Judicial Review of International Investment Arbitration (IIA) Awards

ATLANTA INTERNATIONAL ARBITRATION SOCIETY (ATLAS)
CONFERENCE 2014
November 2-4, 2014
Enhancing Business Opportunities in Africa:
The Role, Reality and Future of Africa-Related Arbitration
PANEL
Arbitrating with the State
November 4, 2014 from 11:00 am to 12:30 pm
Topic: Judicial Review of International Investment Arbitration (“IIA”) Awards
Thesis: Various mechanisms for the judicial review of IIA awards exist
INTRODUCTION
a. Transparency International 2013 Corruption Perceptions Index: But for Botswana (64),
Cape Verde (58), Seychelles (54), Rwanda (53), Mauritius (52), all other African
countries have a corruption perception index below 50. Chad (19), Libya (15), South
Sudan (14), Sudan (11), and Somalia (8) have the worst Corruption Perceptions Index.
Most West and Central African countries have Corruption Perceptions Indexes between
20 and 29. South Africa has a CPI of 42, Egypt’s is 35, the CPI for the Ivory Coast is
27 and Nigeria’s is 25.1
b. Out of the 54 African States, 45 have signed and ratified the ICSID Convention
(Ethiopia, Guinea-Bissau, Namibia have signed it but have yet to ratify it See Chart Overview of Arbitration Laws Applicable on the African Continent.
c. 32 African States have signed the NY Convention. See Chart - Overview of Arbitration
Laws Applicable on the African Continent.
d. There are 17 OHADA (l’Organisation d’Harmonisation en Afrique du Droit des
Affaires) members – Benin, Burkina Faso, Cameroon, Central African Republic, Chad,
Comoros, Republic of the Congo, Cote d’Ivoire, Equatorial Guinea, Gabon, Guinea,
Guinea-Bissau, Mali, Niger, Senegal, Togo and the DRC.
e. 31 African countries have enacted arbitration laws based or largely based on the
UNCITRAL Model Law. See Chart - Overview of Arbitration Laws Applicable on the
African Continent.
1
Transparency International, 2013 Corruption Perceptions Index Results, available at
http://www.transparency.org/cpi2013/results.
1
II.
Annulment under the ICSID Convention
a. Procedural mechanisms
1. Under Article 53 of the ICSID Convention an award is binding on the parties and not
subject to any appeal or any other remedy than those included in the Convention.
2. Article 54 of the Convention requires each State to recognize and award rendered
under the Convention as binding and to enforce the pecuniary obligations imposed by
the award as if it were a final judgment of the State’s courts. Under Article 54(2)
recognition and enforcement of the award can be obtained by the competent court of
the Contracting State upon simple presentation of a copy of the award certified by the
Secretary General of the Center
3. The Convention provides for an internal mechanism for review of IIA awards.
“While awards issued outside of the ICSID arbitration regime are subject to review
by domestic courts—which are often perceived as investor-unfriendly—applications
to annul ICSID awards are heard by an hoc committees specifically convened for this
purpose by ICSID itself.”2
4. Article 52(3) of the ICSID Convention permits an ad hoc committee, a new panel, to
annul an award only if at least one of the five grounds for annulment set out in
Article 52(1) is met: “Either party may request annulment of the award by an
application in writing addressed to the Secretary-General on one or more of the
following grounds:
a) that the Tribunal was not properly constituted;
b) that the Tribunal has manifestly exceeded its powers;
c) that there was corruption on the part of a member of the Tribunal;
d) that there has been a serious departure from a fundamental rule of procedure; or
e) that the award has failed to state the reasons on which it is based.”
5. If the ad hoc Committee determines that one of these grounds exists, then, at the
request of either party, the dispute will be reheard by a newly constituted ICSID
tribunal.
6. The ICSID system does not permit review of awards for substantive errors of law or
fact. “Article 52 is only concerned with the procedural propriety of an award rather
[than] with its correctness as a matter of substance.”3
b. Some numbers:
1. In 2014, ICSID administer a new record of 209 cases, which is 44% of the 473
ICSID cases ever administered by the Center.4
2
Promod Nair & Claudia Ludwig, ICSID annulment of awards: the fourth generation?, GLOBAL ARB. REV. (Feb.
18, 2011) [hereinafter Promod, the fourth generation].
3
Christian J. Tams, An Appealing Option? The Debate about an ICSID Appellate Structure, 57 Beiträge zum
Transnationalen Wirtschaftsrecht, at 9 (June 2006).
4
2014 Annual ICSID Report at 21, available at
https://icsid.worldbank.org/ICSID/FrontServlet?requestType=ICSIDPublicationsRH&actionVal=ViewAnnualRepor
ts&year=2014_Eng.
2
2. In 49% of the new cases registered in 2014 under the ICSID Convention and
additional facility rules, a BIT was the basis of consent invoked to establish ICSID
jurisdiction.5
3. In 2014, 15% of the new registered cases under the ICSID Convention and additional
facility rules involved the Middle East and North Africa, and 20% involved SubSaharan Africa. Compare to 20% for Western Europe and 25% for Eastern Europe
& Central Asia (highest percentage).6
4. In 2014, the Centre registered 12 applications for post-award remedies under the
ICSID Convention, which included 10 applications for annulment, 1 request for
rectification and 1 request for resubmission of the dispute. Of the 10 applications for
annulment, 5 were brought by the Claimant/investor, and 3 were initiated by the
State/Respondent in the underlying arbitration. In one case, both parties filed
separate applications for annulment of the same award.7
5. Number of annulment applications registered by ICSID from 2008-2014 – 2008:9 |
2009:8 | 2010:3 | 2011:8 | 2012: 8 | 2013: 11 | 2014: 10.8
6. Out of the 420 ICSID Convention arbitrations registered to date, 189 Convention
awards were rendered, 73 annulment proceedings were instituted, 25 decisions
refusing annulment were issued, 15 proceedings were discontinued, 13 awards were
annulled (6 in full and 7 in part). This is consistent with the limited nature of
annulment intended by the drafters of the ICSID Convention.9
7. Thus far, ICSID has issued 13 awards granting annulment in part or in full, at least 4
of these annulment decisions were issued in cases involving African nations as
Respondents:
- Klöckner Industrie-Anlagen GmbH v. Cameroon, ICSID Case No. ARB/81/2,
Annulment Decision of May 3, 1985 – annulled in full
- Amco Asia Corp. v. Indonesia, ICSID Case No. ARB/81/1, Annulment Decision
of May 16, 1986, 1 Int’l Arb. Rep. 649 (1986) – full annulment
- Maritime International Nominees Establishment v. Guinea, ICSID Case No.
