In international commercial arbitration, the key arbitral institutions (ICC, LCIA, SIAC, HKIAC, SCC) are generalist institutions. They are not industry specific and can administer a dispute relating to just about anything commercial. However, in recent years, certain specialised arbitral institutions/courts have emerged which provide industry specific rules, procedures and decision makers. This blog, divided into two parts, provides a brief overview of the specialised arbitration that is available in a variety of sectors. This first part will look at the worlds of art, sport and finance, and the second part will look at the energy, construction, maritime and aviation sectors.
The art world has its own specialised institution called the Court of Arbitration for Art (CAfA), which was launched in 2018 in The Hague, Netherlands. Resulting from a joint initiative by the Netherlands Arbitration Institute (NAI) and a non-profit organisation called the Authentication in Art Foundation, CAfA is a specialised forum for the resolution of disputes in the wider art community through both arbitration and mediation. CAfA has issued its own set of arbitration rules, in force since 1 January 2019, which are a modified version of the NAI’s Arbitration Rules. Some of the unique features of the CAfA Arbitration Rules are:
- Arbitrators must be appointed from among the “arbitrator pool”, which is made up of candidates who have been carefully vetted based on their background and experience. Parties are allowed to deviate from this rule if they can present compelling reasons to do so (articles 11(6) and 13(4)).
- With respect to forensic science or provenance of an art object, the only admissible expert evidence must be from an expert appointed by the tribunal who is chosen from the “expert pool” (article 28(7)).
- Tribunals are permitted to appoint a “technical process advisor” to assist with highly complex or technical evidentiary matters, that is, to help with an art object’s authenticity (article 29(7)-(9)).
- If parties have not designated a specific choice of law, the tribunal may consider the appropriate choice of law to be the law of the principal location of the seller (if known at the time of the transaction) or of the purported owner of the art object at the time of commencement of the arbitration (article 42(2)).
CAfA’s website features a list (and short profiles) of over 150 candidates in the arbitrator pool, but the expert pool is not yet available. Not surprisingly, given that it is still in its infancy, there are no statistics available on CAfA’s website as to how many (if any) arbitrations are currently being administered by CAfA (and CAfA did not provide such information when requested).
Perhaps the most well-known of the specialised arbitration courts, the Court of Arbitration for Sport (CAS) has been in operation since 1984 and is widely used within the sporting world. CAS offers four types of procedures:
- Ordinary arbitration (first instance disputes resulting from contractual relations or torts but which must be directly or indirectly linked to sport).
- Appeal arbitration (disputes resulting from decisions taken by the internal bodies of sports organisations).
CAS comes under the administrative and financial authority of the International Council of Arbitration for Sport (ICAS), which operates like an arbitral institution. CAS is governed by the Code of Sports-related Arbitration, which is made up of the Statutes of the Bodies Working for the Settlement of Sports-Related Disputes (articles S1 to S26), together with the Procedural Rules (articles R27 to R70) which apply to the Ordinary Arbitration Division and the Appeal Arbitration Division (and the Anti-doping Division has its own set of rules). Some of the unique features of the Procedural Rules are:
- ICAS is responsible for appointing individuals to the list of CAS arbitrators, who must have a recognised competence with regard to sports law or international arbitration, and have a good knowledge of sport in general (articles S6, S7, S14).
- Parties must appoint arbitrators from the list of CAS arbitrators (articles R33 and R40.2). According to its website, CAS has around 300 arbitrators from 87 countries.
- If the parties have not chosen a substantive law to govern the arbitration, then Swiss law will apply (article R45).
- The appeals procedure is very fast, and an appeal panel has a broad scope of review with full powers to review both the facts and the law, and hold a hearing where witnesses and experts may testify again (article R49 to R57).
CAS also sets up ad hoc tribunals for major sporting events, such as the Olympic Games and the Commonwealth Games. Special procedural rules are issued for each occasion in order to take into account the particular circumstances of such events, but the procedures are generally expedited because decisions often must be taken before the relevant athlete competes in his/her event.
