choice of remedies’ becomes unavailable if a tribunal renders a preliminary ruling affirming its jurisdiction. Therefore, consistent with PT First Media, the notion of a ‘choice of remedies’ remains even if a tribunal renders a preliminary ruling on its jurisdiction, with the consequence that a party in such a situation can raise jurisdictional objections either at the seat or at the enforcement stage.

IV. Policy Reasons for a ‘Choice of Remedies’ Where the Tribunal Makes a Preliminary Ruling on Its Jurisdiction

There are compelling policy reasons for the position taken by the SGCA in PT First Media. If an award-challenging party’s failure to invoke Article 16(3) has a preclusive effect, this would constrain the party to only being able to seek recourse at the seat. Such constraints make little sense if a party objects to the tribunal’s jurisdiction on the ground that there is no valid arbitration agreement; such an objection is tantamount to denying the supervisory jurisdiction of the seat stipulated in the arbitration agreement being challenged.[35]

Moreover, there are legitimate reasons for an award debtor’s reluctance to pursue remedies at a seat he denies agreeing to. For example, the award debtor may have valid concerns as to whether the decisions of the seat would be objective, fair and impartial.[36] If so, the award debtor may want to avoid challenging the tribunal’s jurisdiction at the seat if this could later give rise to an issue estoppel in enforcement proceedings.[37] Alternatively, if the award debtor’s assets are located in a jurisdiction which gives little weight to decisions by the seat, it could consider that setting aside the award at the seat would be costly yet unconstructive.[38] This is because the enforcement courts in such jurisdictions might enforce the award regardless of the decision of the court at the seat of the arbitration.

Thus, the choice between raising jurisdictional challenges before the enforcement courts or at the seat ensures that a party objecting to the existence of a valid arbitration agreement is not prejudiced by limited recourse at a seat that he denies agreeing to. This would also correspond with the Model Law’s intention to be aligned with the New York Convention[39] – which does not regard enforcement courts as unequivocally bound by decisions at the seat.[40]

V. Conclusion

Consistent with the SGCA’s approach in PT First Media, there is and should be a ‘choice of remedies’ even if a tribunal has rendered a preliminary ruling on its jurisdiction, such that a party retains the choice of challenging the tribunal’s jurisdiction at the seat or before the enforcement courts. Although a party’s ‘choice of remedies’ is still subject to the principles of waiver, estoppel or fair conduct, following the position in Singapore and Germany, none will be made out if a party had expressly reserved its position on the tribunal’s jurisdiction. In contrast, until Astro’s appellate ruling, such reservations will have no effect in Hong Kong.[41]

 

David Isidore Tan

David is a candidate for the LL.M. in International Business Regulation, Litigation & Arbitration at the NYU School of Law. He is also a concurrent candidate for the LL.B. (Honours) degree at the National University of Singapore, under the NYU-NUS LLB/LLM Dual Degree Program.

 

[1] PT First Media TBK (formerly known as PT Broadband Multimedia TBK) v Astro Nusantara International BV and others and another appeal [2014] 1 SLR 374 [PT First Media], para. 22; Sir Michael Mustill & Stewart Boyd, The Law and Practice of Commercial Arbitration in England (London: Butterworths, 1982), p. 489.

[2] Based on the grounds in Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 10 June 1958, 330 UNTS 38 (entered into force 7 June 1959) [New York Convention], replicated in UNCITRAL, UNCITRAL Model Law on International Commercial Arbitration, UNGAOR, 40th Sess, Supp No 17, UN Doc A/40/17, (1985) [Model Law] under Article 36.

[3] The tribunal’s preliminary ruling affirming its jurisdiction can be challenged under Article 16(3) of the Model Law. See also PT First Media, supra note 1, para. 22.

[4] Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46 [Dallah], para. 76.

[5] PT First Media, supra note 1, para. 65.

[6] Paklito Investment Ltd v Klockner (East Asia) Ltd [1993] 2 HKLR 39 [Paklito], p. 48, 49.

[7] Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others and AcrossAsia Limited, HCCT 45/2010 [Astro].

[8] PT First Media, supra note 1, paras. 178-185, 191-193, 197 and 198.

[9] PT First Media, supra note 1, para. 143. See also Section 3(1) of Singapore’s International Arbitration Act (Cap 143A, 2002 Rev Ed Sing) (“the Model Law… shall have the force of law in Singapore.”).

[10] PT First Media, supra note 1, para. 224(d).

[11] Astro, supra note 7, para. 37.

[12] Astro, supra note 7, paras. 1, 95.

[13] Astro, supra note 7, paras. 125, 129.

[14] Paklito, supra note 6, p. 48, 49. See also Astro, supra note 7, para. 83.

[15]Astro, supra note 7, paras. 77, 91.

[16] See Tomas Furlong, “Astro v Lippo in Hong Kong: Award Enforced Despite Singapore Court of Appeal’s Finding that the Tribunal Lacked Jurisdiction”, online: Kluwer Arbitration Blog <http://kluwerarbitrationblog.com/2015/03/07/astro-v-lippo-in-hong-kong-award-enforced-despite-singapore-court-of-appeals-finding-that-the-tribunal-lacked-jurisdiction/> (“the judgment appears to go further than the Hong Kong authorities relied on”).

[17] Nicholas Poon, “Issues and Problems in Enforcing Arbitral Awards Across Multiple Jurisdictions: Astro v Lippo, the Hong Kong Edition”, online: Singapore Law Blog <http://www.singaporelawblog.sg/blog/article/102> [Poon].

[18] This is diametrically opposed to the decision in PT First Media, supra note 1. See Nata Ghilbrazade, “Preclusion of Remedies under Article 16(3) of the UNCITRAL Model Law” (2015) 27 Pace Int’l L. Rev. 345 [Ghilbrazade].

[19] Ghilbrazade, supra note 18, p. 384. See also “UNCITRAL Model Law on International Commercial Arbitration: note by the Secretariat” (UN Doc A/CN.9/309) in UNCITRAL Yearbook 1988, vol XIX (New York: UN, 1988) at 117 (UNDOC.A/CN.9/SER.A/1988) [Secretariat Note], para. 25.