ARB/84/4, Decision on Application for Annulment, 22 December 1989 – partial
annulment
- Compañia de Aguas del Aconquija S.A. and Vivendi Universal Group plc v.
Argentina, ICSID Case No. ARB/97/3, Decision on Application for Annulment, 3
July 2002 – partial annulment
- Mitchell v. DRC, ICSID Case No. ARB/99/7, Decision on Application for
Annulment, 1 November 2006 – full annulment
5
6
7
8
9
2014 Annual ICSID Report at 22.
2014 Annual ICSID Report at 23.
2014 ICSID Annual report at 25.
2014 ICSID Annual report at 25.
2014 ICSID Annual report at 26.
3
- CMS Gas Transmission Con v. Argentine Republic, ICSID Case No. ARB/01/8,
Decision on Annulment (dispatched to the parties 25 September 2007) – partial
annulment
- Malaysian Historical Salvors SDN BHD v. Malaysia, Decision on Application for
Annulment (dispatched to the parties on 16 April 2009) – full annulment
- Helnan International Hotels A/S v. Egypt, Decision of the ad hoc Committee
(dispatched to the parties 14 June 2010) – partial annulment
- Sempra Energy International v. Argentina, ICSID Case No. ARB/02/16, Decision
on Annulment (dispatched to the parties 29 June 2010) – full annulment
- Enron Creditors Recovery Corp. & Ponderosa Assets, L.P. v. Argentina, ICSID
Case No. ARB/01/3, Decision on Annulment (dispatched to the parties 30 July
2010) – partial annulment
- Fraport AG Frankfurt Airport Services Worldwide v. Philippines, ICSID Case No.
ARB/03/25, 23 December 2010
8. “The ICSID annulment procedure has started to resemble a form of a standard
appeal, a route taken as a matter of course, rather than as an exception. As a result,
the average duration of an ICSID proceeding (from initiation to annulment award,
often with a stay of enforcement of the original award, and possible re-take before a
different tribunal) is significantly extended.”10
c. Scope of review
1. Examples:
(a) Amco v. Indonesia, ICSID Case No. ARB/81/1, First Annulment Decision, ¶ 23:
“[T]he law applied by the Tribunal will be examined by the ad hoc Committee,
not for the purpose of scrutinizing whether the Tribunal committed errors in the
interpretation of the requirements of applicable law or in the ascertainment or
evaluation of the relevant facts to which such law has been applied. Such scrutiny
is properly the task of a court of appeals, which the ad hoc Committee is not. The
ad hoc Committee will limit itself to determining whether the Tribunal did in fact
apply the law it was bound to apply to the dispute. Failure to apply such law, as
distinguished from mere misconstruction of that law, would constitute a manifest
excess of powers on the part of the Tribunal and a ground for nullity under Article
52(1)(b) of the Convention. The ad hoc Committee has approached this task with
caution, distinguishing failure to apply the applicable law as a ground for
annulment and misinterpretation of the applicable law as a ground for appeal.”
(b)Luccheti v Peru, ICSID Case No. ARB/03/4, ¶ 97: “[T]he task of the Ad hoc
Committee is to consider whether the manner in which the Tribunal approached
and accomplished that task opened its Award to annulment under the Convention
[...] or adequately met the requirements of the Convention [...]. The word
10
Freya Baetens, Enforcement of Arbitral Awards: “to ICSID or not to ICSID” is not the Question, in Todd Weiler,
Ian Laird, eds., INVESTMENT TREATY ARBITRATION AND INTERNATIONAL LAW, 5 Juris Arb. Series 211-228 (2012).
4
2.
3.
4.
5.
‘manner’ is specifically used here in order to emphasize that it is no part of the
Committee’s functions to review the decision itself which the Tribunal arrived at,
still less to substitute its own views for those of the Tribunal but merely to pass
judgment on whether the manner in which the Tribunal carried out its functions
met the requirements of the ICSID Convention.”
According to Christoph Schreuer, there are three generations of ICSID annulment
decisions. See Christoph Scrheuer, Three Generations of ICSID Annulment
Proceedings.
First generation (1985-1986): Klöckner v. Cameroon I and Amco Asia v. Indonesia
setting aside awards “on the ground that the tribunals has manifestly exceeded their
powers.” In those cases, the ad hoc Committee held that annulment would be
automatic if any of the possible grounds were established. The ad hoc committees
were criticized, however, for “re-examining the merits of the cases and for failing to
properly distinguish between annulment and appeal.”11
Second generation (1989-2002): given the criticism of the first generation of
annulment cases, subsequent panels were more conservative. Notably, only 1 partial
annulment was granted from 1991 to 2000 whereas 18 awards were rendered and 1
annulment proceeding was discontinued during that time frame.12 “In MINE v
Guinea, the state applied for annulment on the basis that the tribunal had failed to
state reasons. The ad hoc committee held that ‘[t]he adequacy of the reasoning is not
an appropriate standard of review under paragraph 1(e), because it almost inevitably
draws an ad hoc Committee into an examination of the substance of the tribunal’s
decision, in disregard of the exclusion of the remedy of appeal by Article 53 of the
Convention.’” Where annulment committees reconsidered the awards in the
resubmitted first generation cases, Klöckner v Cameroon II and Amco Asia v
Indonesia II, both applications for annulment were rejected.
Third generation (2002-2009): ad hoc panels employed a more nuanced approach
and indicated that “ad hoc committees would only intervene in ‘serious and
important case.’”13 The main cases embodying this phase are Wena Hotels v.
Egypt,14 Vivendi v. Argentina I and CMS v. Argentina.
(a) Wena Hotels v. Egypt: “the ad hoc committee held that, even where an award
showed a lack of reasons, it had a certain amount of judicial discretion and ‘the
remedy need not be the annulment of the award.’ It explained that it would be
11
Promod, the fourth generation; see also Sylvia Schatz, The Effect of the Annulment Decisions in Amco v.
