Québec – The Powers of Arbitrators: Specific Performance, Interim Measures, and Injunctions, Oh My!

17 Maggio 2018

Canada

Arbitrato

State commercial court in Russia is named in the Russian language – Арбитражный суд. This name of the state commercial court is often translated into English as Arbitration court. Such translation in its turn often causes actual misunderstanding between the parties, since the Russian party will most probably consider the term “Arbitration court” as a state commercial court and the other (non-Russian) party might consider that it agreed to resolve disputes by arbitration rather than in a state court.

Below are some examples of dispute resolution clauses specified by the parties in commercial contracts that caused actual misunderstanding:

“…if there is no agreement, any disputes and claims between the parties relating to the contract will be resolved by arbitration under the Rules of International Chamber of Commerce in Moscow by one or more arbitrators appointed in accordance with the said rules. The Arbitration court shall use the Russian law.”

“…if a dispute is not resolved within 30 days of written notification of the dispute by one party to the other, anyone of the parties may submit the dispute arising out of or in connection with this agreement shall be finally settled under the Rules of Arbitration of the Moscow City Arbitration Court”.

The wording of such clauses and its translation, specifically translation of the term “Arbitration court” might result in resolution of claims by the state commercial courts in Russia, rather than by arbitration. In such situations failure of the non-Russian party to defend itself in the Russian state commercial courts might lead to serious negative consequences.

One of the well-known arbitration institutions in Russia – the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation recommends the following arbitration clause:

“Any dispute, controversy or claim which may arise out of or in connection with the present contract (agreement) [in case a separate arbitration agreement is concluded a particular contract (agreement) is to be indicated], or the entering into force, conclusion, alteration, execution, breach, termination or validity thereof, shall be settled by arbitration at the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation in accordance with its applicable regulations and rules. An arbitral award shall be final for the parties. It shall not be allowed to submit a motion to a state court to make a decision on the lack of jurisdiction of an arbitral tribunal in connection with the issuance by the arbitral tribunal of a separate order on existence of jurisdiction as a matter of preliminary nature”. (http://mkas.tpprf.ru/en/documents/)

As you can see the full name of the arbitration institution is “International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation” and using its short name “Arbitration court” might result in resolution of disputes by the state commercial court.

Another situation is when the parties actually wish to resolve commercial disputes in a state commercial court in Russia but fail to specify the name of the state commercial court correctly. Believe it or not, but there are many lawyers who consider Russian state courts as an effective and less expensive judicial body to resolve commercial disputes as opposed to arbitration.

There was one interesting case mentioned by the Supreme Court of Russia in this regard in its recent overview of court practice on resolving of disputes connected with protection of foreign investors in Russia.

A foreign company filed a claim with the state commercial court in Russia against another foreign company. The court determined that the parties of the dispute concluded prorogation agreement (choice of forum clause) in accordance with which all disputes arising from the specified contract and in connection with it shall be resolved in the courts of general competence of Russia.

The state commercial court of first instance considered that it lacked jurisdiction to resolve this case, because the parties did not agree to resolve their disputes in the state commercial courts, with that the courts of general competence do not resolve commercial disputes between companies in Russia. As a result, the court of first instance returned the claim to the claimant due to the lack of competence of the state commercial court to resolve this dispute.

In the appeal claim the claimant argued that the prorogation agreement was unenforceable, since the court specified by the parties (the courts of general competence) do not consider commercial disputes of legal entities in Russia. The foreign company also argued that there was a close connection of the dispute with the territory of the Russian Federation, and therefore the state commercial court had competence to consider this case.

The appeal court dismissed the ruling of the court of first instance and the case was returned for re-consideration to the court of first instance based on the following grounds.

The appeal court ruled that the enforceable prorogation agreement shall provide possibility to determine the actual intent (true intent) of the parties regarding competence of the state court to resolve disputes.

The appeal court determined that the prorogation agreement agreed by the parties was unenforceable, since such agreement failed to determine the intent of the parties to resolve disputes in a specific court or a system of competent state courts where the specific state court shall be determined based on the rules of internal competence of courts.

The appeal court further ruled that if prorogation agreement is unenforceable the competent court of the Russian Federation shall use general rules of competence of state commercial courts of the Russian Federation set forth in the Commercial procedural code of the Russian Federation.

In this specific case the subject of the disputed transaction was a sale of share in the charter capital of the company registered at the territory of the Russian Federation. The appeal court in this case established close connection of the dispute with the territory of the Russian Federation and ruled that the state commercial court was competent to consider such dispute.

Therefore, if the parties of the contract fail to correctly stipulate the specific state commercial court to consider their disputes in Russia, such prorogation agreement (choice of forum clause) might be considered by the state commercial court in Russia unenforceable and the claim might be returned to the claimant due to the lack of competence of the state commercial court to resolve such dispute.

Conclusions

If you wish to resolve disputes in the state commercial court in Russia, make sure that the full name of the state commercial court is specified correctly.