[20] Compagnie Nationale Air France v Libyan Arab Airlines [2000] RJQ 717 [Air France]; ARL Regional Print Ltd. and Rene Laporte v George Ghanotakis and Jean M. Won, 2004 CanLII 23270 [Ghanotakis].

[21] teleMates (previously Better Telecom) Pty Ltd v Standard SoftTel Solutions Pvt Ltd [2011] NSWSC 1365 [teleMates].

[22] China Nanhai Oil Joint Service Corporation Shenzhen Branch v Gee Tai Holdings Co Ltd.[1994] 3 HKC 375 [Nanhai].

[23] Bundesgerichtshof (Germany), 27 March 2003, Neue Juristische Wochenschrift, 133, 2003, English summary available online: Deutsche Institution für Schiedsgerichtsbarkeit e.V. < http://www.dis-arb.de/en/47/datenbanken/rspr/bgh-case-no-iii-zb-83-02-date-2003-03-27-id212> [Bundesgerichtshof, 27 March 2003]; Oberlandesgericht (Germany), 4 September 2003 in 15 Y.B. Comm. Arb. 528 (2005) [Oberlandesgericht, 4 September 2003].

[24] “Analytical compilation of comments by Governments and international organizations on the draft text of a model law on international commercial arbitration” (UN Doc A/CN.9/263) in UNCITRAL Yearbook 1985, vol XVI (New York: UN, 1985) at 53 (UNDOC.A/CN.9/SER.A/1985) [Analytical Compilation], Article 16, paragraph (3), paras. 7, 8. See PT First Media, supra note 1, paras. 113, 115.

[25] Analytical Compilation, supra note 24, Article 16, paragraph (3), paras. 7, 8; “Summary records of the United Nations Commission on International Trade Law for meetings devoted to the preparation of the UNCITRAL Model Law in International Commercial Arbitration (UN Doc A/CN.9/SR.330-333) in UNCITRAL Yearbook 1985, vol XVI (New York: UN, 1985) at 458 (UNDOC.A/CN.9/SER.A/1985), 320th Meeting at paras. 16, 17. See also PT First Media, supra note 1, paras. 113, 115, 117. Contra Ghilbradze, supra note 18, p. 383.

[26] “Analytical commentary on draft text of a model law on international commercial arbitration” (UN Doc A/CN.9/264) in UNCITRAL Yearbook 1985, vol XVI (New York: UN, 1985) at 104 (UNDOC.A/CN.9/SER.A/1985), Article 16, para. 12.

[27] Secretariat Note, supra note 19, para. 25.

[28] One qualification bears mention here: this analysis is based in part on English interpretations or summaries of the cases which were originally published in languages other than English.

[29] Air France, supra note 20; Ghanotakis, supra note 20; teleMates, supra note 21; Bundesgerichtshof, 27 March 2003, supra note 23; Oberlandesgericht, 4 September 2003, supra note 23.

[30] Nanhai, supra note 22, p. 387. See also Poon, supra note 17 (“that case had considered the principle of good faith as an aspect of the doctrine of estoppel.”).

[31] PT First Media, supra note 1, paras. 224(d) and 130 respectively.

[32] Ghilbradze, supra note 18, p. 385-387.

[33] Judgment of Oberlandesgericht, 7 September 2005 in 31 Y.B. Comm. Arb. 685 (2006), paras. 5-7.

[34] Ibid, para. 5.

[35] See Dallah, supra note 4, para. 23 (“A person who denies [consenting to an] arbitration agreement has no obligation to… take any steps in the country of the seat of what he maintains to be an invalid arbitration…”). See generally Gary B. Born, International Commercial Arbitration, 2d ed (Kluwer Law International, 2014) [Born], Chapter 11.

[36] A well-known example is the decision by the Russian Arbitrazh Courts to set aside an arbitration award of 13 billion roubles made in 2005 in the favour of Yukos Capital S.a.r.L that has been criticized by numerous courts. See e.g. Yukos Capital S.a.r.L. v OJSC Oil Company Rosneft [2014] EWHC 2188, para. 20 (“both unsatisfactory and contrary to principle [to recognize the Russian court’s decision] which offended… principles of honesty, natural justice and [domestic]  public policy.”). See also Court of Appeal of Amsterdam (Enterprise Division), April 28, 2009, LJN BI2451 s 3.10; Albert Jan van den Berg, “Enforcement of Awards Annulled in Russia (Case Comment on Court of Appeal of Amsterdam, April 28, 2009) (2010) J.Int’l Arb. 179, p. 180.

[37] See e.g. Diag Human SE v The Czech Republic [2014] EWHC 1639 (Comm).

[38] For example, France, where some French decisions have enforced awards even after the awards had been set aside by the seat of arbitration. See e.g. Pablak Ticaret Ltd. Sirketi v Norsolor SA, Cour de Cassation (1st Civ. Ch.), 9 October 1984 (court enforced arbitration award even though seat of arbitration had set aside the award for lack of jurisdiction).

[39] Howard M Holtzmann & Joseph E Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Kluwer Law and Taxation, 1989), p. 1055, 1056.

[40] Born, supra note 35, p. 3427 (“[The New York Convention does not require] Contracting State[s] to deny recognition to an arbitral award.”).

[41] On 8 December 2015, First Media was granted leave to appeal the HKCFI’s decision in Astro. See Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others and AcrossAsia Limited, HCCT 45/2010 (8 December 2015), available online: http://legalref.judiciary.gov.hk/lrs/common/ju/judgment.jsp.

Professor Ferrari publishes a paper on “CISG and the Law Applicable in International Commercial Arbitration”

Professor Ferrari, the Director of the Center, an expert on the United Nations Convention on Contracts for the International Sale of Goods (CISG), has just published a paper on said Convention and its applicability in arbitral proceedings. In the paper, Professor Ferrari examines, on the basis of three common hypotheticals, the difference between the Convention’s applicability in state court proceedings and in the arbitral context. In doing so, Professor Ferrari focuses on how arbitrators get to the law applicable to the merits in international commercial arbitration. The paper is one of many papers published in “A Tribute to  Joseph M. Lookofsky”, an expert on the CISG and two time scholar-in-residence at the Center.

