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Failing to pay the advance on costs and the risk of inoperability of the arbitration clause – Remedy?

The advance on costs at the outset of the arbitration ensures that arbitrators are covered for the fees and expenses made upon rendering their final award. It is common practice both in institutional and ad hoc arbitration that the procedure will only continue – or even start – upon payment in full of the advance on costs. It is also common practice that upon indentifying the advance on costs, both sides are invited to pay half of the advance. And finally, it is becoming more and more common that a party – predominantly respondents – fail to meet this requirement as part of – in most cases – a dilatory tactic.

When a party fails to make payment of the advance, the other party is [...]

When Does an Arbitration Agreement Have a Binding Effect on Non-Signatories? The Group of Companies Doctrine vs. Conflict of Laws Rules and Public Policy

A recent decision of the German Federal Supreme Court dated 8 May 2014 (case reference no. III ZR 371/12) again calls for a debate on the binding effect of an arbitration agreement for a non-signatory – a well-known and highly-debated phenomenon since the Dow Chemical arbitration.

The Dow Chemical case

According to the award rendered in the Dow Chemical arbitration (ICC Case No. 4131, Y.C.A. Vol. IX (1984), 131), a third party non-signatory to the contract containing the arbitration clause can be obliged to submit to arbitration proceedings if the common intentions of the signing parties demand for such interpretation. This may be the case in particular if the non-signatory company has ef [...]

Enforcement of Worldwide Freezing Orders in Ukraine

I. General Aspects of Enforceability

English Worldwide Freezing Order (“WFO”) being called by Matthias Scherer and Simone Nadelhofer one of the “nuclear weapons” of commercial litigation and arbitration, is a preliminary injunction preventing a defendant from disposing of assets pending the resolution of the underlying substantive (arbitration or court) proceedings. Its issue in support of an arbitration proceeding significantly impacts further enforcement of an award. However, as WFOs are often sought without prior notice to the defendant, their recognition and enforcement may become problematic. Ukrainian courts only recently were addressed issues related to enforceability of WFOs.

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German Federal Supreme Court Underlines Non-Intervenistic and International Approach of German Arbitration Law

In an order dated 28 January 2014 (file number III ZB 40/13), the German Federal Supreme Court (Bundesgerichtshof, the “Court”) clarified that an arbitral award can only be set aside in recognition or enforcement proceedings by a state court in “extremely exceptional cases”, i.e. if an award breaches the fundamental principles of the German legal system in a manifest way.

The Court considered this clarification was necessary because by its wording, the relevant provision of the German arbitration law, Sect. 1059 para. 2 no. 2 b) of the code of civil procedure (Zivilprozessordnung – “ZPO”), does not require such “manifest” breach of the fundamental legal principles. The wording of the prior [...]

In-House Counsel Take Note: ICC’s John Beechey Won’t Be Sitting You at the Children’s Table

Arbitration service providers often seem to handle parties, especially in-house counsel, with gentle kid gloves. A good example is any “roundtable of in-house counsel”, which is now as common at arbitration conferences as children’s tables are at weddings.

Just like at weddings, the adults occasionally wander over to check on things and ask, “did you like the arbitration? Wasn’t it good!” Then they go back to ignoring the little ones until someone starts to cry.

Not so with John Beechey. The President of the ICC Court of Arbitration wants parties to know they can come to him with any complaints about arbitration, but they won’t be babied if they do.

As reported by Mirèze Philippe last week [...]

Get Rid of the Presiding Arbitrator?

In his President’s Message (ASA Bulletin, Vol. 32, no. 2, 2014), Elliott Geisinger proposes a real challenge to the arbitration community. In a simple but rather persuasive rhetorical style, Geisinger places in confrontation Me. Paul Philibert Confus, Avocat à la Cour and Sir Reginald Muddle, QC, giving life to a debate that seems to be overlooked nowadays.

Is it really necessary to have a “presiding arbitrator”? This is the crux of the discussion.

Sir Muddle advocates that the theatre of arbitration should get rid of that character, while Me. Confus contends that fundamental principles of arbitration, like having a chairman – or chairwoman, for that matter – should be kept alive. Th [...]

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