Indonesia and Klöckner v. Cameroon on the Future of the International Centre for the Settlement of Investment
Disputes, 3 Am. Univ. Int’l L. Rev, no. 2, 481-515 (1988).
12
2014 ICSID Annual report at 31.
13
Promod, the fourth generation.
14
Wena Hotels Ltd. v. Egypt, ICSID Case No. ARB/98/4, Annulment Decision, 5 February 2002.
5
especially likely to exercise this discretion where ‘the reasons supporting the
Tribunal’s conclusions can be explained by the ad hoc Committee itself.’”15
(b)Vivendi v. Argentina I: the ad hoc Committee stated that “it appears to be
established that an ad hoc committee has a certain measure of discretion as to
whether to annul an award, even if an annullable error is found. Article 52(3)
provides that a committee ‘shall have the authority to annul the award or any part
thereof,’ and this has been interpreted as giving committees some flexibility in
determining whether annulment is appropriate in the circumstances. Among other
things, it is necessary for an ad hoc committee to consider the significance of the
error relative to the legal rights of the parties.”16
(c) CMS Gas Transmission Co v. Argentina: “confirmed the Vivendi principle that,
even if an award contains serious errors and defects, annulment does not follow”17
automatically. In its decision the ad hoc Committee stated: “Throughout its
consideration of the Award, the Committee has identified a series of errors and
defects . . .The Award contained manifest errors of law. It suffered from lacunae
and elisions. All this has been identified and underlined by the Committee.
However, the Committee is conscious that it exercises its jurisdiction under a
narrow and limited mandate conferred by Article 52 of the ICSID Convention.
The scope of this mandate allows annulment as an option only when certain
specific conditions exist. . . . the Committee cannot simply substitute its own view
of the law and its own appreciation of the facts for those of the Tribunal.”18
(d)“The third generation of ICSID annulment jurisprudence has come in for praise
for successfully navigating a course between ‘the Scylla of complete fairness and
the Charybdis of absolute finality.’ On the one hand, the annulment process is not
intended to give losing respondents a second bite at the cherry by providing a fullfledged right of appeal. On the other, the process seeks to ensure a minimum level
of oversight over ICSID tribunals – providing an essential safeguard that is
fundamental in helping to preserve the legitimacy of the system.”19
6. Following the three generations, the scope of the ad hoc Committees’ role was
established:
(a) They have a narrow and limited mandate
(b) They cannot correct errors of law
(c) They enjoy a certain degree of discretion
(d) They may reconstruct the reasons if the tribunal has failed to provide them, and
15
Promod, the fourth generation.
Compañia de Aguas del Aconquija S.A. and Vivendi Universal Group plc v. Argentina, ICSID Case No.
ARB/97/3, Decision on Application for Annulment, ¶ --- (3 July 2002).
17
Promod, the fourth generation.
18
CMS Gas Transmission Con v. Argentine Republic, ICSID Case No. ARB/01/8, Decision on Annulment, ¶¶ --(25 September 2007).
19
Promod, the fourth generation.
16
6
(e) They need not automatically annul an award, even if the tribunal makes a mistake
in its search for the appropriate law.20
7. Recent annulment decisions or the fourth generation
(a) Four recent annulment decisions raise questions about the threshold of review in
annulment proceedings as well as to the proper role of the ad hoc Committees
(b)In Sempra v. Argentina and Enron v. Argentina, the ad hoc Committees annulled
the awards on the basis that the tribunals improperly understood and applied the
necessity defense advanced by Argentina.
i. In both cases, the tribunals held that the US-Argentina BIT did not define
‘necessity’ and relied on international customary law to conclude that
Argentina had “failed to establish a right to invoke the ‘necessity’
exception.”21
ii. In Sempra, the ad hoc Committee determined that the tribunal’s holding, that
Article 11 is “inseparable from [the] customary international law standard
insofar as the definition of necessity and the conditions for its operation are
concerned,” was a failure to apply the applicable law—not an error of law as
this is not a ground on which annulment can be granted—because the treaty
contained stand-alone criteria that were distinct from the potentially broader
definition of the defense of necessity in international customary law. As such
the tribunal manifestly exceeded its powers.
iii. In Enron, the ad hoc committee “held that the tribunal was entitled to equate
Article 11 of the BIT and customary international law. However, it
considered that the tribunal had failed to apply a number of the essential legal
elements of the necessity defence under customary international law. For
instance, the tribunal held that Argentina was obliged to prove that the suite of
emergency measures it adopted to deal with the financial crisis was “the only
way” for it to safeguard an essential security interest. The committee
considered that the tribunal dealt with this issue in a “cursory” manner, noting
that it had uncritically relied on the opinion of an economic expert who said
that Argentina had multiple policy options in dealing with the crisis. The
committee thought that the tribunal should also have assessed the viability of
the alternative courses of action – and whether the measures taken were the
only effective way of addressing the crisis. Its failure to grapple with such
issues meant it had neglected to apply the applicable law and thereby
manifestly exceeded its powers, the committee held.”22
iv. “Critics say the Sempra and Enron annulment committees blurred the
distinction between full-fledged error of law review – which is not authorised
20
21
22
Promod, the fourth generation.
Promod, the fourth generation.
Promod, the fourth generation.
7
under the Washington Convention – and the limited jurisdictional review
permitted by Article 52.”23
v. Contrast earlier decision in CMS Gas v. Argentina, where the ad hoc
committee criticized the tribunal’s application of customary international law
of necessity to Article 11 of the US-Argentina BIT but refused to annul the
award because although the application of the law might be defective, the
tribunal did not fail to apply the law.24
(c) In Helnan v. Egypt, the committee partially annulled the award on the ground that
the tribunal had erred in its application of the exhaustion of local remedies rule.
The partial annulment of the award had no impact, however, on the overall
outcome since this finding was not dispositive of the dispute and the committee
did not interfere with the tribunal’s decision on the merits.25
(d)In Vivendi v. Argentina II,26 the committee criticized the conduct of both an
arbitrator and the ICSID secretariat without ultimately refusing to annul the
award. In that case, “Argentina sought to annul on a variety of grounds, including
that the tribunal was improperly constituted and there was a serious departure
from a fundamental rule of procedure. It based its application on the fact that one
of the arbitrators, Gabrielle Kaufmann-Kohler, had failed to disclose that she was
a member of the board of directors of UBS, one of the shareholders of Vivendi.