“How Singapore became a successful arbitration centre using the UNCITRAL Model Arbitration Law,” Monday, 23 November 2015

This is to announce the November session of the Arbitration Forum of the Center for Transnational Litigation, Arbitration and Commercial Law, entitled “How Singapore became a successful arbitration centre using the UNCITRAL Model Arbitration Law,” which will take place on Monday, 23 November 2015, from 6.00 – 8.00 pm, in the Lester Pollack Colloquium Room, Furman Hall 900 (245 Sullivan Street, New York, NY 10012).

It is a great pleasure to be able to announce that Professor Gary F. Bell will give a talk on the aforementioned topic and that Ms. Alexandra Dosman agreed to act as commentator.

Associate Professor Gary F. Bell teaches arbitration, Indonesian law and the international sale of goods at the National University of Singapore where he was the founding director of the Asian Law Institute (ASLI). He has law degrees in both civil and common law from McGill, where he was the Editor-in-Chief of the McGill Law Journal.  He clerked for Justice Stevenson of the Supreme Court of Canada. He has an LL.M. from Columbia Law School.  He has acted as sole arbitrator, member of a panel or chair in numerous ICC and SIAC arbitrations. He presently works on a research project on the use of the UNCITRAL Model Arbitration Law in Asia.

Alexandra Dosman is the first Executive Director of the New York International Arbitration Center (“NYIAC”). Prior to joining NYIAC in May 2013, Ms. Dosman practiced commercial litigation and international arbitration at Shearman & Sterling LLP for seven years. She writes and speaks widely on commercial and investment treaty arbitration matters.

To RSVP (required), please send an email to: cassy.rodriguez@nyu.edu

“Convergence or Divergence of EU and US Private International Law?” Monday, October 26, 2015

The Center for Transnational Litigation, Arbitration and Commercial Law is pleased to announce that it will host a conference entitled, “Convergence or Divergence of EU and US Private International Law?”, which will take place on Monday, 26 October 2015, from 2:00 – 7:30.00 p.m., in the Lester Pollack Colloquium Room, Furman Hall 900 (245 Sullivan Street, New York, NY 10012).

Entries prepared for the European Encyclopedia of Private International Law will be used to look into whether the private international laws of the US and the EU are really as far apart as people generally believe them to be.

Our distinguished list of speakers include Jürgen Basedow, Samuel Baumgartner, George Bermann, Andrea Bonomi, Donald Childress, William Dodge, Tim Dornis, Franco Ferrari, Diego Fernandez Arroyo, Stéphanie Francq, Joseph Lookofsky, Ralf Michaels, Horatia Muir Watt, Luca Radicati di Brozolo, Francesca Ragno, Kermit Roosevelt, Linda Silberman and Louise Ellen Teitz.

For the conference program, click here.

To RSVP (required), please send an email to: cassy.rodriguez@nyu.edu by 21 October 2015.

Conference on Limits to Party Autonomy in International Commercial Arbitration Sept. 17-18

The Center for Transnational Litigation, Arbitration and Commercial Law is pleased to announce that it will host a conference entitled “Limits to Party Autonomy in International Commercial Arbitration” on 17 and 18 September 2015. The list of speakers include Prof. George A. Bermann, Dr. Andrea Carlevaris, Prof. Giuditta Cordero-Moss, Prof. Kevin Davis, Prof. Filip De Ly, Prof. Diego Fernandez Arroyo, Dr. Inka Hanefeld, Prof. Helen Hershkoff, Mr. Brian King, Prof. Stefan Kröll, Prof. Luca Radicati di Brozolo, Dr. Francesca Ragno, Dr. Friedrich Rosenfeld, Prof. Maxi Scherer, Prof. Linda Silberman, Mr. Nathan Yaffe.

The event will start on Thursday, 17 September, at 3 pm. The event will take place at 245 Sullivan St., Furman Hall, Pollack Room, 10012 NY.

For the conference program click here

To RSVP (required), please send an email to: cassy.rodriguez@nyu.edu

The next chapter for dispute resolution in Brazil

I. Introduction

The Brazilian National Congress has been quite active in the past few months with respect to dispute resolution. We have a brand new legal framework for litigation (the new Civil Procedure Code), for arbitration (amendments to the Brazilian Arbitration Act), and for mediation (the new Mediation Act). This article written exclusively for Transnational Notes focuses on the recent developments brought by the amended Arbitration Act and the new Mediation Act.

II. What’s new on arbitration?

For almost 20 years, the Brazilian Arbitration Act (Law 9,307/1996) has played an important role in establishing Brazil as an arbitration-friendly jurisdiction and supporting the ever-increasing growth in the use of arbitration throughout the country. On May 26th, Law 13,129/2015[1] introduced the first amendments to the 1996 Arbitration Act, which are in force as of July 27th.

While the structure and achievements of Law 9,307/1996 were preserved, further improvements came into play: (i) the new legislation consolidates case law on several issues, e.g. allowing the issuance of partial awards[2] and establishing that the limitation period is interrupted upon the institution of arbitral proceedings;[3] and (ii) it also introduces new features, such as the “arbitral letter”, an official instrument for communication between state courts and arbitral tribunals, by which arbitrators may request judicial authorities to perform certain acts within their jurisdiction.[4] In a nutshell, the legal framework for arbitration in Brazil is now strengthened and the country takes some important steps forward in protecting investors who seek a secure and credible alternative to litigation.

In that regard, one of the most relevant amendments relates to the provisions dealing with the use of arbitration by state entities. The new law swept away any doubts that could still exist on the arbitrability of those disputes: its provisions expressly allow the public administration to take part in arbitral proceedings provided that the dispute relates to patrimonial negotiable rights.[5] This prevents state entities from evading arbitration if they have contractually agreed to arbitrate. In such proceedings, arbitrators must decide based on the law and observe the publicity inherent to public acts.[6] Although Brazilian courts, including the Superior Court of Justice, had already confirmed that state entities could be bound by arbitration agreements, the enactment of these new provisions put a decisive end on any residual debate of whether Brazilian legislation authorized state entities to resort to arbitration.