If you wish to resolve disputes by arbitration in Russia it would be reasonable to use a recommended arbitration clause of respective arbitration institution.

And, of course, be sure to check translation of the English version of the contract into Russian.

Québec’s international (and domestic) arbitration rules are codified in the Code of Civil Procedure (the “CCP”) and were first enacted over thirty years ago as part of a major, progressive reform of arbitration law in the Province. This reform was inspired by the 1985 UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”) and sought to promote arbitration as a means of private dispute resolution.

Today, each of the other Canadian provinces have separate legislation that governs international arbitration that is, like Québec, largely based on the Model Law.

Frequently in the context of commercial arbitrations, a party seeks the specific enforcement of the terms of a contract, or, for example, other types of protective or preservation orders. An important issue that has arisen under Québec law over the years is whether an arbitrator has the jurisdiction to render these types of orders, which are injunctive in nature.

Until 2011, there was serious debate in Québec as to whether an arbitrator had the power to render orders of specific performance, namely orders that force a party to an arbitration to do something, or not to do something. The debate stemmed from the fact that: (1) orders of specific performance can be akin to an injunction – which is defined in the CCP as “an order enjoining a person not to do or to cease doing something or, in applicable cases, to perform an act or operation under pain of all legal penalties” – and the CCP expressly provides that the Superior Court of Québec, Québec’s court of original jurisdiction and the highest trial court in the Province (the “SCQ”), has the exclusive jurisdiction to issue the extraordinary remedy of an injunction; and (2) a specific article in the CCP provided that a “judge or court” (as opposed to an arbitrator) could grant provisional measures before or during arbitral proceedings.

In 2011, the Court of Appeal of Québec (the “QCA”), Québec’s highest court, rendered a decision (Service Bérubé Ltée v. General Motors du Canada Ltée, 2011 QCCA 567) (“Bérubé”) that examined the question of whether an arbitrator could order the performance of a contract by a party to an arbitration. More specifically, in Bérubé, a key issue was whether the arbitrator could force General Motors to renew a franchise agreement with its franchisee. The QCA held that not all orders of specific performance were akin to an injunction and that arbitrators can enforce the performance of a contract that is at issue before them.

A year later, in 2012, in a highly anticipated decision (Nearctic Nickel Mines Inc. v. Canadian Royalties Inc., 2012 QCCA 385) (“Nearctic Nickel”), the QCA reaffirmed that arbitrators can order specific performance of contractual obligations that do not amount to injunctions. In Nearctic Nickel, consistent with the terms of a joint venture agreement between the parties, an arbitrator ordered a minority partner to transfer its interest in a mining property to the majority partner. The QCA held that this order did not constitute an injunction but rather, “was tantamount to an order to convey title and where the award itself is equivalent to the specific performance of the contractual obligations.” The QCA did not, however, expressly hold that an arbitrator could issue an injunction.

In rendering its decision in Nearctic Nickel, the QCA rejected the assertion that an arbitrator never possessed the power to grant orders of an injunctive nature because, without limitation: (1) in Québec, specific performance of an obligation (as opposed to pecuniary damages) is, in cases where this is possible, the rule and this can be obtained through an injunction or a simple court order; (2) this interpretation would be incompatible with the codified principle in the CCP that arbitrators “have all of the necessary powers for the exercise of their jurisdiction”; and (3) consistent with the Supreme Court of Canada’s (the “SCC”), Canada’s final court of appeal, modern interpretation of arbitration as a “complete system of alternate dispute resolution”, the powers granted to arbitrators should include the possibility for arbitrators to render awards to be executed by specific performance that do not require court intervention.

In deciding whether the order of an arbitrator is the equivalent of an injunction, the QCA noted as follows:

[63] In order to appreciate whether an arbitrator issued a particular order which would be tantamount to an injunction, one must look at the commercial agreement, determine the true intentions of the parties and decide whether, in light of all the circumstances, the pith and substance of the order truly constitutes an injunction with all of its known penal implications or whether it is more of a declaratory nature which serves the purpose of giving full effect to the Arbitrator’s determinations of the parties’ rights.

Of note in Nearctic Nickel, the QCA also indicated, in obiter, that an arbitral tribunal could grant provisional measures even where the parties’ agreement was silent on this issue. In support of this position, the QCA relied on the fact that the Model Law (article 17) expressly provides that arbitrators have the power to grant interim measures and this article was expressly incorporated in the CCP with respect to inter-provincial and international arbitration and that it would not make sense for domestic arbitration in Québec to follow different rules.

The SCC refused leave to appeal from the QCA’s decision in Nearctic Nickel (19 July 2012, No. 34801). As is always the case when the SCC dismisses an application for leave to appeal, it did not provide reasons for its decision.