In its decision, the ad hoc committee severely criticised Kaufmann-Kohler for not
informing the parties of her mandate for the Swiss bank and generally questioned
her judgment with regard to conflict disclosures. . . . Yet, notwithstanding the
prima facie existence of an annulment ground, the ad hoc committee refused to
annul the award. It accepted that Kaufmann-Kohler had no actual knowledge of
the connection between UBS and Vivendi until after the award was issued –
meaning that ‘despite most serious shortcomings’ her independent judgment was
not impaired. Furthermore, the ad hoc committee took into account ‘the
extraordinary length of the … case’ and said that it would be ‘unjust to deny the
Claimant the benefit of the Award,’ given that it was not responsible for
Kaufmann-Kohler’s actions. Although it identified serious errors in the award,
the committee ultimately found that they were not grave enough to warrant
annulment – as in CMS v Argentina.”
23
Promod, the fourth generation.
Promod, the fourth generation.
25
Promod, the fourth generation.
26
Compañia de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentina, ICSID Case No. ARB/97/3,
Decision on the Argentine Republic’s Request for Annulment of the Award rendered on 20 August 2007 (August
10, 2010)
24
8
e. Africa’s Track Record in ICSID
1. To date, between 105 and 109 ICSID proceedings have involved an African
nation.27
2. Of the 45 African Contracting States, 12 have not been involved in ICSID
proceedings to date. That number was 17 in 2012, but since then Mauritania,
Mozambique, South Sudan and Sudan have all been involved in one ICSID case as
respondents and Uganda in two, also as a respondent.
3. 21 cases involve or involved Egypt, 9 involve or involved the DRC, Guinea is next
with 6 cases, followed closely by Algeria with 5 cases.
4. The Republic of Congo, Gabon, Tanzania, Cameroon and Tunisia have been
involved or are involved in 4 ICSID cases.
5. The Central African Republic, Liberia, Morocco, Zimbabwe, Burundi, Madagascar,
Nigeria, Senegal ad Burkina Faso have been involved or are involved in 3 cases.
6. Ghana, Ivory Coast, Niger, Togo, Kenya, Mali, Rwanda, Uganda and the
Seychelles were involved or are involved in 2 ICSID cases.
7. Two cases involve Equatorial Guinea (a non-ratifying state). One as a claimant, the
other as a respondent.
8. Cases involving African States concern the following industries: industrial
activities, mining, agriculture and forestry, oil and gas contract, contract to
construct and/or upgrade and operate, hospitality, construction contracts, power
generation contracts, and general commercial activities.
9. In 2012, 76 proceedings had been initiated under the ICSID Arbitration Rules
against African states. 56 were concluded and 20 were still pending. In the 56
arbitrations that were concluded, more claims were settled than upheld. Only in 13
arbitrations were the claims upheld. These cases involved: the Central African
Republic, the Congo Republic (twice), Egypt (twice), Gabon, Guinea, Liberia,
Senegal, Seychelles, Tanzania, Togo and Zimbabwe. This means that in 33 cases,
African contracting States have either never been involved in ICSID proceedings,
nor seen the claims against them rejected or settled the claims on agreeable terms.28
III. National Review under the NY Convention
a. Procedural mechanisms
1. Under Article III of the NY Convention Member States are obligated to recognize
foreign arbitral awards as binding and to enforce them in accordance with their
procedural rules.
27
This figure and the following numbers in this section were obtained by reviewing Karel Daele’s May 30, 2012
blog post on Kluwer Arbitration Blog entitled Africa’s Track record in ICSID proceedings and by reviewing
information publicly available at https://icsid.worldbank.org. See also Chapter 6, Annex 1: Chronological List of
ICSID Proceedings Involving African States, in LISE BOSMAN (ed.), ARBITRATION IN AFRICA: A PRACTITIONER’S
GUIDE 463-468 (Kluwer Law International 2013).
28
Karel Daele, Africa’s track record in ICSID proceedings, available at
http://kluwerarbitrationblog.com/blog/2012/05/30/africa%E2%80%99s-track-record-in-icsid-proceedings/.
9
2. Under Article IV a party applying for recognition and enforcement of a foreign
arbitral award has to supply the competent authority with: (a) the arbitral award;
and (b) the arbitration agreement.
3. The party against whom enforcement is sought, can object to such enforcement by
submitting proof of one of the grounds for refusal of recognition and enforcement
which are exhaustively listed in Article V(1), namely:
(a) The parties to the agreement referred to in article II were, under the law applicable
to them, under some incapacity, or the said agreement is not valid under the law to
which the parties have subjected it or, failing any indication thereon, under the
law of the country where the award was made ; or
(b)The party against whom the award is invoked was not given proper notice of the
appointment of the arbitrator or of the arbitration proceedings or was otherwise
unable to present his case; or
(c) The award deals with a difference not contemplated by or not falling within the
terms of the submission to arbitration, or it contains decisions on matters beyond
the scope of the submission to arbitration, provided that, if the decisions on
matters submitted to arbitration can be separated from those not so submitted, that
part of the award which contains decisions on matters submitted to arbitration
may be recognized and enforced; or
(d)The composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties, or, failing such agreement, was not
in accordance with the law of the country where the arbitration took place; or
(e) The award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which, or under the law of
which, that award was made.
4. the competent authority may proprio motu refuse recognition and enforcement for
reasons of public policy as provided in Article V(2), namely if
(a) The subject matter of the difference is not capable of settlement by arbitration
under the law of that country; or
(b)The recognition or enforcement of the award would be contrary to the public
policy of that country.29
5. Can an award be recognized by another court even if set aside in the situs State?
(a) Under Article V(1)(e) an award may not be recognized if it “has been set aside or
suspended by a competent authority of the country in which, or under the law of
which, that award was made.” However, this is a ground for refusal to enforce
29
See International Law Association, New Delhi Conference (2002), Committee on International Commercial
Arbitration, Final Report and Recommendation 2/2002 on Public Policy as a Bar to Enforcement of International
Arbitral Awards (defining “[t]he international public policy of any State [as] includ[ing]: (i) fundamental principles,
pertaining to justice or morality, that the State wishes to protect even when it is not directly concerned
(ii) rules designed to serve the essential political, social or economic interests of the State, these being known as
“lois de police” or “public policy rules” and (iii) the duty of the State to respect its obligations towards other States
or international organisations”).