Law 13,129/2015 also introduced new provisions in the Brazilian Corporations’ Act (Law 6,404/1976), improving the use of arbitration in corporate disputes. The main purpose was to clarify whether the inclusion of an arbitral clause in the company’s bylaws was also binding on dissenting shareholders. This issue had raised controversial debates among scholars. This discussion is now dismissed by the new amendments: the insertion of an arbitration clause in the company’s bylaws is binding on all shareholders if approved by at least half of the voting shares.[7] Nevertheless, the new Law also introduced a threshold to balance the interests and rights of shareholders, assuring that dissenting shareholders have the right of withdrawal upon reimbursement of the market value of their shares.[8]

The interaction between arbitral tribunals and state courts was also improved by the amendments to the Brazilian Arbitration Act. Some provisions were included to consolidate the case law on provisional and interim measures. They confirmed that, if the arbitral tribunal has not yet been constituted, parties may resort to state courts for pre-arbitral interim measures.[9] Once the arbitral tribunal is constituted, however, the arbitrators decide whether they will maintain, modify or revoke the measures granted by state judges.[10]

III. What’s new on mediation?

On 26 June 2015, Law 13,140/2015[11] (the Mediation Act) was enacted to introduce a legal framework for mediation in Brazil. It establishes that any conflict related to negotiable rights or non-negotiable rights that allows for certain transactions[12] may be subjected to mediation. If an agreement is reached, such agreement may be subject to direct judicial enforcement.[13] The Mediation Act also regulates the general principles guiding the mediation process – such as the impartiality of the mediator, equality between the parties, party autonomy, confidentiality,[14] good faith, among others;[15] determines the functions and duties of the mediators, as their duty to disclose any facts or circumstances that could call into question their impartiality;[16] and provides general rules for the mediation proceedings.[17]

Two types of mediation are regulated by Law 13,140/2015: the judicial and extrajudicial mediation. Judicial mediation occurs in state courts either (i) right after the filing of the statement of claim;[18] or (ii) anytime during judicial proceedings, in which case the parties should request the judge to suspend the proceedings.[19] In judicial mediation, the court indicates the mediators.[20] Additionally, the mediators must have been graduated in a higher educational program and trained by an institution recognized by state courts.[21] The parties, on the other hand, must be represented by lawyers or public defenders.[22] The judicial mediation must be concluded within 60 (sixty) days of its first session and, if successful, the state judge can ratify the parties’ agreement if so requested by them.[23]

With respect to the extrajudicial mediation, parties could initiate proceedings (i) if there is a contractual provision mandating mediation; or (ii) if the parties so agree[24]e.g. during arbitral proceedings.[25] The mediator can be anyone who has the parties’ trust.[26] The party who wishes to initiate the mediation must notify the counterparty of its intention and of the date and venue for their first session.[27] There is also a new provision dealing with escalation clauses: if there is a mediation clause determining that parties could only initiate arbitral or judicial proceedings after a specific period of time or after the implementation of a certain condition, arbitrators and judges must suspend the proceedings until such condition is fulfilled.[28]

The Mediation Act has also provisions allowing state entities to resort to non-judicial dispute resolution mechanisms.[29] These provisions are mostly drawn from the positive experience of the Federal Attorney General’s Office (AGU) with the use of mediation between state entities.

IV. Conclusion

The amended Arbitration Act and the Mediation Act mark the beginning of a new chapter for dispute resolution in Brazil, giving more credibility and security to non-judicial mechanisms. Companies and investors have reasons to celebrate the strengthening of alternatives to litigation and will certainly benefit from a more effective dispute resolution environment.

 

Rafael F. Alves

LL.M. New York University, Arthur T. Vanderbilt Scholar – Class of ’10. Master of Laws, University of São Paulo. Senior Associate at L.O. Baptista Schmidt Valois Miranda Ferreira Agel Advogados. Director of the Brazilian Arbitration Committee.

Laura Gouvêa de França Pereira

Associate at L.O. Baptista Schmidt Valois Miranda Ferreira Agel Advogados. Former President of the Brazilian Association of Arbitration Students (ABEArb). Bachelor of Laws (LL.B.) degree from University of São Paulo.

___________________________

[1] Available here: http://www.planalto.gov.br/ccivil_03/_Ato2015-2018/2015/Lei/L13129.htm

[2] Law 9,307/1996, Article 23, §1, as amended by Law 13,129/2015.

[3] Law 9,307/1996, Article 19, §2, as amended by Law 13,129/2015.

[4] Law 9,307/1996, Article 22-C, as amended by Law 13,129/2015.

[5] Law 9,307/1996, Article 1, §1, as amended by Law 13,129/2015.

[6] Law 9,307/1996, Article 1, §3, as amended by Law 13,129/2015.

[7] Law 6,404/1976, Article 136-A, caput, as amended by Law 13,129/2015.

[8] The right of withdrawal is only subject to two exceptions set forth in Law 6,404/1976, Article 136-A, §2, as amended by Law 13,129/2015.

[9] Law 9,307/1996, Article 22-A, as amended by Law 13,129/2015.

[10] Law 9,307/1996, Article 22-B, caput, as amended by Law 13,129/2015.

[11] Available here: http://www.planalto.gov.br/ccivil_03/_Ato2015-2018/2015/Lei/L13140.htm.

[12] Law 13,140/2015, Article 3.

[13] Law 13,140/2015, Article 20, sole paragraph.

[14] Law 13,140/2015, Articles 30 to 31.

[15] Law 13,140/2015, Article 2.

[16] Law 13,140/2015, Articles 4 to 8.

[17] Law 13,140/2015, Articles 14 to 20.

[18] Law 13,140/2015, Article 27.

[19] Law 13,140/2015, Article 16.

[20] Law 13,140/2015, Article 25.

[21] Law 13,140/2015, Article 11.

[22] Law 13,140/2015, Article 16.

[23] Law 13,140/2015, Article 28.

[24] Law 13,140/2015, Articles 21 and 22.

[25] Law 13,140/2015, Article 16.

[26] Law 13,140/2015, Article 9.

[27] Law 13,140/2015, Article 21.

[28] Law 13,140/2015, Article 23.

[29] See Chapter II of Law 13,140/2015.

Argentina, Vulture Funds and a Sovereign Debt Convention

I. Introduction

Without a doubt, sovereign debt is one of the most controversial but yet relevant issues in the international legal arena, not solely for the States as debtors, but also for many private creditors and several other stakeholders. Sovereign debt has gained further attention and importance in light of the recent Argentina’s sovereign debt default, restructure and litigation in NY Courts. In light of these events, this brief note aims to assess the major advantages of the adoption of a multilateral convention regarding sovereign debt restructuring. Therefore, the following note is divided in three main sections; the first one describes the basic sovereign deb restructuring process currently existent. The second section, explains the Argentinian sovereign debt procedure, restructure and litigation. Finally, the third section advances the most positive and relevant elements that a sovereign debt multilateral convention can provide for the international community, by making reference to the other free market alternatives for sovereign debt restructuring currently available.