In 2016, the CCP provisions dealing with arbitration were amended, including to take into account amendments to the Model Law. As part of these significant amendments, the legislator added article 638 CCP, which provides that “[t]he arbitrator may, on a party’s request, take any provisional measure or any measure to safeguard the parties’ rights […].” The legislator also added article 639 CCP, which provides that in urgent situations, even before a party requests provisional or safeguard measures, the arbitrator may issue “provisional orders” for a period not exceeding twenty days. In addition, in article 646 CCP, which deals with the grounds on which a court can refuse to homologate (recognize) an arbitral award, the legislator added the following underlined terms: “The court cannot refuse to homologate an arbitration award or a provisional or safeguard measure unless it is proved that […].”

Subsequent to the 2016 amendments to the CCP, the ratio of the QCA’s decisions in Bérubé and Nearctic Nickel was applied by the SCQ in a 2017 decision in Truong v. Syndicat des copropriétaires Appartements Miraflor, 2017 QCCS 3673 (“Truong”). In Truong, the Court reaffirmed that in Québec, an arbitrator can issue an order of specific performance that is not necessarily an injunction.

More recently, the question of an arbitrator’s powers and more specifically whether an arbitrator can issue a safeguard order that was akin to a Mareva injunction (i.e., a freezing order to prevent a party from dealing with its assets) was considered by the SCQ in the case of Hachette Distribution Services (Canada) Inc. c. 2295822 Canada Inc., 2018 QCCS 1213 (“Hachette”). In Hachette, the SCQ noted the legislator’s clear recognition, in enacting article 646 CCP, that an arbitral tribunal has the power to grant provisional measures or safeguard orders. The SCQ noted that an arbitrator’s ability to do so must be linked to the arbitrator’s mandate, which must be interpreted in a broad and liberal manner.

It should be noted that in Ontario, the Arbitration Act (Ontario) expressly provides that an arbitrator can render orders of specific performance and injunctions. The same is true under the relevant arbitration legislation in a number of other Canadian provinces.

The author of this post is David Stolow.

French law is known to be highly favorable to the enforcement of international arbitral awards (notably those rendered outside of France). This forum should accordingly be considered as a matter of priority if the opposing party holds assets in France.

Are presented below the necessary steps in order to enforce an international arbitral award in France. Please note that some of the steps described are only potential and depend upon the other party’s possible will to resist enforcement.

Step 1: Obtaining exequatur

The award is presented to the Presiding Judge of the Paris Civil Court (Tribunal de Grande Instance de Paris) ex parte who decides whether or not to grant exequatur. There are no briefs to file.

The time required for the Presiding Judge’s answer varies greatly according to the caseload of the Court and his availability. Nevertheless, in case of specific emergency, it is always possible to discuss with the clerk’s office to handle the matter on an urgent basis.

On a practical note, the following documents are required in order to proceed: an original version or certified copy of the award, a certified translation of the award, a copy of the arbitration agreement and a certified translation of the same and one additional copy of each of these documents.

Step 2: Defending exequatur (potentially)

If exequatur is granted or denied, the order may be appealed at the Paris Court of Appeal within one month starting from its service. Additional delay for distance may apply if the appealing party is domiciled or is registered abroad.

If exequatur is granted, it is often the case that the opposing party attempts to question the enforceability of the award in France on the limited grounds of article 1520 of the French Code of Civil Procedure (« CCP »):

the arbitral tribunal wrongly upheld or declined jurisdiction,
the arbitral tribunal was irregularly constituted,
the arbitral tribunal ruled without complying with the mandate conferred upon it,
the due process requirement was violated, or
recognition or enforcement of the award would violate French international public policy.

Of interest in the current judicial environment, is new case law of the Paris Court of Appeal allowing limited revision of the fact findings of the arbitral tribunal in cases of alleged bribery (see AD newsflash on the matter).

After filing an appeal, the opposing party is required to file its complete submissions on the appeal within 3 months and the defendant has 3 months to answer from the notification date of the appellant’s submissions (new delay as per the reform of 6 May 2017 in force since September 2017).

Additional submissions may be filed, one additional set is common practice, and a single hearing is usually scheduled to take place around 18 months after the appellant’s initial declaration to the Court.

It is important to note that during such proceedings the award, whose exequatur has been granted, will remain enforceable in France and that accordingly there are no obstacles for the beneficiary of the award to proceed with any seizure unless the defendant makes a specific application to the Court to stay enforcement (Article 1526 CCP).

Step 3: Defending immediate enforceability of the award (potentially)

In order to take into account specific circumstances that would unjustly prejudice the party against whom a decision is enforced, the CCP reserves the possibility to request the Court of Appeal a stay of the enforcement of the award in exceptional circumstances.

In such case, the debtor would have to prove that enforcement would entail seriously detrimental consequences to his rights (Article 1526 §2). The criteria to meet are restrictive. When the beneficiary of the award is a foreign company, it is often requested as an alternative that the monies be put under escrow and not immediately transferred to the beneficiary on the basis that it will be difficult for the opposing party to recover the funds should it be successful in its appeal against the exequatur order.

These proceedings are usually expedited (hearing within one or two months). The opposing party files a request as soon as it has appealed the exequatur order. A brief in answer rapidly needs to be filed depending on the date of the hearing.