10
and not a prohibition against enforcement of a foreign award, even where the
award was set aside by a court in the place of arbitration.
(b) There are two trains of thought sharing the spotlight on this issue:
i. The seat of arbitration is chosen for little more than the sake of convenience,
as such, “an international arbitral award is an international decision grounded
in a non-national, arbitral legal order, and therefore, its annulment by a state
court has no bearing on its enforcement in another state.”30 (European courts’
view) See, e.g., Yukos Capital v. Rosneft (The Amsterdam Court of Appeal
held that the fact that a Russian court had set aside a Russian arbitral award
was not sufficient to prevent enforcement in the Netherlands. Notably, “the
Appeal Court indicated that there was evidence that the decision of the
Russian court was partial and dependent and was clearly influenced by the
Russian state’s campaign against the claimant.”);31 see also Maximov v.
Novolipetsky Steel Mill (the Tribunal de Grande Instance de Paris enforced an
award rendered in Russia and set aside by the Russian courts). Société
Hilmarton Ltd. v. Société Omnium de traitement et de vaporisation, Bulletin
1994, No. 104, at 79 Cour de Cassation France (23 March 1994); Société
Putrabali Adyamulia v. Société Rena Holding, Société Moguntia Est Pices,
Bulletin 2007, No. 250 Cour de Cassation France (29 June 2007).
ii. The seat anchors the arbitration to the legal order of the state and has the
power to confirm or set aside the award (English courts’ view). Annulment in
a court of the seat of arbitration prevents enforcement in another jurisdiction
because of issue estoppel. See, e.g., Yukos Capital SARL v. OJSC Rosneft Oil
Co. However, since Sulamerica v. Enesa, the law of the arbitration agreement
is not necessarily the law of the seat. Must look to express choice, implied
choice and close connection.32
b. ICSID Annulment vs. NY Convention Refusal to Recognize and Enforce
1. Generally, the grounds under Article V(1) of the NY Convention and Article 52 of
the ICSID Convention are the same and include improper constitution of a tribunal,
failure to respect certain procedural rules (absence of consent to arbitrate or failure to
notify the initiation of arbitral proceedings; violations of due process) or excess of
powers on the part of the tribunal rendering the decision.
2. The NY Convention does not require that the tribunal’s excess of powers be
‘manifest,’ or that the procedural flaws be ‘serious.’
30
Mike McClure, Enforcement of Arbitral Awards that have been Set Aside at the Seat: The Consistent Approach
across Europe, Kluwer Arb. Blog (June 26, 2012), available at
http://kluwerarbitrationblog.com/blog/2012/06/26/enforcement-of-arbitral-awards-that-have-been-set-aside-at-theseat-the-consistently-inconsistent-approach-across-europe/.
31
Mike McClure, Enforcement of Arbitral Awards that have been Set Aside at the Seat: The Consistent Approach
across Europe, Kluwer Arb. Blog (June 26, 2012).
32
Mike McClure, Enforcement of Arbitral Awards that have been Set Aside at the Seat: The Consistent Approach
across Europe, Kluwer Arb. Blog (June 26, 2012).
11
3. The ICSID Convention provides for annulment due to corruption of a tribunal
member and failure to state the reasons on which the award is based. However, the
corruption ground could implicitly be read in Articles V(1)(d) or V(2)(b) of the NY
Convention.
4. When ICSID ad hoc Committee annuls an award, the claimant needs to re-litigate the
entire case before a different investor-State tribunal. Under the NY Convention, after
a refusal to enforce, the original award still exists and the party seeking enforcement
can apply for enforcement before a national court in one of the other Member States
of the Convention.
5. There is additional review under the NY Convention at the situs state and
enforcement state(s). This is not the case under the ICSID Convention.
c. South Africa
1. “South Africa has recently sent notices of termination of its BITs to Belgium,
Luxembourg, Germany, Spain, Switzerland and The Netherlands, which appears to
buck the growing trend of international arbitration across the African continent.
Once the relevant notice periods expire, new investments from these countries will
no longer be protected under the BITs and disputes will not automatically be
resolved by international arbitration. South Africa intends eventually to replace all
its BITs with domestic legislation. The Promotion and Protection of Investment
Bill (the “Investment Bill”) will apply to all foreign investments. The Investment
Bill provides for a narrower definition of expropriation than that contained in
existing BITs and does not make any mention of “fair and equal treatment” of
investments by the host State, which is guaranteed by most BITs. The Investment
Bill also denies investors the right to have disputes resolved by international
arbitration, unless otherwise agreed. Instead, disputes must ordinarily be submitted
to the South African courts or domestic arbitration or mediation. At the time of
writing, there was no publicly available information about when the Investment Bill
might come into force, but a period of public consultation on the Investment Bill
ended on 31 January 2014.”33
d. DRC
1. “The Democratic Republic of the Congo (“DRC”) adopted the New York
Convention in June 2013, but has made four reservations to its adoption. Two of
those reservations are particularly significant. First, enforcement will only be
available in the DRC where awards post-date the DRC’s accession. Second,
immovable property situated in the DRC is excluded from the application of the
New York Convention, thereby excluding mining rights from its ambit.
Notwithstanding those points, it is likely that the adoption of the New York
33
Dr. Stuart Dutson, International arbitration Africa style, The Global Legal Post, June 24, 2014.
12
Convention will increase the attraction of the DRC as an arbitration destination.”34
“If the 21st Century is indeed to be ‘Africa’s century’, the development of
international arbitration in Africa must be a key part of this.”35
IV. Common Court of Justice and Arbitration (OHADA)
a. General Background
1. The Organization for the Harmonization of Business Law in Africa (Organisation
d’Harmonisation en Afrique du Droit des Affaires) Treaty was signed at Port Louis
on October 17, 1993. OHADA has 17 member states. 14 states were initial
signatories and 3 additional states joined in 1995 - Benin, Burkina Faso, Cameroon,
Central African Republic, Chad, Comoros, Republic of the Congo, Cote d’Ivoire,
Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Niger, Senegal, Togo and
DRC.