II.  The Sovereign Debt Restructuring Process

When it comes to private debts – those owed by individuals or corporations – most, if not all, countries have developed mechanisms to resolve in an orderly manner the issues that arise in the event of insolvency.[1] Yet in the sovereign debt context there is no equivalent mandatory bankruptcy procedure upon default.[2] This is a concern that has been exacerbated and brought starkly into focus by the recent Argentine sovereign debt crisis[3] – the juncture at which international finance collides with international law.

At the outset, it should be noted that sovereign debt restructurings are widespread and common practice throughout the world.[4] Moreover, restructurings are a wholly legitimate and sometimes essential exit mechanism out of debt crises,[5] allowing distressed countries to restore the provision of essential public services and recover their domestic economies.[6]

So what then does the term debt restructuring entail? It refers to the making of voluntary changes to the originally envisaged payment terms, undertaken in order to create a more manageable liability profile or to reduce the debt’s net present value.[7] In reality what this tends to mean is that creditors agree to: either, take a “haircut” on the value of the debt they own, lower the interest rates they receive, or delay the bond’s repayment maturity date; as well as any combination thereof.

In this milieu, one of the greatest difficulties in restructuring claims against sovereign debtors is balancing the interests of the majority of the creditors with those of minority creditors.[8] This difficulty arises given the voluntary nature of the restructuring process: creditors are entitled to refuse to participate in a restructuring and instead “hold out” in the hope of receiving better repayment terms, or even the full value of their claims, through litigation or negotiated settlements based on that threat.

a). The Purpose of Holdout Litigation

Bond agreements actually contain clauses that explicitly contemplate enforcement litigation, such as, typically, the waiver of sovereign immunity, and choice-of-law provisions, through which the sovereign debtor submits to the laws and jurisdiction of a country with a mature and robust legal and financial system – typically the UK or USA.

Litigation, then, may function as a deterrent to the possibility of opportunistic default by a sovereign debtor, which in turn facilitates the functioning of the international capital markets.[9] Litigation may also operate as a check on the terms of a proposed restructuring, giving a creditor recourse against a restructuring with inappropriate or unfair terms.

Holdout litigation, therefore, serves a legitimate purpose and is not entirely the pariah that it has recently been made out to be. On the one hand, holdout creditors serve to limit collusive majority behaviour and act as a check on opportunistic defaults and unreasonable restructuring terms, yet on the other hand, their presence interferes with the restructuring process.[10]

Notwithstanding the foregoing, concerns about holdout litigation have acquired fresh urgency as a result of its use as a strategy by “vulture funds” during, inter alia – but most prominently, Argentina’s current financial crisis. This has led many commentators to question the ethicality of their predatory and speculative behaviour,[11] particularly as vulture funds are not comprised of individuals or funds that actually lent money to Argentina or bought Argentine bonds on good faith.

For those that have not been following these developments, vulture funds are hedge funds that seek to enforce contractual claims against distressed sovereign debtors through litigation.[12] Most often they buy the relevant sovereign bonds on the secondary markets at rock-bottom prices and then sue for repayment at nominal value.[13] Put simply, they seek to exploit the current global legal vacuum in order to make exorbitant profits.[14]

III. Argentine Pari Passu Litigation

In December 2001, Argentina defaulted on its external debt – which amounted to well over eighty (80) billion dollars.[15] In the bond contracts governing that debt, Argentina selected New York law and consented to jurisdiction in the Southern District of New York.[16]

Subsequently, Argentina engaged in 2 restructurings – in 2005 and 2010.[17] This resulted in the restructuring of around ninety-two (91.3%) percent of the foreign debt which had been defaulted on in 2001.[18] The majority of the remaining bonds are in the hands of vulture funds.[19]

After the default, NML Capital brought a claim against Argentina in New York, as the bond contracts contemplated.[20] The vulture fund sued Argentina for specific performance of the pari passu (equal treatment)[21] clause contained in the bonds, arguing that the clause precluded Argentina from making payments on some of its debt contracts (the restructured bonds – which Argentina had been servicing) and not others.[22]

The now infamous Judge Griesa of the District Court found in favour of NML Capital,[23] granting an injunction against Argentina.[24] His judgment has been affirmed by the Court of Appeals[25] and the Supreme Court of the United States.[26]

Essentially the judgment made it illegal for Argentina to pay its restructured creditors (91.3% of its original creditors) without also making concurrent ratable payments to the holdout creditors (the vulture funds); an outcome ensured by the fact that Judge Griesa’s injunction also enjoined financial intermediaries from processing any payments not in compliance with his order. As an initial consequence of the judgment, Argentina entered into technical default on the 30th of July 2014.[27]

However, the judgment has wider reaching implications, including that bondholders might now be less inclined to accept bond swaps, safe in the knowledge that they can hold out for face value; which in turn will make it more difficult and more expensive for countries – often those in development – to restructure their debts. This has knock-on effects for their sustainable long-term development.

IV. The Need for an International Convention for Sovereign Debt Restructuring

As a result of the proliferation and success of holdout litigation by vulture funds, Argentina, with the support of the G77 group of developing nations, plus China, presented a draft resolution to the United Nations General Assembly to vote on whether to move forward with a new multilateral international Convention to regulate the restructuring of sovereign debt and curtail the power of holdout creditors.[28]

The draft resolution was approved on Tuesday the 9th of September 2014, and the General Assembly has now committed to adopting a new multilateral legal framework for sovereign debt restructuring processes during its sixty-ninth session.[29]

This is undoubtedly a great achievement.[30] But before evaluating the potential benefits of such an international Convention, the free-market alternatives available for limiting the power of holdout creditors must be analyzed. This is important as, currently, all sovereign debt restructuring efforts take place entirely under a free-market approach,[31] making a superficial understanding of these options necessary in order to determine their limitations.

a). Free-market based alternatives

  • The inclusion of collective action clauses (CACs) in new bond issues.

