Young ICCA Skills Training Workshop: Interim measures and emergency arbitrator in practice

Post Event Report

On 28 October 2016, Italian law firm Gianni, Origoni, Grippo, Cappelli, & Partners opened the doors of its beautiful office in Rome to the very first Skills Training Workshop co-organised by Young ICCA and the Italian Association for Arbitration (“AIA”). Approximately forty students, young arbitration practitioners, and experienced lawyers from a great variety of cultural, geographical, social backgrounds and level of experience, attended the event. The title of the Workshop was “Interim measures and emergency arbitration in practice”. Simona Scipioni reports. 

The distinguished faculty was divided into two sessions: the first panel on “Practical aspects of interim measures and emergency arbitrator proceedings” was composed of Mr Gabriele Ruscalla (Counsel, ICC International Court of Arbitration, Paris); Ms Melissa Magliana (Counsel, Homburger, Zurich); and Mr Cameron Sim (Associate, Debevoise & Plimpton, London) with Professor Maria Beatrice Deli (Secretary General of AIA and ICC Italia) moderating the panel. The second panel included Mr Paolo Marzolini (Partner, Patocchi & Marzolini, Geneva); Ms Marily Paralika (Associate, White & Case, Paris), and Professor Giacomo Rojas Elgueta (Roma Tre University, Rome) and acted first as the Arbitral Tribunal in a case study on emergency measures. Later, the panellists held a feedback session on oral advocacy of participants and gave their views on the dos and don’ts.

The fil rouge of the first session was answering to the following question: “what options are open to a party in need of urgent interim relief before an arbitral tribunal is formed?”. In an emergency situation, a party often requires swift and effective measures. Yet in international arbitration proceedings, it may take weeks or months to constitute an arbitral tribunal that may order such measures. In many circumstances, an application to the national courts of a relevant jurisdiction may be an unattractive alternative – for all of the reasons the parties chose arbitration in the first instance. Emergency measures granted by an emergency arbitrator before the tribunal is constituted, could be a solution to address these limitations.
  

Mr Gabriele Ruscalla provided an overview of the new 2012 ICC Arbitration Rules. Among their most important innovations are the Emergency Arbitrator provisions (Article 29 and Appendix V of the ICC Arbitration Rules). The main features of the ICC Emergency Arbitration are : (i) the provisions  are applicable only to arbitration agreements entered into after the entry into force of the 2012 ICC Arbitration Rules and extend only to parties that are signatories to an arbitration agreement (or their successors); (ii) an application for emergency measures can be filed even before a request for arbitration, thus offering even greater flexibility; (iii) the emergency arbitrator may issue an order even after the arbitral tribunal has been constituted; and (iv) the emergency arbitrator must generally issue his or her order within 15 days of receiving the file.

Mr Ruscalla further illustrated some important limitations of emergency measures that arbitrators may grant. The emergency arbitrator may order any appropriate measure but only in relation to signatories to the arbitration agreement or their successors (Article 29(5) of the ICC Arbitration Rules). Third parties are excluded. Accordingly, Article 29(5) of the ICC Rules excludes emergency arbitration from investment disputes primarily because at least one party to the arbitration, an investor, is not a signatory of a relevant BIT. Another limitation concerns the enforcement of emergency measures. The emergency arbitrator’s order may be not automatically enforceable in every jurisdiction since such orders are not governed by the 1958 NY Convention. However, the orders granted by emergency arbitrators may be “morally binding” on the parties. Moreover, arbitral tribunals are empowered to reflect non-compliance with the orders of emergency arbitrators in the final award of damages. Whilst it may be true that parties have fewer incentives to comply with the orders of emergency arbitrators, arbitral institutions still report a high level of voluntary compliance with such orders.

In sum, although there are practical limitations on the operation and enforcement of these provisions, the proven track record of parties who have successfully deployed these procedures is an encouraging sign of the utility of emergency arbitration and a likely indicator of future positive trends. Between 1 January 2012 and 2016, there have been 42 ICC emergency arbitration requests.

Ms Melissa Magliana discussed interim measures as opposed to emergency measures. Interim measures serve to safeguard the rights of parties during the proceedings. Typical interim measures are used to: (i) prevent the breach of confidentiality obligations; (ii) order a counter-party to perform an obligation under a contract; and (iii) to prevent trademark and patent infringements. She recalled that there is no clear consensus as to the standard needed to obtain interim relief. It seems, however, that the arbitral tribunal needs to be satisfied that there is: (i) a likelihood of success on the merits; and (ii) the risk of irreparable harm. Whilst the former is easy to satisfy, the latter is a higher threshold which purports the existence of substantial and serious harm. Accordingly, the arbitral tribunal will engage in a “balance of interests” analysis to determine whether the moving party may well await the end of the proceedings. Ms Magliana recalled that the recourse to persuasive and descriptive oral and written pleadings is an important means to convince the arbitral tribunal that interim measures are needed.

Ms Magliana, the other speakers, and the participants discussed the impact of emergency and interim measures proceedings on the concurrent jurisdiction of a competent court or the arbitral tribunal. Counsel must always keep the client’s interest in mind while deciding whether to seek interim/emergency measures from local courts or arbitrators. It would be natural to ask an arbitral tribunal to order interim/emergency measures for all the reasons the parties chose arbitration in the first place, including (i) time and cost concerns; (ii) impartiality; (iii) the need to preserve confidentiality; or (iv) when interim orders are in aid of foreign-seated arbitrations or the specific interim relief needed is not available in the relevant jurisdiction. In the context of emergency procedures, emergency measures are not envisaged to represent an exclusive remedy and, in general, emergency proceedings do not operate as a waiver of judicial authority over the matter. Whilst Article 29(7) of the ICC Rules expressly recognises the preservation of judicial remedies, the provisions of mandatory local law may curtail the recourse to local courts where parties have an option to seek relief from another source (such as an emergency arbitrator). For example, under s44(5) the English Arbitration Act (1996), the English courts will grant orders in support of arbitration “if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively”. Finally, Ms Magliana noted that under the US law, interim relief orders fall under the application of the 1958 NY Convention.