2. Purpose: harmonize “the laws through the preparation and adoption of common,
simple and modern rules by Uniform Acts (Actes Uniformes) well suited to their
economic situation; the establishment of appropriate judicial procedures within the
judiciary and the encouragement of the use of arbitration as a speedy and discreet
method for settling commercial disputes.”36 OHADA operates a Uniform Acts
regime, which upon adoption become automatically applicable in all its member
states.
3. The OHADA signatory states are predominantly of the civil law tradition, French
speaking and all but one of the 17 belong to the franc economic zone.
4. The Common Court of Justice and Arbitration (“CCJA”) is located in Abidjan,
Ivory Coast and is one of the five institutions created by the Treaty. (The other
institutions are the Conference of Heads of State and of Government, Council of
Ministers of Justice and Finance, which is the legislative body, the Permanent
Secretariat based in Yaoundé, Cameroon and a training and continuing legal
education center known as the Regional Training Centre for Legal Officers based in
Porto Novo, Benin). The CCJA is both an arbitration institution and a judicial
court, with a remit covering all OHADA states, but it does not act as an arbitral
tribunal.
5. Although the OHADA treaty was amended on October 17, 2008 to include the
working languages of French, English, Spanish and Portuguese, only the French
texts are authentic as there are no official translations of OHADA texts yet.
b. Procedural Mechanism
1. The OHADA treaty itself provides for institutional arbitration under auspices of the
CCJA in accordance with the CCJA’s own Rules of Arbitration.
34
Dr. Stuart Dutson, International arbitration Africa style, The Global Legal Post, June 24, 2014.
Dr. Stuart Dutson, International arbitration Africa style, The Global Legal Post, June 24, 2014.
36
Ndeugwe Bernard Taylor Tumnde, Grounds for the Refusal of Arbitral Awards Under the OHADA Uniform Act
on Arbitration 1999, Africa International Arbitration (August 6, 2012).
35
13
2. Since June 11, 1999, arbitration is governed in the OHADA member States by the
Uniform Act on Arbitration 1999. This Act is based on the UNCITRAL Model
Law.
3. The Uniform Act (“UA”) supersedes existing national laws on arbitration but is
subject to provisions of national laws which do not conflict with the Uniform Act
(CCJA decision 001/2001/EP, 30 April 2001). The arbitration rules of any
institutional center of arbitration based in an OHADA member state should not
conflict with the Uniform Act.37
4. The UA makes no distinction between national and international arbitral awards and
therefore applies to both.
5. Under Article 18, the deliberations of the arbitral tribunal are confidential. This
applies to the entire arbitral proceedings.
6. Under Article 25 a valid award is final and binding on the parties with res judicata
effect and has the same status as a judgment of a national court in all OHADA
member states. Review on the merits is not permitted. There is also no law
permitting refusal based on mistake in fact or law by an arbitrator or arbitrators.
7. Article 26 of the UA lists the limited grounds under which an arbitral award can be
set aside or refused enforcement in an OHADA member State, namely:
(a) Absence of arbitration agreement,
(b) The arbitration agreement was null and void
(c) The arbitration agreement had lapsed by the time the tribunal rendered its award
(d) Improper constitution of the tribunal
(e) Failure to comply with the terms of reference/ Excess Authority
(f) Lack of due process
(g) Absence of any reasoning
(h) Conflicts with the international public policy ruling of the member state.38
8. A party seeking to have an award set aside must apply to the court in the OHADA
state that is the seat of arbitration. The application can be filed any time from the
day the award is given until a month after the parties have been notified that the
award has been granted exequatur. An application to set aside the award stays its
enforcement, except in circumstances where the tribunal has ordered provisional
enforcement of the award.
9. A third party who was not called, and who has suffered harm as a result of the
award, may file an objection before the arbitral tribunal.
10. A judge must review whether the grounds raised by the party or sua moto are
justified under Article 26 and most of the time a distinction is made between the
grounds invoked by a party and those invoked by the court on its own motion.
37
38
OHADA Guide: http://www.nortonrosefulbright.com/files/ohada-25764.pdf.
OHADA Guide at 12-13.
14
11. If either party decides to appeal the ensuing court decision, this appeal has to be
filed with the CCJA in its capacity as a judicial authority
12. Note: these are similar to the NY Convention grounds. 10 OHADA states are also
members of the NY Convention (Benin, Burkina Faso, Cameroon, Central African
Republic, Gabon, Guinea, Cote d’Ivoire, Mali, Niger, and Senegal). In these states
it is up to them to decide which legal regime they want to use concerning
enforcement or refusal to enforce. In those OHADA states that are not members of
the NY Convention, recognition and enforcement can only be sought under the
OHADA Arbitration Law.39
13. Article 27 allows the setting aside application to be filed even after the award has
been declared enforceable, though this must be done within one month as from the
date of notification. Under Article 29, the setting aside of an award does not bar the
institution of fresh proceedings.
Other well-known regional African arbitration centers include the Cairo Arbitration Center
(CRCICA), the LCIA-MCIA, the Kigali International Arbitration Center (KIAC), and the
Arbitration Foundation of Southern Africa (AFSA).
V.
Cairo Regional Center for International Commercial Arbitration (CRCICA) - Egypt
a. Background
1. CRCICA is an independent non-profit international organization that administers
domestic and international arbitral proceedings.40
2. One of the first arbitration centers in the Arab world. It is a leading regional
institution that administers a great number of arbitrations (over 900 arbitration from
its inception to the beginning of 2014 according to the CRCICA annual report).
Established in 1979 by virtue of a treaty between Egypt and the Asian African
Legal Consultative Committee. The Egyptian Arbitration Law, Law 27/1994,
promulgated the law concerning arbitration and commercial matters and was a
welcome development that increased confidence in the choice of Cairo as a seat of
international and local arbitration.
3. Initially, CRCICA adopted the UNCITRAL Arbitration Rules of 1976. In March
2011, it adopted rules based on the UNCITRAL Arbitration Rules 2010 with minor
modifications reflecting CRCICA’s role as an arbitral institution and appointing
authority.
4. CRCICA also acts as an appointing authority and generally adopts the “list
procedure” in making its appointments. CRCICA has recently extended its
arbitrator list to include prominent international arbitrators.