This contractual mechanism permits a supermajority of bondholders to vote to change the payment terms of an issue of bonds.[32] Accordingly, once an agreement is reached with the sovereign debtor, the bonds can be restructured despite the objections of minority bondholders.[33] Crucially, the new terms bind all bondholders, thus negating the holdout problem.[34]

The use of CACs does, however, have certain disadvantages in terms of being a viable option for reforming the restructuring process. (i) CACs only function across specific issues, or series, of bonds. To put this into perspective, Argentina is attempting to restructure 152 different bond issues involving seven different currencies and the governing laws of eight different countries.[35] CACs offer little help in these situations. Moreover, (ii) the insertion of CACs into new issues of bonds does not address concerns regarding existing bonds, including the Argentine bonds, which contain clauses requiring unanimous voting to effect alterations to essential payment terms.[36] As such, and due to the long-term nature of sovereign bonds, the benefit of CACs will not be fully felt by the financial markets until decades further down the line. Countries like Argentina don’t have that long.

  • The restructuring of sovereign debt through an exchange offer coupled with exit consents.

As suggested by its nomenclature, an exchange offer is an offer by the sovereign debtor to exchange new debt for old. Exit consents, in turn, are designed to mitigate the holdout problem by inducing (some would say coercing) all creditors to agree to the exchange.[37] This is achieved by requiring consenting creditors to waive any covenant protections in their bonds that can be waived without unanimous creditor consent.[38] These amendments are intended to reduce the value of the original bonds, thereby making their retention less attractive to would-be-holdouts.[39]

For all intents and purposes this mechanism has the effect of replacing the existing debt claims with securities governed by CACs and, therefore, is susceptible to the same drawbacks as the latter.

Both of these free-market alternatives to an international statutory framework seek, exclusively, to combat the holdout problem – which we could call, without resorting to hyperbole, the residual vulture fund menace – and both achieve this, albeit imperfectly.

b). Advantages of a UN Convention

As the contents of the proposed UN Convention are at present conjecture, we shall proceed by assuming its assimilation, in terms of sine qua non features, with an unsuccessful IMF proposal – known as the Sovereign Debt Restructuring Mechanism (SDRM).[40]

An international statutory bankruptcy procedure would allow sovereign debtors to voluntarily decide whether to apply the provisions to their debt problems by filing a petition. It would create a process by which a supermajority of creditors could negotiate a binding restructuring for all creditors.[41] The most salient advantages of this approach over the universal use of CACs include the capacity to deal with multiple issues and series of bonds (by grouping all creditors into a single class) as well as its applicability to existing debt.[42] These represent two monumental gains at the outset.

Critics and sceptics might, reasonably, point out the concern that holdout litigation offers an apparatus by which minority creditors can challenge restructurings designed principally for the benefit of the majority.[43] But such unfairness concerns are inherently addressed: since all creditors are similarly situated, the outcome of a vote that binds holdouts should benefit all creditors equally.[44] This presupposes that all such creditors were not speculative purchasers of the sovereign bonds, in this way indirectly clamping down on the practices of vulture funds.

The advantages of a multilateral Convention, however, go beyond the scope of the issues that have so far been dealt with. Intrinsic to any restructuring is the concept of default – an inability to meet payments as they become due. It follows, then, that after any restructuring has been carried out, a sovereign debtor will need to borrow money to fund critical expenses borne during the process. Herein lies the problem: who would lend to a nation that has just proven its unreliability as a borrower? Such a lender would insist on priority creditor status as a condition of any loan.

An international Convention can provide for the requisite legally enforceable first priority right of repayment to new loans.[45] Existing creditors could be protected through the right to object to a new loan if its amount is too high or its terms are inappropriate.[46] Moreover, a nation that abuses these borrowing privileges would encounter difficulty in receiving supermajority creditor approval for its debt restructuring plan anyway.[47] Ultimately, sovereign debtors that act in bad faith could be excluded from making recourse to the Convention.[48]

Lastly, a Convention would also eliminate the threat of moral hazard.[49] Such a state of affairs was not present in Argentina, but was apparent in, e.g. the EU bailout of Greece. It arises in cases where there is a high risk of financial contagion – where a sovereign debt default can trigger a systemic collapse.[50] As the trend of global financial integration continues, this scenario of “too big to fail” becomes ever more likely.[51] By imposing strict austerity conditions on bailouts, as has become the norm, a Convention could take precedence and ensure an orderly restructuring of debts in these crises, thereby preventing taxpayers from bearing the brunt of sovereign financial imprudence.

V. Conclusions

As has hopefully been made evident by now, the problem in the sovereign debt restructuring arena is not holdout litigation per se, but rather it is the immoral deployment of it by vulture funds and the potentially sovereignty-violating judicial decisions of foreign states – formalistically adopted to uphold the contractual language of sovereign bonds, which now constitute a substantial impediment to the voluntary method of debt restructuring that had been the long-standing custom.

This is why a binding international Convention could be of much greater value than the current free-market solutions: it resolves the (i) holdout, (ii) funding and (ii) moral hazards problems that arise in such situations, not only concurrently but convincingly. It will not, however, enable sovereigns to renege on their debt by restructuring whenever they please. Argentina take heed! It is a mechanism of last resort and the provisions of any Convention should make that clear.

Nonetheless, the restructuring of debt is a sovereign prerogative, which, as recognized by the UN Resolution in question, “should not be frustrated or impeded by any measure emanating from another State”. A binding UN Convention would restore that essential element of sovereignty back to nations and enable them to determine sustainable levels of debt based on their real payment capacity, thus empowering them to meet the fundamental needs of their societies whilst simultaneously providing much needed predictability to the financial markets.

Of course, as with any international Convention, its real success will be a function of the level of participation it achieves. The onus is on the world’s nations now – they can either expel the vultures forever or allow them to keep circling overhead.

 

Manuel Jordán Bassó

LL.B. from the University of Glasgow, Scotland. LL.M. in Oil and Gas Law candidate at the University of Aberdeen, Scotland. 2015 International Bar Association (IBA) Section on Energy, Environment, Natural Resources and Infrastructure Law (SEERIL) Energy Law Studies Scholar.