More than 5,000 cases have been submitted to CAS and over 3,100 awards and opinions have been rendered. Over the last decade, CAS has seen a yearly increase in the number of new cases, confirming that CAS has become a universally recognised forum for sports disputes.
Traditionally, litigation has been the preferred choice of the financial world, but arbitration is growing in popularity and the generalist institutions are taking note:
- The LCIA’s 2019 statistics show that 32% of all its cases related to banking and finance, which was an increase from 29% the previous year, and 24% the year before that.
- The ICC decided to constitute the Task Force on Financial Institutions and International Arbitration which surveyed financial institutions and banking counsel about its perceptions and experience of international arbitration. In its report dated March 2018, the task force made a series of recommendations for tailoring arbitral procedures to accommodate the needs of the financial sector which parties may consider including in their dispute resolution clauses, such as case management measures to reduce time and costs, summary disposition, expertise of arbitrators, interim relief, and cost shifting.
- The HKIAC has created the Panel of Arbitrators for Financial Services Disputes. It also requires that applicants who wish to be included provide, among other things, at least two sanitised arbitral awards concerning financial services disputes within the last five years, thus ensuring a minimum level of expertise for all candidates. Since 2016, HKIAC has appointed arbitrators from this panel on 114 occasions.
- The American Arbitration Association (AAA) has a specialised panel for mergers and acquisitions and joint ventures, featuring candidates with specific expertise in financial guarantees, purchase price adjustments, earn-out provisions, and so on.
In light of the above, PRIME Finance is an interesting alternative which caters specifically to the finance world. PRIME Finance stands for the Panel of Recognised International Market Experts in Finance. It is an institution that offers a number of products and services to help resolve disputes involving complex financial transactions. First established in 2012, PRIME Finance offers arbitrations and mediations governed by customised rules, as well as appointment of experts or consultants in any other dispute resolution process. The panel is composed of 180 legal and financial experts who have been carefully vetted by a selection committee, and includes sitting and retired judges, lawyers, bankers, regulators and academics.
PRIME Finance issued its own arbitration rules which are a modified version of the 2010 UNCITRAL Rules. It also entered into a co-operation agreement with the Permanent Court of Arbitration (PCA), meaning that all arbitrations will be administered by the PCA. It is also important to note that the International Swaps and Derivatives Association (ISDA®) has recognised the PRIME Finance Arbitration Rules as one of several arbitration rules for inclusion in its master agreements as an alternative to litigation. Some of the unique features of the rules are:
- The secretary-general of the PCA acts as the appointing authority when parties are unable to agree on appointment of arbitrators (article 6).
- Parties, arbitrators or the appointing authority may appoint arbitrators who are not included on the PRIME Finance list of experts (article 10a).
- The regulation of the currency of the award and rates of interest are specifically dealt with (articles 38 and 39).
- Tribunals may take into consideration any tax consequences of the amounts payable under the award (article 40).
- Reflecting the market need for speedy resolution of disputes, several provisions and annexes allow parties to shorten time frames of arbitral proceedings (for example, article 2a allows for expedited proceedings, and article 26b and annex D allow for fast track proceedings leading to an award within 30 to 60 days).
PRIME Finance confirmed that it has not yet convened a panel under its rules, but noted that some market participants have included a PRIME Finance arbitration clause in its contract. Its secretariat confirmed that it provides assistance to parties wanting to contact a specific expert from the panel, or where a party is looking to draw up a list of panel members for a particular matter, and that various panel members have been involved in expert review panels set up by the determinations committee, previously overseen by the ISDA, relating to credit default swaps.
While the art and sport sectors are particularly niche in terms of subject matter and involve a relatively small circle of users, finance is, by nature, a much broader topic which is arguably intertwined with most commercial transactions. It is perhaps not surprising, therefore, that the generalist institutions have made efforts to accommodate the finance sector in ways that they have not for art and sport. The second part of this blog will look at how the sectors of energy, construction, maritime and aviation have been effected by specialised arbitration, and consider the steps generally taken by the generalist institutions.