39
Mamoudou Samassekou, Effectiveness and Remedies of Arbitral Awards in OHADA (1)’s System and in the
People’s Republic of China, 4 J. OF POLITICS & L., no. 1, 67 (Mar. 2011).
40
Global Arbitration Know-How, Egypt Report, first published Jan. 16, 2012 and last verified Aug. 5, 2013,
available at http://globalarbitrationreview.com/know-how/topics/61/jurisdictions/61/egypt/.
15
5. Article 38 of the CRCICA Arbitration Rules grants arbitral tribunals and parties the
right to correct clerical, typographical and similar errors in the award. The Rules do
not provide for an annulment mechanism similar to ICSID’s. See CRCIA Arb. R.,
Art. 38.
b. Enforcement and Nullity Action under the Egyptian Arbitration Law
1. Before the enactment of the Egyptian Arbitration Law, enforcement of arbitral
awards was subject to the rules and procedures of the arbitration chapter in the
Egyptian Civil Procedure Code. The Egyptian Arbitration Law is based on the
UNCITRAL Model Law and on some aspects of local laws.
2. To enforce an award, a party must first apply to the recently established Technical
Office for Arbitration (“TOA”) of the Egyptian Ministry of Justice to secure
“permission for enforcement.” Once the TOA has issued the “permission to
enforce,” the party seeking enforcement may apply for enforcement in a local court
requesting the issuance of an execution. Enforcement may take from 12 to 18
months (if not longer). The general default prescription period of legal rights under
the Civil Code (15 years) would apply.41
3. Nullity action: a party seeking to set aside an award has 90 days from the formal
service of the award to apply to the Egyptian Court of Appeal (not to the Egyptian
Court of First Instance). If the party fails to apply to set aside the award within the
90-day period, the award is immune and can be recognized and enforced under
article 55 of the Egyptian Arbitration Law.
4. Article 53 states the grounds according to which an award can be set aside. These
grounds mirror the grounds provided in the UNCITRAL Model Law.42 The ground
most frequently invoked is that of public policy: “the court adjudicating the action
for annulment shall ipso jure annul the arbitral award if it is in conflict with the
public policy in the Arab Republic of Egypt.” Egyptian Arbitration Law, Art. 53(2)
5. Challenge proceedings are by court action. They do not stay the enforcement of an
award unless a stay of enforcement is granted by the reviewing court. “For
international commercial arbitrations . . . a nullity action is initiated before the
Cairo Court of Appeal, and the proceedings may take between 9 and 18 months for
completion.”43
41
Khaled El Shalakany & Adam El Shalakany, Egypt Arbitration Guide, Int’l Bar Association, 12 (Aug. 2013).
These grounds are: (a) no or void arbitration agreement, (b) incapacitation in the signing of the arbitration
agreement, (c) lack of notice of the arbitral proceedings, the appointment of an arbitrator, or reasons beyond a
parties control, (d) award failed to apply the agreed upon law, (e) composition of the tribunal in conflict with the
Law or parties’ agreement, (f) “[i]f the arbitral award dealt with matters not falling within the scope of the
arbitration agreement or exceeding the limits of this agreement. However, in the case when matters falling within
the scope of the arbitration can be separated from the part of the award which contains matters not included within
the scope of the arbitration, the nullity affects exclusively the latter parts only[,]” legal violation or nullity in the
arbitral award or the arbitration procedures. Egyptian Arbitration Law, Article 53(1).
43
Khaled El Shalakany & Adam El Shalakany, Egypt Arbitration Guide, Int’l Bar Association, 12 (Aug. 2013),
available at
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=20&cad=rja&uact=8&ved=0CGQQFjAJO
42
16
6. Arbitration awards cannot be appealed. The courts have the power only to partially
or completely nullify an arbitral award. No review of the subject matter or
correction thereto is permissible.44
7. Egypt’s position on whether an award set aside by the courts in the seat of
arbitration may be enforced in Egypt: “Whilst the Arbitration Act provides for the
explicit primacy of international conventions (such as the New York Convention),
the grounds for refusal of recognition or enforcement under the Arbitration Act do
not include a provision similar to Article V(1)(e) of the New York Convention
pertaining to non-enforcement of awards that have been set aside. That said, it is
worth noting that Egyptian courts have not, hitherto, adopted a clear position with
respect to the French doctrine of delocalising arbitral awards. Accordingly,
Egyptian courts will assess on a case-by-case basis whether an award that has been
set aside by the courts in the seat of arbitration is enforceable in Egypt.”45
8. Trend in arbitration: “Recent enforcement decisions have shown that the trend
with respect to international arbitration (in non-administrative contracts) is proenforcement. Whilst the procedure for recognition and/or enforcement appear to be
a daunting process, Egyptian courts appear to be enforcement friendly with respect
to international arbitration, and the public policy ground is normally narrowly
construed.”46
VI. London Court of International Arbitration – Mauritius International Arbitration
Center (LCIA-MIAC) - Mauritius
a. Background
1. Created in July 2011 by agreement between the Government of the Republic of
Mauritius, the LCIA and the MIAC. This Center is based in Mauritius, strategically
positioned between Africa and Asia. Offers all the services offered by the LCIA in
the UK and administers cases brought under the LCIA-MCIA Rules, the
UNCITRAL rules or rules agreed upon by the parties. Administrative services are
provided in English and French and arbitrations may be conducted in any language.
It is a relevant and convenient choice of institution for disputes involving parties
from Africa, Europe and Asia.
2. The Arbitration Court of the LCIA is the final authority for the proper application
of the LCIA-MIAC Rules. Its key functions include appointing tribunals,
determining challenges to arbitrators, and controlling costs. The LCIA Court is
composed of up to 35 members.
Ao&url=http%3A%2F%2Fwww.ibanet.org%2FDocument%2FDefault.aspx%3FDocumentUid%3D14B121C0E886-4CFF-AE6EA0CB6EA7EDA5&ei=LL1TVNz4IIjB7Aa2kYDICA&usg=AFQjCNEqGU5P21M9oV7gHIZOraqy3JzipA&sig2=k
ZgL5oVJI-BCEwn6r965ZA&bvm=bv.78677474,d.ZGU.