*Step 4: Seizing assets***

Seizing funds

Upon receipt of the exequatur order, a bailiff may be instructed to seize any funds held in bank accounts in France.

The process is that of a “saisie-attribution”, hereinafter referred to as a seizure. The bailiff is instructed to visit the relevant banks’ headquarters and notify that monies corresponding to the award are seized.

Please note that French bailiffs have access to a specific file called FICOBA which provides them with the names of all the banks where the debtor holds accounts.

As soon as a bailiff requests funds from a bank, the bank has an obligation to provide detailed information on the funds available. Most banks are organized to answer the bailiff’s request on the same day.

Once the bailiff has performed the seizure, the amounts are considered to be the creditor’s property and are rendered unavailable to the debtor. This can paralyze the business of the debtor so it is recommended to proceed with caution.

The seizure is then notified to the debtor within 8 days.

The funds remain frozen the time to allow potential challenges by the debtor (one month).

Seizing other kinds of assets

It is possible to seize a variety of other assets under French law of course (real property, company shares, debt obligations etc.). Seizing funds is usually the easiest.

Step 5: Challenge by the opposing party of the seizures (potentially)

The seized party will have a right to challenge the seizures before the Enforcement Judge (“Juge de l’exécution” or “JEX”) within a month of the notification of the seizure.

The arguments that can be raised by the opposing party usually concern the seizure itself and not the validity of the exequatur order as other proceedings are available for that purpose.

Several briefs are usually exchanged and a hearing is held before the JEX.

The JEX’s decision can be appealed. The appeal does not stay enforcement. However, there exist specific proceedings to request the Court of Appeals to stay enforcement under certain conditions (manifestly excessive consequences).

In conclusion, the process is rather straightforward even though there are legitimate recourses available to the debtor and the above may appear pretty technical. This is natural given the potential use of the public force once exequatur is obtained.

Please note that although French Courts are known not to be very generous in terms of awarding legal fees, there have been decisions in which significant amounts have been ordered in this field (for example EUR 600,000 in CA Paris, 26 sept. 2017, no 16/15338). Therefore, in case of success the costs of enforcement are borne by the debtor.

In case of absence of challenges, it usually takes between two to three months to obtain the wire of the funds in favor of the creditor (however as explained above, as soon as the seizure is performed the funds are immediately frozen until all potential recourses have expired).

The author of this post is Flore Poloni

Come evitare che il debitore si liberi dei propri beni per evitare un’esecuzione forzata? In Svizzera un creditore può farlo con un sequestro conservativo, a due condizioni: in primo luogo, il debitore non deve essere residente o avere un domicilio in Svizzera; in secondo luogo, il creditore deve essere in possesso di una sentenza o un lodo arbitrale favorevole.

Nonostante la pressione crescente degli altri stati, la Svizzera continua a ricoprire un ruolo dominante nel panorama finanziario. Per questo motivo la giurisdizione svizzera è molto importante per i soggetti (persone fisiche o giuridiche) che desiderano eseguire i propri crediti nei confronti di debitori che detengono conti correnti bancari o altri beni in Svizzera. Sebbene nella pratica il sequestro conservativo venga effettuato principalmente su conti bancari, è possibile utilizzare lo stesso strumento anche per aggredire, con il medesimo effetto, altri beni, come ad esempio patrimoni immobiliari, opere d’arte o beni di terzi creditori nei confronti del debitore.

In questo post (in lingua inglese) sul blog di Legalmondo è stato trattato il nuovo regolamento europeo 655/2014 entrato in vigore nel gennaio 2017 (non applicabile in Svizzera) sui sequestri sui conti correnti bancari negli stati appartenenti all’Unione Europea.

Tornando alla Svizzera, un creditore può chiedere al tribunale del luogo dove si trovano i beni del debitore o la sede della banca l’emissione di un sequestro conservativo, solo se dimostra che sussistono prima facie i tre requisiti previsti dalla Legge federale sulla esecuzione e sul fallimento (“Swiss Debt Enforcement and Bankruptcy Act”), ovvero:

il credito è esigibile e non garantito;
i beni del debitore da sequestrare si trovano in Svizzera;
vi sono i presupposti legali per ottenere un sequestro conservativo.

Questi presupposti, come già anticipato, richiedono principalmente che:

Il debitore non sia residente in Svizzera e l’azione stessa sia sufficientemente connessa con la Svizzera o sia fondata su un riconoscimento del debito sottoscritto dal debitore (“sequestro contro un soggetto non residente in Svizzera”);
Il creditore disponga di una sentenza o un lodo arbitrale esecutivi contro il debitore (“titolo esecutivo”).

