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S10 | MONDAY, AUGUST 7, 2017 | Alternative Dispute Resolution
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Dealmaking
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omitted). (The New York Convention has a similar provision in Article III.) Other courts have disagreed, finding that no adequate alternative forum exists for the applicant’s purposes: “Only a court of the United States (or one of them) may attach the commer- cial property of a foreign nation located in the United States.” TMR Energy v. State Property Fund of Ukraine, 411 F.3d 296, 304 (D.C. Cir. 2005).
Language Ensuring Finality, Waiving Rights to Challenge Can Be Helpful
Under the New York Convention, if the losing party in an arbitration has petitioned the courts of the country with primary juris- diction to vacate the award, a court with secondary jurisdiction “may, if it consid- ers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming
Expedited
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When parties try to craft their own expedited arbitration framework, it is easy to make mis- takes in the procedure that can lead to an unenforceable outcome. It is far safer and preferable to utilize institutional expedited rules that have been tried and tested, and that also provide the administrative oversight that often can help to enhance the enforceability of expedited awards.
Finally, parties should be wary about requiring expedited arbitration for all disputes in a contract. It is difficult for a party to know ex ante whether expedited or traditional arbitration will be preferable— and this is precisely why major institutions
enforcement of the award, order the other party to give suitable security.” (Art. VI.) The Second Circuit has outlined a fact-specific, multi-factor balancing test district courts should consider in determining whether a stay based on another country’s pending proceedings is warranted.
Litigations concerning whether enforce- ment should await or turn on the resolution of vacatur proceedings elsewhere are com- plex, not least because state-owned entities typically turn to the courts of their own country to try to invalidate awards against them—the very courts the parties may have sought to avoid by including an arbitra- tion clause in their agreement. Courts often (but not always) refuse to enforce arbitral awards if the courts of the country where the arbitration took place have annulled the award. Thus, care should be exercised in selecting the arbitral seat during the drafting phase. A noteworthy exception is the Second Circuit’s 2016 decision to allow enforcement of a Mexican arbitral award even though the Mexican courts had annulled the award. See Corporacion Mexicana De Mantenimiento Integral, S. De
usually set a quantum threshold. Instead, parties are better off limiting expedited arbitration agreements to specific types of disputes that they are comfortable having resolved on an expedited basis. Of course, even where a standard arbitration process has been agreed to, the parties can always agree after a dispute arises to submit the dispute to an expedited process where it makes sense.
When to Go With Expedited Arbitration
There is no simple formula for determin- ing when an expedited arbitration process is the right solution. However, here is a short and non-exclusive list of the circumstances in which an expedited arbitration should be considered:
R.L. De C.V. v. Pemex-Exploracion Y Produc- cion, 832 F.3d 92, 97 (2d Cir. 2016), cert. dismissed, 137 S. Ct. 1622, 197 L. Ed. 2d 746 (2017).
Personal Jurisdiction Challenges
Another murky area of enforcement law that can lead to disputes if not addressed with contractual language concerns personal jurisdiction requirements for enforcing arbi- tral awards. Recent decisions by New York and other courts have held that foreign states “are not ‘persons’ entitled to rights under the Due Process Clause.” Frontera Resourc- es Azerbaijan v. State Oil Co. of Azerbaijan Republic, 582 F.3d 393, 400 (2d Cir. 2009). See also TMR Energy v. State Property Fund of Ukraine, 411 F.3d 296, 301-02 (D.C. Cir. 2005) (same). Under these decisions, award confir- mation proceedings may be brought against a sovereign-owned entity without the need to demonstrate any contacts between the entity and the U.S. if it can be shown that the foreign government “exerted sufficient control over” the entity so as to create “a relationship of principal and agent” or “if
• Where the amount in controversy is likely to be sufficiently small that the parties will want to reduce the cost of the dispute resolution process and will also be willing to take the risk of a less carefully reasoned outcome;
• Where the anticipated disputes are likely to involve discrete factual and legal issues that can be resolved quickly, without the need for extensive discovery processes and exten- sive expert analysis and testimony;
• Where the anticipated disputes will need to be resolved quickly, perhaps for commer- cial reasons, such that the speed of a final outcome is more important to the parties than the result itself;
A faster and less expensive arbitration pro- cess may well be the right answer in many instances, thus making the expedited arbitra-
adher[ing] blindly to the corporate form ... would cause ... injustice.” Frontera, 582 F.3d at 400 (internal quotations and citations omit- ted). Enforcement is also possible under an in rem jurisdictional theory.
Because the applicability of personal juris- diction requirements often turns on disputed facts, jurisdictional battles can arise when a successful claimant sues to confirm its arbi- tral award, and can sometimes lead to costly jurisdictional discovery. Such disputes can be avoided if the parties’ agreement contains clear language waiving personal jurisdiction challenges.
In sum, state-owned entities and those doing business with them can eliminate many enforcement hurdles by including language addressing sovereign immunity, FNC, the finality of arbitral awards, and the personal jurisdiction of courts prevailing parties are likely to turn to for award enforcement. Courts and legislators can also help, by consider- ing whether allowing FNC, jurisdictional and other challenges by unsuccessful parties is consistent with the goal of promoting arbi- tration as an efficient system for resolving international disputes.
tion processes offered by many institutions an attractive option. However, faster is not always better, as some disputes unavoidably require a more extensive dispute resolution. There is no one-size-fits-all answer. The key is to ensure that the dispute resolution process is thoughtfully selected by the parties to meet their needs. Only the parties can make that determination for themselves.
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1. For example, the International Chamber of Com- merce, the Stockholm Chamber of Commerce, the In- ternational Centre for Dispute Resolution Procedures, the Honk Kong International Arbitration Centre, and the Singapore International Arbitration Centre.
2. See, e.g., Arbitration Rules of the Chinese Arbitra- tion Association, Taipei (CAA Arbitration Rules), Art. 50; China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules, Art. 50; and International Centre for Dispute Resolution Procedures (ICDR Arbitration Rules), Art. E-10.
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