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The era of specialised arbitration: Part two: Energy, construction, aviation, maritime

This is the second part of a two part blog regarding the emergence in recent years of specialised arbitral institutions/courts which provide industry specific rules, procedures and decision makers. The first part looked at the worlds of art, sport and finance, while this second part will look at the sectors of energy, construction, aviation/aerospace and maritime.

Energy and construction

In the energy and construction sectors, arbitration has long been the preferred method of dispute resolution and the generalist institutions are often the go to option for parties in the construction and energy sectors. This is evident based on the statistics of the main arbitral institutions:

Recognising the volume of such disputes, the ICC went one step further and issued a report in 2019 setting out recommended tools and techniques for effective management of construction arbitrations, which is aimed specifically at arbitrators who have little or no construction law experience. Clearly the energy and construction sectors are important generators of arbitration work all around the world.

Both the International Centre for Energy Arbitration (ICEA), based in Scotland, and the Perth Centre for Energy & Resources Arbitration (PCERA), based in Australia, are attempting to channel that preference with a focus on the energy industry.

The ICEA is a joint project of the Scottish Arbitration Centre and the Centre for Energy, Petroleum and Mineral Law and Policy at the University of Dundee. The ICEA published an initial report in 2015 summarising the findings of its energy dispute resolution questionnaire, which it proposes to use as a basis for draft rules aimed specifically at energy disputes. Some of the key findings which could appear in future rules include, among other things:

  • Mandatory high level negotiation and mandatory mediation.
  • Potential cost consequences for a failure to observe these mandatory stages.
  • The possibility of hybrid processes.
  • Time limits for the overall arbitration procedure.
  • A parallel online blind bidding system.

The PCERA was established in 2014 to co-ordinate and facilitate dispute resolution in the energy and resources sectors, specifically catering to Western Australia and Asia, and does so by offering two main options for dispute resolution: arbitration, and a new model for expert determination called collaborative expert resolution. PCERA issued its own rules in 2017 which are a modified version of the UNCITRAL Rules, and includes a list of arbitration principles which has, among others, two unique proposals:

  • Each arbitration should be confined to 12 days of oral hearing.
  • All expert evidence in a particular field should be given by a single expert appointed by the arbitrator.

The collaborative expert resolution process involves an independent expert being appointed to each party to do an informal assessment of the merits of the case, after which the two experts meet and reach a consensus. There is no information on PCERA’s website about the number of arbitrations being administered or using the PCERA Arbitration Rules, nor about the use of the collaborative expert resolution process.

The Society of Construction Arbitrators in the UK promotes the use of the Construction Industry Model Arbitration Rules (CIMAR) issued by the Joint Contracts Tribunal (JCT), initially in 2005 followed by later versions in 2011 and 2016. These rules would be used in an ad hoc arbitration and provide for, among other things:

  • The appointment of a single arbitrator.
  • Parties not being allowed to amend the rules once an arbitrator is appointed.
  • A choice of three procedures (a short hearing procedure, a documents only procedure, a full procedure) which is selected by the arbitrator (and not by the parties) who determines which procedure is most appropriate depending on the size and nature of the dispute.

The American Arbitration Association (AAA) has also issued the Construction Industry Arbitration Rules and Mediation Procedures (last revised in 2015), which include procedures for large, complex construction disputes. In addition to having a Construction Industry Panel of individuals with varied construction experience, the AAA also has a Construction Mega Project Panel which is comprised of top construction arbitrators with experience on so-called mega projects who have been ranked by counsel.

Aviation, aerospace and outer space

The Shanghai International Aviation Court of Arbitration (SIACA) is the product of a trilateral co-operation agreement signed in August 2014 between the China Air Transport Association, the Shanghai International Economic and Trade Arbitration Commission (SHIAC) and the International Aviation Transport Association. The SIACA aims to cater to disputes in the domestic and international civil aviation industry, including between airlines and airports, aircraft manufacturing and sales, aircraft financial leasing, aviation insurance, ground services, and suppliers such as jet fuel providers and aviation catering services. SIACA disputes will use the China (Shanghai) Pilot Free Trade Zone Arbitration Rules (2015) and will use the SHIAC panel of arbitrators. SHIAC issues a new panel of arbitrators every three years and has since added arbitrators specifically with experience and expertise in aviation. SIACA’s website contains no information about the number of arbitrations being administered.

The AAA and its international branch, the International Centre for Dispute Resolution (ICDR) offers a specialised panel for aerospace, aviation and national security claims. The ICDR includes arbitrators and mediators with significant and relevant industry experience to handle complex, high value aerospace, aviation, defence, cyber and security related disputes on both the domestic and international front.

The Permanent Court of Arbitration (PCA) issued the Optional Rules for Arbitration of Disputes Relating to Outer Space Activities in December 2011, aimed at resolving disputes with an outer space component, for example, satellite communications. The PCA also makes available to parties a list of arbitrators considered to have expertise in the subject matter of the relevant dispute. These rules use the 2010 UNCITRAL Rules as a base and include some novel features, such as flexible provisions regarding tribunal sizes, tribunal powers to consult experts on scientific and technical matters (for which the PCA also offers a list of scientific/technical/operational experts), as well as specialised provisions for a confidentiality adviser, where certain information is particularly sensitive and needs to be monitored.

Maritime

The Chambre Arbitrale Maritime de Paris (CAMP) is an arbitral institution first established in 1901 which specialises in the maritime sector. The CAMP has its own arbitration rules for disputes in the international maritime trade and industry (mostly recently revised in 2019). It also offers mediation services. The CAMP boasts a list of over 50 independent arbitrators with experience as either commercial maritime practitioners (ship owners, charterers, ship brokers, insurers), lawyers (maritime law professors, in-house or private counsel, judges) or maritime experts (naval architects, chief engineers, and so on).

The maritime world also benefits from the London Maritime Arbitrators Association (LMAA) which, although not a court or institution, has issued the LMAA Terms (most recently revised in 2017), a widely used set of rules in ad hoc maritime arbitrations.

Comment

Based on the above, it seems that a key benefit, perhaps the key benefit, of choosing to use a specialised arbitral institution or court is that parties are guaranteed that its decision makers have specialised knowledge in that given industry. Additional benefits include procedural rules which have been tailored to the specific sector, and often include specialised procedures for the use of technical experts.

However, other than CAS, these specialised institutions/courts are relatively new to the world of arbitration, and there is very little evidence about how much parties in a given sector are actually using them. Accordingly, the procedures and policies they have developed are relatively untested in terms of judicial scrutiny and enforceability. It is simply too early to tell whether arbitral awards issued by tribunals of a specialised institution are considered to be robust, and whether they can withstand challenges in national courts.

Amidst this era of specialised arbitration, the generalist institutions are taking measures to meet the needs of parties in specific sectors. As mentioned, the ICC has taken steps to address the needs of the financial sector and the construction sector by providing guidance about preferred procedures for disputes in those areas. Other institutions are focusing on providing parties with specialised decision makers in the form of specialised rosters or panels, with the HKIAC and the AAA taking the lead on this front. It would not be surprising if more generalist institutions followed suit.

What is clear based on the above summary is that, in an increasingly crowded field, there are more and more specialised institutions, specialised rules and specialised rosters. Although it remains to be seen whether parties in certain sectors will favour the route of specialised or generalist arbitration, parties have more options now than ever before.

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