Sequestro contro un soggetto non residente in Svizzera. Ai sensi della Legge Federale, il mero fatto che i beni del debitore si trovino in Svizzera non è sufficiente a stabilire una “connessione sufficiente con la Svizzera”. Tale presupposto dipende principalmente dalle circostanze specifiche della controversia, che il tribunale svizzero valuterà caso per caso. La giurisprudenza svizzera ha, però, individuato alcuni criteri di connessione nel caso in cui: il contratto tra le parti sia stato sottoscritto o debba essere eseguito in Svizzera; il contratto sia governato dalla legge svizzera; il creditore viva in Svizzera o l’azione del creditore sia collegata ad un’attività commerciale svolta in Svizzera.

Titolo esecutivo. Al fine di poter chiedere il sequestro conservativo, il creditore deve anche disporre di un titolo esecutivo valido. La Legge Federale non fa alcuna distinzione né tra sentenze e lodi arbitrali, né tra pronunce nazionali o straniere, a patto che siano esecutive (ai sensi della Convenzione di Lugano o della Legge federale sul diritto internazionale privato, oppure – nel caso di un lodo arbitrale straniero – ai sensi della Convenzione di New York del 1958).

Il procedimento. Il tribunale svizzero chiederà al creditore di produrre prime facie la prova dei presupposti legali appena visti. Il provvedimento verrò poi emesso su istanza di parte e spesso può essere concesso inaudita altera parte, quindi – in questi casi – coglierà il debitore di sorpresa, togliendogli la possibilità di spostare le somme di denaro o i beni in altri luoghi.

Il sequestro conservativo – specialmente se emesso inaudita altera parte – è uno strumento particolarmente efficace, perché impedisce al debitore di disporre dei beni sequestrati, che non potranno essere così occultati. È quindi un’arma considerevole a disposizione del creditore che voglia assicurarsi la fruttuosità di un’azione esecutiva e, da ultimo, recuperare il suo credito.

One of the commonly discussed advantages of international commercial arbitration over litigation in the cross-border context is the enforcement issue. For the purpose of swifter enforcement of foreign arbitral awards, the vast majority of countries signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

On contrary, there is no relevant international treaty of such scale for the enforcement of foreign court judgements. Normally, the special legal basis, such as agreement on judicial cooperation between two or more countries, needs to be relied upon in order to get a court judgment recognized and enforced in another country. There are quite many countries that do not have such an agreement with China. This includes, among others, US, Germany or the Netherlands.

Interestingly, however, recently the Chinese court in Wuhan enforced the US court judgement rendered by the Los Angeles Superior Court of California in the Liu Li v Tao Li and Tong Wu case. It did so despite the fact that there is no agreement between China and US providing for mutual recognition and enforcement of such judgements. The court in Wuhan found, however, that the reciprocity in recognizing and enforcing the court judgments between China and US was established because of an earlier decision of the US District Court of the Central District of California recognizing and enforcing the Chinese judgement rendered by the Higher People’s Court of Hubei in the Hubei Gezhouba Sanlian Industrial Co., Ltd et. al. v Robinson Helicopter Co., Inc. case.

Interestingly, similar course of action was taken earlier in 2016 when the Chinese Nanjing Intermediate People’s Court enforced the Singaporean judgement relying on the reciprocity principle in the Kolma v SUTEX Group case.

How much does it tell us?

Should we now feel safe when opting for own courts in the dispute resolution clauses in the China-related deals? – despite the fact there are no relevant agreements between China and our country? The recent moves of the Chinese courts are, indeed, interesting developments changing the dispute resolution landscape in a desirable direction and increasing the chances for enforcing the foreign commercial court judgements. Yet, as of today, one should not see them as the universal door-openers for the foreign court judgements in similar situations. Accordingly, rather careful approach is recommended and the other dispute resolution methods securing the safer way of enforcement, like arbitration, should be kept in mind. The further changes remain to be seen.

The author of this post is Monika Prusinowska.

Some places are good to go to for arbitration, some places are better avoided. It is not this blog’s aim to hail the former and blame the latter but, rather, to outline why Switzerland certainly is a good choice when it comes to arbitration.

Arbitration clauses are sometimes called “Midnight Clauses”. They are called “Midnight Clauses” because they tend to be the very last clause that parties will negotiate on when trying to contractually finalize a business transaction. If the parties are looking for an excellent dispute resolution mechanism or are having last-minute difficulties in finding a suitable compromise, arbitration in Switzerland might be a valuable alternative. Why? There are a handful of unique selling propositions.

First of all, Switzerland has a long tradition of hosting international arbitrations of all kinds (both ad-hoc and institutional). The tradition dates back more than hundred years. As a consequence of this history and experience, you will find easy access to a great number of excellent legal practitioners, both counsel and arbitrators.

Second, Switzerland is politically neutral and is the seat of many international organizations (WTO, WIPO, IOC, etc.). This ensures an openness of mind to different cultures and values and makes Switzerland a great place for an international arbitration.

Third, Swiss substantive law offers a very liberal, clearly defined and predictable legal framework to its users. As a consequence, Arbitration in Switzerland is ideally combined with a choice of law clause in favour of Swiss substantive law.