Juan Pablo Hugues Arthur

Law Degree (Highest Honors) from the CIDE, Mexico. International Law Attorney-Counsel for the Attorney-General on Fiscal and Financial Issues, Mexico.

_________________________________________

[1] S L Schwarcz, Sovereign Debt Restructuring: A Bankruptcy Reorganization Approach (2004) 85 Cornell Law Review 4 [Hereinafter, S L Schwarcz, Sovereign Debt Restructuring], p. 958.

[2] See: Mechanism Must Be Found to Avoid Moral Hazard in Crises, IMFDepuy Says, 69 Banking Rep. (BNA) 623 (Oct. 20, 1997).

[3] J E Fisch, C M Gentile, Vultures or Vanguards: The Role of Litigation in Sovereign Debt Restructuring Conference on Sovereign Debt Restructuring: The View from the Legal Academy (2004) 53 Emory L.J. 1043 [Hereinafter: J E Fisch, C M Gentile, Vultures or Vanguards: The Role of Litigation in Sovereign Debt Restructuring], p. 1046; S L Schwarcz, Towards a “Rule of Law” Approach to Restructuring Sovereign Debt (2014) Harvard Law School Forum on Corporate Governance and Financial Regulation (Available at http://corpgov.law.harvard.edu/2014/10/14/towards-a-rule-of-law-approach-to-restructuring-sovereign-debt/. Last visited 14 May 2015) [S L Schwarcz, Towards a “Rule of Law” Approach to Restructuring Sovereign Debt].

[4] For general references on the history of sovereign debt default, see: M Waibel, Sovereign Defaults before International Courts and Tribunals (CUP, 2011) [Hereinafter, M Waiblel, Sovereign Defaults], pp. 3-19. See also in this same sense C G Paulus, The Interrelationship of Sovereign Debt and Distressed Banks: A

European Perspective, 49 Tex Int’l LJ 201 (2014);  A Sde Vicuña y Barroso, ‘Identical

Collective Action Clauses for Different Legal Systems: A European Model’, in K Bauer et al., Collective Action Clauses and the Restructuring of Sovereign Debt (2013); U S Das et al., Sovereign Debt Restructurings 1950–2010: Literature Survey, Data, and Stylized Facts, 30–36 (Int’l Monetary Fund, Working Paper WP/12/203, 2012) (Available at http://www.imf.org/external/pubs/ft/wp/2012/wp12203.pdf.  Last visited 22 May 2015).

[5] T Jones, When vulture funds circle, who will make debt repayments fairer? (8 September 2014) (The guardian) (Available at http://www.theguardian.com/global-development/poverty-matters/2014/sep/08/vulture-funds-restructure-debt-repayments. Last visited 22 May 2015).

[6] Ibid.

[7] M Waibel, Opening Pandora’s Box: Sovereign Debt in International Arbitration (2007) 101 AJIL 711, p. 712.

[8] J E Fisch, C M Gentile, Vultures or Vanguards: The Role of Litigation in Sovereign Debt Restructuring.

[9] J E Fisch, C M Gentile, Vultures or Vanguards: The Role of Litigation in Sovereign Debt Restructuring, p. 1047.

[10] Jeffrey D. Sachs, Do We Need an International Lender of Last Resort, Frank D. Graham Lecture at Princeton University 8 (Apr. 20, 1995), p. 6 (Available at http://www.cid.harvard.edu/archive/hiid/papers/intllr.pdf. Last visited 14 May 2015); C Lipson, ‘Bankers’ Dilemmas: Private Cooperation in Rescheduling Sovereign Debts’ in Cooperation Under Anarchy 200 (Kenneth A. Oye ed., 1986).

[11] See: F Salmon, Vulture Funds in Distress, REUTERS (24 February 2011), (Available at http://blogs.reuters.com/felixsalmon/2011/02/23/vulture-funds-in-distress/. Last visited 22 May 2015).

[12] C C Wheeler & A Attaran, Declawing the Vulture Funds: Rehabilitation of a Comity Defense in Sovereign Debt Litigation (2003) 39 Stan J Int’l L 253, p. 254.

[13] K H Fukuda, What is a vulture fund? (2008) University of Iowa College of Law Center for International Finance & Development 2.

[14] Vulture Funds in the Sovereign Debt Context, African Development Bank Group (Available at http://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/african-legal-support-facility/vulture-funds-in-the-sovereign-debt-context/. Last visited 14 May 2015).

[15] J F Hornbeck, Argentina’s Defaulted Sovereign Debt: Dealing with the “Holdouts” (2013) Congressional Research Service [Hereinafter: J F Hornbeck, Argentina’s Defaulted Sovereign Debt], p. 1.

[16] Republic of Argentina v. NML Capital LTD, et. al. On Petition for Writ of Certiorari to the United States Court of Appeals for the Second Circuit PETITION FOR WRIT OF CERTIORARI (February 18, 2014), p. 8.

[17] J F Hornbeck, Argentina’s Defaulted Sovereign Debt, pp. 4-6.

[18] Ibid., p. 7.

[19] J Muse-Fisher, Starving the Vultures: NML Capital v. Republic of Argentina and Solutions to the Problem of Distressed-Debt Funds (2014) 14 CalLRev 1671, p. 1688.

[20] NML Capital, Ltd. v. Republic of Argentina, No. 08 Civ. 6978(TPG), 2011 WL 9522565 [Hereinafter: NML Capital v. Argentina]; Stephen Davidoff Solomon, In Court Battle, a Game of Brinkmanship With Argentina, N.Y. TIMES (Nov. 27, 2012), (Available at http://dealbook.nytimes.com/2012/11/27/in-court-battle-a-game-of-brinkmanship -with-argentina/. Last visited 22 May 2015).

[21] L C Buchheit & J S Pam, The Pari Passu Clause in International Debt Instruments (2004) 53 Emory L J, p. 851.

[22] NML Capital, Ltd. v. The Republic of Argentina.