Mr Cameron Sim discussed emergency measures from a practical lawyer’s perspective. He noted that the party asking for emergency measures must satisfy a high threshold and to prove the existence of “special urgency”. If such a threshold is not met, the application for emergency measures is inadmissible. Accordingly, from a strategic point of view, the moving party must be fairly confident of its case. Equally, the moving party may consider whether filing a request before domestic courts may be faster than recurring to arbitral proceedings (this may be the case in England & Wales). Other points to consider when deciding to file a request for emergency measures are (i) the enforceability of the order; (ii) the availability of ex parte applications for urgent or emergency relief; (iii) orders affecting parties; and (iv) potential penalties for breach of the order granting emergency measures. Moreover, depending on the urgency of the issue, a sensible claimant may well prepare an application for emergency measures together with a request for arbitration and propose a procedural timetable at the outset of the emergency proceedings.

Mr Sim noted that most arbitration rules provide for between 24 and 60 hours to appoint an emergency arbitrator. However, this  may raise concerns regarding the expertise and qualifications of a person chosen to serve as an emergency arbitrator. The default position under most rules is that the emergency arbitrator cannot later become a member of the full arbitral tribunal. Whilst the ICC Rules expressly prohibit this, the LCIA rules are silent on this point. Nevertheless, some  arbitration rules provide that parties may agree on an emergency arbitrator being appointed to the full tribunal. As to the procedure, Mr Sim considered that it used to be considered as more “claimant-friendly” but the advantages are slowly shifting to the respondents as well.

At the conclusion of the first panel, the participants were divided into four groups lead by the speakers of the first panel to work on the mock case on emergency measures and prepare their oral submissions before the Arbitral Tribunal. 

After a lunch kindly sponsored by CMS and JMU, the participants participated in a moot case where they had to defend the interests of a buyer and a seller of tyres. They were required to make (and to rebut) an application for emergency measures.

In addition to providing feedback on each participant’s performance, the members of the second panel engaged in a discussion on oral advocacy following the structure of real arbitration proceedings.

Mr Paolo Marzolini described the importance of opening statements. Parties get only one chance to make a first impression, as the saying goes, and the opening statement is that first impression that will often set the tone for entire proceedings. The opening statement at the beginning of the arbitration is limited to outlining facts. This is each party’s opportunity to set the basic scene for the arbitrators, introduce them to the core dispute(s) in the case, and provide a general road map of how the proceedings are expected to unfold.

The very first advice is that counsel must be prepared. They shall know every single aspect of the case since knowledge will come across. Moreover they need to engage with the arbitrators and persuade them. The only way to do so is to tell a story to the arbitral tribunal. If counsel’s aim is to persuade, they shall present their case as a tale, following a structure, bringing in the human aspect of the story.

Of course, the delivery comes as one of the outmost important aspects: counsel should have their own style, and that can be created only with lot of rehearsals. However, counsel needs to be flexible and sensitive to the signs of the arbitrators. Even a complex legal problem with a complicated factual matrix can capture the tribunal’s interest if presented shortly and simply by counsel seeking to communicate with the arbitrators. Indeed, oral communication is a two-way dialogue. Eye contact is important, as is “reading” the audience counsel is communicating with, to gauge whether arbitrators are following the counsel, or they want the counsel to pause or explain something further. Mr Marzolini noted that you may be a fantastic orator but you won’t get far in persuading the tribunal if you launch into a 50 page monologue worthy of Shakespeare without any thought about your audience. Therefore, when confronting a complex case, counsel should choose their own battles, select key elements, know the weak points of the case and appear fair.

Professor Giacomo Rojas instead concentrated on the closing arguments. The closing arguments are an opportunity for each party to remind the arbitrators about key evidence presented and persuade them to adopt an interpretation favourable to their position. At this point, parties are free to use hypothetical analogies to make their points, to comment on the credibility of the witnesses, to discuss how they believe the various pieces of the puzzle fit into a compelling whole, and to advocate why arbitrators should decide the case in their favour. According to recent studies, the mind tends to forget what has been said in the middle. So, the opening and closing arguments are what the arbitrators will remember. Because of the primacy effect, it is important that information is presented correctly the first time. The first thing presented makes a huge impression that is often hard to override. If what is stated in the opening submissions is not correct, and is modified later, the arbitrators will still remember your first statement. Of the two effects, the closing effect carries more weight for your message than the recency effect because the last thing the audience hears and experiences, is the first thing they’ll remember! It should be outstanding!

Finally, Ms Marily Paralika concluded the second session reminding the audience that a good lawyer should get away from his/her personal background. In an international environment it is essential to have an open mind.

Students and young practitioners should also take the chance to participate in moot courts to address arbitral tribunals. Mooting enables students to develop strong writing and oral advocacy skills, intellectual flexibility, the ability to function well under pressure, and the self-confidence necessary to be successful advocates in the future.

To celebrate the end of a successful and convivial workshop, a cocktail reception kindly sponsored by White & Case was held for all the participants and speakers where they were able to continue exchanging views and experiences.