Fourth and importantly, Switzerland offers both a very stable legal system and an excellent legal framework. Switzerland’s international arbitration law follows an efficient regime and is comprised of only 18 very concise articles. Furthermore, the Swiss judiciary applies a very arbitration-friendly approach in dealing with challenges of arbitral awards and only interferes in exceptional circumstances. There is only one challenge available and this challenge goes right to the Swiss Federal Supreme Court, Switzerland’s highest court. The Supreme Court will not review the merits of the award. It will, however, ensure that the most basic legal principles (public policy) are safe-guarded. Consequently, there are no cost-intense multi step annulment proceedings before state courts. Challenges are generally dealt with within six months.

Fifth, Switzerland offers great infrastructure both in terms of travelling access, hotels, security, court reporting and translation needs.

Last but not least, arbitration in Switzerland offers you great flexibility. You can arbitrate according to the arbitration rules of all of the major institutions, i.e., ICC, Swiss Chambers of Commerce, LCIA, SCC, DIS, AAA, SIAC, HIAC, CIETAC or under Ad-Hoc Rules and will find a suitable ground for your arbitration. For all of these reasons and many more, arbitral awards originating in Switzerland will profit from a great reputation and will be easily enforceable internationally in case of need.

Arbitration could be a strange world of wonders, but, on the other hand, if mastered professionally in the first place while planning and managing the process, arbitration could turn out to be a process that will be directed towards a winning strategy.

Much can be written about the arbitration process, but this article attempts to pinpoint 7 essentials that are a must in the tool box and knowledge of the arbitration lawyer.

1 – You must control your arbitral procedure – This may seem rather trivial. However, time and again, cases such as those this writer has scrutinized or managed indicate that when counsels who are aware of the “technicalities” and plan for them, they gain considerable advantages or at least control of the international arbitration.

2 – Precisely define your arbitration agreement/clauses – This essential cannot be emphasized enough, as to its importance and great impact over the arbitral process. This preliminary phase of any arbitration process – which is always based upon some kind of consent granting the jurisdiction to an arbitral tribunal – is the key for safeguarding interests.

3 – Cautiously choose and define the seat of arbitration– The seat of arbitration is not “just” the venue where the arbitration will take place – it is the country whose courts will have jurisdiction over the matters surrounding, supporting and enforcing the arbitration procedure.

This might have crucial relevance, even for the validity of the arbitration agreement itself, since each country has its own internal arbitration laws regulating arbitration and, thus, might interpret validity or non-validity of an arbitration agreement irrespective of the law applying to the arbitration or the intent of the parties initially. For example, some countries may not enforce an arbitration without a signed arbitration agreement, whereas others, such as Israel, might acknowledge consent for arbitration without a written document.

The seat of arbitration may also have a great impact even over interim measures. It is crucial to review what kind of interim measures are possible or impossible according to the law of the seat of the arbitration – some cases revolve around interim measures without which the arbitration might be meaningless.

The seat of arbitration might also have a great impact in light of the public policy in the specific country – which might not enable the validation or enforcement of an arbitral award counter to its public policy principles – and thus make an arbitral award worthless.

4 – Definition of the possible remedies and the exclusion of others – This is another essential that, for some reason, in practice is often overlooked, despite the obvious advantage this might have over the scope of the arbitration. Parties to an arbitration agreement have the power not only to provide the matters that are subject to arbitration and the applicable law, but also to control their legal exposure in arbitration – and, in fact, minimize or maximize it – if they just give thought to remedy definitions, rather than leave it inattentively hanging as a midnight clause.

For instance, a party might define that punitive or tort damages are included or excluded. Similarly, parties can provide to cap possible compensation (such as a certain value of the transaction), all in a manner so that the arbitration process can be navigated solely to what the parties, or any one of them, actually seek. This will contain and minimize the risk of the unexpected or unknown.

In this respect, it is also important to determine clearly what the scope of the arbitral tribunal authority might be – because what is not included might be determined to be excluded.

For instance, parties sometimes provide that the tribunal will have the jurisdiction to render awards as to questions of interpretation of the contract and its terms – but such a provision may be found to not provide jurisdiction as to breach of the contract – this might turn out to be a substantial obstacle for the enforcing party.

5 – Determining the applicable law – This has great relevance and importance for obvious reasons – and yet many times parties are found to have agreed upon an applicable law – such as British or Swiss law – without actually looking into said law and its possible implications for the matter in the case in dispute. It is indeed worth the extra effort to consult with counsel acquainted with the proposed applicable law while presenting the scope of interests to be protected and any possible downsides in the transaction.