[23] “It is DECLARED, ADJUDGED, and DECREED that the Republic is required under Paragraph 1(c) of the FAA at all times to rank its payment obligations pursuant to NML’s Bonds at least equally with all the Republic’s other present and future unsecured and unsubordinated External Indebtedness.”). The specific pari passu clause provides that “[t]he Securities will constitute […] direct, unconditional, unsecured and unsubordinated obligations of the Republic and shall at all times rank pari passu and without any preference among themselves. The payment obligations of the Republic under the Securities shall at all times rank at least equally with all its other present and future unsecured and unsubordinated External Indebtedness. It is DECLARED, ADJUDGED, and DECREED that the Republic lowered the rank of NML’s bonds in violation of Paragraph 1(c) of the FAA when it made payments currently due under the Exchange Bonds, while persisting in its refusal to satisfy its payment obligations currently due under NML’s Bonds. 6. […] It is DECLARED, ADJUDGED, and DECREED that the Republic lowered the rank of NML’s bonds in violation of Paragraph 1(c) of the FAA when it enacted [the relevant Laws] […]” NML Capital v. Argentina, pp. 1-2.

[24] Ibid. p. 254.

[25] NML Capital, Ltd. v. Republic of Argentina, No. 12-105 (2d Cir. 2013).

[26] Republic of Argentina v. NML Capital, Ltd, 134 S. Ct. 2250 (2014).

[27] J Hartley, Argentina’s Default: Lessons learned, what happens next? Forbes, 2014 (Available at http://www.forbes.com/sites/jonhartley/2014/08/04/argentinas-default-lessons-learned-and-what-happens-next/. Last visited 22 May 2015).

[28] Y Li, U.N. to negotiate a multilateral legal framework for sovereign debt restructuring (2014) (Opinio Juris Blog) (Available at http://opiniojuris.org/2014/09/16/guest-post-u-n-negotiate-multilateral-legal-framework-sovereign-debt-restructuring/. Last visited 14 May 2015).

[29] GA Resolution 68/304: “Towards the establishment of a multilateral legal framework for sovereign debt restructuring processes”. See Resolution on Sovereign Debt Restructuring Adopted by General Assembly Establishes Multilateral Framework for Countries to Emerge from Financial Commitments (9 September 2014) (Available at http://www.un.org/press/en/2014/ga1  1542.doc.htm. Last visited 15 May 2015).

[30] See: B Muchhala, Historic UN General Assembly vote on a multilateral sovereign debt mechanism (Available at http://www.twn.my/title2/unsd/2014/unsd140903.htm. Last visited 15 May 2015); A Caliari, Historic agreement paves the way for just response to sovereign debt crises (Available at https://www.coc.org/rbw/historic-agreement-paves-way-just-response-sovereign-debt-crises-september-2014. Last visited 15 May 2015).

[31] See footnote 2 supra.

[32] W Mark, C Weidemaier & M Gulati, A People’s History of Collective Action Clauses (2014) 54 VirJInt’lLaw, p. 53.

[33] See: W Mark, C Weidemaier & M Gulati, ‘How Markets Work: The Lawyer’s Version’ in From Economy to Society? Perspectives on Transnational Risk Regulation  (Bettina Lange et al. eds, 2013).

[34] Ibid.

[35] G Nielsen, Secretary of Finance of Argentina, Remarks in Dubai 14 (Septembre 22, 2003), (Available at

http://www.argentinedebtinfo.gov.ar/documentos/discurso_gn_dubai_con_diap_english.pdf. Last visited 15 May 2015).

[36] S L Schwarckz, A Minimalist Approach to State “Bankruptcy” (2011) 59  UCLA L Rev  322, pp. 329-331.

[37] L C Buchheit & G M Gulati, Exit Consents in Sovereign Bond Exchanges (2000) 48 UCLA L Rev 59, pp. 65-66.

[38] Ibid.

[39] Ibid.

[40] Anne Krueger, New Approaches to Sovereign Debt Restructuring: An Update on Our Thinking, Address

to the Institute for International Economics Conference Sovereign Debt Workouts: Hopes and Hazards (1 April 2002) (Available at https://www.imf.org/external/np/speeches/2002/040102.htm. Last visited 22 May 2015).

[41] S L Schwarcz, Sovereign Debt Restructuring Options: An Analytical Comparison (2012) Harv Bus L Rev [Hereinafter, S L Schwarcz, Debt Restructuring Options] p. 107.

[42] Ibid.

[43] J E Fisch & C M Gentile, Vultures Or Vanguards? The Role Of Litigation In Sovereign Debt Restructuring (2004)  53 Emory L.J 1043, p. 1098.

[44] S L Schwarcz, Sovereign Debt Restructuring: A Bankruptcy Reorganization Approach (2000) 89 Cornell L Rev 956, p. 1005; B J Houser et al, ‘Plan Issues: Classification, Impairment, Subordination Agreements’

in Chapter 11 Business Reorganizations 317, 328 (ALI-ABA Course of Study Materials S024, 1998).

[45] S L Schwarcz, Debt Restructuring Options, p. 113.

[46] Ibid. Pp. 113-113.

[47] See: W W Bratton & G M Gulati, Sovereign Debt Reform and the Best Interest of Creditors (2004) 1 VLRev 54, p. 26.

[48] S L Schwarcz, Debt Restructuring Options, p. 110.

[49] Which denotes a situation whereby a party does not bear the full costs for the risks it takes. See: O Gürtler & M Kräkel, Double-Sided Moral Hazard, Efficiency Wages, and Litigation (2010) 1 J Law Ec Bus 54.

[50] S L Schwarcz, Towards a “Rule of Law” Approach to Restructuring Sovereign Debt.

[51] Ibid.

Professor Franco Ferrari and former Vice-President of the ICJ, Ambassador Bernardo Sepulveda Amor, to discuss the usefulness of investment arbitration for companies investing in Mexico

 

On 10 June 2015, Professor Franco Ferrari, the Director of the Center for Transnational Litigation, Arbitration and Commercial Law, and the former Vice-President of the International Court of Justice, Ambassador Ambassador Bernardo Sepulveda Amor, formerly Ambassador to the United States of America and to the United Kingdom and Secretary of Foreign Affairs of Mexico, will discuss the positive effects of investment arbitration on the development of projects in Mexico by foreign companies. Please click here for the official program.

 

The Center for Transnational Litigation and Commercial Law aims at the advancement of the study and practice of international business transactions and the way to solve related disputes either through litigation or arbitration. As commercial transactions become increasingly international, it is vital to the legal and business communities to understand and analyze the practices and legal principles that govern relationships between firms and between firms and consumers in the international arena