44
Khaled El Shalakany & Adam El Shalakany, Egypt Arbitration Guide, Int’l Bar Association, 12 (Aug. 2013).
45
Global Arbitration Know-How, Egypt Report, first published Jan. 16, 2012 and last verified Aug. 5, 2013.
46
Global Arbitration Know-How, Egypt Report, first published Jan. 16, 2012 and last verified Aug. 5, 2013.
17
3. The LCIA-MIAC Rules contain a provision allowing for tribunals to correct
“computation, clerical or typographical errors or any errors of a similar nature,” but
do not provide for a similar annulment proceeding like ICSID. See LCIA-MIAC
Arb. R., Art. 27. Where an award fails to address certain claims or counterclaims
presented to the Tribunal, a party may request via written notice to the Registrar,
that the Tribunal make an additional award. See Art. 27.3.
4. Since 2001, the legislature has taken “deliberate steps to build up the arbitration
framework in Mauritius by adopting the New York Convention . . . (which came
into force in March 2004), and enacting the Mauritian International Arbitration Act
in 2008 based on the 2006 UNCITRAL Model Law on International Commercial
Arbitration (MIAA). The 2001 Act and MIAA were recently amended in June
2013 pursuant to the International Arbitration (Miscellaneous Provisions) Act 2013.
One significant amendment to the 2001 Act removed the reciprocity reservation,
which opens up the enforcement of foreign arbitral awards made in states which are
non-signatories of the New York Convention. It is notable that Section 3(9) of the
MIAA, introduced in the amendments in 2013, expressly states that, “in applying
and interpreting this Act and in developing the law applicable to international
arbitration in Mauritius”, recourse may be had to international materials including
relevant case law from other Model Law jurisdictions, and treatises on the Model
Law. The 2013 amendments to the MIAA also make it clear that the MIAA applies
only to an arbitration where its juridical seat is in Mauritius. The Supreme Court
(International Arbitration Claims) Rules were also passed in 2013 to provide for
bespoke rules to govern cases under the MIAA and 2001 Act. Both of these
initiatives show that the Mauritian legislature and judiciary are endeavouring to be
at the forefront of arbitration developments . . . Under the MIAA, the PCA has
jurisdiction over the appointment of arbitrators, and the PCA has permanent
presence in Mauritius from 2011.”47
5. The Supreme Court of Mauritius’s decision in Cruz City 1 Mauritius Holdings v
Unitech Limited and Anor [2014] SCJ 100 (Cruz City 1 Mauritius Holdings) was
the first judgment of the “designated judges” (constituted under Section 42 of the
MIAA). The case involved the enforcement of two LCIA arbitral awards under the
New York Convention. The Supreme Court, comprising the Honorable Justices S.
Peeroo (delivering the judgment of the Court), A. Caunhye and N. Devat, took a
very robust approach on the enforcement of foreign awards in Mauritius, setting the
tone for a pro-arbitration judicial attitude in Mauritius. For example, with respect to
the opponent’s contentions on the jurisdiction of the tribunal, the Supreme Court
refused to re-open the merits of the disputes between the parties, and made it clear
47
Katie Chung, Arbitration in Mauritius: Supreme Court gives confidence to foreign investors, HK45/HKIAC
(Hong Kong International Arbitration Center) Newsletter (3d ed.) (April-June 2014), available at
http://www.hkiac.org/newsletter/HKIAC_news_and_views_3rd_edition.pdf.
18
that the role of the enforcement court was to consider whether it would refuse
recognition and enforcement of a foreign arbitral award under any of the grounds in
Article V of the New York Convention. Enforcement of the award was granted.48
VII. Kigali International Arbitration Center (KIAC)49 - Rwanda
a. KIAC is the first Centre of its kind established in the East African Region to provide
institutional support to domestic and international arbitration, while promoting
alternative dispute resolution.
b. Created in 2011 by an Act of Parliament as an independent body, KIAC was officially
launched in May 2012. It is an initiative of the Rwanda Private Sector Federation
(PSF) supported by the Government of Rwanda in order to help Economic Operators to
resolve their disputes without need to go to Courts.
c. KIAC administers cases under KIAC arbitration Rules and UNCITRAL Rules. Parties
may agree to use in part or wholly KIAC arbitration Rules, a modern set of Rules
consistent with international best practices and covering all aspects of the arbitral
proceedings.
d. Arbitration services under KIAC are very cost effective with a schedule of fees
allowing the costs of KIAC arbitrations to be kept in line with the size and the
complexity of the cases referred to the Centre.
e. Rwanda is signatory to the 1958 New York Convention on the Recognition and
Enforcement of foreign Arbitral Awards which enables the KIAC arbitral awards to be
enforceable in any other country signatory to the Convention
f. Recognizing the benefits of arbitration and the long local tradition for ADR, the
Rwandan judiciary follows a pro-arbitration policy, which includes, for instance,
prioritizing arbitration related matters and handling them in a timely manner.
g. Rwanda claims to be an independent neutral third-country venue, politically stable with
well-functioning institutions, rule of law and zero tolerance for corruption; Rwanda was
ranked fourth in Africa and first in East Africa for fighting corruption in the 2012
Corruption Perceptions Index (CPI).
h. According to the 2012 “World Bank Doing Business” report Rwanda is the third easiest
country in which to do business.
i. Three official languages are in use in Rwanda: Kinyarwanda, English and French, and
the local workforce is fluent in these three languages.
VIII. The Arbitration Foundation of Southern Africa (AFSA) – South Africa
48
See Katie Chung, Arbitration in Mauritius: Supreme Court gives confidence to foreign investors, HK45/HKIAC
(Hong Kong International Arbitration Center) Newsletter (3d ed.) (April-June 2014) (containing additional
information about the case).
49
The information below is lifted in substantial part from the KIAC article provided by Global Arb. Rev., available
at http://globalarbitrationreview.com/regional-arbitration/5/category/89/region/20/entry/317/.
19
a. AFSA was founded in 1996 and is a joint venture between business organizations and
the legal and accounting professions. It provides a one-stop service, with facilities for
arbitrations and mediations, a fully administered dispute resolution service (including
panels of experts) and a choice of rules depending on the size and complexity of the
matter.
b. AFSA is a domestic arbitration organization. The most popular international arbitration
organizations in South Africa are the ICC and the LCIA.
20

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