6 – Determining and controlling arbitration costs – International arbitration could be extremely costly, especially if parties have not provided in advance for the terms for conducting the process. Parties could and should consider controlling costs, inter alia, by the following:

Providing for a sole arbitrator rather than a tribunal of three
Providing that the arbitration will be conducted by written submissions and affidavits only
Providing limitation of document disclosure – especially while dealing with U.S. parties or under U.S. applicable laws (which may have extremely broad and often onerous discovery provisions)
Providing in advance for short hearings and a limitation on the number of hearings
Appointing an arbitrator to manage the arbitration without the administrative costs and fees usually involved when applying to an international arbitration institution
Providing that the arbitrator is an expert in the fields relevant to the matter, in case specific expertise is required, therefore avoiding the need for appointment of an expert

7 – Ensuring that enforcement is possible – An essential element to be reviewed in advance, even before engaging in an arbitration agreement, is the possibility of enforcing the arbitral award. In general, the New York Convention of 1958 provides sufficient reference for this consideration. This may not always be the case. Thus, a technical review of the convention is sufficient to ensure enforceability in a particular case or situation.

There are instances in which legal or political considerations may preclude enforcement even when the target jurisdiction is part of the New York Convention. For instance: non-mutuality of enforcement among countries, an award that contradicts public policy of the target enforcement country, difficulties originating from conflicts of law – since the enforcing jurisdiction will usually apply its set of laws, rules and values.

Moreover, it is greatly advisable to explore in advance if the opposing party is solvent, where its assets are situated and the ability to enforce the award against such assets.

Arbitrate wisely.

There is a number of dispute resolution mechanisms available for the disputes with the Chinese parties. Depending on bargaining power of the parties and few other circumstances, such as limitations of Chinese law, the dispute can be sometimes resolved outside of China. More frequently, however, the Sino-foreign disputes are resolved in China and this post offers a brief introduction to the methods available there .

As almost anything else in business, an optimal method for resolution of future disputes is worth of anticipating well in advance. Once there is a conflict, it is much more difficult for the parties to agree on the solution equally acceptable to both of them. There is a variety of options to choose from and each of them has its own advantages and disadvantages. Also, there is no “one size fits all” solution and each transaction as well as dispute should be approached individually. Of course, there is always is a default solution, which is going to state court in case the parties have not provided for any alternative mechanism, but this is not always the most optimal way to go.

Litigation

Chinese courts are commonly perceived by foreigners as rather undesirable scenario for dispute resolution. It is so due to the often mentioned problems, such as local protectionism of the Chinese courts or lack of their professionalism. However, in practice, this is not always true and especially the courts in the China’s well-developed regions, particularly in the biggest coastal cities are generally a safe harbor for disputes involving foreigners. The same holds true for the IP courts located in Beijing, Shanghai and Guangzhou. One needs to remember, however, that the jurisdiction of particular court depends on a number of factors, such as place of registration of the Chinese counterparty or place of performance of the contract and therefore, the Chinese top courts may not be the ones handling particular dispute in practice.

Arbitration

Arbitration is a common choice for foreign-related disputes in China. It happens so, because of a number of advantages of arbitration over litigation in such a context. To start with, China and the vast majority of the countries in the world are the parties to the New York Convention, which significantly streamlines the enforcement of foreign arbitral awards. There is no comparable treaty of that scale for the enforcement of state court judgements, what can cause practical problems if certain country does not have an agreement on judicial assistance with China and the enforcement of foreign court judgements is sought. Therefore, since the parties want money and not a piece of paper, the use of arbitration in the cross-border context can substantially improve the prospects for effective enforcement of arbitral award. Furthermore, in contrast to litigating in China, in arbitration English language can be used in proceeding and a party can be represented by a foreign counsel. In arbitration, the parties can also select arbitrators resolving their dispute and a foreign arbitrator is not an uncommon scenario in case of the Sino-foreign arbitration proceedings in China. The parties can also select a specific arbitration institution and rules applicable to the proceeding.

The China International Economic and Trade Arbitration Commission (CIETAC) and the Beijing Arbitration Commission (BAC) are one of the most frequently chosen arbitration institutions in China for the foreign-related disputes. Alternatively, if the circumstances of the case permit – the dispute can be taken outside of China and resolved, for instance, by the Hong Kong International Arbitration Centre (HKIAC) or the Singapore International Arbitration Centre (SIAC), which are fairly acceptable alternative choices for the Chinese parties.

Other options

One of the other methods popular in China is mediation. Mediation is typically faster, cheaper and increases the chances of preserving good relationship between the parties. However, one needs to remember that in order to mediate, the parties need to be willing to do so, since the role of mediator is to help the parties reach an agreement and not to ultimately decide their dispute. Furthermore, the product of mediation is a contract and so, the breach of mediation agreement typically equals to contractual breach.

One additional important tool frequently used in practice is engaging local lawyers for the purpose of negotiating with the Chinese party as soon as the dispute escalates. The lawyers can help the parties communicate and when the communication is impossible – they can prepare a document describing the claims and informing the Chinese party about the risk of undertaking further legal steps, such as staring court proceeding, what is made mainly for the purpose of brining the other party back to negotiation and finding a solution acceptable to both parties. This often helps save time and money, but it can be problematic if the other party ignores the actions of lawyer. Also, like in case of mediation, the problem lies in the enforcement of any agreement reached by the parties in the course of negotiation.

The main takeaways from this short post are the following:

Think about the dispute resolution mechanism in advance. There are quite many issues that need to be taken into consideration and there is no “one size fits all” solution. There might be the situations when going to the Chinese court makes perfect sense and there also might be the situations when it makes no sense at all. What is the best option for me in particular case? Which court can potentially have jurisdiction over my case? Does the country involved have a judicial assistance agreement with China for the purpose of enforcement? What should be the language of proceeding? Which arbitration institution to choose?
Think about hiring professionals right from the very beginning, preferably at the stage of negotiating and drafting agreements. Choosing an optimal solution for resolution of future disputes can help save a lot of time, money and energy. In case of dispute occurring already – act promptly. If the dispute escalates, think about what you can do to best preserve your rights. Should you apply for interim measures? Do you need to first negotiate before you can go for arbitration in case of multi-tier clauses? Which documents are needed to start the proceeding?

The author of this post is Monika Prusinowska.

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Below are some examples of dispute resolution clauses specified by the parties in commercial contracts that caused actual misunderstanding:

The appeal court dismissed the ruling of the court of first instance and the case was returned for re-consideration to the court of first instance based on the following grounds.

Conclusions

If you wish to resolve disputes in the state commercial court in Russia, make sure that the full name of the state commercial court is specified correctly.

If you wish to resolve disputes by arbitration in Russia it would be reasonable to use a recommended arbitration clause of respective arbitration institution.

And, of course, be sure to check translation of the English version of the contract into Russian.

Today, each of the other Canadian provinces have separate legislation that governs international arbitration that is, like Québec, largely based on the Model Law.

In deciding whether the order of an arbitrator is the equivalent of an injunction, the QCA noted as follows:

The author of this post is David Stolow.

Step 1: Obtaining exequatur

The award is presented to the Presiding Judge of the Paris Civil Court (Tribunal de Grande Instance de Paris) ex parte who decides whether or not to grant exequatur. There are no briefs to file.

Step 2: Defending exequatur (potentially)

the arbitral tribunal wrongly upheld or declined jurisdiction,
the arbitral tribunal was irregularly constituted,
the arbitral tribunal ruled without complying with the mandate conferred upon it,
the due process requirement was violated, or
recognition or enforcement of the award would violate French international public policy.

Step 3: Defending immediate enforceability of the award (potentially)

*Step 4: Seizing assets***

Seizing funds

Upon receipt of the exequatur order, a bailiff may be instructed to seize any funds held in bank accounts in France.

Please note that French bailiffs have access to a specific file called FICOBA which provides them with the names of all the banks where the debtor holds accounts.

The seizure is then notified to the debtor within 8 days.

The funds remain frozen the time to allow potential challenges by the debtor (one month).

Seizing other kinds of assets

It is possible to seize a variety of other assets under French law of course (real property, company shares, debt obligations etc.). Seizing funds is usually the easiest.

Step 5: Challenge by the opposing party of the seizures (potentially)

The seized party will have a right to challenge the seizures before the Enforcement Judge (“Juge de l’exécution” or “JEX”) within a month of the notification of the seizure.

The arguments that can be raised by the opposing party usually concern the seizure itself and not the validity of the exequatur order as other proceedings are available for that purpose.

Several briefs are usually exchanged and a hearing is held before the JEX.

The author of this post is Flore Poloni

il credito è esigibile e non garantito;
i beni del debitore da sequestrare si trovano in Svizzera;
vi sono i presupposti legali per ottenere un sequestro conservativo.

Questi presupposti, come già anticipato, richiedono principalmente che:

Il debitore non sia residente in Svizzera e l’azione stessa sia sufficientemente connessa con la Svizzera o sia fondata su un riconoscimento del debito sottoscritto dal debitore (“sequestro contro un soggetto non residente in Svizzera”);
Il creditore disponga di una sentenza o un lodo arbitrale esecutivi contro il debitore (“titolo esecutivo”).

How much does it tell us?

The author of this post is Monika Prusinowska.

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Much can be written about the arbitration process, but this article attempts to pinpoint 7 essentials that are a must in the tool box and knowledge of the arbitration lawyer.

In this respect, it is also important to determine clearly what the scope of the arbitral tribunal authority might be – because what is not included might be determined to be excluded.

Providing for a sole arbitrator rather than a tribunal of three
Providing that the arbitration will be conducted by written submissions and affidavits only
Providing limitation of document disclosure – especially while dealing with U.S. parties or under U.S. applicable laws (which may have extremely broad and often onerous discovery provisions)
Providing in advance for short hearings and a limitation on the number of hearings
Appointing an arbitrator to manage the arbitration without the administrative costs and fees usually involved when applying to an international arbitration institution
Providing that the arbitrator is an expert in the fields relevant to the matter, in case specific expertise is required, therefore avoiding the need for appointment of an expert

Moreover, it is greatly advisable to explore in advance if the opposing party is solvent, where its assets are situated and the ability to enforce the award against such assets.

Arbitrate wisely.